2Q - Truman and post-war reconstruction: the economy
Learn why recovery after the war created political conflict, how far Truman advanced reform, and why anti-communism became a major domestic force.
Reconversion, inflation and employment
Truman's first economic problem was to move from wartime mobilisation to civilian production without recreating Depression unemployment. Millions of servicemen returned while war contracts ended and factories retooled. Wartime savings, demand for houses and consumer goods, and veterans' benefits helped sustain spending. The expected collapse did not occur: employment and output recovered strongly, although shortages and disruption continued.
The difficulty was increasingly inflation, rather than simply insufficient demand. Households could buy more than producers could immediately supply. As wartime price controls weakened and were largely removed in 1946, prices rose and reduced the purchasing power of wages. Workers demanded increases; employers resisted costs which threatened profits. A booming economy could therefore produce dissatisfaction if households felt poorer at the shop counter. Truman's first Economic Report of January 1947 described both high employment and the damage from rising prices.
The Employment Act of 1946 recognised a federal responsibility to promote employment, production and purchasing power, and created the Council of Economic Advisers. It did not guarantee a job to every person. The difference reveals a compromise between advocates of stronger economic management and those resisting an enlarged federal obligation. Recovery also experienced recessions, including 1948–1949; Korea subsequently increased defence demand from 1950. Thus the whole Truman period cannot be treated as either uninterrupted crisis or effortless prosperity.
Reconversion
The change from a wartime to a peacetime economy, including the retooling of factories, demobilisation and the replacement of military demand by civilian spending.
Strikes and labour policy
The strike wave of 1945–1946 made tensions visible. Workers in industries including coal, steel and railways sought better wages after wartime restraint. Unions were central to the Democratic coalition, but stoppages affected fuel, transport and production across the economy. Truman had to balance workers' demands against pressure to restore essential services. His threat in May 1946 to draft striking railway workers into the armed forces illustrated that a pro-labour party label did not determine every presidential decision.
The Taft–Hartley Act of 1947 shifted the balance against unions. It restricted practices including the closed shop and secondary boycotts, required non-communist affidavits from union officers seeking access to the National Labor Relations Board's procedures, and enabled federal action against strikes threatening national health or safety. It also permitted state right-to-work laws. The act did not abolish unions or all strikes, but narrowed union methods and strengthened employers' position.
Truman vetoed the act; Congress overrode him. Republicans and conservative Democrats could agree on limits to labour power despite belonging to different parties. Truman's opposition subsequently helped him rebuild support among union voters, while the law remained in force. The Truman Library's Taft–Hartley documents show the competing claims about labour power and economic stability.
Political divisions and the 1948 election
Economic disruption helped Republicans win both houses of Congress in the 1946 midterm elections. Truman faced a hostile legislature as well as divisions within his party. By 1948, liberals dissatisfied with Cold War confrontation could support Henry Wallace's Progressive Party. Southern opponents of civil rights supported Strom Thurmond's States' Rights Democratic Party, commonly called the Dixiecrats. Truman therefore faced challenges from both left and right alongside Republican Thomas Dewey.
Truman used a vigorous campaign of train journeys and speeches to defend ordinary voters against what he called the “do-nothing” Republican Congress. He mobilised union workers, farmers and northern Black voters and defended an expanded social programme. Dewey's more cautious campaign, confidence among Republicans and errors in polling encouraged expectations of a Republican victory. Truman's success was not simply an upset caused by one speech: it rested on rebuilding much of the New Deal coalition despite the splits.
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