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1920s and 30s Boom and Bust

1920s and 30s Boom and Bust. Chapter 17. The New Economy.

charles-burke
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1920s and 30s Boom and Bust

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  1. 1920s and 30s Boom and Bust Chapter 17

  2. The New Economy • Wars are great for the economy (as long as you aren’t fighting at home) There was a brief recession as the war ended, but from 1923-29 there was widespread prosperity and expansion- due in part to the fact that we were the only major econ left standing after the war…..Business glorified again- Calvin Coolidge said “the man who builds a factory builds a temple”. • Economy was shifting- industry was becoming based in consumer goods (ready made clothes, appliances, electronics etc…) Prices had dropped, wages had risen; Americans had to spend far less on “necessities” and had more to spend on “luxuries”. Industrial productivity rises 70% • White Collar Workers Increasing- in 1900 18% were, by 1930 44% were

  3. Transportation • We are entering the age of the automobile. Model T introduced in 1908, and prices went down as manufacturing became more efficient. By 1920 you could buy one for $400, or pay for it on credit. • During the 1920s 23 million cars will be purchases- which will radically change American family and social life. • Airplanes invented in 1903- and used in WWI (flying “aces”) Charles Lindbergh’s solo flight 1927 made him a national hero (with a dark side….) Amelia Earhart did it in 1931.

  4. Electricity and Radio • Also hallmarks of the new consumer economy. By 1930 2/3 of homes had electricity (as opposed to 20% before the war) which could be used not only for light, but appliances like washing machines, refrigerators, vacuums etc…, and ½ had telephones. • Again, prices for these products were dropping, so things that had been “luxuries” became commonplace

  5. New Production Methods and Selling Techniques • Henry Ford’s great contribution wasn’t really the car…it was the assembly line…industrial output grew by 40% in the 20s. He increased worker’s salaries from $2 a day to $5 a day if they would develop “thrifty” habits- and kept spies around to make sure no one was slacking on the job. • Though the era of the “trust” is over- the war had encouraged consolidation of major industry, so there were often large corporations dominating particular markets. • “Chain Stores” also became more common- like A &P grocery or Woolworths five and dime.

  6. Credit • New concept- the installment plan. • During the 1800s the focus had been on thrift and saving, now consumers are encouraged to buy with “no money down”

  7. Advertising • Another burgeoning industry. Buy something not because you NEED it, but because you WANT it and “You’re worth it”. • Celebrity endorsements, (espmoviestars) catchy slogans, impossible promises….advertising is here to stay

  8. Radio • Guglielmo Marconi (Italian Immigrant) invented radio in 1890. 1st radio station 1920 (KDKA Pittsburgh) broadcast presidential election of Warren Harding. NBC founded 1926, CBS 1927- by 1929 there were 10 million radios in the US • Huge with advertising- and allowed people to experience things as they happened. • Helped create a national culture- could be used for propaganda, entertainment, politics, almost anything. “Media” quickly becomes enormously influential.

  9. Farmers and the New Economy • Mechanization meant that fewer people needed to be farmers, and migration to cities continued (majority of Americans became Urban) • Farming also represented a ever decreasing proportion of the economy, only 12.7% in 1929. Not really able to take part in the new “prosperity” of the consumer income- a gap is widening that will become very problematic when everything falls apart in the depression

  10. Changing American Lifestyles and Values • 1920s witness the birth of a widespread popular culture that crosses class lines, age brackets, and regional zones. It was a little wild and crazy (reflecting the idea that the old world order had been destroyed in the chaos of war) and from this point- every generation pushes the boundaries

  11. Fads and Fashions • This is the Jazz Age (named by F. Scott Fitzgerald), with flappers, drinking (illegally) and smoking in public, dancing in shocking ways to shocking music (Louis Armstrong, Duke Ellington and Ella Fitzgerald) all taking part in a “New Morality” that puts pleasure before all else, and opens up taboos. • Professional Sports players and Movie Stars become the the new American Heroes. Silly competitions (flag sitting)

  12. Women’s Freedom • Before WWI Margaret Sanger published an article about how multiple pregnancies etc… were bad for women’s heath- and advocated gov’t distribution of birth control. (contraception had been against the law since 1873) • Opened the 1st family planning clinic in 1916 (jailed) 1921 founded American Birth Control League (Planned Parenthood) • Freud’s theories about sexual repression causing emotional/mental problems (esp for women) were widely believed- therefore expressing greater “physicality” was healthy….

