Written by: Michael Parrish, UC San Diego
By the end of this section, you will:
- Explain the context in which America grew into its role as a world power
- Explain the causes of the Great Depression and its effects on the economy
- Compare the relative significance of the major events of the first half of the 20th century in shaping American identity
World War I signaled great changes in the modern world. The conflict’s introduction of total warfare mobilized the industrial economies of the great powers and left 8.5 million soldiers dead, 21 million wounded, and 7.5 million missing or captured. The combined debts of the combatant nations totaled $232 billion. Four empires—Russian, Ottoman, Austro-Hungarian, and German—had collapsed, inspiring their subject people from Asia to the Caribbean to demand independence. In Russia, a communist-led coup by Vladimir Lenin enabled him to seize power; he negotiated a separate peace with Germany and vowed to spread revolution throughout the world. By 1920, a deadly influenza epidemic, likely spread by the movement of troops, had killed another 22 million people, including 675,000 in the United States. The almost wholesale destruction of an entire generation of young men led many to question old assumptions and traditional truths. The Versailles Treaty failed to establish a just and sound peace, sowing the seeds for future conflict, as many contemporaries noted. The United States could not escape the consequences of victory, peace, and demobilization in 1919–1920. (See The Spanish Flu of 1919 Narrative.)
The nation struggled with postwar problems, including a recession and inflation, worker strikes, race riots, and a Red Scare. However, the ensuing decade was remarkably prosperous for the country until the Great Depression of 1929. After a brief but intense postwar recession, the 1920s were a period of fairly widespread affluence, erected on a new foundation of technological innovation and consumerism. Americans continued to debate the size and purpose of government, and although progressive reform slowed, progressive ideals and the regulatory state endured. The decade was also an anxious one as Americans came to grips with the challenge modern values presented to traditional virtues, and several groups tried to participate fully in American society.
The Treaty of Versailles
On January 22, 1917, three years into a raging European war the United States had not yet entered, President Woodrow Wilson addressed Congress and offered to mediate the conflict to produce a “peace without victory.” Three months later, he instead asked Congress to declare war on Germany in the wake of the latter’s decision to resume unrestricted submarine warfare. Wilson thereby placed himself and the country in the untenable position of both belligerent and mediator and turned U.S. entry into the war into an idealistic crusade to “make the world safe for democracy.” As Wilson said in his war speech to Congress: “We shall fight . . . for a universal dominion of right by such a concert of free peoples as shall bring peace and safety to all nations and make the world itself at last free”.
In January 1918, before U.S. forces had reached the Western front, Wilson offered his Fourteen Points address as the basis for a new world order. There should be “open covenants openly arrived at,” freedom of the seas, a reduction in armaments, lower tariff barriers, autonomous development for the people of the defeated empires, and a new “general association of nations to preserve the peace.”
At the end of June 1919, however, when Wilson placed his signature on the Treaty of Versailles, his grandiose dreams lay largely in ruins, partly as the result of his own obstinacy. Obsessed with the goal of creating an “association of nations,” which became the League of Nations included in the treaty, the president had sacrificed other core principles. Rather than “peace without victory,” he agreed to a “war guilt” clause in the treaty that placed the entire burden of the war on Germany. Foregoing a “concert of free peoples,” he allowed the victorious allies to take de facto control of Germany’s colonial territories under a system of “mandates” that failed to disguise the Allies’ own naked imperialism.
The U.S. Senate and the president fought over ratification of the Versailles Treaty, which included the covenant of the League of Nations. From Wilson’s perspective, the heart of the covenant (and thus the heart of the treaty) resided in Article X, the collective security mechanism, which provided that member nations would “respect and preserve as against external aggression the political integrity and existing political independence of all Members of the League.” In the event of any threat or danger of such aggression, the league Council “shall advise upon the means by which this obligation shall be fulfilled,” including the use of force. Without Article X, Wilson believed, the world would be left with the old failed structure of alliances and power politics. However, from the point of view of his critics in the Senate, especially Henry Cabot Lodge of Massachusetts, chair of the Senate Committee on Foreign Relations, Article X violated the constitutional powers of Congress to declare war. Others condemned the provision for requiring the United States to defend the status quo throughout the world, including the vast colonial holdings of Britain and France.
Wilson faced an uphill struggle in the Senate, where a two-thirds majority was needed to approve the treaty and the Republicans had won control of the Senate in the 1918 election. Twelve to 18 senators, mostly Republicans who were called “Irreconcilables,” had announced their complete opposition, with or without any reservations. Wilson attempted to mobilize public opinion by launching a 21-day, 10,000-mile speaking tour throughout the West. Once back in Washington, he suffered a stroke that left him partially blind and paralyzed. For the next two months, as the treaty went down to defeat in the Senate, the president could barely function. He refused to compromise on Article X or to allow his fellow Democrats in the Senate to do so.
