B005HFI0X2 EBOK (38 page)

In 1942, at the age of seventeen, Geraldine Hoff, then unmarried, was working as a metal presser in the American Broach and Machine Company in Ann Arbor, Michigan, when her picture was taken by the photographer J. Howard Miller. An image of her looking determined, with her sleeves rolled up and her hair wrapped in a scarf, was used in a morale-boosting poster used in Westinghouse plants, with the slogan “We Can Do It!” The poster did not identify her by name, and it was only in the late twentieth century that the Westinghouse poster became identified with the mythical Rosie the Riveter, who symbolized American women working to defeat the Axis in the factories on the home front.

Rosie the Riveter got her name from a 1942 hit song by Redd Evans and John Jacob Loeb.

All the day long,

Whether rain or shine

She’s part of the assembly line.

She’s making history,

Working for victory

Rosie the Riveter
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The inspiration for the song was Rosalind Palmer Walter, who worked as a riveter during the night shift on the marine fighter airplane, the Corsair. Far from being proletarian, this Rosie came from a patrician family, married the chairman and CEO of International Flavors and Fragrances, and became a major philanthropist, funding, among other institutions, Long Island University, the American Museum of Natural History, and public television.

There were other Rosies, too. Kentucky-born Rose Will Monroe, the daughter of a carpenter, was working at Henry Ford’s enormous Willow Run Aircraft Factory in Ypsilanti, Michigan, when she was spotted by the actor Walter Pidgeon and cast as Rosie the Riveter in a series of wartime films. Another Rosie was Mary Keefe, a dental hygienist. She posed as Rosie the Riveter for a painting by Norman Rockwell for the cover of the
Saturday Evening Post
, taking a break to eat a sandwich with her feet propped up on Hitler’s
Mein Kampf
.

The “real Rosie” who came closest to the archetypal character, perhaps, was Rose Bonaventura, whose parents had immigrated to the United States from Italy. President Roosevelt sent her a letter of commendation after she and her partner set a record drilling holes and driving rivets into a bomber during one overnight shift in 1943.
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There were millions of Rosies. By 1944, women were 40 percent of the workers in the aircraft industry, 34.2 percent of all ammunition workers, 10.6 percent of all steel workers, 10 percent of all workers in shipping, and 8 percent of railroad workers.
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The mass entry of American women into the industrial workforce created a crisis in child care. In 1934–1935, the WPA had created 1,900 emergency nursery schools as part of its work relief program. During the war the government increased their number to 3,102 for 128,357 children.
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By 1944, female participation in the workforce rose to 36.3 percent, with 71 percent remaining outside. However, the mobilization of women was far more limited in the United States than in Britain and the Soviet Union, where only 30 percent of women remained outside of the workforce during World War II.
³³

The United States never mobilized its workforce or its economy as much as the other participants in the war did. The sheer size of its economy and the safety from attack provided by its geographic distance from the centers of conflict permitted American leaders to ask for far less sacrifice than the leaders of other nations on both sides demanded. Indeed, in the United States, unlike in Britain or other Allied countries, personal consumption actually grew during the war.

BATTLING RACISM ON THE HOME FRONT

Almost a million black Americans moved from the rural South to industrial jobs in the North and West. Those who remained behind benefited from a tighter labor market.

In the summer of 1941, A. Philip Randolph, the president of the Brotherhood of Sleeping Car Porters, threatened to lead a march on Washington, DC, to demand equal opportunity for blacks in defense jobs. Secretary of War Henry L. Stimson wrote in his diary on January 24, 1942: “What these foolish leaders of the colored race are seeking is at the bottom social equality.”
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After Randolph refused to back down following a meeting with the president and other officials, Roosevelt signed Executive Order 8802, which banned racial discrimination in defense industries. This not only marked the first time that the federal government had intervened on behalf of black rights since the end of Reconstruction after the Civil War, but it also laid the groundwork for the postwar civil rights movement led by Martin Luther King Jr., whose 1963 march on Washington was inspired by Randolph’s idea.

While the federal government took the first tentative steps toward dismantling segregation in the workforce, it also carried out one of the worst acts of official racism in American history. Between 1942 and 1945, 110,000 Americans of Japanese descent, the majority of them Nisei, or US citizens, were forcibly relocated to ten internment camps. Decades later, the federal government compensated survivors with only $38 million, a fraction of the $200 million in property that they had lost.

