1920's-1929

UNITED STATES HISTORY

THE 1920’S & 1930’S

 

In many ways the war created changes in American society for America for the first time had been mobilized into a war society.

In order to keep the factories humming Wilson made concession to the labor movement that would have been unthinkable a few years later. He appointed Samuel Gompers the leader of the AFL to sit on the War Industries Board. In return for this recognition Gompers pledged the AFL unions to a no-strike policy.

Wages rose during the war, business boomed and employers made dizzying profits. The AFL became respectable and was

from this time on a sort of aristocracy of labor as far as labor unions went.

The respectable AFL grew from 2.7million members in 1914 to 4.2 million in 1919.

In terms of racial equality in the US it was hoped among Blacks that enlisting in the war effort would give Blacks in the US more social and racial equality about 400,000 enlisted.

It was difficult to ignore the contradiction between Wilson’s ringing declaration that the purpose of fighting WWI was to defend democracy and liberty when the Blacks of the US suffered second class citizenship.

W.E.B. Du Bois the leader of the NAACP pointed out the hypocrisy of Wilson’s stance and Wilson did go so far as to condemn lynching...something that no modern US president had done.

Black soldiers were segregated and only a few Black units saw combat. But even more important than the war was the massive movement of blacks from the rural and segregated south to the industrial centers of the north.

Before 1914 only 10,000 blacks a year migrated from the south to the industrial urban centers of the north. But after 1914, when European immigration was choked off due to the War, 100,000 Blacks a year made the trek to the north to work in the war industries.

From a Mississippi cabin to the slums of Detroit was a big social and cultural change for most Blacks and most of the immigrants were young and they were less inclined to accept the daily humiliations that white America bestowed upon them than were their older relatives.

This was particularly true of men in uniform who felt that they deserved the same respect as white men in uniform.

The result of the building of these tensions was that 1917 was to be a year of racial conflict, and a frightening race riot broke out in industrial St. Luis. Also in Houston whites fought a pitched battle with black servicemen. Although both sides shared the blame for the riot 13 black soldiers were hanged and 14 imprisoned for life.

Du Bois and the NAACP were only partly right in how the war would affect race relations in America. Clearly the war led to the growing affluence of some sectors of the black population, but it did not grant them civil equality.

The women’s suffrage movement on the other hand parlayed the war into a successful attempt in securing equal political rights. During the war working-class women began doing factory work and other jobs that had been closed to them. Women operated trolley cars, drove delivery trucks, cleaned streets, directed traffic, and filled jobs in every industry from aircraft construction to zinc galvanization.

In 1917 the feminist movement was split into radical and conservative wings. When the aggressive Women’s Party led by Alice Paul demonstrated in Washington DC and burned a copy of Wilson’s idealistic 14 points and chained themselves to the gate of the White House.

most American women opposed such radical behavior. many politicians went scurrying for reassurance to the more sedate National America Woman Suffrage Association.

The association was led by Carrie Chapman Catt who argued that their numbers would counterbalance the increasing influence of radicals and foreigners at the polls.

Wilson clearly disliked the idea of women voting but he grudgingly announced his support and on June 4, 1919 a few months after the armistice congress set the 19th amendment to the states and it was ratified on August 18, 1920. Carrie chapman Catt had no doubt about what had put it over. It was the war the former pacifist said, that liberated American women.

Because many breweries were run by German-Americans there was nothing they could do politically to stop the growing wave of prohibition that had developed up till 1914. In 1919 the Volstead Act was passed which prohibited the manufacture, sale, or transportation of liquor.

WWI also led to a relaxation of sexual morality among men in the US service and many of these men brought their new nocturnal habits back to the states.

Wilson also attempted to crush socialism in the US and the most celebrated attack no socialism was the indictment and jailing of Eugene Debs for making speeches against the military conscription. By doing this Wilson made it clear that dissension on the war issue would not be tolerated.

The suppression of the IWW was more violent who were also clearly against he war. The IWW workers were involved in many of the war-related industries and the Wobblies as they were called refused to abide by the no-strike pledge that Samuel Gompers had made.