On November 18 and 19, 1919, a group of 38 senators voted for the treaty with some reservations, but 55 senators, including all the Irreconcilables and a handful of Democrats, voted against. On a second roll call, voting on the treaty without any reservations, the treaty failed again, 53–38. Finally, on March 19, 1920, eight Democrats broke with Wilson to support Lodge’s reservations, but even with the latter’s support, the treaty failed by seven votes to reach the two-thirds threshold. America had rejected the League. Wilson, according to one critic, had committed “supreme infanticide” by refusing to accept any compromise.
Postwar American Society
The nation to which Wilson returned after six months of negotiations abroad had itself fallen into class and racial conflict that turned 1919 into one of the most violent years in the nation’s twentieth century. In late July, a white man tossing rocks at African American teenagers who ventured onto a segregated white beach triggered a race riot in Chicago that lasted 13 days, leaving 38 dead and 537 injured before troops restored a semblance of order. Chicago’s riot became only the first of 25 other racial conflagrations that claimed 120 victims as whites rampaged through new African American neighborhoods and returning black soldiers took up arms to defend their homes. African Americans who had moved north with the Great Migration discovered that racism was widespread in the cities of that region. (See the Postwar Race Riots Narrative.)
Disillusionment also swept through the white working class, which was fearful that with the end of wartime gains in wages and union organizing, it faced an uncertain future. A postwar recession and ruinous inflation caused many to struggle financially. In September 1919, approximately 350,000 steelworkers walked off the job in the largest labor protest to date in American history, demanding recognition of a union and an end to 12-hour days. After a three-month struggle, they had gained neither. The steel strike had come on the heels of a general strike in Seattle, Washington, led by shipyard workers who were ultimately confronted by bayonet-armed U.S. Marines. Policemen in Boston went on strike in September after their demands for a union were turned down. Wilson labeled their action “a crime against civilization,” and Massachusetts governor Calvin Coolidge backed the city’s decision to fire all the strikers and hire a new force. By one estimate, 4 million American workers launched more than 3,000 strikes in 1919. As a result of the public’s reaction against its postwar strikes, organized labor suffered losses in membership over the next decade.
Adding to the chaos of these unsettling events, terrorists mailed 34 bombs to prominent citizens, including John D. Rockefeller and J. P. Morgan. On June 2, eight other bombs exploded 90 minutes apart in some of the nation’s biggest cities, including New York, Boston, Washington, DC, Pittsburgh, and Cleveland. One blew out windows at the home of A. Mitchell Palmer, the U.S. attorney general. Assuming command of the government in President Wilson’s absence, Palmer launched a full-blown antiradical Red Scare, targeting aliens and detaining 3,000 by January 1920. Many were never charged with an offense and were deported without due process as the government flouted the rule of law. (See The Red Scare and Civil Liberties Narrative and Mitchell Palmer, “The Case against the Reds,” 1920 Primary Source.)
Sociocultural Conflict and Debate over Modernization
In addition to exacerbating racial and class tensions and restricting civil liberties, the war and its immediate aftermath also led to several movements inspired by great anxiety over modernization. Industrialization, immigration, and urbanization had wrought significant changes in the American economy, society, and culture. Deep divides resulted as some people embraced or adapted to modernism and others revolted against it. The 1920 federal census indicated that, for the first time, more Americans lived in metropolitan areas than in small towns and villages, but the cultural debates were less about city versus country and more about the debate over modernization.
The war had provided significant momentum for the fulfillment of the crusade against alcohol, the roots of which went back to the antebellum era. During the Progressive Era, reformers associated banning alcohol with reforming immigrants, curbing urban crime, regulating the “liquor trust” and saloons, and controlling the personal behavior of soldiers during the war to achieve social order and efficiency. By 1917, laws banning hard liquor for 65 percent of the population had already been passed in 18 states, and federal law made it a crime to ship such beverages across state lines where local regulations prohibited it. The war gave the Prohibition movement, led by the Women’s Christian Temperance Union and the Anti-Saloon League, a huge lift when the government promoted food conservation. The argument was that grain should not be used for intoxicants when it was necessary to feed American and allied soldiers. Many Americans also did not want to put money into the pockets of the great brewers, most of whom were of German descent.
In 1918, Congress passed the Eighteenth Amendment, which banned the production, sale, and distribution of alcoholic beverages (but not their consumption) throughout the United States. Early in 1919, the required 36 states ratified the amendment and, over Wilson’s veto, Congress passed the Volstead Act, entrusting federal enforcement of Prohibition to the treasury department. Wilson opposed the act because he supported personal liberty and the “personal habits and customs of large numbers of our people.” On the other hand, former presidential candidate William Jennings Bryan declared the saloon “as dead as slavery . . . the virtue of the country asserts itself.”
