Explain America's industrial growth during the World War I era.

While the U.S. economy was in a recession when World War I broke out in Europe in 1914, the economy quickly rebounded while the U.S. provided war materials to Europeans. The period of American neutrality, which lasted until 1917, allowed the U.S. to convert factories to wartime use so that they were already running when the U.S. later joined the war.

The American government bankrolled a lot of the new production. During the period 1914 to 1918, 3 million people were added to the military payroll, while one million people were added to the government payroll. Unemployment declined from 7.9 percent to 1.4 percent (see the National Bureau of Economic Research statistics at the link below), as people were employed in the military and in defense plants. The government also controlled prices and rates of production through agencies such as the War Industries Board. Much of the industrial growth during World War I was fueled by government spending and controlled through government administration.