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Carl Mollins
All-out war may be hell for people and places, but it sure can beef up a flailing economy.
True enough, North America slid deeper into recession after George Bush Sr.'s attack on Iraq in the 44-day Gulf War of early 1991. But the economic slowdown back then may more likely be attributed to the simultaneous closing of the Cold War. It was that long contest of ideas and mutual menace between the US-directed Atlantic Alliance and the Soviet Union's Communist bloc that kept global economies ticking along prosperously and progressively for most of its more than 40-year duration.
The same thing during the Second World War, compressed into a six-year span, provided a prompt cure for the maladies inflicted on the world by the Great Depression of 1929 to 1939. With the West, the Soviet Union and China engaged in active combat against the "evil Axis" of the time — Germany, Italy and Japan — the record-breaking unemployment of the 1930s gave way to jobs for everybody, in the armed forces or in the factories, shipyards and airfields supporting the war.
Canada built warplanes, armored vehicles and one of the world's biggest navies. At the same time, the national war effort developed human skills in making things and running high-tech electronics gear spawned by the urgencies of the time.
Afterward, the country experienced anxieties that the postwar years might inflate the cost of living and deflate the economy:
This
year may...witness a gradual
change from a
distinctly inflationary environment to one of restrained
deflation....Consumer resistance — forced and voluntary
— is becoming a
factor.
Last month's break in commodity prices was somewhat startling. Newspaper headlines heralded the end of inflation. The stock market stumbled lower....Communists everywhere beamed with hope that this was the initial crack which would bring about the collapse of the decadent western democracies....But no economic collapse faces us. This isn't a 1929 situation....Inflation still remains an insidious danger. None the less [sic], powerful psychological forces are combining to break the back of the price spiral....Let's not begin crying for too many cushions to soften the economic bumps...we must let normal economic corrections achieve their purpose.
—span
style="font-style: italic;">Canadian Business -
Jan. 1948
Last month's break in commodity prices was somewhat startling. Newspaper headlines heralded the end of inflation. The stock market stumbled lower....Communists everywhere beamed with hope that this was the initial crack which would bring about the collapse of the decadent western democracies....But no economic collapse faces us. This isn't a 1929 situation....Inflation still remains an insidious danger. None the less [sic], powerful psychological forces are combining to break the back of the price spiral....Let's not begin crying for too many cushions to soften the economic bumps...we must let normal economic corrections achieve their purpose.
—Canadian Business -
March 1948
In fact, as it turned out, the shortages of civilian cars and other goods created by the war helped defeat deflation, while the removal of wartime price and trade regulation by Ottawa in a measured, cautious way beat back the worst of price inflation.
At the same time, a lively commercial and industrial climate absorbed hundreds of thousands of war veterans, many of them first taking advantage of the country's offer of subsidized expansion of their education:
On top of the pent-up demand for
consumer goods during the
past several years, capital expenditures have reached unprecedented
proportions. Additions to inventories have also been unduly large.
Generous loans have supported export trade and imports have been
maintained through the use of our accumulation of American dollars. The
combination of these influences has resulted in boom conditions in this
country.
— Canadian
Business
- June 1948
All in all, just as the country's performance during the decade of the First World War carried Canada into political maturity, so the 1940s marked its industrial coming of age.
As for employing war as a healer of economic ailments then or now, the costs in humanity, of course, outweigh the benefits to business. As historians Jack Granatstein and Desmond Morton conclude in their 1995 book, Victory 1945: "It was, on the whole, a good war for Canada. The country emerged richer, more powerful, more outward looking than anyone could have imagined in 1939." But they also observe: "A wiser people would have found better ways to spend $13 billion than on tanks and bombers and artillery shells, and on putting a million people in uniform and sending them to die."
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