America in the 1920s

Kevin J. Benoy

End of the Great War• America’s entry into the war had

been late, but was substantial when it came.

• President Wilson had tremendous clout at the Paris Peace Conference.

• While he won more points than he lost in negotiations, his experience left him a jaded and dispirited man

• He refused to accept the reservations of the majority of Republican Senators, led by Henry Cabot Lodge.

• Wilson collapsed after a long speaking tour of the West.

• His illness made him even more intransigent.

• No compromise was possible and ratification of the treaty was blocked.

1920 Presidential Election• Wilson’s ill health made it

impossible to contest the 1920 election.

• Democratic candidate James M. Cox was soundly thrashed by Warren G. Harding and the isolationist Republicans.

• Most Americans preferred to turn inward rather than focus on world affairs.

• Europeans and other foreigners were left to sort out their own affairs.

Domestic Trouble• At home there was enough to

deal with.• Government control of

telephone, telegraph, cable lines and railways ended.

• America wanted to get government out of the business world.

• Labour peace – the legacy of Sam Gompers and the American Federation of Labour’s effort to strengthen the war effort – ended.

• Soldiers returned to an America torn by labour unrest.

Domestic Trouble• While still in power,

Wilson used the lack of a treaty and the technicality that the USA was still officially at war to force a settlement of a 1919-1920 coals strike idling half a million miners.

• The depression of 1919-1920, a world-wide event, could not be solved as easilly.

Warren G. Harding• Harding’s solution was to

do little.• In May, 1920, he said

“America’s present need is not heroics but healing, not nostrums but normalcy; not revolution but restoration...not surgery but serenity.”

• Harding cut government spending to deal with the recession.

Warren G. Harding• Harding presented himself

as a congenial president. He even freed imprisoned socialist leader Eugene Debs from prison, saying “I want him to eat his Christmas dinner with his wife.”

• At the same time, Harding allowed business to operate without much regulation.

• Once the vicious recession ended, business rebounded strongly – partly on the back of depressed wages.

Immigration• In 1921 the government

responded to pressure from labour and businesses to curtail immigration.

• Labour feared low wage competition for jobs.

• Business worried that Bolshevik radicals lurked among newcomers.

• The legislation drastically reduced immigration in a manner that was clearly racist.

• Racial quotas were set. Congressmen made it clear that their intent was to bar the entry of “inferior stock.”

Immigration• Mainstream America was

deeply racist. • Scott Fitzgerald wrote the

following to Edmund Wilson in 1921: “God damn the continent of Europe. It is of merely antiquarian interest. Rome is only a few years behind Tyre and Babylon. The Negroid streak creeps northward to defile the Nordic race. Already the Italians have the souls of blackamoors. Raise the bar of immigration and permit only Scandinavians, Teutons, Anglo-Saxons and Celts to enter.”

Racism• Popular support for the

Ku-Klux Klan was undeniable.

• It counted 4 million members in the East and Midwest.

• Will Hayes, Harding’s campaign manager, was careful to stress that his candidate’s lineage was “the finest pioneer blood, Anglo-Saxon, German, Scotch-Irish and Dutch.”

Conformity• Clearly, Americans preferred

conformity to diversity.• British writer H.G. Wells

lamented in his The Future in America that American politics lacked variety: “All Americans are, from the English point of view, Liberals of one sort of another.” (Liberal here meant the 19th century variety – favouring free trade and small government.)

Prohibition• Intolerance also manifested

in the Volstead Act – which went into effect in 1920.

• Prohibition of alcohol was introduced in the war years in some states.

• Now it would be enforced by Congress’ 18th Amendment.

• It was introduced alongside the 19th Amendment – granting women the vote.

• Both were supposed to improve society, though the former had the opposite effect.

Prohibition• The prohibition era was

marked by hypocrisy from the start.

• Most men seemed to agree with Mencken’s view that it was the work of “ignorant bumpkins of the cow states who resented the fact that they had to swill raw corn liquor while the city slickers got good wine and whisky.”

Prohibition• Enforcement was

impossible as long as politicians would not allocate resources to combat bootlegging – which rivaled automobile production as America’s fastest growing economic sector.

• Corrupt politicians like Chicago’s “Big Bill” Thompson allowed bootleggers like John Torrio and Al Capone to operate openly.

Prohibition

• Harding himself served whisky in the White House, where friends were invited for “food and action,” which meant eating, drinking and playing poker.

• This is hardly what the teetotallers were hoping for.

Prohibition

• Harding dropped dead in San Francisco, following the Teapot Dome Scandal, in which his cronies were implicated.

• His successor, the straight-laced Calvin Coolidge, did little more than his predecessor to combat bootlegging.

