The interwar economy in the United States of America

The 48-star flag of the United States of America in 1944

By the end of World War I, the United States had begun to replace England as the financial center of the world economy because it was the only source of short- and long-term capital. In the 1920s, American industry and agriculture grew rapidly and entered a period of prosperity and expansion. This contrasted with Germany, which, under the terms of the Treaty of Versailles, was forced to return Alsace-Lorraine to France, West Prussia to Poland, and the Upper Silesia mining region to Poland.
Germany also had to give up all its colonies and most of its fleet and furthermore was forced to pay punitive war reparations to the victors, which hindered economic recovery and the hoped-for improvement in the social situation. Paying war reparations and the difficulties of reconstruction and industrial conversion led to an economic crisis that peaked between 1922 and 1923. 

By the end of 1923, Germany had begun a strict monetary stabilization program to stop the inflation that had reached unsustainable levels. Substantial international aid arrived to help Germany and other countries, mainly from the United States and its banks, which were attracted by the high interest rates involved. Meanwhile, U.S. traders imposed free movement of goods and capital on their own government and Europe. The world economy recovered and returned to pre-World War I levels in a relatively short time. The economies of France and England grew steadily, and American industry and agriculture exported much of their production to Europe. Beginning in 1925, as Germany's situation also improved, markets became saturated due to overproduction, particularly of agricultural products. Prices began to fall, and protectionism returned with the imposition of cross-tariffs. 

Between 1926 and 1928, the U.S. stock market index doubled, attracting capital from large investors and individuals who took on debt to invest in stocks. When interest rates rose, investors were forced to sell their stocks to repay their loans, which had become too costly. In 1929, stock prices plummeted as everyone sold and no one bought. Overproduction, the stock market crash, companies shutting down or drastically reducing production, and the resulting rise in unemployment ushered in the Great Depression, which lasted until 1932. 

The American crisis quickly spread to Europe. The collapse of Wall Street brought the steady growth of capital and investment to a halt, causing difficulties for all Western economies, especially Germany, which was also affected by the institutional crisis that overwhelmed the Weimar Republic. Economic and social difficulties, combined with uncertain and confused policies, brought Adolf Hitler's National Socialism to power in Germany. 

In 1932, U.S. President Franklin D. Roosevelt introduced a new economic policy based on the ideas of economist John Maynard Keynes. Keynes had strongly criticized the sanctions imposed on Germany. The New Deal called for massive public works projects to increase employment, as well as government control of industrial competition to prevent further crises of overproduction. While the United States sought to rebuild its economy through heavy investment in public works, other countries chose to invest in rearmament and/or territorial expansion in search of new markets during the second half of the 1930s. Inevitably, international conflict increased. Examples include Italy's colonial war in Ethiopia in 1935, the Spanish Civil War from 1936 to 1939, Japan's invasion of Manchuria in 1937, Austria's annexation in 1938, and Germany's invasion of Bohemia and Moravia in 1939. Public investment in rearmament and heavy industry brought these countries' populations to full employment. 

The U.S. economy did not return to prewar levels until the outbreak of war. Then, industries began producing war equipment to supply the Lend-Lease Act for the Allies and the massive rearmament that preceded and followed the U.S.'s entry into the war in 1940. The new equilibrium of the American financial system was financed by the issuance of government bonds, which local banks purchased with money collected from savers. Once war production resumed, large corporations no longer needed credit. The big banks survived by acting as intermediaries for the enormous sums of money that flowed from Europe in the form of capital flight to the only financial center truly safe from invasion. 

Bibliography:
L'oro in Europa (Gold in Europe) by Marcello de Cecco
The Great Crash, 1929 by J.K. Galbraith.

 

The United States Armed Forces

At the beginning of World War II, in 1939, there was very little military interest and investment in national defense, and as a result, the army was inadequate and equipment was outdated due to the continual reduction of funds for military expenditures. After the demobilization that followed the end of World War I, the army consisted of just over 170,000 men, vehicles were scarce, and funds for training were a tiny fraction of the budget. The service rifle was the Springfiled 1903, now decidedly outdated, the artillery was obsolete, while anti-tank and anti-aircraft equipment was almost nonexistent. Army Chief of Staff General George Marshall, in particular, tried to explain to politicians that the Army's needs for expansion and modernization were essential to national defense.

With the outbreak of war in Europe, U.S. President Franklin Delano Roosevelt declared the country in a limited state of emergency, authorizing a slight increase of 17,000 men in the Army, the purchase of vehicles and equipment, and increased exercises both for the state militia and to provide experience for senior officers and general staff personnel through Regular Army Corps maneuvers. The majority of the American public, however, was imbued with a non-interventionist view of the war that was breaking out in Europe, especially when the situation seemed to have stabilized after the Wehrmacht's conquest of Poland.

Everything changed, even in public opinion, when, between May and June 1940, the German army overwhelmed France and England, after the defeat at Dunkirk and the almost total loss of heavy equipment left on the French coast, found itself on the brink of invasion, while the Royal Air Force fought fiercely in the skies. By May 1940, at the President's request and initiative, Congress had appropriated nearly $1.5 billion, increasing the Army to 375,000 men and enabling it to begin acquiring new artillery, building new ammunition factories, and beginning production of equipment for soldiers. By the fall, manpower levels in both the Army and Air Force would begin to grow more substantially, with additional funding allowing them to plan for the modernization of the aircraft fleet.

In the summer of 1940, between August and September, the state militia came under federal control, the President signed the Conscription Act, and the construction of the first training camps for future recruits began. In practice, with the Conscription Act, the U.S. Army could grow to nearly 1.5 million personnel.

On March 11, 1941, the Lend-Lease Act was passed, allowing Roosevelt to "sell, exchange, lease, loan, or otherwise dispose of to any government whose defense is deemed essential by the President of the United States. The first recipient of $1 billion was England, in October 1941.

All of America's economic, productive, and organizational power had begun to be deployed, and by July 1941 the strength of the armed forces was 1,400,000 men, divided into 456,000 in 28 divisions, 43,000 in armored forces, 308,000 in 215 specialized regiments of land artillery, 167,000 in aviation, 46,000 in harbor defense, 120,000 men in overseas garrisons including Alaska and Newfoundland, 160,000 in 550 military installations including depots and embarkation ports; the remainder were recruits in training centers which, like those for the Army, had been built and set up very quickly during the winter of 1940-1941.

THE MAIN INFANTRY ARMAMENT
The Garand M1 semi-automatic rifleThe Garand M1 was the first .30-caliber (7.62-millimeter) gas-operated semi-automatic rifle fed by an eight-shot .30-06 Springfield "en bloc" clip.
It was already in production by 1937 and had been mass-produced and distributed by 1940, after defeating its direct competitor, the Johnson 41.
Considered the rifle that won World War II, some six million were produced during its long production run.

The Winchester M1 was a short, lightweight semi-automatic carbine designed for men in support roles, such as tankers, artillerymen, and engineers, as well as NCOs on the front lines.
Deliveries began in mid-1942, and it was a medium-range weapon fed by 15- and 30-round .30 Carbine magazines. Approximately seven million were produced.

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