Two Wars_ Four Armies

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					World War One, the 1920s,
and the Great Depression
1917-1932: America between the
Progressive Era and the New Deal
               Periodization, 1917-1941

• World War One, 1917-1918
   – Enormous initial enthusiasm and “voluntarism” from industry, labor
   – Command economy agencies provide a partial model for New Deal
   – Marks a temporary end of the Progressive “regulatory impulse”

• The “Long Twenties,” 1919-1932
   – “Modern” American culture begins to emerge (mass media, advertising, etc.)
   – False appearance of national prosperity ends with Great Depression
   – Collapse of banking, manufacturing, agricultural sector in 1930-2

• The New Deal Era, 1933-1941
   – Creation of executive agencies to achieve “recovery” from depression
   – The federal government becomes a “regulatory-broker state”
   – After Pearl Harbor “Doctor Win-the-War” succeeds “Doctor New Deal”
 The Basic Consequences of Progressivism
• Americans reach a consensus that national problems
  require national solutions that only the Federal Gov’t
  can implement
• The Federal Gov’t, previously a minimal “distributive”
  state, becomes a “distributive-regulatory” state able
  to regulate competition in the U.S. economy
• The U.S. now has a federal government that can
  expand its capacities further as needed to solve
  future national crises (WWI, Great Depression)
      Progressivism Brought an End to:
• The national consensus on the need to keep the
  federal government as small and weak as possible

• The universal, while male (i.e. voting electorate)
  embrace of intense, lifetime partisan loyalties

• The dominance of Congress over the Executive
  Branch (the Presidency and the new independent
  agencies such as the ICC, FTC, and the “Fed”)
      Domestic Aspects of World War One
• War declared in April 1917, first troops enter combat in April 1918
• War initially popular, with “voluntaristic” enthusiasm for top-down
  command direction of the war economy; conscription, etc.
• Executive agencies created to manage war effort, including
    – War Industries Board: directs production ; guarantees a “standard return”
    – National War Labor Board: bans strikes but grants 8 hour day to workers
    – Food Administration Board : so efficient rationing is unnecessary
• Widespread persecution of pacifists, socialists, and labor radicals
  under the Espionage (1917) and Sedition (1918) Acts
• War effort financed through progressive income taxes (1/3), war
  bonds and inflation of the money supply (2/3)
• The 19th Amendment (“Womens’ Suffrage”) ratified in 1919
   Basic Consequences of World War One
• Marks the emergence of the U.S. as a
   – Military and diplomatic “great power”
   – A net creditor and guarantor of the world’s industrial economy
     through the Dawes Act and its successors
• Other temporary effects
   – An expanded federal government contracts with peace
   – A popular reaction in the 1920s-30s against the human costs of the
     war and “war profiteers”
• Other long-term effects
   – Global wastage of productive capital leads to Great Depression
   – The wartime mobilization boards will serve as a partial model for
     the executive agencies of the New Deal
  Developments in the U.S. Economy during the 1920s
         (contributing factors to the recession of 1928-9)

• Prosperity after 1918 rests one sector of the economy: the highly
  productive assembly line manufacturing oligopolies
• The Progressive regulatory impulse fades after the war
• Wartime overexpansion and overproduction leads to a brief but
  sharp recession in 1919-1922, with high veteran unemployment
• Rural agricultural economies / states remain weak after 1922 even
  as industrial sector in urbanized states becomes more profitable
• Increased inequality of wealth reduces net “spending power”
• Consumer “store credit” gives false impression of individual and
  family prosperity while increasing vulnerability through debt
• The middle class embraces speculation in overvalued stocks and
  real estate “bought on margin”
           Agriculture and Organized Labor:
             Big Losers during the 1920s
• The “extractive industries:” agriculture / mining / lumbering never
  recover from the recession of 1919-22 and remain weak
• Farmers ask for “price supports;” Republican-dominated Congress
  blocks legislation (most successful farmers are Republicans)
• Farmers’ share of national income drops from 16% to 9% between
  1919-1929; 20% of farm laborers are unemployed in 1928
• Unions deprived of Federal Government protection when war ends
  unexpectedly early; employer organizations counterattack
• Federal courts continue to support employers over unions
• Wave of strikes during 1919 decisively defeated; unions broken
• Union membership declines from 5 to 3 million between 1920-1929
 1920s Social Issues: Modernity and its Discontents

• Modernity: a set of anti-traditional beliefs embracing the continual
  transformation of social and economic relationships
• 1920 census: U.S. population exceeds 50% urban for first time
• Urban areas rapidly secularize during the 1920s (definition: a
  turning away from religious authorities for personal guidance)
• Rural areas react to secularization with religious fundamentalism:
  rejection of Darwinian evolution and the liberal “social gospel”
• Sex: the “Flapper” phenomenon: faux feminism; autos as satanic
• Popular nativist opposition to continued European immigration
  leads to massive reductions of migration quotas after 1924
• 18th Amendment to the Constitution prohibits sale of alcohol in the
  U.S. after 20 January 1920
               The Emergence of
     Media-Based Popular Culture in the 1920s

