The war also left many domestic legacies, as shown by Robert Higgs in his book Crisis and Leviathan (1987, chapter 7). Some were financial, such as increased federal spending for interest on the national debt, veterans’ benefits, and other long-term costs.
More important was the ideological legacy. Most Americans, it is true, were more than willing to return to the old ways of doing things after the war; a weariness with war had set in. President Warren Harding (1921-1923) captured this mood perfectly when, in his campaign for the presidency against democrat James M. Cox, Harding called for a “return to normalcy.”
Some people, however, including prominent war leaders, Bernard Baruch in particular, concluded that the economy would work better if the government played a larger role in coordinating economic activity than it had before the war. In retrospect, we can see that American involvement in the war was too brief to allow strong conclusions about the long-term effects of government interventions. But the glow of success that surrounded wartime government programs made them powerful examples in the debate over the appropriate role of government in the economy. The idea that an activist government could improve the functioning of the economy lay dormant during the prosperous twenties but would become important as the Great Depression took shape. In chapters 22 and 23 we will explore the Great Depression and the New Deal. Suffice it to say here that many New Deal agencies were modeled on World War I agencies. The New Deal’s National Recovery Administration, for example, was modeled on Baruch’s War Industries Board. The New Deal’s Commodity Credit Corporation was modeled on the U. S. Grain Corporation, and controls exercised under the Agricultural Adjustment Acts, passed in the 1930s, were modeled on those exercised by the Food Administration. The complete list is much longer. Many of the individuals who were chosen to run New Deal programs, moreover, had worked for government agencies during the war. General Hugh S. Johnson, for example, who headed the National Recovery Administration in 1933, had served under Baruch at the War Industries Board (Leuchtenburg 1966).
Reformers undoubtedly would have won many changes in the economy in the 1930s even if World War I had never occurred. But the perception in the 1930s that control and regulation of markets by federal agencies had been a success in World War I increased the pace and depth of reform.
World History