The IWW was crushed by a combination of vigilante terrorism and government action, In July of 1917 a thousand deputies wearing white armbands in order to identify one another rounded up 1200 strikers in Bisbee, loaded them on a specially chartered train and dumped them into the deserts of New Mexico where they were without food and water for almost 36 hours.

The fatal blow fell in the autumn of 1917 then the Justice Department raided the IWW headquarters and indicted about 200 under the Espionage Act of 1917 .

The government was never able to prove that the IWW was guilty of sedition or espionage, but those who were punished received up to 20 years in a federal prison for due to their membership in an organization which was unpopular with the American government.

Other organizations were formed by the government such as the CPI or Committee on Public Information which carried out a propaganda campaign against socialists, Germans. The CPI censored Hollywood since movies were the most important medium at that time.

The key question to consider was why would a lofty, idealistic liberal such as Wilson allow such civil atrocities to occur under his very nose. And the answer lies in the fact that Wilson was so obsessed with the building of a new world order and international relations and US foreign policy that he lost track of American domestic policy.

The repression of dissent, of freedom of speech in many cases, the unjust and illegal repression of innocent men and women appeared to hasten the defeat of the Kaiser so Wilson abandoned the principles that had guided his life.

In January of 1918 Wilson presented to Congress his blueprint for the new world order. It consisted of the 14 points of which there were five main principles.

first, Germany must be treated fairly and generously in order to avoid festering resentments that could lead to another war. Second the boundaries of all European countries must conform to nationality as defined by language. Another was a pledge to end colonialism. Wilson also called for Germany’s colonies to be disposed of on some basis other than as spoils of war divided among the victors. Third, wilson demanded freedom of the seas for all nations. Fourth Wilson demanded disarmament for two decades of arms races had contributed to this horrible war. Finally, Wilson called for the establishment of a general assembly of nations or a kind of congress of countries to replace the alliances and secret treaties that contributed to the tragedy of WWI.

But the American people were as not as enthusiastic as Wilson in remaking the world system, the American people were wary of idealism.

Wilson also believed that the people of Europe endorsed his proposals when he was cheered throughout Europe.

But he could not have been more mistaken and the peoples o of the allied nations wanted revenge not a just peace against Germany.

In 1919 the big four as they were called paid lip service to Wilson’s ideals, but behind closed doors they put their national interests first. Georges Clemenceau the PM of France commented that God gave us ten commandments that we broke and now Wilson gives us 14, we shall see!

France blamed Germany for the war and sought and gained a key piece of German territory as a buffer zone between Germany and France and also wanted Germany to pay a huge war indemnity.

David Lloyd George of Britain was more cordial to Wilson but Britain was not about to give up its dominance of the high seas.

Vittorio Orlando of Italy was only casually interested in the larger questions for he sought Austrian territory that included several regions in the alps and the Japanese delegate Count Nobukai sought former German colonies in Asia and the Pacific.

Europe clearly rejected Wilson’s call for national self-determination and the just treatment of Germany.

And when the US congress voted down Wilson’s idea of the League of Nations Wilson suffered either a nervous breakdown or a stroke.

Wilson was replaced by Warren Harding as president in 1920.

The 1920’s were known as the roaring 20’s and Harding’s victory showed that the American people wanted normalcy not more intervention by the US. The 1920’s were the golden age of sports such as Babe Ruth’s Yankees, Jack Dempsey and Gene Tunney were famous prize fighters, Bobby Jones of Georgia made golf a spectator sport and Bill Tilden did the same for tennis.

Radio made its debut and the first commercial broadcast told of Harding’s landslide victory. The movie theater was a fixture in every town in America that showed movies that starred Valentino, Charlie Chaplin, and Clara Bow the "it" girl.

The automobile was everywhere, but only a small portion of the American population enjoyed the prosperity of the 20’s.

Harding assumed office in March of 1921 and most American historians consider him the worst president in the history of the US.

He was a decent man and pardoned Debs and other socialists in 1921 for opposing the war something that the vindictive Wilson vowed never to do.

