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    United States History
    War, Prosperity and Depression united_states_history_war_prosperity_and_depression.html
    Source: United States Information Agency


        "THE CHIEF BUSINESS OF THE AMERICAN PEOPLE IS BUSINESS." President Calvin Coolidge, 1925




        To the American public of 1914, the outbreak of war in Europe came as a shock. At first the encounter seemed remote, but its economic and political effects were swift and deep. By 1915 U.S. industry, which had been mildly depressed, was prospering again with munitions orders from the Western Allies. Both sides used propaganda to arouse the public passions of Americans -- a third of whom were foreign-born or had one or two foreign-born parents. Moreover, Britain and Germany both acted against U.S. shipping on the high seas, bringing sharp protests from President Woodrow Wilson. But the disputes between the United States and Germany grew increasingly ominous.


        In February 1915, German military leaders announced that they would attack all merchant shipping on the waters around the British Isles. President Wilson warned that the United States would not forsake its traditional right, as a neutral, to trade on the high seas -- a view of neutral rights not shared by Germany or Great Britain. Wilson declared that the nation would hold Germany to "strict accountability" for the loss of American vessels or lives. Soon afterward, in the spring of 1915, when the British liner Lusitania was sunk with nearly 1,200 people aboard, 128 of them Americans, indignation reached a fever pitch.


        Anxious to avoid a possible declaration of war by the United States, Germany issued orders to its submarine commanders to give warning to ocean-going vessels -- even if they flew the enemy flag -- before firing on them. But on August 19, these orders were ignored and the British steamer Arabic was sunk without warning. In March 1916, the Germans torpedoed the French ship Sussex, injuring several Americans. President Wilson issued an ultimatum stating that unless Germany abandoned its present methods of submarine warfare, the United States would sever relations. Germany agreed.


        As a result, Wilson was able to win reelection that year, partly on the strength of his party's slogan: "He kept us out of war." As late as January 1917, in a speech before the Senate, Wilson called for a "peace without victory," which, he said, was the only kind of peace that could last.




        On January 22, 1917, the German government gave notice that unrestricted submarine warfare would be resumed. When five U.S. vessels had been sunk by April, Wilson asked Congress for a declaration of war. Immediately, the government set about mobilizing its military resources, industry, labor and agriculture. By October 1918, on the eve of Allied victory, a U.S. army of over 1,750,000 soldiers had been deployed in France.


        The U.S. Navy was crucial in helping the British break the submarine blockade, and in the summer of 1918, during a long-awaited German offensive, fresh American troops, under the command of General John J. Pershing, played a decisive role on land. In November, for example, American forces took an important part in the vast Meuse-Argonne offensive, which cracked Germany's vaunted Hindenburg Line.


        President Wilson contributed greatly to an early end to the war by defining the war aims of the Allies, and by insisting that the struggle was being waged not against the German people but against their autocratic government. His famous Fourteen Points, submitted to the Senate in January 1918 as the basis for a just peace, called for abandonment of secret international agreements, a guarantee of freedom of the seas, the removal of tariff barriers between nations, reductions in national armaments, and an adjustment of colonial claims with due regard to the interests of the inhabitants affected. Other points sought to ensure self-rule and unhampered economic development for European nationalities. The Fourteenth Point constituted the keystone of Wilson's arch of peace -- the formation of an association of nations to afford "mutual guarantees of political independence and territorial integrity to great and small states alike."


        By the summer of 1918, when Germany's armies were being beaten back, the German government appealed to Wilson to negotiate on the basis of the Fourteen Points. The president conferred with the Allies, who acceded to the German proposal. An armistice was concluded on November 11.




        It was Wilson's hope that the final treaty would have the character of a negotiated peace, but he feared that the passions aroused by the war would cause the Allies to make severe demands. In this he was right. The concept of self-determination proved impossible to implement. Persuaded that his greatest hope for peace, the League of Nations, would never be realized unless he made concessions to the Allies, Wilson compromised on the issues of self-determination, open diplomacy and other specific points during the peace negotiations in Paris. However, he resisted the demands of the French premier, Georges Clemenceau, to detach the entire Rhineland from Germany, prevented France from annexing the Saar Basin, and frustrated a proposal to charge Germany with the whole cost of the war -- although the Versailles Peace Treaty did levy a heavy burden of reparations upon Germany.


