Demobilizing the mass army and defense industry at the end of America's two world wars in 1918 and 1945 was an extremely complicated task. In 1918, American officials expected World War I to last another year and were taken by surprise when the Armistice was announced on November 11, 1918. With only preliminary planning for demobilization underway, the government did a hasty and poor job directing the shift from a wartime to a peacetime economy. During World War II, the government made significant strides preparing for demobilization well before victory was attained on the battlefield. In 1945, most Americans feared a return of the Great Depression once the war-fueled boom evaporated. Instead, the government found itself combating inflation.

World War I

At the end of World War I, the government immediately dissolved the wartime agencies that had directed the nation's economic mobilization. Concocting a viable demobilization plan, therefore, fell to the War Department. Returning...