  13. The Women’s Movement • 19th Amendment approved in Congress in 1919- ratified in 1920 • But while women had the vote, most Americans did not question that they should remain in their traditional subordinate roles. Many felt that women needed additional legal “protections”, to prevent long work hours, or force men to pay child support. • Divorce laws liberalized in many states- with preference for child custody going to the mother 1 in 6 marriages ends in divorce in the 1920s. • Equal Rights Amendment proposed in early 1920s by Alice Paul- proposed eliminating all legal distinctions based on sex. Failed (as it did in the 1970s too)

  14. Conflicts Between Old and New Values • Obviously not everyone was going to jump on board with new ideas… • One group strongly opposed were Evangelical (Born Again) who resented the secular nature of the age, and the pushing of boundaries away from biblical standards • Fought hard when pushed to try and maintain “traditional values”

  15. Scopes Trial • In 1925 a Biology teacher named John Scopes was arrested in Tennessee for teaching evolution (which many felt was representative of a “moral breakdown” in US Christian values- ACLU had asked for a teacher to challenge in order to get the case) • Trial became a national sensation- and debate about freedom of thought. Clarence Darrow (pro) vs. William Jennings Bryan (against)- broadcast on the radio. • Scopes found guilty, but case essentially disappeared. Evolution became more accepted in schools. (still controversial in some)

  16. Prohibition • The last of the great progressive reforms- 18th amendment passed in 1919, prohibiting the sale of alcohol. Unfortunately the age of reform had passed, and people weren’t really interested in restriction- they are interested in pushing boundaries- and this became one more thing to rebel against • Volstead Act: set criminal penalties for sale- and created Prohibition Bureau within the Treasury Department. • At first it seems to go well- by 1921 alcohol consumptions drops to 1/3 of where it had been in 1914…. But…

  17. Problems with Prohibition • It’s hard to enforce a ban on something most people don’t think of as a real crime, plus there are loopholes. Doctors can “prescribe” alcohol, and it wasn’t a crime to manufacture or drink- just sell (bathtub gin) • People still want alcohol, and were there is a demand, a supply will follow. Bootlegging became a huge business, bars become “speakeasies”. • Organized crime really born in US during 1920s- gangsters like Al Capone/Lucky Luciano made $$ off illegal alcohol, and took care of competition however they needed to- over 500 gangster related murders in Chicago in the 1920s, and once prohibition ended, gangsters moved on to gambling, prostitution, drugs etc… • Bu 1929 alcohol consumption was 70% of what it had been in 1914- and the Volstead Act was a national joke

  18. Red Scare • The Bolshevik Revolution in Russia, and communist movements in general really freaked people out in the 20s (so much so they ignored the larger threat of Fascism as it rose) There were about 70,000 members of the US communist party in 1920. Transfer existing fears about “new” immigrants to this group. • In 1919 there were a series of violent strikes and labor disputes (Seattle General Strike, Boston Police Strike, United Mineworkers Strike)- blamed on radicals (as the Haymarket riots had been) And a mysterious series of threats on the government ( 30 bombs sent through the mail- no one killed or seriously injured) and suddenly people see “communists” behind every tree- Witch hunt mentality • Attorney General Mitchell Palmer determines to “stamp out” the communist movement- Palmer Raids arrest 6000 people- 500 of whom(mostly Russian)are eventually deported.