For the next 13 years, the United States remained constitutionally and legally a dry republic, but making it a sober one proved impossible. Given porous borders and long coastlines, the smuggling of illegal intoxicants into the United States became big business for a decade. The Prohibition battle often pitted old-stock, small-town Protestants who were in favor of it against European and Catholic immigrants who consumed alcohol and opposed Prohibition. In big cities, enforcement of the Volstead Act broke down entirely. Prohibition raised questions about the government regulation of personal behavior and individual liberty. (See the Was Prohibition a Success or a Failure? Point-Counterpoint.)
Similar ethnocultural divisions defined the struggle over immigration restriction, which many proponents felt was necessary to protect the nation’s cultural and ethnic purity from immigrants. World War I had stirred toxic nativism against “hyphenated Americans,” especially German Americans, which spilled over into the government’s Palmer Raids, targeting aliens suspected of radical politics. Army intelligence tests, administered during the war, also gave credibility to false claims that native-born army recruits surpassed more recent immigrants in their mental capacities. Wilson had vetoed an attempt to impose a literacy test for all new immigrants during the war, but Congress overrode him. After the war, immigration restriction gained momentum and broad support. (See the Ellison DuRant Smith, “Shut the Door,” 1924 Primary Source).
The new immigration laws, adopted by Congress in 1921 and 1924, severely curtailed the opportunity for immigrants to move to the United States, which generally had had been open to immigrants since the American founding. The 1924 law capped transatlantic immigration at 150,000 people per year, apportioned by the national origins recorded in the census of 1890 and giving a higher quota to Northern Europeans than to those from Southern or Eastern Europe. Immigration from Japan and other Asian countries was banned entirely. The exceptions were people from Mexico, the Caribbean, and Latin America, because of the agriculture industry’s demand for cheap farm labor. These laws remained the basic framework of American immigration policy until 1965 and were a potent symbol of the country’s retreat from Wilson internationalism in the 1920s.
Another source of cultural conflict was the intellectual upheaval introduced by Darwinian evolutionary science and the debate about whether evolution would be taught in public schools. Dayton, Tennessee, became the flash point for these cultural wars in 1925, when the state prosecuted high school teacher John Scopes for violating a new state law that made it a crime to teach any ideas that contradicted the Book of Genesis or suggested human beings had evolved from lower life forms. Celebrated defense lawyer Clarence Darrow joined Scopes’s legal team, while William Jennings Bryan, Christian fundamentalist and prohibition spokesperson, aided the prosecution. Hundreds of newspapers, magazines, and radio networks sent their reporters to Dayton to witness the titanic battle between Darrow, the Chicago atheist, and Bryan, the defender of evangelical Christianity.
The Scopes trial became a circus when the judge excluded scientific testimony about evolution or Darwinism, and Darrow instead put Bryan on the stand as an expert on the Bible. Bryan insisted that Eve had come from Adam’s rib and that Joshua had stopped the sun. Most commentators ridiculed Bryan (who died in his sleep several days after the trial), but Scopes was convicted and fined $100, a penalty that was never collected because the Tennessee supreme court tossed out his conviction on a technicality. The episode revealed a split in American Christianity between many mainline Protestant denominations that accepted the new scientific ideas and the fundamentalists who rejected them. With the aid of anti-evolution fundamentalist forces, more states adopted laws similar to Tennessee’s and major publishing companies watered down or excluded Darwinian theory from their science textbooks. The episode dramatized the cultural tensions in the 1920s’ debate about the desirability of a modernizing, industrializing, and urbanizing society. (See The Scopes Trial Narrative.)
Many Protestants sought to preserve traditional Victorian virtues and American culture. From 1915 to 1925, four million Americans, mostly white Protestants, joined the new Ku Klux Klan, the “Invisible Empire,” dedicated to preserving white supremacy, traditional values, and a Protestant America against the perceived threat from African Americans, Mexicans, Jews, Catholics, and immigrants. Members feared the effects on American society of the crime, vice, and drinking they associated with immigrants in urban areas. With their hooded white robes and nighttime rituals, Klansmen and their female auxiliaries spread more than verbal bigotry and burned more than a few crosses; they often subjected their victims to beatings, whippings, and lynchings.
Unlike the post-Civil War Klan, the refurbished organization flourished far outside the Old South, recruiting members especially in the booming cities of the upper Midwest, the Plains, and the Northwest: Indianapolis, Denver, Dallas, and Portland. By 1925, the Klan, headquartered in Atlanta, was raking in $40,000 a month in dues and initiation fees, but it could not survive the rape and murder conviction of its Indiana Grand Dragon David Stephenson or the financial scandals that put other local Klan leaders behind bars by the end of the decade. The organization shed many members and lost its national reach until its resurgence in the civil rights era. (See The Ku Klux Klan in the 1920s Narrative and The KKK during Reconstruction vs. the KKK in the 1920s Lesson Plan.)
