Kira Barrett ’18
Assistant News Editor
Macroeconomic historian and Smith alumna Gillian Brunet ’08 gave a talk titled “Stimulus on the Home Front: the State-Level Effects of World War Two Spending” last Friday to Smith students and faculty.
Brunet addressed the economic impact of the war on America. Specifically, she discussed the shifts in automobile and airplane industries and the responses from the average American household.
Before the attacks on Pearl Harbor in 1941, there were a huge amount of uncertainty over whether the United States would offensively join the war, Brunet explained.
This uncertainty made it very difficult to get production expansion underway. At first, only defensive measures were taken, such as preparing the Air Force and Navy to defend the coasts.
In the winter of 1942, war production really kicked off when US entered the war.
The goal, Brunet said, was not to be efficient, but rather to get things going as fast as possible. Hitler’s power only seemed to be increasing and the United States understood that we had a limited amount of time to defeat Germany and the Axis powers.
Brunet went on to explain that rather than building new facilities for war production, which would take a long time, facilities that previously manufactured civilian goods were converted into ones that manufactured goods for the war effort.
The automobile industry experienced conversion on a monumental scale.
“In February of 1942, U.S. auto production shut down completely and this lasted through the summer of 1945,” Brunet said.
According to PBS, an estimated three million cars were made in the United States in 1941. Only 139 cars were made between 1942 and 1945. This was when automobile companies like Ford, General Motors and Studebaker started to manufacture tanks and guns to aid the war effort.
Brunet explained that there was a limited supply of metal during the war so industries and companies that had previously relied on using metal in their products could no longer do so. This led those companies agreeing to war contracts in order to continue to make money.
“Non-war industrial production really falls deeply, and this is mostly durable goods, and mostly places with metal - which is actually great for the war effort.” Why would this be great? Because people with real expertise in using metal were now employed in manufacturing goods for the war.
The automobile industry was soon converted from manufacturing cars to manufacturing planes and the same workers who used to build cars built planes.
“Studebaker made bomber planes. Ford and GM took a billion dollars of war contracts each,” Brunet said. Small airplane firms began to grow on the west coast, with some experiencing as much as a hundredfold increase in production.
Brunet ended her talk by examining how households responded to the many changes that war brought to society.
There was a huge increase in private saving, which could mainly be attributed to patriotism. There were several ad campaigns starring celebrities that urged Americans to be frugal.
Brunet also provided a psychological explanation behind the urge to save.
“During a crisis, people get scared and they have a behavioral response where they increase their savings,” Brunet explained.
This behavior of saving still reinforced the conversion of companies. “This is because the increase in public debt relative to the impulse of economic activity is larger than it would normally be,” Brunet said.
Brunet obtained her Ph.D. in economics from the University of California, Berkeley. She is currently a postdoctoral fellow at the National Bureau of Economic Research and will begin teaching as an assistant professor at Wesleyan University in the fall of 2018.