Harding did make some excellent appointments to his cabinet. For secretary of commerce he picked Herbert Hoover who was pro-business and would later encourage the formation of private trade and industrial associations in the US in order to eliminate waste, prevent destructive competition, and develop uniform standards of production.

Charles Evan HUghes became Secretary of State under Harding. In 1921 at the urging of the British Hughes called the Washington Naval Disarmament Conference in order to slow down the number of battleships being built. The formula would be 5-5-3. Due to the conference the US scrapped 30 battleships that were on the drawing boards or under construction.

Unfortunately most of Harding’s appointees were either grossly incompetent or outright crooks. Secretary of Treasury Andrew Mellon pursued tax policies that extravagantly favored the rich and helped bring on the disastrous depression.

The grandest thief of all was Secretary of the Interior Albert Fall who leased the navy’s petroleum reserves at Teapot Dome Wyoming and Elk Hills in California to two freewheeling oilmen Henry Sinclair and Edward Doheny and in return Fall accepted loans of $300,000 from the two. This also spread to Harding for Fall had convinced Harding to transfer control of the reserves from the navy to the Department of the Interior.

In 1919 new race riots broke out in 25 cities across the US. 78 blacks were lynched, 10 were veterans dressed in their uniforms and hundreds of blacks died in the race riots.

In Chicago in July a vicious race war broke out in which 38 people, mostly black were killed and some 500 injured.

This will be a period of renewed black nationalism. In 1916 Marcus Garvey came from Jamaica to the US and he concluded that whites would never accept blacks as equals. He also urged blacks never to accept integration or they would lose touch with their cultural heritage and adopt that of the whites.

Garvey created the Universal Negro Improvement Association that argued that Europe was peopled by a savage race of cannibals while Africa was peopled by a race of cultured black men who were masters in arts ans sciences. He preached Black pride. UNIA would soon come to have almost 4 million members in northern urban areas.

The rise of Marcus Garvey was also paralleled by the growing political power of the Klan in local, state and national government and the by the mid-1920’s Klan membership was over 4.5 million with millions more approving of the Klans activities.

The 1920’s were also the great period of Prohibition. Bootlegging and smuggling in liquor became a great illicit business. In Chicago by 1927 Al Capone grossed $60 million by supplying liquor there and he also made $10 million from prostitution and $25 million from gambling.

As far as Al Capone was concerned he was just a businessman who supplied 10,000 speakeasys with liquor.

With incredible profits to be made from this illicit economy rival gangs engaged in open, bloody warfare for control of the trade. At least 400 gangsters were killed in Chicago alone in the 1920’s.

By the 1920’s the film industry was concentrated in Hollywood and LA was a booming metropolis. But LA was probably one of the most corrupt cities and counties in the US. Drugs, prostitution, and the pornography industry flourished in LA in the 1920’s. To survive LA needed water and it was in the 1920’s that LA essentially stole the water it needed from Owens Valley where the farmers and ranchers of Owens Valley fought a guerilla war against the county of LA with many cases of bombings, sabotage and murder being committed in the name of water for LA.

Harding dies of a heart attack in 1923 and his VP Calvin Coolidge becomes president and he ushers in the NEW ERA when the business of American was business from 1923 to 1929. Many historian regard Coolidge as the epitome of sloth and showmanship. Coolidge was asleep most of his term as president for he slept 14 hours a day except for slow days and holidays when he could nap. When Coolidge died in 1933 the writer Dorothy Parker asked "How could they tell?"

The center piece of the New Era government was the tax policy sponsored by the secretary of Treasury Andrew Mellon. Mellon was one of the three or four richest men in the world who was a banker with close ties to the steel industry.

Mellon believed that economic prosperity depended on the extent to which capitalists reinvested their profits in economic growth Mellon favored the rich by slashing taxes that fell most heavily on them.

He reduced the personal income tax for people who made more than $60,000 a year and by 1929 the Treasury was actually refunding money to the largest corporations in the US. US Steel received a refund of $15 million in 1929.

