Ch. 28 - The Affluent Society

America in the 1950’s

Part 1

America after the War

• Celebration…. and

DEMOBILIZATION

• 1945 – 12m military• 1947 -- 1.6m military

Demobilization

• War industries convert to peace production– Autos, TV's, household appliances, cameras

• War-time price controls/rationing removed– Prices rise

• Increased demand– Inflation sky rockets1945-1947– Labor Strikes (5 million strikers 1946)

• Truman’s Fair Deal– Taft-Hartley Act

• Limits union power

• Many women exit the labor market

The Economy Grows in the 50’s

0

50

100

150

200

250

300

350

400

450

500

billions of dollars

Year

GNP Gross National Product

1940

1950

1960

“Real Income – up 20% 1950--1960

Consumer Society• 1950’s We were 6% of the world’s

population, producing and consuming 50% of the world’s products.

Why were the 50’s so prosperous?

• Rise in real income/savings from WWII

• “Pent-up” demand– Little consumer spending WWII/Great Depression

• New Technologies

• GI Bill

GI Bill of Rights Servicemen's Readjustment Act of 1944

• Provides funds for education for Veterans– an estimated 2.2 million

veterans received education at colleges and universities

– A total of 7.8 million veterans, or 50.5 percent of the World War II veteran population, received training or education under the bill.

GI Bill

• Funds Home Loans– Over 2 million loans by

1950– Housing starts:

• 1944 -114,000• 1950 - 1.7 million

• Home ownership increases to 62% of the population by 1960

New Jobs• “White collar” jobs

– Big Business– Finance– Advertising

(mostly white and male) • Service Industry

– Insurance– Transportation– Retail– Hospitality

• MacDonald’s• Holiday Inns

– Service and repair workers (service jobs > manufacturing jobs)

– A shift from producing goods to providing servicesA shift from producing goods to providing services

Why were the 50’s so prosperous?

• “Bigger is Better” efficiencies in industry– IBM sales grow 10x between 1946-1961– GM doubles its assets to $2.8 billion in 1960

• Conglomerates-large companies with holdings in unrelated industries, brought about by business mergers

– benefit: company could grow without violation of anti-trust law– Example: General Electric, Berkshire-Hathaway, Time-Warner, Phillip-Morris

Farms Become Big Business

• Small family farms replaced by agribusiness corporations.– Cost efficiencies on larger farms– Expense of new technologies– Pesticide/Synthetic fertilizers

• 1940 to 1960– Farm size doubles– Total farms: 6 million to 4 million (2.3 million now)

– Farm population: 30 million to 13 million

Mobility

• Post-war shifts in population– To “Sunbelt”– Rural to Urban

(20% of American moved each year of the 50s)

• The “Automobile Culture”– 58 million cars purchased during the 1950s– Highway Act of 1956

• $32 billion to build 40,000 miles of roads• Interstate Highway System

Supporting Businesses

Suburbia

Small, mass-produced homes that the middle-class can afford

“Sunbelt” Growth

Part 2

Eisenhower in the White House

Eisenhower’s New Look

• Many Americans were ready for a change in leadership

• Truman did not run again

• Dwight D. Eisenhower vs. Adlai Stephenson (IL)

• Eisenhower won in a landslide (head of D-Day)

“More Bang for the Buck”

• Key to victory in Cold War was strong military and economy

• Had to show the world that free enterprise was better than communism

• Instead of maintaining a large and expensive army, the nation “must be prepared to use atomic weapons in all forms”

Massive Retaliation

• Eisenhower concluded that we could not win the war on communism by fighting a few small wars

• Best way was to threaten to use nuclear weapons (Massive Retaliation)

• Cut military spending from 50 to 34 billion• Increased nuclear arsenal from 1,000 bombs

to 18,000

The Sputnik Crisis

• B-52 bomber revealed that it could fly across continents and drop nuclear bombs anywhere in the world

• Could be shot down!

• Developed intercontinental ballistic missiles that could deliver bombs anywhere in the world

The Sputnik Crisis cont.

• At the same time Soviets had launched Sputnik, the first artificial satellite to orbit the earth

• Made the U.S. think we were falling behind the Soviets

• Developed NASA: National Aeronautics and Space Administration &

• National Defense for Education: funds for education and training in math, science, and foreign languages

Brinkmanship in Action

• There were critics to Eisenhower’s policies

• Critics called this brinkmanship: the willingness to go the brink of war to force the other side to back down---argued that this was too dangerous

The Korean War Ends

• Eisenhower promised to end the war in Korea

• Eisenhower was convinced that the ongoing battle was costing too many lives and bringing too few victories

• Quietly let China know that the U.S. “might continue the Korean War under circumstances of own choosing”– Hinting of a nuclear attack

The Korean War Ends cont.

• The threat of nuclear war was enough • The battle line between the 2 sides, became

the border between North Korea and South Korea

• A “demilitarized zone” (DMZ) separated them• There was no victory, but the war had

stopped the spread of communism in Korea-the goal of containment

The Taiwan Crisis

• Chinese nationalists still controlled Taiwan even though Chinese communist had taken over the mainland

• Communists threatened to take it from the nationalists

• Eisenhower warned the communists that the US would use nuclear weapons to stop an invasion and they back down

The Suez Crisis

• Middle East; Eisenhower’s goal was to prevent Arab nations from aligning with the Soviet Union

• To build support the U.S. offered to help Egypt finance the construction of a dam on the Nile River

• Egypt had bought weapons from Communist Czechoslovakia

• Had to withdraw offer

• Arab nations supported Communists

Fighting Communism Covertly

• To prevent communist uprisings in other countries, Eisenhower decided to use covert or hidden operations conduction by the CIA-Central Intelligence Agency

• Providing developing countries with financial aid

• Staged covert operations to overthrow anti-American leaders and replace them with pro-American leaders; although it didn’t always work and created more tensions

Continuing Tensions• Nikita Khrushchev became

leader of Russia

• “We will bury capitalism…Your grandchildren will live under communism”

• 1960 Khrushchev and Eisenhower were to meet at a summit: formal face to face meeting of leaders

Continuing tensions..cont.

• Before the summit was to begin, the Soviet Union shot down the American U-2 spy plane

• Soviets produced the pilot; Soviets wanted Eisenhower to apologize; refused

• Khrushchev called off the summit

• Eisenhower then left office