  19. Sacco and Vanzetti • 1921 Most publicized “red” case- and a representation of how fear throws reason out the window. • Nicola Sacco and Bartolomeo Vanzetti (Italian immigrants) arrested for the murder of a factory guard in Massachusetts. The main “evidence” against them was that the men were known to be anarchists, atheists and draft dodgers. Sentenced to death in 1927- probably innocent- case overturned in 1977

  20. Nativism, Immigration and Racism • Red scare led to calls to restrict immigration- esp from southern and eastern Europe who are thought to be polluting “native” values (good news is- we now like Germans and Irish whom original “know nothings” had protested) • 1921 Immigration Act: Congress limited immigration to 350,000 people a year, 1924 National Origins Act lowered to 164,000. It also set “quota system” saying that of those people allowed to come it could only represent 2% of that country’s immigrants in 1890 (heavily favoring western Europeans) Cut immigration in half- actually more people left the country in 1930 than arrived. • No limitations on immigration from other parts of the Americas- significant numbers of Mexicans (they had a revolution in 1910- hot mess) and French Canadians arrive

  21. Decline of the Labor Movement • Unions became associated with socialism (which they are), communism and other “radical” elements. After all, workplaces are much safer now (after progressive reforms) what else do workers need? Bloody summer of 1919 had seen 4 million workers on strike- and cost them public support. • Many states passed open shop laws forbidding unions from forcing membership, and businesses created blacklists of “union agitators”

  22. KKK • Revived in the 20s (Birth of a Nation 1915- great recruiting film- and 1st “blockbuster” movie in history)- targeting not only African Americans, but immigrants, esp Communists, Catholics and Jews (you have to be a WASP to be KKK) • In 1925 there are 5 million klansmen- who make no effort to hide activities saying that they are “cleansing” society (they are an extremist reaction to Jazz age shifts in morality) • Eventually their violence (along with some other scandals like embezzlement) will discredit

  23. The Lost Generation • Many people who had survived the war found themselves struggling to create a place in the world. Traditional values no longer seemed solid, emerging culture seemed shallow after all they had been through – what had all that death and sacrifice been about? Quest to find meaning inspired great art, esp in literature • Great writers: • TS Elliot- the Waste Land (a collection of poems about pessimism of the modern world) • F Scott Fitzgerald- The Great Gatsby (the glamour and cruelty of materialistic society) • Sinclair Lewis – Main Street (debunked small town hypocrisy) • Ernest Hemingway- A Farewell to Arms (disillusionment of WWI) • Ex-patriots- many young intellectuals left their homes to move to artist colonies in the west (Santa Fe) or Paris (Getrude Stein)

  24. Harlem Renaissance • The same feelings of confidence and despair that existed in society overall could be found in the African American community as well. Had fought, worked, and still were not being allowed to move forward in society. • So they decide to stop “apologizing” and revel in their own culture “I am Negro, and I am beautiful”. Creators of Ragtime (Scott Joplin) and Jazz (Louis Armstrong, Duke Ellington) Moved north from New Orleans- A generation of artists and writers made Harlem (Cotton Club) a center of poetry, music, and art that came from African inspiration (Chicago important as well) • Langston Hughes- poet, voice of Harlem, disillusioned with society, but proud of culture. • Marcus Garvey- Political leader. United Negro Improvement Movement- promoted return to Africa, which didn’t happen often, but spoke of racial pride, reclaiming roots, and separation by choice as superior group.

  25. The Politics of Prosperity • Political Pendulum (I like alliteration) swings away from progressive idealism, especially as it is discredited by the struggles of prohibition, and towards a business 1st approach. • Republicans control the white house and congress through the 20s, ushered in by Warren G Harding’s promise of a return to “normalcy”. This is where Republicans, the party of reform under TR and Taft, become more of their modern conservative selves (the progressive element had bolted in 1912)

  26. Presidential Rankings: C-Span Survey, 2009 29. Zachary Taylor 30. Benjamin Harrison 31. Martin Van Buren 32. Chester Arthur 33. Rutherford Hayes 34. Herbert Hoover 35. John Tyler 36. George W. Bush 37. Millard Fillmore 38. Warren Harding 39. William Harrison 40. Franklin Pierce 41. Andrew Johnson 42. James Buchanan

