World War II Manufacturing and the Postwar Southern Economy

Abstract

MANY SCHOLARS CONSIDER THE TRANSFORMATION OF THE SOUTHERN economy after World War II to be a central element of the regional and economic history of the United States in the twentieth century. Even though several reasons have been posited for the region's changes, many observers believe that manufacturing expansion during the war was a principal cause. Large-scale manufacturing growth allied with agricultural change and rising wages supposedly produced important shifts in the postwar period. The years after 1945 are typically contrasted with the prewar situation in which the southern economy remained geared to low-wage, low-skill, labor-intensive production of nondurable goods. The machinations of a traditional planter elite focused on nonindustrial pursuits--combined with the lack of effective local demand for factory-made products and ongoing financial and industrial control by northern elites--ensured that the southern industrial economy continued to be relatively insignificant through the Great Depression. According to the reigning academic opinion, the growth initiated during the war then quickened in the postwar period. Taking advantage of wartime investments, postwar local boosters opened up the South for industry. Many northern firms sought southern sites in an attempt to escape the problems and diseconomies of the North and to gain access to cheap and docile labor, plentiful raw materials, and expanding markets. Wartime changes and New Deal programs combined to bring the South into line with the rest of the country, or so the story goes. (1) In the prevailing analysis, real wages for workers in all sectors of the economy increased and grew more rapidly in the South than in the rest of the country in the subsequent decades. Massive public and private investment in new factories and machinery laid the foundations of a new manufacturing economy and, through multiplier effects, quickened the pulse of other economic sectors. Technological innovations reduced agricultural employment and freed workers for employment in other sectors. Federal labor and economic policies from the 1930s stimulated change, while new wage codes reduced the income gap and forced manufacturers to rethink labor-capital ratios. The continued existence of wartime military bases further enhanced the expanding southern economy. New housing, welfare, and programs for military veterans promoted greater federal presence in the South and channeled funds to the working poor. Together, these changes initiated a virtuous cycle of growth that produced a diversified southern economy, which increasingly resembled that of the nation by the end of the 1950s. A modern industrial economy was built over an old agriculture-based society. The long-term results of these changes were the transformation of the southern economy, the development of the Sun Belt, and the rise to national importance of metropolitan areas such as Atlanta, Dallas, and Houston. (2) This standard interpretation of southern economic change after 1940 rests heavily on federal investment in manufacturing plant during the war. For example, Gerald T. White, in his study of the Defense Plant Corporation, shows that combined federal and private investment in new plant in the South totaled nearly $4.5 billion (some $3.5 billion of it from the federal government), a substantially higher amount than the region's investment in manufacturing facilities as of 1939. Even though some plants were closed after the war, their importance outran direct value for peacetime production. During the war, they helped train a managerial group whose entrepreneurial skills were a continuing asset to the South and acquainted many of the rural poor with an alternative way of life. Southern skills were built up and attitudes affected. (3) This echoes George Brown Tindall, who argues that [m]ore important than physical assets, perhaps, were the intangibles: the demonstration of industrial potential, new habits of mind, a recognition that industrialization demanded community services. …