WWII Economys

[Diceman]

Can anyone tell me the GDPS of the major combatants of WWII?

[Holman]

I can't tell you myself. But there's a book by Richard Overy called "Why the Allies Won" that deals well with economic and production issues.

[Michael Dorosh]

See also John Ellis' BRUTE FORCE.

[JasonC]

The problem is comparing nominal figures in the utter monetary chaos of the period. The issue will become clear after a few figures.

US GNP was $89 billion in 1939, and rose to $135 billion by 1944, in constant 1939 dollars. German GNP was 129 billion Reichsmarks in 1939, 131 in 1941 (basically unchanged), and rose to 150 billion RM in 1943. Japanese GNP in 1940 was 40 Billion yen (1940 yen), and rose to 49 billion yen by 1944 (still 1940 yen). The Russians did not track GNP but government revenue, since it was a communist state. 1939 Nat. Rev. was 156 billion roubles, it rose to 191 BR in 1941, fell to 165 BR in 1942 under the effects of occupation, rebounded to 203 BR in 1943, and rose to 269 BR by 1944. Italian GNP at market prices 178 billion lira in 1939, fell slightly to 170 BL by 1942, and then dropped sharply as it became a theater of war, to 151 BL in 1943 and 121 BL in 1944, when it had ceased to be a combatant.

The problem obviously is, what the heck is that in any one common currency? And the answer is, it is quite impossible to translate values from wartime reichsmarks (being printed in epic proportions to finance the war) into 1939 US dollars. There was no trade to speak of of - what there was occurred by barter or in lend-lease form, not on a monetary basis. Nominal figures do not translate into real values in any uniform, simple way. Essentially all the currencies were also legally inconvertible (as in, trade RMs for dollars and you will be shot), except through special state-managed "clearing" accounts at managed prices.

Britain is one of the few cases that can be more or less straightforwardly translated in USD equivalents, because there was dollar-based trade between the US and the UK. The GNP there rose from about $15 billion to $25 billion over the course of the war. But then the dominions and empire add to this, without it being at all clear how much each economy mattered to the war effort (e.g. most of India's economy was needed for subsistance, South Africa similarly, etc).

The first thing economists do when monetary chaos like this prevents comparable measurements, is to switch from nominal values to some category of real goods. For measuring basic military power in WW II era terms, the most common index used for this sort of thing is steel production. This is not the same as GNP - non-industrial countries have little or no steel production but some GNP. But it allows a measurement in a raw tonnage, which pricing regulations and currency shenanigans can't wish away. You can't print steel, and you can't make new ships or tanks out of paper money. It is not perfect, because there are other goods besides steel, and some economies are more flexible (e.g. able to turn out high-end engineered products) while others are more "brute strength" (able to make many large items). But it is a reasonable measure for military production, and can be compared from country to country.

Raw steel production (in megatons) of the major combatants before and during the war look like this -

Germany - 23.7 in 1939, peaked at 30.6 in 1943, fell to 25.8 in 1944.

Japan - 5.5 in 1939, still 5.6 in 1943, fell to 4.3 in 1944

Italy - 2.3 pre-war, stagnant until they dropped out in 1943.

UK - 13.2 in 1939, flat at around 13 throughout the war

USSR - 18 before the invasion, dropped to 8 in 1942, recovered to 10.8 by 1944.

USA - 67 in 1940, 97 by 1942, leveled off a little over 100.

The Russians lost areas that had accounted for 58% of pre-war steel production in the course of the German invasion. They evacuated some plant to the Urals, and recovered some areas by mid 1943, but their overall steel production remained far below pre-invasion levels throughout the rest of the war.

If you look at what the ratio of those numbers imply for the relative strengths of Axis and Allied economies, then there are periods in the war. Before the attack on Russia, the Axis had twice the industrial production of the last major combatant facing them, the UK. Invading Russia pushed that ratio to about parity, but only temporarily, since they rapidly cut Russian production in half. That would have pushed the ratio to 3:2 favor the Axis, except for the entry of the USA and Japan. That swung the production ratio to 3.3:1 favor the Allies, because USA production was so enourmous. It did not "tell" instantly, however. By 1944, the ratio had passed 4:1 against the Axis, as Italy dropped out and both other Axis economies declined slightly from blockade and bombing, while USA finished mobilization and Russia recovered as territory was regained.

