Therefore government intervention was needed, especially in recessions, to spend massive amounts of money on public works, which would create new jobs, expand demand, and rebuild consumer confidence. They consciously (and sometimes unconsciously) followed ideas popularized in 1936 by John Maynard Keynes in his bestselling book, The General Theory of Employment, Interest and Money.Ĭapitalism was inherently unstable, Keynes argued, and would rarely provide full employment. The NRPB leaders believed that government planning was necessary to promote economic development. He had created the National Resources Planning Board (NRPB) in 1939 and urged it during the war to plan for peacetime. What would happen after the war-when 12 million troops came home and the strong demand for guns, bullets, tanks, and ships ceased? A recovery that does not make-as Robert Higgs points out in Depression, War, and Cold War.įranklin Roosevelt recognized that the war only provided a short-term fix for the economy-and a very costly one at that. Food was rationed, luxuries removed, taxes high, and work dangerous. The quality of American life, however, was precarious during the war. “World War II got us out of the Great Depression.” Many people said that during the war, and some still do today.