        In the end, there was little left of Wilson's proposals for a generous and lasting peace but the League itself -- and the president had to endure the final irony of seeing his own country spurn League membership. Partly due to his own poor judgment at the time, Wilson made the political mistake of failing to take a leading member of the opposition Republican Party to Paris on his Peace Commission. When he returned to appeal for American adherence to the League, he refused to make even the moderate concessions necessary to win ratification from a predominately Republican Senate.


        Having lost in Washington, Wilson carried his case to the people on a tour throughout the country. On September 25, 1919, physically ravaged by the rigors of peacemaking and the pressures of the wartime presidency, he suffered a crippling stroke at Pueblo, Colorado, from which he never fully recovered. In March 1920, the Senate rejected both the Versailles Treaty and the League Covenant. As a result, the League of Nations, without the presence of the United States or Russia, remained a weak organization.


        Wilson's belief in a moral and legal basis for war and peace had inspired the nation. However, when events didn't live up to this optimistic standard, Wilsonian idealism gave way to disillusion, and the nation withdrew into isolationism.




        The transition from war to peace was, for many, tumultuous. A massive influenza epidemic, which had spread rapidly throughout Europe in 1917, broke out in the United States in the spring of 1918. Before it vanished a year later, as mysteriously as it had begun, it claimed the lives of more than half-a-million Americans.


        The immediate economic boom right after the war led to high expectations that were quickly sunk once the postwar economy returned to normal. In turn, labor became dissatisfied with the rising costs of living, long hours and unsympathetic management. In 1919 alone, over 4 million workers went on strike. During that summer, moreover, race riots broke out in both the North and South.


        Yet the event that triggered the greatest national outcry and concern had occurred two years earlier outside the United States: the Bolshevik Revolution of 1917 in Russia. With morale low, Americans became fearful that, just as a small faction had seized power in Russia, so could a similar group take over the United States. This fear crystallized when, in April 1919, the postal service intercepted nearly 40 bombs addressed to prominent citizens.


        Attorney General A. Mitchell Palmer set up a new office of general intelligence within the Justice Department, and appointed J. Edgar Hoover as its head. Hoover began collecting files on known radicals, and raids on various organizations led to deportations of scores of people. Although Palmer's dire warnings continued to fuel what became known as the "Red Scare," the threats never materialized; and by the summer of 1920, the American people realized that the United States was safe from anarchy.


        THE BOOMING 1920s


        In the presidential election of 1920, the overwhelming victory of the Republican nominee, Warren G. Harding, was final evidence of the general repudiation of Wilson's internationalism and idealism. As journalist William Allen White explained, the American people were "tired of issues, sick at heart of ideals, and weary of being noble."


        The 1920 election was also the first in which women throughout the nation voted for a presidential candidate. In 1919 Congress had submitted to the states the 19th Amendment, which was ratified in time to permit women to vote the following year.


        In keeping with the prevailing prosperity (at least in the urban areas of the country), governmental policy during the 1920s was eminently conservative. It was based upon the belief that if government did what it could to foster private business, prosperity would eventually encompass most of the rest of the population.


        Accordingly, Republican policies were intended to create the most favorable conditions for U.S. industry. The tariff acts of 1922 and 1930 brought tariff barriers to new heights, guaranteeing U.S. manufacturers in one field after another a monopoly of the domestic market. The second of these tariffs, the Smoot-Hawley Act of 1930, embodied rates so high that more than 1,000 economists petitioned President Herbert Hoover to veto it: subsequent events bore out their predictions of costly retaliation by other nations. At the same time, the federal government started a program of tax cuts, reflecting Treasury Secretary Andrew Mellon's belief that high income taxes prevented the rich from investing in new industrial enterprises. Congress, in a series of laws passed between 1921 and 1929, responded favorably to his proposals that wartime taxes on income, excess profit taxes and corporation taxes be repealed outright or drastically reduced.


