History America 1919-41

Isolationism - America regarded itself as the 'New World' and did not want anything to do with the 'Old World', which they saw as being corrupt, old-fashioned and full of dangerous ideas like Communism.   When Wilson went to the Versailles Conference, he was the first US President EVER to visit Europe.   Most Americans liked the Monroe Doctrine of 1823 that America should stay out of Europe’s affairs and Europe should stay out of America's.

American soldiers - 100,000 soldiers had died in the First World War, and many Americans couldn't see why American soldiers should die keeping peace elsewhere in the world.

·       America was a democracy - Wilson could not sign the peace himself, but had to ask Congress to agree to the Treaty of Versailles he had negotiated.

·       The Treaty of Versailles was finally rejected by the Senate in March 1920.

So why then did the Treaty fail - simply, say modern historians, because of Wilson stupidity.

·       He WOULD not compromise.

·       He would not accept ANY changes

·       And in the end - rather than accept the 14 Reservations - Wilson's 23 supporters              voted  AGAINST the Treaty and destroyed it. 

Wilson believed in low tariffs.   He had reduced tariffs in 1913, and refused to increase them.  Demand was growing, however, for higher tariffs (Source B).   As soon as he became President, Warren Harding passed an Emergency Tariff (May 1921) to increase duties on food imports, and in 1922 Congress passed the Fordney-McCumber Tariff.   This had two principles:

'Scientific tariff': this linked tariffs to the wages in the country of export.   If wages in, say Italy, were very low, then Italian goods were given a proportionately higher tariff.   This negated the effect of lower wages in competitor countries.

'American Selling Price': this linked tariffs to the price of American goods, not to the cost of production.   A German company might be able to produce, say, a certain chemical for $60, but if the selling price in America was $80, and the US tariff was 50%, the tariff would be $40.   This meant that foreign imports were ALWAYS more expensive than American-produced goods, however cheaply they had been made.

ALL Americans were immigrant families, of course, but until 1890 most immigrants were 'WASPs' (white Anglo-Saxon Protestants) from the wealthier countries of Europe such as Britain, Germany and Sweden.   After 1890, more immigrants started arriving from Eastern Europe and Asia. Demand was growing, however in-

1917:   Immigration Law - This required all immigrants to prove they could read English, banned all immigration from Asia, and charged an immigration fee of $8.

1921:   Emergency Quota Act - This stated that the number of immigrants from 'the eastern hemisphere' could not be more than 3% of the number already in America in 1910.  It set the maximum number of immigrants in any year at 357,000.

1924: Reed-Johnson Act - Maximum number of immigrants in any year at 154,000.   Quota from eastern hemisphere reduced to 2% of those already in America in 1890; the South and the East of Europe were thus only allowed to send 20,000 immigrants per year, and non-Europeans only 4,000.

At the same time measures were taken to 'Americanize' immigrants.

Between 1922 and 1929 the annual Gross National Product of the USA increased by 40%.   The average income per head increased by 27%. 

·       Innovation in production methods, especially in the motor industry (by 1925 Ford were producing a car every 10 seconds); this pushed down prices and made goods more accessible for ordinary people (the ‘Tin Lizzie’ cost $850 in 1910, only $295 in 1920).

·       Upsurge in car ownership – esp. the Ford Model T; 15 million had been produced by 1927, and the number of Americans owning cars rose from 8 to 23 million.

·       Communications revolution – number of telephone doubled/ number of radios increased from 60,000 to 10 million.

·       Entertainment industry – Hollywood, Charlie Chaplin, the ‘talkies’ and cinemas, jazz clubs and speakeasies.

·       Stock market – Wall Street boomed (a 'bull' market) with many people buying shares to make a profit.   Many new businesses were 'floated' on the stock market.

Not everyone shared in the prosperity, however, and there were glaring weaknesses in the American economy in the 1920s.   

However, there is plenty of evidence that all was not well with the American economy in the 1920s, and in 1928 the 'boom' began to slow down.

