ABSTRACT
As Table 2.1 and Fig. 2.1 show, half of the postwar fall in war expenditures took place in the second half of 1945, and more than offset rises in private expenditure, the fall in Federal defence expenditures being $75 billion compared with a decline in total GNP of $57 billion. In the fifteen months after 1945 IV defence expenditures fell another $75 billion but were completely offset by rising private and other government expenditure. As far as the balance between military and civilian output is concerned, the postwar reconversion may be said to have been completed by mid-1946, although as was seen in the previous chapter demobilization was not completed until the end of the year. But before the changes in the main categories of expenditure can be discussed it is necessary to review the effects of the suppressed wartime and postwar inflation.