  27. The Harding Years • Believed in cooperation between business and government- with gov’t main job being to help business make $$. • Harding himself was one of our more “ordinary” presidents- and that was his appeal. The public was tired of big personalities and crusades and speeches…Harding was just a normal guy. • BUT… he also did a little spoils system…. And while some were good administrators, others were known as the “ohio gang” and maybe weren’t good choices for public trust, several were implicated and convicted of bribes etc….and therefore Harding ends up fairly far down the list of American leaders • In 1923 Harding died (natural causes- though possibly stress induced), and his VP Calvin Coolidge took over.

  28. Teapot Dome and Arms Reduction • The biggest scandal came to light after Harding died. • Secretary of the Interior (Albert Fall) arranged for the transfer of naval oil reserves in Teapot Dome Wyoming to his department, and leased the land to private contractors- accepting a bribe of $400,000 to do so. Secretary Fall ends up in prison • One of the best achievements of the Harding presidency was the Washington Naval Arms conference in 1922. League of Nations and US worked together to slow naval buildup, and create a ratio of ships for 5 major powers (US, Eng, Jap, Fr, Italy) 5-5-3-1.7-1.7

  29. Calvin Coolidge • Cabinet scandals did not scare people away from the Rep party, Coolidge won re-election easily in 1924 • Nicknamed “Silent Cal”- he neither offered or achieved much change…kept tariffs high, taxes low, and businesses running smoothly. He was a believer in “trickle down” economics: keep things good for the rich (esp low taxes), and their wealth will be invested in business which will flow down to lower levels of society. Deliberately rejected programs that would help ordinary citizens or local issues, for ex, to help after a devastating flood that hit Mississippi, or building dams in Tennessee- these are jobs for local governments and charities- not the federal system. • Decided not to run in 1928 with the following speech “I do not choose to run”

  30. Hoover in the White House • Republicans ran Herbert Hoover in 1928, who was well qualified to be president- had served with distinction as head of Food Board in WWI and Secretary of Commerce for 2 administrations. Radio speeches (national campaigning) significant for the 1st time promising “Poverty will be banished from the nation, there will be a chicken in every pot”…and the Democrats ran Al Smith- a Catholic (Nativist uproar) Even a couple southern states vote for Hoover! • As Hoover entered the white house in March of 1929 the US had never been more optimistic, more sure that they were heading towards and endlessly bright future…..

  31. The Stock Market Crash: Roots • The Depression came from a variety of factors- a “perfect storm” of economic issues- and while the Crash was the explosion, it wasn’t really the start • Overproduction of Agriculture all through 20s- falling crops prices meant farmers were losing $$, and therefore less able to buy manufactured goods (so overproduction there too) • Many industries were weak- stuck in 1880s (cotton textile, RR, coal- the backbones of the 2ndIR). • Uneven distribution of income and taxation from trickle down. Unstable banking system with no federal protection. • Weak International econ b/c of war and tariffs • Speculation in stocks- with buying “On the Margin” (10% down, which only works as long as value of stock goes up) Many people counseled caution- including Hoover • “Easy Credit” was too easy- people in debt

  32. Results • A Recession began in August of 1929, and then on October 29th 1929 (Black Tuesday) a selling frenzy began- which led to a dip, then a crash ($30 billion in “paper profits” lost in a month)…market and economy fall until rock bottom of July 1932 • Major blame for gov’t comes not from letting crash happen…but for inactivity once it did….

  33. Impact on Europe and Japan • As market had begun to stumble in early 1929, US had stopped making loans to Germany… which is how they had been paying their reparations to France and England, which is how France and England had been repaying their war loans to the US (House of Cards) • As banks struggle in Europe and US with international $$ issues- they stop making loans to businesses, who then lay off workers, who then can’t buy goods • Japan also very hard it- heavily dependent on exports to US (they fix it by shifting to military production…)

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