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🥶 Unit 8

  •  ⏱️4 min read

8.4 Economy after 1945

Robby May

robby may

⏱️ June 2, 2020


G.I. Bill

The Servicemen’s Readjustment Act of 1944, popularly known as the GI Bill of Rights, was a powerful support during the transition of 15 million veterans transitioning to a peacetime economy. More than half the returning GIs seized the opportunity afforded by the GI Bill to continue their education at government expense. Over 2 million attended college. The veterans received over $16 billion in low-interest, government-backed loans to buy homes and farms and to start businesses. 

Baby Boom

One sign of the basic confidence of the postwar era was an explosion in marriages and births. Younger marriages and larger families resulted in 50 million babies entering the US population between 1945 and 1960, a generation that due to their rapid growth and size, became known as baby boomers. 

Suburban Growth

The high demand for housing after the war, as well as the baby boom, resulted in a construction boom. William J. Levitt led the development of postwar suburbia with his building and promotion of Levittown, a project of 17,000 mass-produced, low-priced family homes on Long Island, New York. 

The secret to the Levittown appeal was the basic home. It had a kitchen, bedrooms and bath, a living room with a fireplace and an expansion attic with room for two more bedrooms. The home came with a refrigerator, cooking range, and washing machine. He built only 1 interior, but there were 4 different facades to break the monotony.  The original house sold for $6,990 in 1948.

In a single generation, a majority of Americans became suburbanites. For many older inner-cities, the effect of the mass movement to suburbia was disastrous. Cities from Boston to Los Angeles became increasingly poor and racially divided. 


A warmer climate, lower taxes, and economic opportunities in defense-related industries attracted many GIs and their families to the Sunbelt states from Florida to California. By transferring tax dollars from the Northeast and Midwest to the South and West, military spending during the Cold War helped finance the shift of industry, people and ultimately political power from one region to another. 

Taft-Hartley Act

The purpose of the Taft-Hartley Act was to check the growing power of unions. Provisions included:

  • Outlawing the closed shop (contract requiring workers to join a union before being hired)

  • Permitting states to pass “right to work” laws outlawing the union shop (contract requiring workers to join a union after being hired)

  • Outlawing secondary boycotts (the practice of several unions supporting a striking union by joining a boycott of the company’s products)

  • Giving the president the power to invoke an 80-day cooling-off period before a strike endangering the national safety could be called. 

Unions fought for years to repeal the act. 

Truman’s Fair Deal 

Continuing the example of FDR’s New Deal, Truman launched an ambitious reform program, which he called the Fair Deal which included the following:

  • national health care insurance

  • federal aid to education

  • civil rights legislation

Conservatives in Congress blocked the proposed reforms. Most of the Fair Deal bills were defeated for two reasons:

  • Truman’s political conflicts with Congress

  • The pressing foreign policy concerns of the Cold War. 

Modern Republicanism

Eisenhower was a fiscal conservative, whose first priority was balancing the budget after years of deficit spending. A moderate, he accepted most of the New Deal programs as a reality of modern life and even extended some of them. In this system, which he called Modern Republicanism, he:

  • During Eisenhower’s two terms in office, Social Security was extended to 10 million more citizens, the minimum wage was raised, and additional public housing was built.

  • In 1953, he consolidated welfare programs by creating the Department of Health, Education and Welfare.

  • He opposed the ideas of federal health care insurance and federal aid to education.

Interstate Highway System

The most permanent legacy of the Eisenhower years was the passage in 1956 of the Highway Act, which authorized the construction of 42,000 miles of interstate highways linking all the nation’s major cities. When completed, the system became a model for the rest of the world. This justification for new taxes on fuel, tires, and vehicles was to improve national defense This immense public works project created jobs, promoted the trucking industry, accelerated the growth of the suburbs, and contributed to a more homogenous national culture. 

Kennedy’s New Frontier

In a program called the New Frontier, John F. Kennedy called for: 

  • aid to education 

  • federal support of health care,

  • civil rights

Basically, these were the continued Democratic goals of FDR and Truman, of which they were not able to accomplish.  Unfortunately, Kennedy wouldn’t have any success either.

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