A Brief History of the California Economy

ADVERSITY BEGETS PROSPERITY

The turbulent years of the Great Depression and World War II were a prelude to California’s most dynamic period of growth.  California was a haven that attracted many of those hardest hit by the Depression.  The material demands of the federal government during the war would boost the state’s industrial output, and manufacturing would takes its place as the primary driver of the state’s economic growth. 

One of the most dramatic effects the Great Depression had on California was the migration caused by the Dust Bowl.  From 1928 to 1935 a major drought in the Southern Plains states produced dust storms that spewed dust 300 miles out into the Atlantic.  At one point, dust obscured the sun in New York City for five hours.  By 1945 over one million dust bowl-driven migrants had arrived in California.   

For the $10 cost of gas, refugees from Oklahoma, Texas and Arkansas, and other Dust Bowl states could migrate to California.  This was the first mass migration of impoverished people in California’s history.  Before the development of the automobile, migrants to California tended to be middle or upper income.  

Another contrast was that this was a migration of families.  Earlier, especially during the Gold Rush, most migrants to California were single men.  The Dust Bowl migrants were attracted to California by its climate and because they were familiar with growing and harvesting cotton.  By 1936 they made up 90 percent of California’s farm labor force. 

They lived in squalid conditions.  Few of the state’s 8,000 labor camps were inspected to ensure they conformed to minimum health standards.   These conditions formed the basis of John Steinbeck’s Pulitzer Prize winning novel The Grapes Of Wrath, which was banned in Kern County’s public schools and libraries.  In several communities, prominent growers burned copies of the novel in public.  In 1939, Dorothea Lange’s photographs—which became the images that would define the great depression—were published in American Exodus: A Record of Human Erosion. 

Complete relief from the Great Depression came with World War II, which sparked even more dramatic changes for California.  In 1930 the federal government was spending $190 million in California.  By 1945 it was spending $8.5 billion yearly in the state.  The state’s manufacturing output more than tripled during the war.  Of all the new war manufacturing plants developed in the west, 45 percent were located in California.  California’s weather was ideal for troop training.  Thus California became a major staging ground for the war in the Pacific, and home to numerous military posts, airfields and depots.  

Shipbuilding was the most prominent wartime industry, and Henry Kaiser was the leading shipbuilder.  Kaiser cut the time needed to build a freighter from 250 days in 1940 to 25 days in 1944.  One ship was built in a record time of eight days.  During the war, the shipyards at South San Francisco, Vallejo, Richmond, Oakland and San Pedro were operating twenty-four hours a day.  He offered his employees low cost housing and a health care program that became Kaiser Permanente. 

During the war years, 280,000 employees built 60,000 aircraft in California, more than anywhere else in the United States.  Lockheed built 18,000 planes during the war, in contrast to 1937, when it only built 37 planes.   

Along with aircraft, California firms also produced the necessary electrical components, such as radios and sonar.  Hewlett-Packard, for instance, produced signal generators for the Naval Research Laboratory.  It also produced radar-jamming devices.  These developments set the stage for the modern electronics industry. 

This industrial boom, combined with the workforce drain into the armed services—over 700,000 Californians—spurred an even greater wave of migration—dwarfing that of the Gold Rush era, and far exceeding the Dust Bowl.  Over 1.9 million new residents arrived between 1940 and 1945.  Manufacturing employment increased from under 400,000 in 1939 to over 1,000,000 by 1943. 

The Depression and war years left California with an impressive manufacturing base.  Another surge of migration, along with the massive growth of ship and aircraft production spurred by the war, turned the state into an industrial powerhouse.  The state would grow and prosper in the booming postwar economy.  The industrial development of this era also laid the groundwork for California to become a leader in several high technology fields later in the century.

Return to Beginning The Gold Rush Plants the Seed 1848-1860  20th Century Industries    1900-1929 Adversity Beget Prosperity 1925-1945 A Modern Economy is Born    1946-1975       Leading the Way   1976-1999