With a monopoly on the atomic bomb and an economy fortified by World War II, the United States in 1945 was the strongest nation in the world. The country demobilized quickly, and Americans were determined to enjoy the fruits of peace after years of depression and wartime sacrifice. The end of the war did not initiate retreat from international responsibilities, as it had after World War I, however. As tensions with the Soviet Union intensified into a cycle of political and economic antagonism known as the Cold War,
the United States combated the threat posed by the USSR by forming new alliances and providing economic and military assistance to weakened democracies. The onset of the Cold War also affected domestic politics. Fear of internal subversion allowed anticommunist demagogues, such as Senator Joseph McCarthy of Wisconsin, to wield considerable political power and led to congressional investigations of Communist infiltration of the government, the film industry and even the U.S. Army.
After V‐J Day, when Japan surrendered, men and women in uniform and civilians alike expected the government to “bring the troops home by Christmas.” Indeed, demobilization of the armed forces and reconversion of the economy occurred faster than anyone expected. The size of the armed forces was reduced from 12 million at the end of the war to 3 million by mid 1946 and to 1.5 million in 1947. Across the country, defense plants shifted back to producing civilian goods, so quickly, in fact, that the first new automobiles were ready to roll off the assembly line for the 1946 model year. By and large, the economy was ready to absorb the returning veterans. About two million took advantage of the GI Bill, returning to school rather than entering the labor market immediately. Those veterans who did need a job usually found one since pent‐up demand for consumer goods drove the creation of jobs to produce those goods. Additionally, millions of women who had entered the workforce during the war were either laid off or left their jobs when the war ended. However, even though the postwar depression that people feared would occur never materialized, the country did face economic and social challenges.
Inflation and labor unrest. The country's main economic concern in the immediate postwar years was inflation. The president worried that a sudden end to price and wage controls would result in a dramatic rise in prices. Under pressure from both workers and business leaders to end wartime restrictions as quickly as possible, Truman reluctantly ended most price controls in the summer of 1946 and all wage controls in November 1946. The result was a nearly 25 percent jump in the overall consumer price index and an even greater increase in food prices. This decrease in purchasing power did not sit well with either consumers or organized labor. Not only were people able to buy less because of inflation, but they were earning less due to the end of the double shifts and overtime hours that were common during the war. The response was a wave of strikes in 1946 for higher wages involving more than 4.5 million workers.
Truman reacted strongly to the labor unrest. When the United Mine Workers struck, he ordered the federal government to seize the coal mines. When a national railroad strike loomed, he threatened to do the same thing and even asked for the authority to draft striking railroad workers into the Army. These actions cost the Democrats labor support, allowing the Republicans to use the public's dissatisfaction with Truman's handling of the economy to their advantage and win control of both the House and the Senate in 1946. The new Congress passed the Taft‐Hartley Act over Truman's veto in 1947. Widely seen as an antilabor measure, the legislation gave the president the authority to order striking workers back to work for an 80‐day “cooling‐off” period. The act also prohibited strikes by federal employees, banned the closed shop (workplaces that did not allow the hiring of nonunion workers), and permitted the union shop (workplaces that hired both union and nonunion workers, but required nonunion workers to join the union after being hired), except in states that had right‐to‐work laws. (Right‐to‐work laws state that union membership or nonmembership is irrelevant in getting or keeping a job.) Many states, particularly in the South, adopted such laws in the wake of the Taft‐Hartley Act.
The baby boom and suburbia. Making up for lost time, millions of returning veterans soon married and started families. Indeed, twice as many Americans were married in 1946 as in 1932. The birth rate soared between 1946 and 1964, reaching its highest level in 1952. During this baby boom, about 76 million children were born, which contributed to the expanding postwar economy and also created an enormous demand for housing. Because of the housing shortage, young families often moved in with their parents, couples shared living space until an apartment became available, and wartime Quonset huts on college campuses became married‐student housing for those on the GI Bill. When these families did find housing, it was usually a home that they owned in the suburbs rather than an apartment they rented in the city. William Levitt first introduced small, massproduced, and relatively inexpensive suburban homes on Long Island in 1947. His “Levittowns” soon sprang up in Pennsylvania and New Jersey, and the pattern of suburban development was repeated in Chicago and Los Angeles. The government supported suburban growth by making money available for homes through the GI Bill and authorizing the Federal Housing Administration to insure loans for up to 95 percent of the value of a home.
Because the overwhelming majority of those who moved to the suburbs were white, the ethnic composition of urban America began to change. Many of the new housing developments had restrictive covenants that prohibited sales to African‐Americans, Hispanics, Jews, and other minorities, so a home in the suburbs was not an option for them. Consequently, as whites left the cities, blacks and other minorities made up a larger and larger percentage of inner‐city residents in places like Chicago, Detroit, and Philadelphia. In Los Angeles, the Mexican‐American population also increased, especially as whites spread out in suburban neighborhoods across Los Angeles and Orange Counties. The rise of suburbia was also part of a larger migratory pattern. Blacks continued to desert the South for the Midwest and Northeast, while whites in those regions began to settle in the sunbelt states of Florida and California.
The election of 1948 and the Fair Deal. Few thought Truman could win an election in his own right in 1948. Inflation was still a problem, the Republican Congress had blocked his legislative program, and the Democratic Party was badly split. The left wing of the party backed Henry Wallace, who had served under Roosevelt as Secretary of Agriculture, Secretary of Commerce, and Vice President. Wallace ran as the Progressive Party candidate on a platform that supported expanding the New Deal and improving relations with the Soviet Union. Meanwhile, several Southern delegations bolted the Democratic convention because of the inclusion of a civil rights plank in the platform. Called the Dixiecrats, they formed the States Rights Party and nominated Governor Strom Thurmond of South Carolina for president. Campaigning against the “do‐nothing” Eightieth Congress, Truman managed to keep most of the Roosevelt coalition together and upset Republican candidate Thomas Dewey to win the election. Despite the loss of four states to Thurmond, Truman won most of the electoral votes in the South and received strong support from African‐Americans, Catholics, Jews, farmers, and organized labor.
Truman announced an ambitious domestic agenda, known as the Fair Deal, at his inauguration in January 1949. Some Fair Deal programs that were implemented included an increase in the minimum wage, an expansion of Social Security, funding for low‐income public housing, and farm price supports. However, even with Democrats back in control of both houses, the president could not get Congress to back other key elements of the Fair Deal. Conservatives in both parties were able to muster enough votes to block his really significant policy initiatives, such as civil rights legislation that would expand on Truman's executive orders prohibiting discrimination in federal government hiring and ending segregation in the armed services; national health insurance (which the American Medical Association labeled “socialized medicine”); federal aid to education; and repeal of the Taft‐Hartley Act. The president's foreign policy had broader bipartisan support.