Even as their relatives were interned in the United States, Japanese American soldiers fought from Asia to Europe. Daniel Inouye, who had planned to become a doctor, lost an arm while fighting the Germans in Italy; he later became the first Japanese American senator. The 100th Infantry Battalion earned the name “Purple Heart Battalion” because so many of its members were injured in combat. The 100th, along with the 442nd Regimental Combat Team that followed it, rescued a besieged battalion of Texans in the Vosges Mountains in France in the depths of winter in 1944. When its size and length of service are considered, the 100th Infantry Battalion/442nd Regimental Combat Team was the most decorated military unit in American history.
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Latinos suffered from racism and economic exploitation during the war, as well. In 1943, white sailors and marines stationed in Los Angeles took part in violence in the “zoot suit riots,” named for the zoot suits worn by Mexican American youth. The labor shortage in agribusiness along the Southwestern border was addressed by the Bracero Program, a system of indentured servitude for Mexican nationals that was so exploitative it was abolished during the civil rights era of the 1960s.

Although the United States remained a deeply racist society, World War II had a liberalizing and integrating effect. The fact that the United States was fighting totalitarian and racist regimes allowed reformers to identify antiracism and support for civil liberties with the American way of life. The military-based economic development of rural areas shocked much of the country into modernity. Old-stock Americans and first- and second-generation immigrants, whites, blacks, Latinos, and Asians, mingled in factories at home and in military units around the world. The integrated platoon, with Italian Americans, Jews, Texas cowboys, and black Americans, provided Hollywood with a symbol of a postracist America.

PAYING FOR THE WAR

The US government paid for its World War II effort by a combination of taxes and borrowing. The national debt swelled from 43 percent of GNP in 1940 to 129 percent in 1946. Thanks to a combination of economic growth and inflation, as a percentage of GNP the war-swollen national debt declined from two-thirds in 1955 to 47 percent in 1965 and 34 percent in 1981.

Although the government relied chiefly on borrowing, taxes were still high—about 45 percent of all war expenditures, a higher percentage than in World War I or the Civil War.
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Rejecting a general sales tax to pay for the war, the government imposed the personal income tax on 60 percent of households by the end of the war. During the war the practice of withholding taxes from biweekly wage payments, now a fixture of American life, was first instituted. The personal income tax surpassed the corporate income tax as a source of federal revenue, and by the late twentieth century three-fourths of federal revenues came from personal income taxes and payroll taxes.

During World War II, millions of middle-class and working-class Americans for the first time paid income taxes, which previously had fallen on the affluent. The Office of War Information commissioned the composer and songwriter Irving Berlin to write “I Paid My Income Tax Today,” which was performed by the actor and comedian Danny Kaye:

I said to my Uncle Sam,

“Old Man Taxes, here I am.”

And he was glad to see me,

Mister Small Fry, yes indeed—

Lower brackets, that’s my speed,

But he was glad to see me.

I paid my income tax today

I never felt so proud before

To be right there with the millions more

Who paid their income tax today.

I’m squared up with the U.S.A.

See those bombers in the sky?

Rockefeller helped to build them; so did I—

I paid my income tax today.

I paid my income tax today.

A thousand planes to bomb Berlin,

They’ll all be paid for and I chipped in;

That certainly makes me feel okay—

Ten thousand more and that ain’t hay!

We must pay for this war somehow;

Uncle Sam was worried but he isn’t now—

I paid my income tax today.

In addition to paying income taxes, ordinary Americans had to endure the rigors of wartime rationing. “General Max” was not a soldier, but a policy: the General Maximum Price Regulation policy of the Office of Price Administration (OPA). The mission of the OPA was to use rationing to avert inflation.

Because they were not permitted to raise wages, US employers competing for workers in the tight labor market began offering fringe benefits, like employer-provided health insurance. Minor at first, this fringe benefit ballooned into the major method by which Americans received health care by the late twentieth century, after the defeat of postwar plans for government-provided universal health care.

