Chapter 36

The Cold War Begins



Postwar Economic Anxieties

In the initial postwar years, the economy struggled and prices of consumer goods increased because the wartime price controls were removed.  An series of strikes swept over the country in 1946.

In 1947, the Republican Congress passed the Taft-Hartley Act over President Truman's veto.  It outlawed "closed" (all-union) businesses, made unions liable for damages that resulted from jurisdictional disputes among themselves, and required union leaders to take a noncommunist oath.  Taft-Hartley was just one of several obstacles that slowed the growth of organized labor in the years following WWII.

The CIO's "Operation Dixie," tried to unionize southern textile workers and steelworkers. It failed in 1948 because it couldn't overcome fears of racial mixing.

The Employment Act of 1946 created a 3-member Council of Economic Advisers to advise the president on policies regarding employment, production, and purchasing power.

The Servicemen's Readjustment Act of 1944 (GI Bill of Rights / GI Bill), made money available to send former WWII soldiers to school. This bill raised educational levels and stimulated the construction industry; this helped to create the economic expansion that started in the late 1940s.


The Long Economic Boom, 1950-1970

From 1950s to the 1970s, the American economy grew rapidly. Incomes rose, the middle class expanded, and Americans accounted for 40% of the planet's wealth. The economic growth changed the face of politics and society. It paved the war for the success of the civil rights movement; it funded new welfare programs; and it gave Americans the confidence to exercise international leadership in the Cold War era.

Most new jobs created after WWII went to women, as the service sector of the economy dramatically outgrew the old industrial and manufacturing sectors.


The Roots of Postwar Prosperity

WWII boosted the American economy, but large increases in military spending helped sustain the economic growth. The increased military budget helped start high-technology industries like aerospace, plastics, and electronics.  Low-cost petroleum from the Middle East (prices were controlled by Europe & America) caused America to significantly increase its energy consumption.

Productivity was the key to prosperity for America. Increased productivity was caused by improved technology and the rising educational level of the workforce.

Mechanization and fertilizers increased the productivity of farms. Because of this, less people were needed to work on farms, and the work force shifted out of agriculture.


The Smiling Sunbelt

Economic prosperity caused by WWII enabled people to move about the country at a higher rate than in the past (population mobility). 

The "Sunbelt" is a 15-state area stretching along the southern portion of the U.S. from Virginia to California. The population in this region grew nearly twice as fast as in the Northeast (the "Frostbelt").  In the 1950s, California alone accounted for 1/5 of the nation's population growth. It became the most populous state in 1963.

People moved to the sunbelt in search of jobs, better climate, and lower taxes. The sunbelt states' economic prosperity was large due to the fact that this region received significantly more federal money that the North. The industrial region of the Ohio Valley (the "Rustbelt") was especially hit hard as a result of the loss in federal funds and population.


The Rush to the Suburbs

Throughout the country, home ownership became increasingly popular and many white Americans moved from the city to the newly created suburbs. The Federal Housing Administration (FHA) and Veterans Administration (VA) made home-loan guarantees, making it more economical to own a home in the suburbs rather than rent an apartment in the city.

The construction industry expanded in the 1950s and 1960s.

"White flight" to the suburbs left the inner cities poverty-stricken. Migrating blacks from the South moved into the abandoned inner cities. The FHA often refused blacks home mortgages for private home purchases, thus limiting black mobility out of the inner cities.


The Postwar Baby Boom

In the 15 years after 1945, the birth rate in the United States exploded as the "baby boom" took place.  More than 50 million babies were born by the end of the 1950s.  By 1973, the birth rates had dropped below the point necessary to maintain existing population figures.


Truman:  The "Gutty" Man from Missouri

President Harry S. Truman was the first president, in several years, to not have a college degree. He was known as the "average man's average man."  He had the ability to face difficulty with courage.

Yalta:  Bargain or Betrayal?

In February 1945, the Big Three (Roosevelt, Churchill, and Stalin) met in Yalta to discuss the war's end (Yalta Conference). Plans were made for the occupation of Germany. It was agreed that Poland, Bulgaria, and Romania should have free elections. Stalin eventually broke this agreement. The Big Three also announced plans for fashioning a new international peacekeeping organization (the United Nations).

The most controversial decision regarded the Far East. American casualties were expected to be high in the war against Japan, so Stalin agreed to attack Japan after the collapse of Germany. In return, the Soviets were given the southern half of Sakhalin Island, lost by Russia to Japan in 1905, and Japan's Kurile Islands.  The Soviet Union was also given control over the railroads of China's Manchuria and special privileges in the two key seaports of that area, Dairen and Port Arthur.  These concessions gave Stalin control over vital industrial centers of China.

The agreements at the Yalta Conference were not really binding. The conference was more of a way for the Big Three to discuss general post-war plans.


