“The Economics of World War”

The young nation of the United States in the year 1914 was largely untested on a global scale. Economically and militarily, the country still had much to prove despite a handful of international conflicts, since winning its war of Independence. The nation faced a depression and an unemployment rate of 7.9%. The start of the Great War saw a dramatic increase in industrial production, nationally. As European nations required supplies and equipment to fight the war in Europe, the US was able to emerge globally, as an investor and economic power. Young men were required to enlist, leaving behind civilian job vacancies. As well as the increased production of war goods, leading to an increase in women and men ineligible to fight to lead the labor force. Unemployment rates would fall to 1.4%, by the end of the war. 

The United States would also implement several tactics in order to pay for the large war effort, including increased taxation, money creation and borrowing from the public through “liberty bonds.” Taxes increased drastically with those making $50,000 and more annually seeing a tax increase from 1.5% in 1913-15 to as high as 18% by 1918. Citizens would also see an increase in government propaganda encouraging the purchase of war bonds and a change in advertising. During and after WWI, US citizens would see an increase in patriotic language and propaganda. Advertisers found opportunity in marketing patriotism, heroic sacrifices and undertaking financial burdens on behalf of the nation. Effects of WWI are still seen in the current economy, patriotism and being “Proudly made in America,” is a large marketing strategy used today. The war also taught the nation the importance of economic preparedness, another lesson still in use today.