·       Stock Exchange – the biggest problem; Wall Street was 'over-heating.   So great was over-confidence that people were even buying shares in imaginary companies.   Many were buying shares ‘at the margin’ (a person could get a loan of up to 90% to buy shares) expecting to make enough profit to repay the loan when the shares were resold - brokers’ loans almost trebled 1926-9.  All this threatened disaster if share prices ever stopped rising.

Argument 1 - VERY significant:

       Work:  Many women had taken over jobs traditionally reserved for men (such as manufacturing), and 1920-29 the number of working women increased by 25%; many went to be teachers and secretaries.

·       Vote:  In 1920 the 19th Amendment gave women the vote.   The former suffrage campaigners formed themselves into the Woman's Joint Congressional Committee, which lobbied successfully for a Maternity and Infancy Protection Act (1921), equal nationality rights for married women (1922), and the Child Labour Amendment (1925).

·       Flappers:  dumped the old restrictive fashions, corsets etc. in favour of short skirts, short hair, and the flat-chested 'garconne' look.   Many of them wore men's clothing.   They smoked, drank, used make-up, played tennis, and danced wildly in jazz clubs.   Some were openly lesbian, others were sexually active.  

·       Hostility to immigrants:  and the Red Scare'

·       American Government:  refused to pass laws banning lynchings or giving Black Americans the vote.

·       Ku Klux Klan:  an organisation to maintain WASPs supremacy, which had 5 million members by 1925.   Many supporters were poor whites, who did not want Black Americans to be their equals/fear they would take their jobs, but many were racism wealthy white Americans.   They wore white sheets and hoods, and marched with burning crosses.   They spoke with each other in a secret language which they called 'Klonversations'.   They attacked, tortured and killed Black Americans, but also Jews and Catholics and 'immoral' people such as alcoholics.

·       Lynchings:  mobs of white people often hanged ('lynched') Blacks Americans whom they suspected of a crime (usually the police turned a blind eye).  

·       Drinking continued:  impossible to enforce (not enough police - only 4000 agents, many of whom were sacked for taking bribes).

·       Available:  the liquor trade just 'went underground'.   speakeasies (illegal bars), moonshine (illegally-made alcohol), bootlegging (smuggling alcohol to sell).   It is sometimes asserted that there were more speakeasies than there had been saloons (not true, but there were 200,000 speakeasies in 1933).

·       Made criminals of ordinary people

·       Gangsterism flourished running the illegal trade: It became hugely profitable, and led to a growth of violence, protection rackets etc. associated with the illegal trade.   The general flouting brought the rule of law in general into disrepute as police 'turned a blind eye.   Corruption grew.

·       End: in 1933 the 21st Amendment abolished Prohibition (= 'proved' that it failed).

·       Organised crime stepped in to take over from the breweries and spirits manufacturers:

·       They ran the speakeasies, and bootlegging.

·       They also ran protection rackets, prostitution and drug-running.

·       They bribed trade union leaders, police, lawyers, judges and even Senators.

·       The most famous gangster was Al Capone, who earned $100,000 a year from beer sales alone, ran a private army of more than 700 mobsters, and is thought to have murdered more than 200 opponents.

·       They fought with each other for control of their 'territory' - the most famous incident was the

·       St Valentine's Day Massacre in 1929, when 'torpedoes' from Capone's gang shot dead 7 members of Bugs Moran's gang.

 Wall Street over-heated:

·       Between 1924-29 the value of shares rose 5 times.  

·       Share prices rose way beyond what the firms they were shares were worth; only speculation kept up the over-inflated prices.

Speculation:

·       Many people became speculators - 600,000 by 1929.

·       Many people were buying shares 'on the margin' (borrowing 90% of the share value to buy the shares, hoping to pay back the loan with the profit they made on the sale).   American speculators borrowed $9bn for speculating in 1929.

·       Some firms which were not sound investments floated shares (e.g. one was set up to develop a South American mine which did not exist), but people still bought them, because they expected to make a profit in the bull market.

Corruption:·

The Senate Committee set up to investigate the Great Crash found that there was a corruption and 'insider-trading' between the banks and the brokers.

Panic:

·       There were losses of confidence in March and September (when the economist Roger Babson forecast a crash), but the banks papered over the cracks by mass-buying of shares to help the market. On Thursday 24th October 1929, nearly 13 million shares were sold in a panic, and prices crashed.  

