Reconversion

As early as spring 1943, with Allied victory in World War II increasingly likely, government and military officials began seriously considering plans for returning the United States to a peacetime economy after the war—a process called reconversion. Reconversion included terminating wartime contracts that were no longer needed, helping returning veterans and former war workers find civilian employment, disposing of surplus government property, assisting business to resume production of civilian products, and relaxing wage and price controls, rationing, and other wartime restrictions.

Most people agreed that early planning for reconversion was a necessary part of postwar planning. America’s unplanned demobilization after World War I had disastrous consequences for the U. S. economy, and policymakers hoped that early planning would allow the United States to avoid making the same mistakes again. Moreover, Americans realized that the wartime economic recovery was based largely on the money spent on war mobilization, and many feared that without carefully planned reconversion the United States might slip back into the Great Depression once the stimulus of wartime spending had disappeared. Yet, despite the agreement that timely and effective planning for reconversion was necessary, policy clashes ensued over how and when reconversion should take place.

Although the National Resources Planning Board and the War Production Board had done some work on reconversion, Congress did not give reconversion significant attention until 1943, when the tide of war had clearly turned in favor of the Allies. In March 1943, the Senate created a special committee on Postwar Economic Policy and Planning chaired by Walter F. George of Georgia, followed 10 months later by a parallel House of Representatives committee headed by William Colmer of Mississippi.

By then, however, demobilization and reconversion had already become controversial issues. Liberals and labor argued that an early, incremental, and well-planned reconversion would limit the number of worker layoffs as well as protect small businesses as war production declined. On the other hand, the military argued that early reconversion would disrupt the production of war goods and wanted to delay reconversion for as long as possible. Big war contractors wanted to delay reconversion because they feared that early reconversion would allow competitors to resume civilian production, while they would still be producing war materials. Businesses also did not want to dispose of surplus government property, or terminate wartime contracts, without receiving generous compensation from the U. S. government.

In November 1943, James F. Byrnes, director of the Oeeice of War Mobilization (OWM), announced that Bernard M. Baruch and John M. Hancock had agreed to head a special unit within OWM to develop a unified approach for dealing with postwar reconversion. The Baruch-Hancock Report, made public in February 1944, proposed creating a Joint Contract Termination Board within OWM to unify all government contract termination efforts, as well as a Surplus Property Administrator to dispose of surplus property. It also suggested creating a “work director” to supervise the discharge of personnel from the armed forces, coordinate efforts to care for disabled veterans, and provide job placement assistance and educational training to returning service personnel.

Many of these provisions went into effect. President Franklin D. Roosevelt set up the Surplus War Property Administration within OWM, as well as a new unit called the Retraining and Reemployment Administration, which became the “work director” proposed in the Baruch-Hancock Report. Roosevelt also signed the GI Bill oe Rights

In June 1944, and in October 1944 Congress created the Office of War Mobilization and Reconversion (OWMR). Yet as many people had feared, the so-called human side of reconversion, such as the training and placement of discharged veterans, took a back seat to the interests of the military and big business. Indeed, OWMR, its Surplus Property Administration, and other reconversion agencies allowed war manufacturers to purchase government-owned factories and other surplus property at greatly discounted rates, offered them lucrative bonuses to settle wartime contracts, and protected them from competitors.

Nevertheless, because of careful planning, generally efficient retooling of factories, higher incomes and savings, and pent-up demand during the war years, the nation did not slip back into depression after the war as many had feared. Despite some difficulties, such as labor unrest that impaired production and inflationary price rises for many items, consumer spending increased significantly once the war was over and wartime restrictions were lifted. The resulting surge in demand helped maintain prosperity and enabled returning service members and war workers to be reintegrated into America’s peacetime economy.

Further reading: Herman Miles Somers, Presidential Agency: OWMR, the Office of War Mobilization and Reconversion (Cambridge, Mass.: Harvard University Press, 1950).

—David W. Waltrop