The United States and the Soviet Union

The United States terminated the USSR's much-needed lend-lease aid in 1945. It also ignored Moscow's plea for a $6 billion reconstruction loan, while approving a similar loan of $3.75 billion to Britain in 1946. 

The USSR sought to guarantee its own security by creating a "sphere of influence" around it (a surrounding set of friendly countries). These spheres of influence contradicted President FDR's Wilsonian dream of an "open world," decolonized, demilitarized, and democratized.

Each country believed in the universal expanse of its own form of government. The Soviet Union and the United States provoked each other into a tense, 40-year standoff known as the Cold War.


Shaping the Postwar World

In 1944, the Western Allies met at Bretton Woods, New Hampshire (Bretton Woods Conference) and established the International Monetary Fund (IMF) to encourage world trade by regulating currency exchange rates.  They also founded the International Bank for Reconstruction and Development (World Bank) to promote economic growth in underdeveloped areas.  Unlike after WWI, the United States took the lead in creating the important international bodies and supplied most of their funding after WWII.  The Soviets declined to participate.

The United Nations Conference opened on April 25, 1945. Representatives from 50 nations made the United Nations charter.  It included the Security Council, dominated by the Big Five powers (the United States, Britain, the USSR, France, and China), each of whom had the right of veto, and the General Assembly, which could be controlled by smaller countries.  The Senate overwhelmingly passed the document on July 28, 1945.

The U.N. has helped people throughout the world via organizations like UNESCO (United Nations Educational, Scientific, and Cultural Organization), FAO (Food and Agricultural Organization), and WHO (World Health Organization).

In 1946, Bernard Baruch wanted to create a U.N. agency, free from the great-power veto, with worldwide authority over atomic energy, weapons, and research.  The plan fell apart as neither the United States nor the Soviet Union wanted to give up their nuclear weapons.


The Problem of Germany

At Nuremberg, Germany from 1945-1946, Nazi leaders were tried and punished for war crimes.  Punishments included hangings and long jail sentences.

Americans realized that a flourishing German economy was necessary to the recovery of Europe. The Soviets refused to support the development of Germany because they feared another German-initiated war.

At the end of the war, Austria and Germany were divided into 4 military occupation zones, each assigned to one of the Big Four powers (France, Britain, America, and the USSR). 

Denied post-war economic support from America, the USSR wanted to take war reparations from Germany.

As the USSR spread communism to its Eastern zone in Germany and the Western Allies promoted the idea of a reunited Germany, Germany was divided into 2 zones.  West Germany became an independent country, and East Germany became bound to the Soviet Union as an independent "satellite" state, shutoff from the Western world by the "iron curtain" of the Soviet Union.

Berlin, still occupied by the Four Big powers, was completely surrounded by the Soviet Occupation Zone.  In 1948, the Soviet Union attempted to starve the Allies out of Berlin by cutting off all rail and highway access to the city.  In May 1949, after America had flown in many supplies, the blockade was lifted. 

In 1949, the governments of East and West Germany were established.


The Cold War Congeals

In 1946, Stalin, seeking oil concessions, broke an agreement to remove his troops from Iran's northernmost province.  He used the troops to aid a rebel movement.  When Truman protested, Stalin backed down.

In 1947, George F. Kennan came up with the "containment doctrine," which tried to explain the behavior of the USSR. This concept stated that the USSR was relentlessly expansionary and that the USSR could be contained by being firm and vigilant.

This doctrine was embraced by President Truman in 1947 when Congress passed the Truman Doctrine. This gave financial support to Greece to resist communist pressures. Truman declared that it must be the policy of the United States to aid any country that was resisting communist aggression.

Following WWII, France, Italy, and Germany were suffering from the hunger and economic chaos caused by the war. They were in danger of being taken over by Communist parties within the countries. By promising financial aid, American Secretary of State George C. Marshall convinced the Europeans to create a joint plan for their economic recovery. Marshall offered the same aid to the Soviet Union and its allies, but the Soviets refused it. The Marshall Plan gave $12.5 billion to 16 European countries. Within a few years, Europe's economy was flourishing, and the Communist parties had lost ground.

Access to Middle Eastern oil was crucial to the European recovery program and to the health of the U.S. economy.  Despite threats from the Arab nations to cut off the supply of oil, President Truman officially recognized the state of Israel on May 14, 1948.


America Begins to Rearm

The Cold War, the struggle to contain Soviet communism, was not a war, but it was also not a peace.

In 1947, Congress passed the National Security Act, creating the Department of Defense.  The department was headed by a new cabinet officer, the secretary of defense. The heads of each branch of the military were brought together as the Joint Chiefs of Staff.