·       The banks tried to shore up the market again, but on Monday there were heavy selling; the banks realised it was hopeless and stopped buying shares.

·       Speculators panicked at the thought of being stuck with huge loans and worthless shares.   On Tuesday 29th October the market slumped again, when 16 million shares were sold.

Great Crash

·       You will often hear it said that the Great Crash didn’t cause the Great Depression.   There were only 1.5 million shareholders, and only 600,000 speculators – so why should their misfortune cause a Depression in a country of 123 million?

 Tariffs

·       In 1930, fearing for the US economy, the government passed the Smoot-Hawley Tariff – a new, even heavier tariff law.  

·       Sixty countries passed retaliatory tariffs in response and world trade slumped.   This damaged US industry, especially agriculture.

Misdistribution of wealth

·       Nowadays, historians think that a major cause of the depression was the inequality of wealth in America.   There were some extremely rich people, and huge numbers of extremely poor people – the top 5% owned a third of the wealth, while 40 per cent of the population were living in poverty.  

·       It wasn’t that there was too little money, but it wasn’t in the hands of the people who would spend it.   Consequently, Americans produced too much and bought too little, and prices plummeted. 

Cycle of Depression

·       As more banks and companies failed, and people were put out of work, they had less to spend, and so more companies went bankrupt and made their workers unemployed etc.   Once the Depression had taken hold, it simply spiralled down worse and worse.

 ·       In 1931, 238 people were admitted to hospital suffering from starvation.  

·       International trade slumped from $10bn in 1929 to only $3 bn in 1932.

·       5000 banks went bankrupt 1929-1932, including the Bank of America.

·       In 1932, 20,000 companies went out of business.

-        Industrial production had fallen by 40%

-        Prices had fallen 50%

-        Wages had fallen by 60%

-        Share prices had fallen by 80%

-        5000 more banks went bankrupt.

-        25% of Americans were unemployed.

Hobos and Hoovervilles: · Homeless people went to live in shanty towns called ‘Hoovervilles’ (as an insult to President Hoover). ‘Hobos’ travelled round looking for jobs, usually riding illegally on freight trucks. Hatred of Hoover: · The government did not know how to stop the Depression, and Hoover believed in ‘rugged individualism’, and stuck to the idea that it was not the government’s job to interfere with business.

 In the November 1932 election, therefore, Roosevelt promised ‘a new deal for the American people’ if they elected him.   The result was a landslide – Roosevelt won 42 of the 48 states, the biggest election victory of all time.

In his Fourth Fireside Chat (June 1934), Roosevelt said that his ‘New Deal’ had three related steps:

·       Relief (helping the poor and unemployed to survive)

·       Recovery (getting the economy going again) and

·       Reform (changing things so a depression could never happen like that again).

The First New Deal

Roosevelt persuaded Congress to give him emergency powers from 9 March to 16 June 1933 (the 'Hundred Days').   Although many of Roosevelt's ideas were not new (some just copied Hoover's), 1933 - especially the 100 days - saw a burst of legislation to tackle the Depression like never before.

 Confidence:

Roosevelt undertook a series of measures to keep the American people on his side.

Abolished Prohibition

-   (It also increased the government’s revenues.)

Fireside Chats

-   FDR made sure that everyone who sent him a letter got a reply (he got up to 8,000 letters a day), and that everyone who telephoned the White House was never cut off.  

Bank holiday

-   This restored confidence in the banks, and people deposited their money there again.  

Reform - Roosevelt's new laws about social security/ minimum wage/ labour relations and trade unions survived and protected ordinary people’s rights and conditions.   Democracy survived in America (unlike Italy and Germany)

  Weaknesses and Failings

 Did not end the Depression -  Depression did not end until the Second World War got production going again.

Damaged Blacks and immigrants - In fact, many were laid off as a direct result of the New Deal’s attempts to give workers rights.

 ·    Businessmen hated the New Deal because it interfered with their businesses and supported workers’ rights.   Rich people accused Roosevelt of betraying his class.   Henry Ford hired thugs to attack his trade union workers.