Truman’s Forgotten Economic Crisis | by Simon Constable | March 2022

President Harry S. Truman is famous for many lines, including one of my favorites: “I never gave anyone hell!” I just told the truth and they thought it was hell.

What is perhaps not so well known is the economic turmoil his administration had to endure when peace broke out.

Kenneth Weisbrode reveals this story, along with other parts of the first post-war year, in his new book: The Year of Indecision, 1946: A Tour Through the Crucible of Harry Truman’s America. It was released in March.

The end of World War II was supposed to bring prosperity. Indeed, the period from the defeat of Germany and Japan through the late 1960s is widely considered a happy period of stellar growth and good times for Americans.

But it didn’t start out that way without major problems. First, the United States had to leave the war footing. The change was brutally painful.

Wage and price controls were to disappear. In addition to this, the government’s purchase of materiel specifically for the war was to cease. What looked a bit like a planned economy would come out, in favor of the free market.

The first result was horrible. Wages fell, prices rose and workers lost their jobs.

  • “The average rent has increased, in some cities, by 1,000%. The price of butter has increased by 25%,” says Weisbrode. Steak too, almost doubled in price.
  • Soldiers returning from the war “were seen selling ‘Welcome Home’ signs, begging for a place to live,” he wrote.
  • The weekly wage for manufacturing workers fell from $47.12 in April 1945 to $43.07 in July 1946.
  • My former employer, General Motors, laid off 140,000 United Auto Workers as the government canceled contracts worth $2 billion, the book says.
  • “The year 1946 would see the biggest strikes in recent memory,” he wrote, as unionized workers wanted a reward for their wartime restraint.
  • “The value of the dollar would fall.”
  • “Taxes have become heavier.”

Weisbrode says the economic strain has resulted in mutual distrust between workers and managers. “Workers still feared unemployment and inflation, while businessmen worried about workers,” he writes.

The war “had been sold like a stock, and the public now demanded a dividend.” This shouldn’t be too surprising given the huge losses.

This book, which is worth reading, gives fascinating details of how the economic malaise unfolded during that first year of peace. Of course, we all know the result by now – America continued to be the richest country in the world. Yet the trip shows how difficult it was to maintain that status.

This is an edited version of a story first published on on March 4, 2016.

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