“OIL, BULLETS AND BEANS”

In 1944, the United States completed one plane every five minutes, launched fifty merchant ships a day, and finished eight aircraft carriers a month.
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Mobilized for war, the US economy grew as rapidly during World War II as it declined in the early years of the Depression. US GDP doubled between 1938 and 1944.
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While in 1938 capacity use in the steel industry had been only 40 percent, in 1943 US Steel and other firms in the industry were operating at 98 percent capacity.
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The extent to which capacity had lain unused during the 1930s was illustrated by the fact that, between 1939 and 1944, US gross national product grew in real terms by 52 percent.
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By 1944, the United States was producing as many munitions as its allies and enemies combined.
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Between 1938 and 1948, US national income rose from the equivalent of that of Germany, Britain, France, and the Benelux countries combined to twice as much, and from three times the size of the economy of the Soviet Union to six times.
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America’s converted factories produced 88,410 tanks and self-propelled guns; 257,390 artillery pieces; 105,054 mortars; 2,679,840 machine guns; 2,282,311 trucks; and 324,750 aircraft.
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The number of aircraft manufactured in America grew thirty-fold between 1937 and 1944.
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Aircraft production peaked at more than 96,000 in 1944.

The United States also undertook a prodigious shipbuilding effort, constructing 141 aircraft carriers, including escort carriers, 8 battleships, 48 cruisers, 349 destroyers, and 33,993 gross tons of merchant shipping.
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The United States also produced most of the energy and raw materials that fueled the victory of the Allies over the Axis powers: 2,129.7 million metric tons of coal, 833.2 million metric tons of crude oil, 369.9 million metric tons of iron ore, 334.5 million metric tons of steel, and 4.12 million metric tons of aluminum.
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On D-Day, June 6, 1944, the Germans could deploy only 319 aircraft. The United States and its allies deployed 12,837.
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According to the historian Alan Milward, “The war was decided by the weight of armaments production.”
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The combination of American state capitalism and large-scale corporate industrial capitalism, with the help of organized labor, women, and nonwhite Americans, helped to defeat Hitler and his allies. Admiral Chester Nimitz, commander of the US Pacific fleet, put it best: “Winning the war is a matter of oil, bullets and beans.”
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The 1929 crash, the slow recovery of 1930, and the ensuing spiral descent into an abyss of unemployment, bank failures, and commercial paralysis was not corrected by market processes. . . . Out of the crisis was born the American economic republic as we know it today.

—Adolf A. Berle, 1963
¹

I
n Germany, the period was called the
Wirtschaftswunder
, the economic miracle. In 1958, John Kenneth Galbraith coined the phrase “the affluent society.”
²
Looking back, Americans today often call it the Golden Age. In a 1979 book, the French demographer Jean Fourastie called the era from 1946 to 1975
les trente glorieuses
, the glorious thirty, a reference that evoked the
Trois Glorieuses
, or glorious three days of revolution in France of July 27–29, 1830.

During the thirty glorious years, the Western democracies experienced similar combinations of high growth and rapid expansion of mass middle classes, underpinned by high labor-union membership, middle-class welfare states, and highly regulated economies. By the 1950s, all the democratic societies of the North Atlantic world had “settlements” or “new deals” that were similar in combining various forms of social insurance with increased government regulation of or ownership of banking and industry. The term “mixed economy” was sometimes used for an economy that blended private enterprise with public regulation, redistribution, and in some cases public ownership. Shared prosperity gave electorates in America and other white-majority democracies the confidence to eliminate the racial-caste systems that had long made a mockery of their ideals.

The restructuring of the economy after World War II in the United States and other nations coincided with the maturation of the technologies of the second industrial revolution, electricity and the internal combustion engine. In the 1950s and 1960s, the United States completed its electrical grid system and put it under the dull but safe management of local utilities that replaced rival corporate empires. The United States also undertook one of the greatest works of civil engineering in history—the construction of the interstate highway system. Together, the two grids transformed the landscape and the American way of life, by permitting the decentralization of production, work, shopping, and homes.

While the electric grid and the highway grid were visible manifestations of the second industrial order, the unseen motors hidden in household appliances were just as revolutionary. The industrialization of the household with the help of labor-saving appliances like refrigerators, washing machines, and dishwashers allowed the members of America’s new mass middle class to spend time formerly devoted to household chores on other activities, including listening to the radio, watching television shows, and going to the movies.

Other countries caught up rapidly, as they rebuilt themselves after the devastation of the second global war in a generation. All the industrial democracies, from Japan to North America to Western Europe, created mass middle classes by using the technologies of the second industrial era for liberal and democratic ends. But it was in the United States that the promise of the liberating technologies of the second industrial revolution was first fulfilled.

THE PAX AMERICANA AND THE COLD WAR

In their planning for the postwar world, the Roosevelt and Truman administrations assumed a rapid demobilization by the United States. The US military sought to possess new island bases around the world on the assumption that there would be no permanent US military garrisons in Asia and Europe once the occupations of the defeated Axis powers came to an end. These assumptions were slowly abandoned, as hopes for postwar cooperation between the Soviet Union and the United States were thwarted by the tensions of the Cold War.