“Silent Cal” – President Calvin Coolidge

Prohibition• Bootlegging generated

enormous profits, much of which was reinvested in other criminal activities, like prostitution and gambling.

• This was the era when the Mafia entrenched itself in American society.

• Despite its clear failure, prohibition was not dropped until 1933.

The Roaring 20s

• Despite the dark side of the era there were positives too.

• After the post-war depression, there was a period of unprecedented growth.

• Calvin Coolidge said “the chief business of the American people is business.”

The Roaring 20s• “Silent Cal” was convinced

that government intervention produced undesirable results, so he was committed to leaving business alone.

• He appointed commissioners and regulators who would not interfere.

• He refused to tighten credit or make stock speculation more difficult.

The Roaring 20s• He was willing to increase

tariffs on imported goods, however.

• This hampered foreign efforts to pay debts to America and hampered American exports.

• His policies appear dangerous in light of what followed, but they seemed eminently sensible at the time.

• Economic growth was spectacular.

The Roaring 20s• Per capita income rose by 1/3

in eight years.• A building boom provided 11

million new homes by 1924.• The automobile ceased to be a

luxury item as car production rose from 569,054 in 1914 to 5,621,715 in 1929. Henry Ford revolutionized industry with new production techniques and standardization.

• US car production was 5/6 of total world production – 1 car for every 5 people in America.

• The radio became a domestic staple, creating mass culture along with another new necessity – movie going.

The Roaring 20s

• All this buying was fueled by the new advertising industry, with products like cigarettes touted as “progressive, liberating and healthy.”

The Roaring 20s• Women smoked to show

how liberated they were, but real liberation came from work outside the home.

• Over 10 million women were employed in 1930; 1 million in professions.

• Even housewives lived better than ever because of new labour- saving devices and convenience foods.

• All this was affordable because of their husband’s high wages and cheap credit.

The Roaring 20s• America was booming.• Americans were better

off than ever before – and better educated.

• Literacy was increasing and the Book of the Month Club and Literary Guild put literature into the hands of the masses.

• Jazz clubs proliferated, but so too did orchestras.

Politics• In a booming America, few were

concerned about political change.• Both political parties favoured

business and most Americans were happy with their prosperity. The rest were largely ignored.

• Radicalism was relegated to the political fringes. Only the most marginalized favoured radical parties.

• As a union organizer said in 1929: “the Ford car has done an awful lot of harm to unions here and everywhere else. As long as men have enough money to buy a 2nd hand Ford and tires and gasoline, they’ll be out on the road and paying no attention to union meetings.”

Politics• Calvin Coolidge decided not to fight the 1928 election,

preferring retirement despite massive public support.• In his final speech, he said: “The great wealth created

by our enterprise and industry and saved by our economy, has had the widest distribution among our people, and has gone out in a steady stream to serve the charity and business of the world. The requirements of existence have passed beyond the standard of necessity into the region of luxury. Enlarging production is consumed by an increasing demand at home and an expanding commerce abroad. The country can regard the present with satisfaction and anticipate the future with optimism.

Politics

• Coolidge was wise to quite while he was ahead.

• His successor, Herbert Hoover, would have to meet the next economic down-turn head on.

Warning Signs• Structural weaknesses were

present in the economy well before the crash.

• The agricultural sector was weak throughout the 20s. Southern sharecroppers lived in poverty.

• The USA was a high tariff country throughout the decade – limiting international trade opportunities.

• The result was high prices – with government deliberately inflating the money supply to keep the public buying.

Warning Signs• Buying on credit became a

way of life in the 1920s with present lifestyles bought with borrowed money.

• Banking was propped up by foreign loan repayment. American prosperity relied on foreign stability.

• So long as consumption and business confidence were high, the system worked – but it could not do so for ever.

Warning Signs• For consumption to

remain high at the end of the decade, credit had to be extended.

• The bankers’ solution was terribly flawed: available funds went largely into speculation as investors, rich and poor, bought stocks at grossly inflated prices.

• Stock market investment was a national mania.

Warning Signs• Investing in the stock market was

once the realm of the wealthy.• Now even secretaries and

teachers invested – firm in the belief that the stock market always went up on balance.

• To make matters worse, stocks could be bought on margin, with only a 10% down-payment required. The rest would be redeemed through paper profits on expected earnings.

• Speculation bid up stock values, while easy credit pumped speculation.

• Even drops in consumption in 1928 did not dampen investment

• The result was an economic time bomb.

Warning Signs

• Credit inflation eased at the end of 1928, but the economy declined six months later.

• What followed would be either a short, sharp recession and financial correction, or a full blown depression.

• The stage was set for the economic crisis of 1929.

finis