        "The chief business of the American people is business," declared Calvin Coolidge, the dour, Vermont-born vice president who succeeded to the presidency in 1923 after Harding's death, and was elected in his own right in 1924. Coolidge hewed to the conservative economic policies of the Republican Party, but he was a much abler administrator than the hapless Harding, whose administration was mired in charges of corruption in the months before his death.


        Throughout the 1920s, private business received substantial encouragement, including construction loans, profitable mail-carrying contracts and other indirect subsidies. The Transportation Act of 1920, for example, had already restored to private management the nation's railways, which had been under government control during the war. The Merchant Marine, which had been owned and largely operated by the government from 1917 to 1920, was sold to private operators.


        Republican policies in agriculture, however, were meeting mounting criticism, for farmers shared least in the prosperity of the 1920s. The period from 1900 to 1920 had been one of general farm prosperity and rising farm prices, with the unprecedented wartime demand for U.S. farm products providing a strong stimulus to production. Farmers had opened up poor lands long allowed to remain idle or never before cultivated. As the value of U.S. farms increased, farmers began to buy goods and machinery that they had never before been able to afford. But by the end of 1920, with the abrupt end of wartime demand, the commercial agriculture of staple crops such as wheat and corn fell into sharp decline. Many factors accounted for the depression in American agriculture, but foremost was the loss of foreign markets. U.S. farmers could not easily sell in areas where the United States was not buying goods because of its own import tariff. The doors of the world market were slowly swinging shut. When the general depression struck in the 1930s, it merely shattered agriculture's already fragile state.




        Restriction of foreign immigration during the 1920s marked a significant change in U.S. policy. Immigration had soared in the late 19th century and peaked in the early 20th century. Between 1900 and 1915, for example, more than 13 million people came to the United States, with the preponderance from Southern and Eastern Europe. Many of these people were Jewish or Catholic, a fact that alarmed many older Americans who were predominately Anglo-Saxon and Protestant. Some resented the newcomers because they competed for low-wage jobs, others because the new immigrants maintained Old World customs, often lived in urban ethnic enclaves, and seemed to resist assimilation into the larger American culture.


        As a result of this immigrant surge after World War I, nativist appeals intensified. A reorganized Ku Klux Klan emerged calling for "100-percent Americanism." Unlike the Klan of Reconstruction, the new Klan restricted its membership to native-born white Protestants, and campaigned against Catholics, Jews and immigrants as well as African Americans. By redefining its enemies, the Klan broadened its appeal to parts of the North and Midwest, and for a time, its membership swelled.


        Anti-immigration sentiment was codified in a series of measures, culminating in the Immigration Quota Law of 1924 and a 1929 act. These laws limited the annual number of immigrants to 150,000, to be distributed among peoples of various nationalities in proportion to the number of their compatriots already in the United States in 1920. One result of these restrictions was to reduce the appeal of nativist organizations; the Great Depression of the 1930s also caused a sharp drop in immigration.




        Some Americans expressed their discontent with the character of modern life in the 1920s by focusing on family and religion, as an increasingly urban, secular society came into conflict with older rural traditions. Fundamentalist preachers such as Billy Sunday, for example, a professional baseball player turned evangelist, provided an outlet for many who yearned for a return to a simpler past.


        Perhaps the most dramatic demonstration of this yearning was the fundamentalist crusade which pitted biblical interpretation against the Darwinian science of biological evolution. In the 1920s, bills to prohibit the teaching of evolution began appearing in Midwestern and Southern state legislatures. Leading this crusade, improbably, was the aging William Jennings Bryan, who skillfully reconciled his anti-evolutionary activism with his earlier radical economic proposals, saying that evolution "by denying the need or possibility of spiritual regeneration, discourages all reforms."


        The issue came to a climax in 1925 in Tennessee, when the American Civil Liberties Union challenged the nations's first anti-evolution law. A young high school teacher, John Scopes, went on trial for teaching evolution in a biology class. In a case that drew intense publicity, Bryan, representing the state, was subjected to a withering examination by defense attorney Clarence Darrow. Scopes was convicted but released on a technicality, and Bryan died a few days after the trial ended.