The National Security Act also established the National Security Council (NSC) to advise the president on security matters, and it created the Central Intelligence Agency (CIA) to coordinate the government's foreign fact-gathering.

In 1948, the United States joined the European pact, called the North Atlantic Treaty Organization (NATO).  The pact pledged each nation to regard an attack on one as an attack on all. The pact also marked a departure from American diplomatic convention, a boost for European unification, and a significant step in the militarization of the Cold War.


Reconstruction and Revolution in Asia

General Douglas MacArthur took control of the democratization of Japan.  The Japanese people cooperated with his plans; they saw that good behavior and the adoption of democracy would speed the end of the occupation.  In 1946, a MacArthur-dictated constitution was adopted.  It renounced militarism and introduced western-style democratic government.

From 1946-1948, top Japanese "war criminals" were tried in Tokyo.

In late 1949, the Chinese Nationalist government of Generalissimo Jiang Jieshi was forced to flee the country to the island of Formosa (Taiwan) when the communists, led by Mao Zedong, took over the country.  The collapse of Nationalist China was a depressing loss for America and its allies in the Cold War, as of the world's population fell to communism.

In September 1949, the Soviet Union exploded its first atomic bomb, 3 years before experts thought possible.  To stay one step ahead, Truman ordered the development of the H-bomb (Hydrogen Bomb).  The first H-bomb was exploded in 1952.  The Soviets exploded their first H-bomb in 1953, and the nuclear arms race entered a dangerously competitive cycle.


Ferreting Out Alleged Communists

In 1947, President Truman launched the Loyalty Review Board to investigate the possibility of communist spies in the government.

In 1949, 11 communists were sent to prison for violating the Smith Act of 1940 (first peacetime antisedition law since 1798) in supporting the overthrow of the American government.  The ruling was upheld in Dennis v. United States (1951).

In 1938, the House of Representatives established the Committee on Un-American Activities (HUAC) to investigate "subversion" (opposition to the government).  In 1948, Congressman Richard M. Nixon led the conviction of Alger Hiss, a prominent ex-New Dealer. Americans began to join in on the hunt for communist spies who were thought to be living in America.

In 1950, Truman vetoed the McCarran Internal Security Bill, which authorized the president to arrest and detain suspicious people during an "internal security emergency."  Congress overrode Truman's veto and passed the bill.

In 1951, Julius and Ethel Rosenberg were convicted and sentenced to death for stealing American atomic bomb plans and selling them to the Soviet Union.  They were the only people in history to be sentenced to death for espionage.


Democratic Divisions in 1948

In 1948, the Republicans chose Thomas E. Dewey to run for president.  After war hero Dwight D. Eisenhower chose not to run for the presidency, the Democrats chose Truman. Truman's nomination split the Democratic Party.  Southern Democrats opposed Truman because he supported civil rights for blacks, so they nominated Governor J. Strom Thurmond. The new Progressive party nominated Henry A. WallaceTruman won and was reelected as president.  Truman's victory came from the votes of farmers, workers, and blacks.

President Truman supported a plan to lend American money to underdeveloped countries ("bold new program" or "Point Four" program). He wanted to help these countries develop before they succumbed to communism.

At home, Truman supported a "Fair Deal" program in 1949. It called for improved housing, full employment, a higher minimum wage, better farm price supports, new TVAs, and an extension of Social Security.  Congress only passed parts of the program: raises to the minimum wage; creation of public housing in the Housing Act of 1949; extension of old-age insurance to many more beneficiaries in the Social Security Act of 1950.


The Korean Volcano Erupts

When Japan collapsed in 1945, Korea was divided up into two sections:  the Soviets controlled the north above the 38th parallel and the United States controlled south of that line. Each country set up opposing governments in Korea.

The National Security Council Memorandum Number 68 (NSC-68) was a document created by the National Security Council that outlined America's national security strategy. It called for quadrupling military spending and using the Containment policy in regards to the Soviet Union. NSC-68 was a key document of the Cold War because it marked a major step in the militarization of American foreign policy.

On June 25, 1950, the North Korean army invaded South Korea. In response to this, Truman ordered a massive military buildup, well beyond what was necessary for the Korean War. Without Congress's approval, Truman ordered American air and naval units to be sent to support South Korea. The U.N. was responsible for sending troops to fight the North Koreans, but the fight was led by General MacArthur and most of the troops were American.


The Military Seesaw in Korea

On September 15, 1950, General MacArthur pushed the North Koreans past the 38th parallel, but on November 1950, thousands of communist Chinese "volunteers" attacked the U.N. forces, pushing them back to the 38th parallel.

Due to General MacArthur's insubordination and disagreement with the Joint Chiefs of Staff about increasing the size of the war, President Truman was removed MacArthur from command on April 11, 1951.

In July 1951, truce discussions dragged out over the issue of prisoner exchange.


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