Superpower Relations: The Cold War 1945–1991

Truman and Eisenhower of USA and Stalin of USSR

Truman feared the spread of communism throughout the world, and Stalin was angry because America and Britain had invaded Russia in 1918-19 to try to destroy communism. Truman was also angry, but about the Nazi-Soviet Pact (a major factor in starting the Second World War). America wanted reconstruction - to make Germany a prosperous democracy and recover it as a trading partner. It appeared Russia wanted to wreck Germany, take huge reparations for the damage done during the war, and set up a buffer of friendly states around Russia.

The Economy and How It Was Run

At the end of World War II, many Americans feared that the drop in military spending might consequently bring back the hard times of the Great Depression. Instead, the strong economic growth was fuelled by pent-up consumer demand during the post-war period. The automobile industry was converted back to producing cars, while new industries such as electronics and aviation grew enormously. A housing boom was stimulated by easily affordable mortgages for members of the military returning, and added to the expansion. The nation’s row national product rose from roughly $200,00 million in 1940 to $300,000 million in 1950 and then to more than $500,000 million in 1960. At the same time, the jump in post-war births (the “baby boom”) increased the numbers of consumers. More and more Americans started to join the middle class. The need to produce war supplies did not disappear with the war’s end. As the Iron Curtain descended across Europe, the US found itself in a cold war with the Soviet Union. The government maintained substantial fighting capacity, and also invested in sophisticated weapons such as the hydrogen bomb. War-ravaged European countries flowed with economic aid under the Marshall Plan, which helped maintain markets for numerous US goods as well. The government recognized its central role in economic affairs. The Employment Act of 1946 stated the government policy as “to promote maximum employment, production, and purchasing power.” The United States also recognized during the post-war period the need to restructure international monetary arrangements, spearheading the creation of the International Monetary Fund and the World Bank -- institutions designed to ensure an open, capitalist international economy. The American work force also changed significantly. The number of workers providing services grew until it equalled and then surpassed the number who produced goods during the 1950s. By 1956, a majority of US workers had white-collar jobs rather than blue-collar. At the same time, labour unions won long-term employment contracts and other benefits for their members. On the other hand, farmers faced tough times. The gains in productivity led to agricultural overproduction, as farming became a big business. Small family farms were finding it increasingly difficult to compete with bigger farms and so more and more farmers were forced to leave the land. Other Americans moved as well. The growing demand for single-family homes and widespread ownership of cars led many Americans to migrate from central cities to suburbs. However, in USSR, Stalin sought out to reshape the Soviet society with aggressive economic planning, in particular of agriculture and development of industrial power. He introduced his "Westernizer" ideals to the Soviet Union by thoroughly reforming Soviet policy; which was demonstrated by a period of rapid industrialization. He also promoted a secret police and a mass mobilization party, which led to millions of deaths. The Soviet Union economy was based on a system of state ownership of the means of production, collective farming, industrial manufacturing and centralized administrative planning. Stalin also introduced a new system of planning arrangements referred to as the five-year