To compensate for this loss in revenues Mellon cut government expenditures. To Pay for government Mellon raised the tariff on imported products. Second Mellon sponsored a regressive tax bill so that taxes fell harder on the middle and lower classes of the US. Also there were many new excise taxes such as on autos and cigarettes.

Mellon contended that when businessmen reinvested their government-sponsored windfalls they created jobs which led to a better standard of living for all Americans. This was the famous trickle down theory.

From 1923 to 1929 Mellon appeared to be correct in his assessment and people called Mellon the greatest Secretary of the Treasury since Alexander Hamilton.

Just how much damage his policies did to the national economy would not be realized until after 1929.

But as early as 1924 the policy of subordinating federal policy to the short-term interests of big business and banking was helping to make a shambles out of the international economy.

The key problem of the international economy was due to the cost of the war. The war had pushed every major European power to brink of bankruptcy. Britain and France were deeply in debt to the US some $10 billion and since France had been the battlefield for most of the war France demanded that Germany pay france and Britain each $13 million. As the Germans paid Britain and France these countries would pay back the US.

Thus, the flow of international p[ayments was from Germany to France and Britain and then to the US. The problem lay in the fact that Germany was being drained of wealth for an industrial nation to exist. German gold was used to pay the debt and inflation went crazy in Germany. Many economists warned that if the European continued to bleed Germany of its wealth this would serve to promote political extremism and threaten the economies of all the European nations.

There were several ways out of this morass. First the US could import more European products but Mellon’s policies shut the door on that idea. Alternatively the US could forgive France and Britain their war debts and they in turn would cancel their Germany’s reparations. But thanks to Mellon and others in the administration the government was too closely allied with banking interests to do that.

At the same time American bankers were profiting doubly from the European financial mess by loaning money to the Germans to subsidize their reparations payments. And as far as the Republicans were concerned the profiteering was good enough for the Republican administrations of the 1920’s.

The circular flow of payments continued as American bankers loaned money to Germany; Germany paid 2.5 billion in reparations to France and Britain and they, in turn, paid $2.6 billion to the US.

The European economy was becoming sapped of its vitality and the American economy was becoming indirectly damaged by this arrangement for the capital that was to trickle down to ma and pa in middle America or be reinvested in the American economy was going abroad to Germany.

After the Washington Treaty the Harding and Coolidge administrations returned to a policy of isolationism. Still, in 1928 Senator Kellog and the French Foreign Minister created the Kellog-Briand Pact which outlawed war and 62 nations signed this pact.

In terms of Latin America the Harding and Coolidge administrations were anything but isolationist especially when it came to Nicaragua and other Caribbean Basin countries.

Part of the reason for this was the US investments in Latin America climb from $800 million in 1914 to 5.4 billion in 1929.

Industrial and agricultural productivity soared in the 1920’s but the size of the workforce remained the same.’

And while dividends on stocks rose 65% in the years between 1920 and 1929 wages increased only 25%.

Before the 1920’s people only borrowed money to start a business or buy a house for in theory borrowing money should only be invested in something that would be productive, make more money and then you could retire the debt. But this was to change in the 1920’s

For the first time in history American began to borrow money simply to live more pleasantly and they went into debt, not to produce but to consume.

The chief agency of consumer borrowing during the 1920’s was the installment plan with E-Z payments. In the 1920’s 60% of all autos were bought on credit, 70% of the furniture, 80% of heavy electrical appliances and radios and 90% of sewing machines, pianos and washing machines.

This was also the great period of consumer advertisements of buy, buy, buy and advertising became a profession.

Chain stores became common, image advertising was used, anxiety advertising was used and the automobile became the cultural symbol the New Era.

A Major weakness of the Coolidge economic approach was that significant numbers of Americans were left out of the buying spree and people in the rural areas may actually have been getting poorer during this orgy of consumer credit spending.

Since economically deprived groups are rarely politically articulate or listened too in our political system mainstream America was quite at ease. Businessman’s clubs flourished, and Henry Ford was seen as the great American wise man, afterall anyone who made $25,000 net per day must be wise most American figured.

Business was worshipped, as was conspicuous consumption, crass materialism had become the new religion of America.