• Popular culture becomes increasingly homogeneous; this means that
• Americans are beginning to share the same cultural experiences at the
  same time via the radio and movies
• All the genres of TV’s “golden age” are developed by radio; situation
  comedies, mysteries, westerns, variety shows
• Rural isolation eased by automobiles, paved roads, radio
• In 1922, 22 magazines have a circulation of over one million
• Movies create the “star” and “notoriety:” national status comes with
  being known, not by achieving anything inherently “respectable”
• African-Americans become culturally influential via jazz
• Baseball becomes the “national *spectator+ sport”
• Prizefighting , Golf at the low and high ends of the sports spectrum
                 The Acceleration of
     Advertising and Consumerism in the 1920s

• Advertising begins to focus on the “creation of new needs”
• Advertising and store credit (buying “on time”) convert “luxuries” to
• “Labor saving devises” fail to reduce the workload of wives, as
  standards for cleanliness are raised by “women’s magazines”
• All the above factors increase consumerism:
• The tendency of individuals to derive their self- respect from the
  products they are able to buy and display to others
• The Model T Ford becomes the external confirmation of middle-
  class status
    – Production time for individual vehicle drops from 13 hours to 90 minutes
    – Purchase price drops from $1000 to $295 between 1907 and 1928
       Primary Causes of the Great Depression

• The wastage of human and financial capital during World War One
• The post-1918 dependence of European nations on continued
  investment capital from the U.S. (particularly Germany)
• The U.S. economy’s vulnerability to a collapse of world demand for
  manufactured goods / interruption of cheap raw material imports
• The “flawed expansion” of the U.S. economy after 1922 (see slide 9)
  means that an eventual “cyclical” recession will be quite severe
• By 1928 Americans had run out of credit and savings, and could not
  “spend their way” out of a long recession
• Even after the regulations of the Progressive Era, the federal
  government had no mechanisms to slow a runaway recession
                    The “Great Crash” of
             “Black Thursday,” 29 October 1929
•   More an indicator of the Great Depression that a cause
•   16 million shares sold
•   Value of U.S. stocks falls from 87 to 55 million
•   Partial recovery yields to slow decline through to 1932
•   The “Ripple effect” throughout the economy:
     – Margin buyers of stocks unable to repay loans to banks, and many lose
        their homes which they had used as collateral
     – Smaller banks experience customer “runs” on deposits, and are unable to
        repay their loans to larger banks
     – When banks fail, individual customers lose their deposits, because
     – There was no form of deposit insurance for anyone in the economy
     – This revealed the inter-connectedness of the U.S. banking industry, and its
        lack of Federal regulation, thus its fragility
         Political Decisions that Aggravated the
                Depression once it Began
• Until sometime in 1932 President Hoover believed the Depression
  was noting more than a severe “business cycle recession”
• Other than marginally increased public works spending, Hoover did
  not believe the federal gov’t should or could end the “recession”
• The Republican dominated Congress raised tariff barriers (the
  Smoot-Hawley Bill), which caused European retaliation
• As manufacturing exports were critical to the U.S. economy, the
  “tariff wars” caused accelerated plant closures and layoffs
• The Federal Reserve raised interest rates to defend the value of the
  dollar, but this had the effect of
    – Choking off commercial credit to U.S. businesses
    – Cutting off loans to foreign countries to encourage purchases in the U.S.
            The Downward Spiral, 1929-1932

• The U.S. “GNP” contracts from $103 billion to $58 billion
• Retail consumption down 18%; retail prices down 20%
• Construction down 78%; private investment down 88%
• 100,000 businesses fail; 9,000 banks close
• Marriage rate drops; age at marriage rises; divorce rate drops
• Birth rate drops to lowest in U.S. history: 19/1000 living Americans
• The “Dust Bowl” hits OK, AR, TX, KS, NM, CO in 1930-1; 350,000
  migrate to Southern California and Chicago using U.S. Route 66
• Incidents of Social Violence in West Virginia, Michigan, Washington DC
  (the “Bonus March”), and the Great Plains
• For the first time in U.S. history inter-generational downward mobility
  seems possible for middle class Americans who “play by the rules”
               The Situation in March 1933

• Between 25% and 33% of salaried and wage workers in the U.S. are
  unemployed, with the highest rates in NE and MW industrial cities
• The annual income of employed Americans has fallen by 33%
• 1000 homeowners a day are suffering foreclosure
• Farm foreclosures and bank failures in rural states spike
• State governors begin to declare “bank holidays” to prevent “runs”
• Shantytowns (“Hoovervilles”) appear throughout the U.S.
• “Rent strikes” in large cities; policemen refuse to make arrests
• State governors uncertain of reliability of National Guard troops
• Private / church based charities have exhausted their welfare funds
• The April 1933 Le Mars, Iowa incident
La Mars, Iowa, April 1933