Although it included proxy wars in Korea, Indochina, Afghanistan, Latin America, Africa, and the Middle East, arms races, espionage, sabotage, and propaganda, the Cold War waged by the United States was essentially a war of economic attrition. The United States sought to cripple the Soviet economy by two methods. The first was an embargo of advanced dual-use, or civilian-military, technology, under the direction of the Coordinating Committee for Multilateral Export (CoCom), which was established in 1949 and which governed allied trade with the communist bloc until it was dissolved in 1994. The second was preventing the Soviets from controlling or intimidating West Germany and Japan and other industrial nations.

From the American perspective, the central assets at stake in the Cold War were the factories of defeated Germany and conquered Japan. As the American diplomat George Kennan pointed out, the strategy of the United States was to deny the Soviet Union control of or influence over the other centers of military-industrial power in the world, which at the time were located in Germany/Europe, Japan, Britain, and North America. If the United States directly or indirectly controlled all the centers of manufacturing outside of Soviet borders, then its internal resources alone would not allow the Soviet Union to mount a military challenge to the United States without risking bankruptcy.

During World War II, the Roosevelt administration considered a proposal by Secretary of the Treasury Henry Morgenthau to permanently “pastoralize” or deindustrialize Germany. But in early 1947, Herbert Hoover, sent to Germany on a fact-finding mission by President Harry S. Truman, was shocked by the hunger that he found. Hoover’s argument that European economic recovery depended on Germany’s economic recovery prevailed. In June 1947, at a Harvard commencement address, secretary of state George Marshall outlined what became known as the Marshall Plan, an offer of substantial amounts of aid to the countries of Europe, including the Soviet Union.

Stalin rejected Marshall Plan aid and denied it to the Eastern European countries under the control of the Red Army. As East-West tensions rose, the American, British, and French zones of occupied Germany were merged into the Federal Republic of Germany, leaving the eastern section of Germany to become a separate country, the German Democratic Republic. The two Germanies would be reunited only after the Cold War ended, in 1990.

The ultimate solution to “the German problem” was integration—the integration of German industry into multinational systems, first the European Coal and Steel Community in 1951 and then the European Economic Community, and the integration of a rehabilitated German military into the North Atlantic Treaty Organization (NATO) alliance in 1955. The extension of multinational control over Germany’s coal and steel resources ensured that they would not be enlisted again in the service of military aggression.

West Germany and Japan rearmed, but they remained semisovereign states, subordinate to the United States and, in the case of Germany, to the other members of the European community and NATO. Having ceased to be independent military powers, these great powers devoted their energy to running up manufacturing export surpluses. By the end of the twentieth century, their new specialization would produce problems for the world economy, but in the 1950s Americans were glad to encourage their former enemies to devote their efforts to making cameras and cars instead of Zeros and Panzers.

America’s economic superiority allowed it and its allies to prevail in the Cold War, as in the world wars. The United States was able to bankrupt the Soviet Union, which spent between a third and a half of its smaller economy on the military, while spending no more than an average of 7.5 percent of GDP on defense between 1948 and 1989.
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THE GLOBAL OIL CARTEL

Among the global public goods that the United States, as the hegemonic power, supplied to its allies and protectorates was secure access to cheap and abundant petroleum, which was essential to the second industrial economy. In seeking to secure energy supplies for itself and its friends, the United States sacrificed its support of free markets and democracy to the imperatives of geopolitical strategy.

A global oil cartel dated back to the 1920s. After new production in Texas and Oklahoma caused prices to collapse, a cartel was organized by the three largest global oil companies, Standard Oil of New Jersey, Royal Dutch Shell, and Anglo-Iranian Oil (British Petroleum). At a meeting in Scotland, the companies negotiated the “As Is” agreement. The accord provided that, outside of the United States, where antitrust laws applied, the companies would preserve their proportional shares of the global oil market.

This was followed in 1932 by an agreement to fix quotas, enforced by fines and rebates set by a central organization in London. The cartel now included Gulf Oil, Texaco, and Standard Oil of New York (Socony/Mobil). When Standard Oil of California (Socal/Chevron) developed oil fields in Bahrain, it was pressured into joining the cartel and using the marketing organization of the existing cartel member, Texaco.
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The global oil cartel might not have survived without regulation of production in the United States, which was the world’s leading producer during World War II and for some time afterward. The greatest danger was that many small operators would lack the money and technology to cap wells, leading to the waste of a precious natural resource. The problem was illustrated on January 1, 1901, when a well drilled into the salt dome called Spindletop under Beaumont, Texas, blew. By the time the well was capped on January 19, the well had spouted a two-hundred-foot column of oil into the air, wasting seventy thousand barrels a day.

