Economic Effects of WWI(USA) By Bailey Spilker

World War One had many effects on the United States' economy, but they weren't all bad. Sure it could've been better, but it also could've been much worse. US exports to Europe rose from about $1.5 billion in 1913 to $4.06 billion in 1917. Also sending the military into WWI would be hard product wise. The military needed food, water, clothing, supplies, ammunition, guns, etc. to withstand the war. The result of these needs for the military was a rapid increase of federal spending from $477 million in 1916 to $8,450 million in 1918. Although the Army would number in the millions, raising wouldn’t be an unmanageable problem for the economy. The total labor force rose from about 40 million in 1916 to 44 million in 1918. This increase allowed the United States to field a large military while still increasing the labor force in the non-farm private sector from 27.8 million in 1916 to 28.6 million in 1918.

Real wages rose in the industrial sector during the war, perhaps by six or seven percent, and this increase combined with the ease of finding work was sufficient to draw many additional workers into the labor force. Women’s employment rates increased during WWI, from 23.6% of the working age population in 1914 to between 37.7% and 46.7% in 1918. Also the employment of married women increased sharply – accounting for nearly 40% of all women workers by 1918.

The war also drove stock prices way down. Of course, to investors not being able to buy or sell shares is even worse than selling them at a loss. Although stocks could not be traded on the main exchanges, over-the-counter markets replaced exchanges for those who were desperate enough to sell. Most of the new bonds that listed on the London Stock Exchange were British government bonds and their share of the London Stock Exchange’s capitalization grew from 9% to 33% during the war. As can be seen, stocks lost value continually during the war, hitting their bottom only in 1918, despite the general inflation that occurred in Britain during the war, which normally would have carried prices upwards. This wouldn't just affect European countries, but all countries.

The performance of the London Stock Exchange between 1913 and 1919 .

World War I ruined the global integration of capital markets. The Gold Standard never returned despite attempts after the war to revive it. The system of issuing bonds and shares internationally failed to recover from the war, and stock exchanges listed fewer international shares. The ownership of stocks and bonds from other countries decreased dramatically.

As a result of the USA joining the war in 1916, industry production in America shot up. Manufacturers had to keep production up to the pace needed to support the war. In order to produce more material in a little amount of time, new technologies were developed to help manufacturers meet the needs of the government and people. Also more employment opportunities opened for women and African-Americans. However, as the end of the war drew near, and soldiers started to return home, the industry production began to slow, and there was less need for workers in factories. Many women stopped working, but even so there were not enough jobs for the men returning home from Europe. This rising unemployment after a time of industry and economic prosperity, planted the seeds of the coming Great Depression.

Also our national debt went through the roof, in 1915 it went up about $145 million making our total debt $3 billion. Then in 1916 it went up $551 million and grew by $2 billion in 1917! To make matters worse in 1918 it grew by about $8 billion and in 1919 $12 billion. That is insane, our national debt through 1915 to 1919 went from $3 billion to $27 billion. Why couldn't we be like Andrew Jackson who at one point dropped our debt from about $4.7 million to just $33,733.05! Granted he wasn't in one of the biggest wars in world history and that seemed like a ton of money back then but imagine our debt being $33k, that would make our governments lives and our lives so much easier. Then from 1920 to 1925 our debt came down to $20 billion. So the war had a clear effect on our nation and the people living in it.

World War One was a hard war for us even though we were in it for about 2 years. Yet it took us decades to recover, but our conditions were better than all of Europe. But the debt we were in then is nothing compared to what we're in now. We need to find a way to get our economy back on it's feet and lower our national debt, because we don't need a second Great Depression. World War One had many devastating effects on the United States, but the economic effects were tremendous.


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