INTRODUCTION

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Term Paper Title	INTRODUCTION
# of Words	1580
# of Pages (250 words per page double spaced)	6.32

INTRODUCTION

     Fiscal policy played a major role in the lives of civilians and military citizens of the United States during the second World War.  Policies instituted by Roosevelt and later by Truman were integral to the economy for the purposes of both stabilization of the economy to protect it from a second depression and to finance the war sufficiently to ensure victory.

BACKGROUND

     In 1941 The United States entered the second world war due to the advancing German forces and the Japanese attack on Pearl Harbor.  At the time of this entry the US was undergoing a slow but steady recovery from the Great Depression of the previous decade(Smiley, p.184 ).  Our entry into the war caused very swift and drastic changes in the economic conditions present at that time.  It was up to the Roosevelt administration to both finance the largest scale war the world had ever seen while stabilizing a fragile economy in a state of recovery.  What was once a market economy quickly transformed into a command economy.  The actions dictated by that economy, the problems it faced, and the results that ensued are as follows.

ECONOMIC STABILIZATION POLICIES

     The war effort increased real income drastically in the United States, as well as in many other countries.(Tax Institute, p.29) It was this increase that caused a large increase in demand for consumer goods since they had been in such short supply during the Great Depression, but most resources were being used to manufacture military and other war related goods.  Mainly, these resources were steel, aluminum, and other metals used for making weaponry, but, textiles were also in short supply.(Smiley, p.190)  Automobile factories became tank factories and dress shops become uniform shops. Agricultural production also rose while rural population and farm employment both fell(Smiley, p.189).  In 1941, the bill which led to legal power being granted to the Office of Price Administration also included special provisions to set the price ceilings for farmers at 100% parity(Compagna, p.158).  Parity was set at different rates for different commodities, based on usage and demand.  This led to high prices and uneven allocation of the goods most sought after by consumers and the military(Compagna, p.166).  Rationing was a commonly used tactic in response to the sharp rise in real income coinciding with the decline in production of consumer goods.  The success of this technique was questionable as fraud was common and rationing ...

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