The case of Sacco and Vanzetti revealed additional fault lines in the sociocultural divide over modernization in the 1920s. On April 15, 1920, two men stole a payroll of more than $15,000 in Massachusetts and in the process killed two people. Nicola Sacco and Bartolomeo Vanzetti, immigrants with radical affiliations, were arrested and tried the following year. The presiding judge made biased comments against the defendants’ political views, and the jury found them guilty. After years of fruitless appeals, Sacco and Vanzetti were executed in 1927. They were idolized by many intellectuals for being victims of an injustice suffered by poor immigrants, but the evidence of their guilt was still being debated more than a century later.
In a postwar America dominated by strident nationalism, racial chauvinism, and fear of foreigners, African Americans were the most oppressed minority group and responded in a variety of ways. The Universal Negro Improvement Association (UNIA) arose, headed by Jamaican immigrant Marcus Garvey, who advocated black pride and racial purity and railed against the integrationist ideology of other black organizations like the National Association for the Advancement of Colored People (NAACP) and its leader W. E. B. De Bois. (See the Marcus Garvey, “Declaration of the Rights of the Negro Peoples of the World,” 1920 Primary Source.)
By the early 1920s, Garvey’s UNIA operated a small life insurance business, grocery stores, a newspaper called Negro World, and a steamship line, the Black Star, intended to promote trade among Africans and their descendants throughout the world. It was also part of a black nationalist “Back to Africa” movement hoping to relocate African Americans away from a racist America. Sporting military uniforms and a red, black, and green flag, Garvey’s followers marched in urban areas from New York to Los Angeles, swelling the group’s membership to more than two million members in 800 local chapters on four continents. Echoing Booker T. Washington and black nationalists, Garvey preached economic self-reliance and racial autonomy, earning the enmity of the NAACP and the attention of the Department of Justice. The head of the Justice Department’s Federal Bureau of Investigation (FBI), J. Edgar Hoover, launched an inquiry into the UNIA’s financial activities. Sloppy bookkeeping made Garvey an easy target. Convicted of mail fraud in 1923, he served a five-year federal prison sentence and then was deported as an undesirable alien. The UNIA soon collapsed without him.
The artists, poets, and writers of the Harlem Renaissance brilliantly expressed the hopes and fears of African Americans as they demanded their rightful place in American society. The Renaissance was rooted in the Great Migration of African Americans to northern cities such as New York (home to the neighborhood of Harlem) during and after World War I. With its mixture of appeals to African Americans’ pride and their long history of cultural achievements and struggles, the Harlem Renaissance was a great flourishing of black culture. Poets such as Langston Hughes evoked ancient glories and staked a claim for equality. Novelist Zora Neale Hurston wrote her masterpiece, Their Eyes Were Watching God, exploring the relationships of African American men and women in the postslavery South. Jazz and blues music spread from the South and were popular in clubs with patrons of different races. Black pride and cultural achievement helped lay the foundation for the post-World War II civil rights movement. (See the Langston Hughes, “I, Too” and “The Weary Blues,” 1920 and 1925 Primary Source and The Blues and the Great Migration Lesson.)
The Lost Generation
Many American writers were part of the Lost Generation of artists and filled with despair in the wake of World War I and its devastating impact on civilization. Writer Gertrude Stein coined the phrase “the lost generation” to describe the intellectuals among whom malaise and disaffection had set in.
Fellow writers such as F. Scott Fitzgerald, Ernest Hemingway, and William Faulkner questioned traditional mores in the aftermath of the war’s destruction. Life became an existential search for meaning, though answers were rarely discovered. Fitzgerald questioned the value of wealth and high society, presenting them as symbols of empty decadence in novels like The Great Gatsby. Sinclair Lewis attacked middle-class conformity and consumerism in his novel Babbitt. Poets e.e. cummings, T.S. Eliot, and Ezra Pound explored many of the same themes in their works. (See the Ernest Hemingway and the Lost Generation Lesson.)
In November 1920, fed up with high wartime taxation, disillusioned with Wilson’s peacemaking efforts, and shaken by racial violence and widespread strikes, American voters deserted the Democratic Party and returned Republicans to the White House and Congress. Warren Harding won by the largest popular vote to date, with a margin of seven million votes and a decisive electoral college tally of 404 to 127 over Democrat James Cox. The GOP continued this dominance of the presidency, Congress, and the federal courts until 1930, presiding over the greatest economic boom in the nation’s history. The policies of the 1920s were not a sharp break with Progressivism or the end of reform. Rather, they were rooted in the progressive ideal of business-government cooperation for order and the efficiency of the Progressive Era and World War I, which continued into the 1920s and laid the foundation for the New Deal.
The presidency of Warren Harding promised a return to normalcy, which was a reconversion from war rather than a return to a nostalgic past. The wartime repression of civil liberties and the Red Scare slackened, wartime wage and price controls were ended, and the economy recovered from the postwar recession. Harding’s administration was marred by scandals, however, especially the Teapot Dome scandal in which Secretary of the Interior Albert Fall was tried and convicted for taking bribes to give valuable leases to two oil companies for lands with federal oil reserves for the U.S. Navy. A notable achievement of Harding’s era was the Washington Conference of 1921–1922, which limited naval buildups by the great powers to try to avert an arms race that might lead to another world war. The Budget Act of 1921 required the president to submit an annual budget for executive departments to Congress. By 1923, to help fuel prosperity, Congress had cut many of the wartime taxes.
