The Warfare State

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World War II far surpassed the New Deal with respect to the formation of new federal agencies. The War Powers Act of December 1941 gave Roosevelt the same authority Wilson had acquired in the Overman Act to redistribute functions and personnel among existing agencies, but Roosevelt received this authority earlier and held it much longer than Wilson had. Before the war ended, more than 150 new agencies, bureaus, commissions, and boards had been established. This was made possible in part by the abolition of New Deal agencies, many of whose functions and personnel were transferred to wartime agencies. Malcolm Cowley proclaimed in The New Republic in 1943 that “the New Deal is being abandoned,” but he couldn’t realize that the new administrative juggernaut being reared during the war would prove a far more potent instrument of social welfare and economic regulation than anything created before 1939. World War II did not dismantle the welfare state in America; it bequeathed it a permanent bureaucratic base.

By 1943 the federal government had become the consumer of nearly half the nation’s output of goods and services and of a much higher percentage of total industrial output. The federal budget grew from $6.8 billion in 1938 to an unthinkable $98.3 billion in 1945—that is, the national government was spending fourteen times as much at the height of World War II as at the peak of the Great Depression. As in earlier American wars, military expenditures were a spur to fiscal reform. The most important innovation was the introduction in 1943 of income-tax withholding on a temporary basis. Needless to say, it became permanent. By making income taxation largely invisible and hence less painful, withholding not only helped finance the war effort but greatly facilitated the permanent maintenance of a large federal bureaucracy. The number of tax returns filed shot from 7.5 million in 1939 to 50 million in 1945. With the lowest tax bracket raised from 5.5 percent to 23 percent, income tax receipts increased 1,800 percent during the war. Before 1941 less than half of internal revenues had come from individual and corporate income taxes; by 1945, 80 percent did, and never again would it be less than 70 percent.

During World War I most prosecutions of war dissenters took place locally; from 1941 to 1945 the repression of dissent was essentially federalized with the centralization of power in the American system. There were relatively few prosecutions for verbal opposition to the war, but active dissent was another matter. Federal authorities suppressed numerous groups and closed at least a hundred publications. More than 6,000 draft resisters went to jail, a rate four times higher than in World War I. Nor had the First World War seen anything comparable to the forced internment from 1942 to 1945 of 120,000 Americans of Japanese descent. And the Federal Bureau of Investigation’s force of special agents grew from 785 in 1939 to 4,370 by 1945.

Despite the freedom of our mainland from enemy attacks, World War II was an enormous upheaval for the American population. The massive collective effort it entailed served to partly break down long-standing racial, ethnic, and gender barriers. Although black Americans fought in segregated military units, at home their share of federal civilian employment rose from 8 to 18 percent, with a marked increase in white-collar jobs. The war likewise shattered barriers to female employment; by mid-1945, 16.5 million women were at work, 36 percent of the civilian labor force. The archetype of the female worker in World War II was “Rosie the Riveter,” but even the New York Stock Exchange hired its first female clerk in 1943. To be sure, many gains proved temporary, and 920,000 black soldiers soon found that the rights they had fought for did not apply to them. Still, the war helped place the issue of racial discrimination firmly on the national agenda, where it has remained ever since. During the conflict the Urban League tripled in size, while the National Association for the Advancement of Colored People grew from 50,000 to nearly 500,000 members. The war thus commenced a long postwar struggle for racial equality. It marked, in fact, the beginning of the modern civil rights movement.

Periods of war have favored the Hamiltonian vision of a strong, centralized state; periods of peace, the Jeffersonian vision of a limited one. It is tempting to conclude that the Hamiltonian vision has triumphed unconditionally. Yet it hasn’t.
 

The United States never fully demobilized after the Second World War. By 1946 the armed forces had shrunk from 12.5 million to 3 million troops; by 1948, to less than 1.5 million, but that was still by American standards a massive force, nearly five times its 1939 size. The downward trend abruptly ceased that year with the corning of the Berlin airlift and the onset of the Cold War, which lasted forty-two years, until the reunification of Germany in 1990. During those decades the United States spent more than $6 trillion on defense, maintained standing military forces that averaged 2.4 million persons, supported a civilian defense bureaucracy of over a million employees, and funded a vast military-industrial complex against whose influence even the thirty-fourth President, the most famous general of World War II, felt compelled to warn. The coming of the Cold War thus gave a permanent cast to the transmutations of World War II.