Marc Gallicchio on Truman and the Transition to a Peacetime Economy

Strained supply chains, inflationary pressures in the pipeline and worries about the health of the labor market. Sound familiar? This is the US in 1945 as President Harry S. Truman tried to engineer an end to World War II and minimize disruptions that would accompany peace. 

The  role of the atomic attacks on Japan, fears of Russian encroachment and the collapse of Japanese industry are well charted in discussions surrounding Tokyo’s capitulation on Aug. 15, 1945. Less well known is the impact of financial and commercial tensions developing on the home front. I spoke to Marc Gallicchio, professor of history at Villanova University and author of “Unconditional: The Japanese surrender in World War II,” which dives into the debates within Truman’s team about ending the war, including fears of an impending economic calamity.  

These concerns didn’t stop at America’s shores. What did planners envisage for Japan’s economy and did they drop the ball by not thinking more about the prospect that China — a wartime ally — would one day challenge the US? The conversation has been edited for clarity and length.  

DANIEL MOSS: Describe domestic economic conditions and how were they shaping Washington’s decisions in 1945? 

MARC GALLICCHIO: From early that year, with the impending defeat of Germany, people were beginning to look past the war. Not only the general public, but also business leaders, who were concerned that not enough emphasis had been placed on reconversion to a peacetime economy. If peace burst upon the US suddenly, the economy would be unprepared. Manufacturers were still in wartime mode, primarily producing goods for the military. There were restrictions on consumer activity, there was food rationing, price limits imposed. There was anxiety that if the war ended suddenly, all these soldiers and sailors would come home and the domestic economy would be in no shape to absorb them into the workforce.  

There was this rising chorus of complaints among executives and legislators — you begin to see it in the newspapers — that the army is absorbing too much manpower and material. Now that they have a one front war to fight, the questions were increasingly about why so much was needed to fight just Japan when they had been fighting both Japan and Germany? The worry was all these wartime jobs and contracts would end and business would not be ready make the transition to domestic production.  

There was great fear of unemployment. That turned out to be less of a problem than expected, but access to consumer goods and worries about inflation were real issues. By the early summer of 1945, the coal industry was warning that unless it could get more miners, there would be shortages. For that they needed personnel released from the army, which was reluctant. Moving people and goods across the US was becoming more difficult after four years. There was a lot of track maintenance that needed to be done. So there were petitions for the early release of people from various professions and the military just didn’t want to do that.     

DM: What priority did Truman give these economic pressures, given the development of the atomic bomb and worries about the implications of Russia’s entry into the war against Japan?

MG: Before Truman went to the final summit of the war at Potsdam in July, he sided with the army. But Treasury Secretary Fred Vinson, in whom Truman had great confidence, opposed the army’s position. It’s not clear what Truman would have done if he didn’t have the bomb.

Truman receives these extraordinary cables from Vinson at Potsdam telling him there will be a serious crisis if the US doesn’t move more forcefully toward reconversion. Vinson starts to suggest that surely the army doesn’t need all these resources. We need unconditional surrender, but maybe we can get there through blockade and bombardment, which would allow for fewer men. The military was against that view because they believed it would lead to a protracted war, the American public would lose interest and the Japanese would use that to their advantage. What Vinson was proposing in order to avoid disaster was a modification of unconditional surrender. He didn’t outright say that, but that would probably have been the result.