After Harding’s unexpected death in 1923, his vice president, Calvin Coolidge, became president. In 1924, Coolidge was elected president in his own right, defeating Democrat John Davis and third-party Progressive candidate Robert LaFollette. Coolidge had a strong limited-government philosophy and worked with Congress to cut spending, including military spending. Although Congress cut taxes in 1924, 1926, and 1928, the federal government still ran significant annual surpluses during the Coolidge administration, with a high of $677 million in 1925. The president refused to sign a bill to build a federal power plant at Muscle Shoals, Alabama, because he did not think it was constitutional, but federal ownership of public utilities later became an important New Deal measure, showing different approaches to government regulation. (See the “Silent Cal” Coolidge Narrative.)
Herbert Hoover, who succeeded Coolidge as president, had been secretary of Commerce from 1921 to 1928. An engineer who also headed the wartime Food Administration, Hoover embodied the progressive vision of government by fostering close government-business cooperation to create a more ordered capitalist economy. Hoover promoted trade associations that could cooperate on prices, to avert ruinous competition as the federal government eased up on antitrust regulations and allowed business to keep prices high. This idea was based on the relationship between business and government that had held during World War I. It also became the core of recovery from the Depression under the Franklin Roosevelt administration during the 1930s.
The public reaction against American intervention in the war and the Versailles Treaty continued to shape American foreign policy during the 1920s. Republican administrations sought to end the financial and human cost of interventionism, especially in Latin American affairs, and withdrew troops from several nations, including the Dominican Republic and Haiti. They also sought to win the goodwill of their western hemisphere neighbors and protect the investment opportunities and overseas property of American businesses. (See the U.S. Foreign Policy between the Wars Narrative.)
Republican presidents achieved notable foreign policy successes in Europe. Bankers Charles Dawes and Owen Young helped negotiate deals to restructure war reparations payments and underwrite loans, which aided the repayment of Allied loans to the United States that Coolidge had insisted on. In 1929, the United States signed the international Kellogg-Briand Pact, which outlawed war as an instrument of foreign affairs.
The Consumer Economy
Despite the social and cultural turmoil of the years after 1920 and clashes over race, class, religion, and many public issues, the American people enjoyed almost a decade of unsurpassed prosperity, the beginning of a new consumer-oriented economy. Although not all participated equally, such as farmers and workers in aging industries such as coal, many luxuriated in the wealth of the richest society on earth.
These great boom years rested on the productivity and the ingenuity of capitalism and on the deliberate fiscal and monetary policies to balance the federal budget and cut taxes, led by Republican Presidents Harding, Coolidge, and Hoover, helped by a compliant Congress and a tenacious Treasury secretary, Andrew W. Mellon. Americans mastered productivity in these years by applying science and technology to the industrial and the agricultural sectors. Electric power and mechanization were transformative forces in factories, farms, and homes. Americans did not work longer; they worked smarter and more efficiently on the assembly lines and on mechanized farms. Over the course of the decade, gross domestic product (GDP) rose 40 percent, per capita income reached the then-astronomical figure of $681 a year, and real wages were up 11 percent over 1914, while the average number of hours worked dropped. By 1928, Americans produced more of everything—including wheat, corn, hogs, automobiles, washing machines, vacuum cleaners, and radios—than ever before. In that year, 24 million cars and trucks rolled over American roads, 78 percent of all those in the world. Presidential candidate Herbert Hoover had every reason to say in 1928: “Americans today are nearer to the abolition of poverty than at any time in their history”.
In addition to electric motors, gasoline tractors, advances in plant genetics, and innovations at Bell Labs, DuPont, Kodak, and General Electric, the economic policies of the Republican administrations from Harding to Coolidge fostered the consumer economy. Strategies included cutting income taxes and capital gains taxes for investors and maintaining low interest rates that encouraged credit expansion for individuals buying on installment plans and speculating in the stock market. Moreover, workers had more disposable income to spend on cars, amusement parks, household technologies, radios, department store clothing, and entertainment (See the Andy Razaf (lyrics), Thomas “Fats” Waller and Harry Brooks (score), “Ain’t Misbehavin’,” Jazz and the Radio, 1929 Primary Source.)
The growth of the consumer economy was symbolized by the rise of exotic department stores and reliable chain stores to replace individually owned dry-goods general stores. Advertising in urban newspapers urged shoppers to fulfill their every desire. Mail-order catalogs such as Montgomery Ward and Sears, Roebuck and Company allowed rural American families to participate in the consumer culture as well. A modern ethic of personality, self-fulfillment, and spending began to replace the Victorian virtues of character, thrift, and sacrifice.