There are other constraints on economies besides steel, however. The USA could use its enourmous steel production to make gobs of ships, which certainly helped beat Japan directly and made it possible to apply some of its production against Germany despite losses to U-boats. But it could not actually use all its steel for armaments, and in practice only applied 40% of its overall economy to war purposes. As a result the civilian standard of living actually rose, even with a shift from 2% of GNP spent on the military in 1939 to 40% spent on it in 1944. Effectively the huge increase in military expenditure was "funded" out of economic growth. Part had to be focused on ships, and by choice much of the rest was focused on planes. The US made 87,000 tanks and 300,000 planes during the war.

Other nations had other problems and adopted other expedients. The Russians dramatically increased tank and aircraft production by 1942 and maintained it thereafter, despite the loss of half of their heavy industrial areas, by sacrificing essentially all civilian use of industrial products, and by drafting enourmous amounts of labor to production and military service, out of agriculture. Despite food aid from the west (which fed the army, mostly), large numbers of civilians starved to death as a result of this diversion of effort. But it enabled them to produce 102,000 tanks and 137,000 planes with less steel production than Germany, which managed to turn out only 50,000 and 112,000 of those items, respectively.

Germany was able to expand its tank production through 1944, despite heavy Allied bombing, in large part because they were slow to mobilize their economy and as a result it still had considerable slack left in it. In 1939 only 9% of industrial production had gone to armaments proper, while large scale investments in basic industry and construction took most industrial output. By 1942 they had raised the portion going to armaments to 22%, mostly by reducing construction projects 60%, with only limited falls in consumer output. By 1944, armaments took 40% of industrial production and the civilian share had fallen 25%.

There was a partial uptick in economic mobilization for war after the first six months in Russia, but the big shift did not occur until after Stalingrad. This delay accounts for most of the difference in tanks produced, compared to Russia. Russian tank production plateaued in 1942, while the Germans reached the same level of output eventually, but only in 1944. The Russians got far more tanks because they produced at the peak level for a longer period of time, not because of a higher peak (let alone higher industrial potential). And that they even matched the German peak required enourmously greater sacrifices by the civilian population, since they had less industrial potential than Germany to start with, and lost half of it to the invasion.

Japan and Italy were bit players compared to Germany. Japan suffered from additional economic difficulties besides the small size of their economy in industrial terms. They also had to import essentially all raw materials, with an inadequate merchant fleet to do it - which furthermore rapidly evaporated under attack by US submarines. They managed to keep the supply lines to Korea and northern China open for most of the war, and stockpiled oil during their period of control of SE Asia. These kept the economy moving into 1944, though of course they were completely unable to match the output increases fielded against them by the USA. By 1945, the raw material supplies were reduntantly cut (areas recaptured, ships to move the stuff sunk, stockpiles exhausted), and the cities were burnt to the ground. Their home defense plans included armies of millions with bamboo spears, because there was no way an economy in free fall by that point could supply the armed forces.

More complicated than just a list of dollarized GNP figures, I realize. That is the nature of the subject. If you want to see a detailed treatment of the matter, I recommend a small monograph called "war, economy and society" by Alan Milward. I hope this helps.

[ 01-19-2002: Message edited by: JasonC ]</p>

[Diceman]

Thanks, yes that helped a great deal.

Oh BTW Jason, I took the liberty of saving this information in a word document for future reference. Did you know you just wrote a three and a half page report? Thanks again.

Cheers

Eric

[ 01-19-2002: Message edited by: Diceman ]</p>

[PiggDogg]

Jason,

Holy cow. How do you do it?

Compliments to you again on your tome. :eek: Also, thanks. The information is quite useful and informative. Keep 'em coming & I'm looking forward to the next.

Cheers, Richard

[Gyrene]

<blockquote>quote:</font><hr>Oh BTW Jason, I took the liberty of saving this information in a word document for future reference. Did you know you just wrote a three and a half page report? <hr></blockquote>

Yeah, he's slowing down...He's usually good for at least 7 pages.

Gyrene

[CombinedArms]

If I hadn't just seen it with my own eyes, I wouldn't believe that Jason knows as much about WWII currency as about WWII weaponry, TOEs, artillery firing systems--you name it.

Jason, you should really write a book. No, that won't do it. 10 books. A ten volume history covering all aspects of the war. You're wasting your many talents on we poor schmos. Actually--just collect all the writings you've produced in this forum, edit them into an orderly structure and--you've got your ten books right there.

[Viceroy]

Diceman,

a good source of economic info is The Oxford Companion to WWII which has data on individual countries and a section on the World economy by Richard Overy.

[ 01-20-2002: Message edited by: Viceroy ]</p>