The danger of waste was apparent to Herbert Hoover, who proposed a federal regulatory commission to supervise oil production. In the fall of 1930, an independent oil operator or “wildcatter,” seventy-one-year-old C. M. “Dad” Joiner, discovered the largest oil field yet known in Rusk County in East Texas; he sold out to H. L. Hunt, later one of the biggest and most reactionary Texas oil tycoons. What followed was anarchy.

Texas politicians were painfully aware of a crisis of waste, overproduction, and prices too low to encourage investment. The Texas Railroad Commission (TRC), founded in 1891 to regulate railroads in Texas, was given responsibility to regulate Texas oil and gas in 1919. By the 1930s, Texas produced half of the crude oil in the world. In 1931, the TRC began to engage in “prorationing,” that is, issuing production quotas. To enforce the railroad commission’s orders, Governor Ross Sterling, a former president of Humble Oil Company, ordered the Texas National Guard to impose martial law on East Texas oil fields.

When the smuggling of “hot oil” produced in violation of the quotas became a problem, the Roosevelt administration sought to coordinate oil production under the oil and gas sections of the NIRA. Influential Texans in Washington, including Roosevelt’s first vice president, John Nance Garner, Senator Tom Connally, and Congressman Sam Rayburn, fought back. The Connally Hot Oil Act gave the federal government the power to enforce directives of the TRC in interstate commerce. State governments and oil companies formed a public-private cartel, the Interstate Oil Compact (IOC). The US Bureau of Mines in the Department of the Interior and the American Petroleum Institute, a trade association, collected data about the industry. This awkward, jury-rigged system succeeded from the 1930s until the 1970s; it was critical to the success of the Allied forces in World War II and became an integral part of the US-dominated global oil system in the early Cold War.

THE POWER POLITICS OF ENERGY

During World War II in 1943, a leading American geologist, Everette Lee DeGolyer, was sent to evaluate the oil-producing potential of the Persian Gulf. Previously, there had been discoveries of oil in Iran (1908), Iraq (1927), and Bahrain (1932). In 1938, Anglo-Persian and Gulf Oil had discovered oil in Kuwait, while Chevron and Texaco in the same year found oil in Saudi Arabia. DeGolyer told the Roosevelt administration, “The center of gravity of world oil production is shifting from the Gulf-Caribbean area to the Middle East—the Persian Gulf area.”
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Britain considered the Middle East to be its sphere of influence, and competed with the United States to win the favor of the Saudi monarch Ibn Saud. In 1944, the United States and Britain negotiated a petroleum agreement, which the leader of the British delegation called “a monster cartel,” while the American government used the euphemism “commodity agreement.” The agreement was withdrawn from submission to the Senate for approval because of intense opposition from independent oil producers and liberal antimonopolists.
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In 1953, the United States and Britain sponsored a coup in Iran to overthrow its democratically elected prime minister, Mohammad Mossadegh, before he could nationalize the Anglo-Iranian Oil Company. Installed as ruler of Iran until he was overthrown in the revolution of 1979, Muhammad Reza Shah Pahlavi presided over a system in which the country’s petroleum industry, nominally owned by Iran, was managed and developed by a consortium of Western oil companies.
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The major oil companies similarly collaborated in developing Saudi oil through the Arab-American Oil Company (Aramco).

In the generation that followed World War II, the global oil industry was dominated by Texaco, Gulf, Standard Oil of New Jersey (Exxon), Royal Dutch Shell, British Anglo-Persian Oil Company (British Petroleum or BP), Standard Oil of New York (Mobil), and Standard Oil of California (Chevron). They were called
le sette sorrelle
, the Seven Sisters, by an Italian oil man, Enrico Mattei.

According to the Federal Trade Commission, in 1952 the Seven Sisters controlled 88 percent of global oil reserves outside of the United States and the USSR.
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In 1960, the seven controlled 60 percent of global oil.
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When the Justice Department’s Antitrust Division planned a criminal suit against the Seven Sisters, President Truman ordered the investigation to be suspended. His successor, Dwight D. Eisenhower, also suppressed the litigation, although the investigation survived until it was abandoned in 1968.
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