World War I

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What were the economic benefits of WWI in the United States?

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World War I benefitted the United States greatly on the economic front. It catapulted the US out of a recession and into an economic boom that lasted almost four years. The US doubled its output of goods in this period so that it could help supply the massive war effort in Europe. It went from being a debtor to a lender nation. Furthermore, to finance the war effort, the US, like most other countries, raised its top tax rate to unprecedented levels—in the US's case, to a top rate of 77 percent.

The war also led to the Great Migration of African Americans from the South to higher wage industrial jobs in the North. The higher taxes on the wealthy and higher wages for poorer groups together led to greater income equality after the war, which benefitted the economy, helping to fuel the Roaring Twenties. However, income inequality still remained high until the Great Depression devastated all economic classes.

The United States benefitted after the war from having made great increases in its industrial capacity, turning factories that churned out war supplies into factories producing consumer goods. More importantly, the US, poised before the war to be the world's superpower, consolidated this position after the war. Great Britain, the world's superpower at the time, was burdened by a great deal of debt as a result of the war while the US emerged in a stronger economic position than ever. The United States would not fully accept its world leadership position until after the end of World War II, but World War I helped it along on that path.

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For the innovations and the economic benefits of WWI, I would look at exports of American products during the war. American goods made it to the front well before American servicemen did. The United States economy was in a mild recession before the war; European wartime demand helped to fill orders and gave many Americans jobs. You can also look at how mechanized agriculture benefited from the war, as farmers turned to tractors in order to farm more acreage and take advantage of strong grain markets caused by European demand. Of course, when the market unexpectedly bottomed out by the abrupt end of the war, these same farmers who took out loans for their tractors and combines were the hardest hit.

Many innovations continued to have postwar uses. The airplane grew in prosperity after the war, and during the 1920s, the United States even had an airmail service. After a recession that took place in the immediate aftermath of the war, the United States' economy grew sharply as more people gained more money to spend. WWI's propaganda techniques proved that the average American could be swayed by marketing, and many businesses took advantage of nationwide marketing campaigns. War is often seen as a time of innovation, and WWI was certainly no exception.

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Assuming that you are talking about the United States, WWI had two major types of economic benefits.

First, the war improved the US economy in the short term.  The US had been in a recession when the war began.  But that changed when the war started and the European countries started needing things from the United States.  The European economies stopped working so well because of the war and so they needed to buy from the US.  That led to a major boom in business.

Second, the war made the US government and industry work together more closely.  Some economists (see link) believe that this helped lead to American prosperity even after the war.

It is also worth noting that, after the war, the US became a major player in terms of investing in other countries.  England had previously been the biggest investor, even in countries like Mexico.  After the war, America's economy was stronger than that of England and the US was in better position to invest in other countries' economies.  This was also an economic benefit of the war for the US.

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