There was a real estate boom in Florida and thousands of get rich quick schemes and as we have seen land in Florida became more expensive not because of tourism and it being a vacation paradise, but because each speculator sold the land to another speculator. perhaps as much as 40% of all the real estate in certain areas of Florida changed hands over a dozen times in a month. In the relatively small city of Miami there were over 2,000 real estate offices.

Every acre in Florida was skyrocketing many northern investors were willing to buy the property sight unseen and this led to much fraud.

The crash came when a hurricane that hit Miami and the price of land plunged.

In the 1920’s even the Middle Class was peculating on the stock market since stock brokers offered middle class investors the option of purchasing stock on the installment plan and the brokers made it out to look that with the appreciation of the stock there would almost no payments to pay. Money for nothing, you cant go wrong.

Thus, investors with just a few hundred dollars of investment cash could buy shares of RCA Victor by paying out as little as 10% of the quoted price of that companies shares.

And in this way there were able to hold 10 times as many shares and they could buy in reality.. A banker or a broker would loan the speculator the balance of the stocks actual price with the stock themselves serving as collateral.

When the shares were sold, presumably at a high profit the loan was paid off and the shrewd speculator pocketed the difference which was also close to ten times what they would have made had they paid for them in cash. In 1926 1.5 million Americans were playing the market.

In 1927 during a bull market it did work this way for hundreds of thousands of people.

In the summer of 1929 values went crazy; ATT climbed from $209 to 303, GM went from 268 to 391 and then to $452. Overnight people were becoming millionaires.

But like land in Florida the price of stocks did not reflect their true value which was the productive and earning capacity of the corporation. By 1927 prices were rising because of the speculative mania, entire companies put their capital assets into this bull market in order to make a quick killing. At one point Coolidge told people publicly that he thought that stock prices were cheap and this stimulated another great wave of stock buying and even more inflationary stock prices.

Joseph P. Kennedy said in later years that he had sold all of his stocks in the summer of 1929 after the man who shined his shoes told him that he had invested in the stock exchange. Kennedy correctly reasoned that if such a poorly paid person was buying stock there was no one out there left to bid prices higher and he was right.

On September 3, 1929 the average price of shares on the market peaked and then dipped sharply. Then on Black Friday of October 24 a record 13 million shares changed hands and values collapsed. GE dropped 47 points that day as did most major corporations.

On Tuesday, October 29 the wreckage was worse as panicked speculators dumped 16 million shares on the market and when the dust settled the following morning more than $30 billion had been lost.

The eradication of so many dollars shattered Americas trust in the business world and culture of the 1920’s.

The Great Crash of 1929 did not cause the Great Depression of the 1930’s but it exacerbated its impact on average Americans. The Great Depression was a result of the fundamental weakness and contradictions of the world economy.

Middle class families lost their savings, Banks went broke and closed up in the middle of the night and as they closed throughout the country the average and poor American lost their life savings.

With the economic contraction corporations cut back on production, throwing people out of work or cutting wages in half or worse.

People who had mortgages contracted in the high days of 1928 and 1929 were ruined, people lost their homes and farmers their farms.

And foreclosures contributed to further bank failures. As people cut back on consumption, farmers and corporations were forced to produce less and less and even more people were thrown out of work and so it went, down, down, down.

By the end of 1930 the depression had engulfed the nation and the bad times did not really lift until 1940 after the economy had been jolted back into full productivity by the outbreak of war in Europe.

The Great Depression was the most serious economic collapse in American history but it was also the most jarring psychological and moral experience that the American people had ever to face except for the Civil War. At least 50% of all Americans were out of work 90% were underemployed and in some areas close to 85% were completely out of work. There were homeless everywhere. It was estimated that there may have been 200,000 to 300,000 homeless people within one year by 1930. In one bank alone in NY over 400,000 people lost their life savings.

Shantytowns were everywhere. It was so bad that the USSR said there 6,000 skilled jobs for Americans in the machine industries and over 100,000 people applied for these jobs to leave the US. There were over 1.5 million people who would do any job just to eat and this number excluded children who numbered just as many.