Economic Effects of the Vietnam War

The decade leading up to the conflict in Vietnam was a prosperous one for the United States from an economic standpoint. Aside from two minor recessions, the economy grew steadily throughout the 50’s; Unemployment was low, with a high of 6.8% in 1958 and a low of 2.9% in 1953; GDP grew steadily from $300 billion to $520 billion; and overall growth of the economy totaled 37%. Because of this economic success, much of the population was accustomed to economic comfort and stability going into the Vietnam War.

Upon entering the war, President Lyndon B. Johnson and the United States government put in place a series of wartime government policies. These policies were not much different than the policies put in place during World War Two, aside from being decidedly less drastic. However, when implementing these policies, Johnson elected to undersell their importance, and the importance of civilians doing their part to help the war effort, and thus much of the population did not understand the reasons behind the new economic difficulties they were experiencing. This contributed to an increasing dissatisfaction with Johnson and the current government.

There are many differences between the average Vietnam soldier and average soldiers in the other wars we have studied. Most of these differences stem from the fact that the average Vietnam soldier was about 8 years younger than the average WWII soldier. Because of their youth, many Vietnam soldiers had no families of their own. Also stemming from their youth was their lack of financial¬†responsibilities. Many Vietnam soldiers had not yet moved out of their parents houses, much less settled down in their own house with a wife and children. These men knew little about how to handle their finances and were irresponsible with their paychecks. Pay for a Private First Class was about $300 a month, including oversees pay, combat zone pay, and base salary. This $300 was tax free, as is most pay for soldiers stationed in a combat zone. Soldier’s savings also gained about 10% interest per year while they were in Vietnam. Because all necessities and most commodities were provided to soldiers by the military, a fiscally smart serviceman could leave Vietnam barely having spent any money, and about $25,000 richer. Unfortunately, most likely because of their youth and inexperience, most soldiers managed to spend almost all the money they made while in Vietnam, and returned home with almost nothing to show for their service.


For soldier’s with families, the government provided Dependency and Indemnity Compensation should the soldier be killed while serving in Vietnam. DIC consisted of between $167 and $426 a month, depending on the soldiers rank. While these seemed like a relatively simple and straightforward policy in theory, it was not very efficient in practice. Many times it was difficult for a widow to prove she qualified for DIC, and if she remarried she would no longer qualify. Because of the flaws in the DIC system, many families of soldiers who gave their lives in Vietnam ended up in poverty.

Overall, the United States economy was not significantly effected by the war in Vietnam. While the economy did slump slightly during the war, as with most wars, it was not to the same extent as many other wars.



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