The consumer culture idolized the individual accomplishments of heroes and made them celebrities. Perhaps no one embodied the new heroism as much as the pilot Charles Lindbergh, who, in 1927, became the first person to fly solo across the Atlantic, captivating millions on both sides of the ocean. The Lindbergh image combined traditional virtues of American individualism and simple humility with technological progress and innovation. (See the Charles Lindbergh and Flight Narrative.)
Sports figures were similarly adored by millions of fans for their achievements, who experienced them in person or heard them broadcast over the radio. Baseball professional Babe Ruth thrilled audiences with homeruns at the Polo Grounds in upper Manhattan and at the new Yankee stadium in the Bronx. Ruth endorsed numerous products and led a glamorous life in the public view. College and professional football drew massive audiences as well, who came to see “Red” Grange or the Olympic hero Jim Thorpe. Boxing was one of the biggest draws, with Jack Dempsey and Gene Tunney pulling in $2 million at the gate for their famed fight in Philadelphia in 1926. Dempsey was painted as a working-class hero and a brawler, whereas Tunney was a middle-class devotee of Shakespeare who took the heavyweight crown and then successfully defended it against his rival.
The Great Crash and the Great Depression
From 1927 to 1929, banks and corporations loaded $7.6 billion into the stock market to encourage the buying of shares on credit and to foster the belief that continued increases in common stock values had become inevitable. Shares of Radio Corporation of America (RCA), for example, soared from $85 to $420 without the company paying investors a single dividend. Wright Aircraft stock increased $220 per share in 19 months, and shares of the Piggly Wiggly grocery chain jumped $52 in one day of trading. The reckoning came at the end of October 1929, when company earnings faltered and panic about their stock values set in. Investors sold off six million shares on October 21, another 12.9 million on October 24, “Black Thursday,” and yet another 16.6 million on October 29, “Black Tuesday.” Even blue chip stocks like AT&T, General Electric, and Standard Oil lost half their value. Crafty investors were wiped out in the Great Crash. The banking system, the heart of the nation’s credit network, stopped functioning. America entered the longest economic decline so far in its history. (See The Crash of 1929 Narrative.)
The causes of the Great Depression are still debated by historians. The stock market crash led to many difficulties for banks and financial institutions that had allowed investors to buy stocks on margin (i.e., with borrowed money). When the market crashed, those investors could not meet their financial obligations and nor could banks, which cut off additional credit. Employers began to lay off workers and cut production. Older industries such as steel and coal went into decline, and the new consumer-driven industries in airlines, automobiles, and chemicals suffered drops as well and were not mature enough to prop up the economy. Gross national product fell from $87.8 billion to $75.7 billion within a year. The ranks of the unemployed increased from 1.5 million Americans to 4.3 million and soon included almost 25 percent of the American workforce. Among those who had jobs, salaries and hours were often greatly reduced, cutting income to families. Farmers had not enjoyed the prosperity of the 1920s and saw prices for their agricultural goods collapse. For example, wheat fell from one dollar a bushel to less than 40 cents. Farmers stopped planting when the cost exceeded the price; then they and many other workers could not pay their mortgages and lost their homes. Millions joined soup lines and waited for help from churches, charitable institutions, and local governments until these were completely overwhelmed by the need.
President Herbert Hoover and the Great Depression
Herbert Hoover won the presidency in 1928 when he defeated Democrat Al Smith, who represented the solid South and the ethnic enclaves of the Northeast. He thus had the misfortunate of occupying the White House during the 1929 stock market crash and the resulting economic collapse. Hoover was severely criticized for appearing to do nothing to alleviate the suffering of the American people caused by the economic crisis. People called the camps of cardboard hovels in which the homeless lived “Hoovervilles,” empty pockets were “Hoover flags,” and newspapers stuffed in clothing to keep warm were “Hoover blankets.”
More so than earlier presidents faced with a financial panic, a liquidity crisis, and mounting unemployment, Hoover worked with Congress to pass some measures that reflected his reliance on the voluntary cooperation of bankers, industrialists, farmers, charitable organizations, and local governments to effectively act together to overcome the spreading misery. The Agricultural Marketing Act was intended to prop up the income of farmers, but without production controls, prices continued to collapse across the nation’s farms. The National Credit Corporation sought to rescue banks on the brink of insolvency, but the bankers who managed the institution became reluctant to make loans to those who needed aid the most. Cities, counties, and states ran out of tax dollars to aid the unemployed and destitute. Finally, Hoover began to directly use the power of the federal government by instituting the Reconstruction Finance Corporation (RFC) to make up to $2 billion of financing available to state-run public works projects. The RFC became a key recovery measure of President Franklin Roosevelt’s New Deal, but it came too late and with too little spending to save Hoover’s presidency. The Roosevelt presidency would see the rapid expansion of the scale and scope of government intervention in the American economy and society with the creation of the New Deal welfare state. (See Should Herbert Hoover Be Considered an Activist President? Point-Counterpoint.)