        Another example of a fundamental clash of cultures -- but one with far greater national consequences -- was Prohibition. In 1919, after almost a century of agitation, the 18th Amendment to the Constitution was enacted, prohibiting the manufacture, sale or transportation of alcoholic beverages. Prohibition, although intended to eliminate the saloon and the drunkard from American society, served to create thousands of illegal drinking places called "speakeasies," and a new and increasingly profitable form of criminal activity -- the transportation of liquor, known as "bootlegging." Prohibition, sometimes referred to as the "noble experiment," was repealed in 1933.


        The common thread linking such disparate phenomenon as the resurgence of fundamentalist religion and Prohibition was a reaction to the social and intellectual revolution of the time -- variously referred to as the Jazz Age, the era of excess, the Roaring '20s. Many were shocked by the changes in the manners, morals and fashion of American youth, especially on college campuses. Among many intellectuals, H.L. Mencken, a journalist and critic who was unsparing in denouncing sham and venality in American life, became a hero. Author F. Scott Fitzgerald captured the energy, turmoil and disillusion of the decade in his short stories and novels such as The Great Gatsby.


        Fitzgerald was part of a small but influential movement of writers and intellectuals dubbed the "Lost Generation," who were shocked by the carnage of World War I and dissatisfied with what they perceived to be the materialism and spiritual emptiness of life in the United States. Many of them -- such as their most celebrated member, writer Ernest Hemingway -- traveled to Europe and lived as emigres in Paris.


        African Americans also engaged this spirit of national self-examination. Between 1910 and 1930, a huge black migration from the South to the North took place, peaking in 1915-1916. Most settled in urban areas such as Detroit and Chicago, which held greater opportunities for jobs and personal freedom than the rural South. In 1910 W.E.B. DuBois and other intellectuals founded the National Association for the Advancement of Colored People (NAACP), which helped black Americans gain a national voice that would grow in importance with the passing years.


        At the same time, an African-American literary and artistic movement, termed the "Harlem Renaissance," emerged. Like the "Lost Generation," these writers, such as Langston Hughes, rejected middle-class values and conventional literary forms, even as they addressed the realities of American life.




        In October 1929 the stock market crashed, wiping out 40 percent of the paper values of common stock. Even after the stock market collapse, however, politicians and industry leaders continued to issue optimistic predictions for the nation's economy. But the Depression deepened, confidence evaporated and many lost their life savings. By 1933 the value of stock on the New York Stock Exchange was less than a fifth of what it had been at its peak in 1929. Business houses closed their doors, factories shut down and banks failed. Farm income fell some 50 percent. By 1932 approximately one out of every four Americans was unemployed.


        The core of the problem was the immense disparity between the country's productive capacity and the ability of people to consume. Great innovations in productive techniques during and after the war raised the output of industry beyond the purchasing capacity of U.S. farmers and wage earners. The savings of the wealthy and middle class, increasing far beyond the possibilities of sound investment, had been drawn into frantic speculation in stocks or real estate. The stock market collapse, therefore, had been merely the first of several detonations in which a flimsy structure of speculation had been leveled to the ground.


        The presidential campaign of 1932 was chiefly a debate over the causes and possible remedies of the Great Depression. Herbert Hoover, unlucky in entering The White House only eight months before the stock market crash, had struggled tirelessly, but ineffectively, to set the wheels of industry in motion again. His Democratic opponent, Franklin D. Roosevelt, already popular as the governor of New York during the developing crisis, argued that the Depression stemmed from the U.S. economy's underlying flaws, which had been aggravated by Republican policies during the 1920s. President Hoover replied that the economy was fundamentally sound, but had been shaken by the repercussions of a worldwide depression -- whose causes could be traced back to the war. Behind this argument lay a clear implication: Hoover had to depend largely on natural processes of recovery, while Roosevelt was prepared to use the federal government's authority for bold experimental remedies.


        The election resulted in a smashing victory for Roosevelt, who won 22,800,000 votes to Hoover's 15,700,000. The United States was about to enter a new era of economic and political change.

        NOTE: The information regarding the United States on this page is re-published from United States Information Agency. No claims are made regarding the accuracy of United States History information contained here. All suggestions for corrections of any errors about American History should be addressed to the United States Information Agency

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