Hoover’s other policies were economically disastrous and worsened the Depression. The Smoot-Hawley tariff, the largest tariff increase ever passed by Congress, was meant to protect American jobs. However, it strangled world trade, which hurt businesses and raised the price of imports, because of retaliatory tariffs when people were struggling. Hoover also endorsed a substantial income tax increase to cut the rising budget deficit, but then workers had less money to support their families and lost purchasing power needed to buy essentials. And when the “Bonus March” World War I veterans arrived to petition Congress for early payment of their promised bonuses, he allowed them to be driven out of Washington with tanks, tear gas, and bayonet-wielding infantry. The era had begun with those veterans marching proudly down urban streets in 1919. It ended in 1932 when armed soldiers commanded by World War I officers set fire to their makeshift encampment in the nation’s capital. (See The Bonus Army Decision Point.)
In the election of 1932, Democrat Franklin Roosevelt won a landslide victory over Hoover with 472 electoral votes to 59. Roosevelt had a record of instituting progressive programs as governor of New York during the Depression. In his Commonwealth Club address, he signaled his intention to further expand the scope and scale of the federal government’s intervention in the economy and society. “The day of enlightened administration has come. . . The task of statesmanship has always been the redefinition of these rights in terms of a changing and growing social order. New conditions impose new requirements upon government.” Roosevelt faced a daunting crisis, and it remained to be seen whether his New Deal would achieve its promised results.
Additional Chapter Resources
- Henry Ford and Alfred P. Sloan: Industrialization and Competition Narrative
- Cartoon Analysis: Elmer Andrews Bushnell “The Sky Is Now Her Limit ” 1920 Primary Source
- Alice Paul and the Equal Rights Amendment (Lucretia Mott Amendment) 1923 Primary Source
1. One of the first orders of business for President Woodrow Wilson at the beginning of his second term in office was
- combating the influenza epidemic
- creating a plan for “peace without victory”
- dealing with the revolution in Russia
- keeping the United States out of World War I
2. Once the United States had declared war on Germany what was President Wilson’s major goal?
- To achieve “peace without victory”
- To make the world safe for democracy
- To stop the spread of communism
- To increase trade with Europe
3. The most significant of President Wilson’s postwar goals was to
- increase the United States’ presence in Europe
- take control of the former German colonies in the western hemisphere
- create a general association of nations to maintain world peace
- strengthen the U.S. military
4. At the end of World War I President Wilson’s approach to the peace treaty centered on
- freedom of the seas
- a plan to invest millions of dollars to rebuild western Europe
- his Fourteen Points
- strategic negotiations among the “Big Four”
5. In the immediate aftermath of World War I the United States faced all the following issues except
- the worst economic crisis in its history
- more than 3,000 labor strikes
- race riots
- a Red Scare
6. The labor strikes of 1919-1920 were caused by all the following except
- a recession
- union recognition
- unfair competition with European companies
7. Which politician earned public attention by firing the striking Boston police force in 1919?
- Woodrow Wilson
- Warren G. Harding
- Calvin Coolidge
- Herbert Hoover
8. The Red Scare was caused by all the following except
- labor unrest
- the Great Depression
- package bombs
- immigration of socialists and anarchists from Europe
9. Attorney General A. Mitchell Palmer targeted which group during the Red Scare?
- Labor union leaders
- Supporters of United States’ membership in the League of Nations
- Recent immigrants
- Strike breakers
10. The main reason the U.S. Senate did not ratify the Treaty of Versailles was
- President Wilson’s unwillingness to compromise about the League of Nations
- lack of a clause ensuring freedom of the seas
- the Irreconcilables’ demands for changes in the treaty
- Wilson’s unexpected death
11. Which two social issues were significantly affected by federal legislation immediately after World War I?
- Civil rights and women’s suffrage
- Prohibition and immigration restriction
- Labor relations and environmentalism
- Race relations and religious freedom
12. Which of the following groups from earlier periods in U.S. history would most likely have approved of the trends in immigration legislation during the 1920s?
- Jacksonian Democrats
13. An event that demonstrated the growing social tension between modernism and traditionalism during the 1920s was the
- fight over the income tax
- growth of an income gap between rich and poor
- passage of legislation to increase immigration from Asia
- John Scopes’ trial
14. Compared with the Ku Klux Klan of the post-Civil War years the Klan of the 1920s was
- more restrictive about who could join
- larger and more widespread with more targets for its activities
- less violent
- more like a social organization than a militant group
15. The political disposition of the United States during the 1920s can best be described as
- in sympathy with radical new ideas that came out of Europe
- a rejection of Wilsonian ideals leading to Republican control at the federal level
- a desire for strong international ties and a progressive domestic agenda
- dissatisfaction with the two-party system and the emergence of third parties
Free Response Questions
- Explain the contest between President Wilson and the U.S. Senate over the ratification of the Treaty of Versailles.
- Explain the motivation for immigration restrictions during the 1920s.
- Describe the reasons for the rebirth of the Ku Klux Klan in the 1920s.
AP Practice QuestionsRefer to the image provided.
1. This political cartoon is a response to the
- immigration of illiterate eastern Europeans
- unionization of unskilled workers
- failure of Progressive programs to help the poor
- loss of tax revenue due to prohibition
2. Which of the following groups would most likely support the sentiment that led to the situation depicted in the cartoon?
- Irish and German immigrants
- Fundamentalist Christians
- Members of labor unions
3. The federal law hinted at in the political cartoon
- made it illegal to drink alcoholic beverages without a permit from the U.S. Treasury
- resulted in development of a big business that enriched criminal gangs linked to big-city political machines
- was most popular among Irish German and Italian immigrants in big cities
- became more difficult to enforce when the U.S. government promoted conservation of food during World War I
“I desire to remove the misunderstanding that has been created in the minds of millions of peoples throughout the world in their relationship to the organization. The Universal Negro Improvement Association stands for the Bigger Brotherhood; the Universal Negro Improvement Association stands for human rights not only for Negroes but for all races. The Universal Negro Improvement Association believes in the rights of not only the black race but the white race the yellow race and the brown race. The Universal Negro Improvement Association believes that the white man has as much right to be considered the yellow man has as much right to be considered the brown man has as much right to be considered as well as the black man of Africa. In view of the fact that the black man of Africa has contributed as much to the world as the white man of Europe and the brown man and yellow man of Asia we of the Universal Negro Improvement Association demand that the white yellow and brown races give to the black man his place in the civilization of the world. We ask for nothing more than the rights of 400 0 000 Negroes. We are not seeking as I said before to destroy or disrupt the society or the government of other races but we are determined that 400 0 000 of us shall unite ourselves to free our motherland from the grasp of the invader.”
Marcus Garvey Principles of The Universal Negro Improvement Association 1922Refer to the excerpt provided.
4. According to the excerpt with which of the following issues was Marcus Garvey most concerned?
- Immigration of Africans to the United States
- Lack of equality among the races
- The Great Migration
5. Which of the following best describes the goals of the Universal Negro Improvement Association (UNIA)?
- An equal-opportunity social structure in the United States
- Separation of the races within the United States
- Black nationalism
- Funding for the Harlem Renaissance
6. Which of the following best describes the goals of the Universal Negro Improvement Association (UNIA)?
- An equal-opportunity social structure in the United States
- Separation of the races within the United States
- Black nationalism
- Funding for the Harlem Renaissance
Wilson Woodrow. “Transcript of Joint Address to Congress Leading to a Declaration of War Against Germany (1917).” 1918. www.ourdocuments.gov/doc.php?doc=61&page=transcript
Boyle Kevin. Arc of Justice: A Saga of Race Civil Rights and Murder in the Jazz Age. New York: Holt 2005.
Brinkley Douglas. Wheels for the World: Henry Ford His Company and a Century of Progress. New York: Viking 2003.
Coben Stanley. Rebellion Against Victorianism: The Impetus for Cultural Change in 1920s America. Oxford UK: Oxford University Press 1991.
Cohen Lizabeth. Making a New Deal: Industrial Workers in Chicago 1919-1939. Cambridge UK: Cambridge University Press 2008.
Dickson Paul and Thomas B. Allen. The Bonus Army: An American Epic. New York: Walker 2004.
Dumenil Lynn. Modern Temper: American Culture and Society in the 1920s. New York: Hill and Wang 1995.
Farber David. Sloan Rules: Alfred P. Sloan and the Triumph of General Motors. Chicago: University of Chicago Press 2002.
Galbraith John Kenneth. The Great Crash 1929. New York: Mariner Books 2009.
Goldberg David A. Discontented America: The United States in the 1920s. Baltimore MD: Johns Hopkins University Press 1999.
Kazin Michael. A Godly Hero: The Life of William Jennings Bryan. New York: Knopf 2006.
Kennedy David M. Freedom from Fear: The American People in Depression and War 1929-1945. Oxford UK: Oxford University Press 1999.
Larson Edward J. Summer For The Gods: The Scopes Trial And America’s Continuing Debate Over Science And Religion. New York: Basic 1997.
Leuchtenburg William E. The Perils of Prosperity 1914-1932. University of Chicago 1958.
Marchand Roland. Advertising the American Dream: Making Way for Modernity 1920-1940. Berkeley CA: University of California Press 1985.
McGirr Lisa. The War on Alcohol: Prohibition and the Rise of the American State. New York: W. W. Norton and Company 2015.
Parrish Michael E. Anxious Decades: America in Prosperity and Depression 1920-1941. New York: W. W. Norton and Company 1992.
Shlaes Amity. Coolidge. New York: Harper 2014.
Life, Liberty, and the Pursuit of Happiness
In our resource history is presented through a series of narratives, primary sources, and point-counterpoint debates that invites students to participate in the ongoing conversation about the American experiment.