Domestic Economic Policies and Government Control of Information During World War I

1. Decision Making Outcomes Domestic Economic Policies and Government Control of Information During World War I

2. Government and Business • The government chose both B and C • Established War Industries Board • Increased efficiency • Conserved resources through standardization • Heavily influenced by business • Unintended Consequences • Business controlled WIB and used it for own benefit • Several thousand businesses made over 50% profit

3. Government and Business • Unintended Consequences Continued • WIB made decisions that benefitted big business • Government offered contracts that guaranteed a profit • “Cost-plus-fee contracts” reimbursed company for expenses plus gave an added fee • Government gave subsidies, relaxed antitrust laws, restricted market entry • This was done to foster cooperation, but undid many progressive reforms • Big business set up a well-organized lobbying group in Washington

4. Government and Business • Unintended Consequences Continued • The size of government grew relative to the economy • 1915 war spending 1% GDP • 1918 war spending 28% GDP • Large bureaucracy • Standardization led to industrial efficiency • Standard of living increased • Businesses incorporate more planning in producing goods

5. Government and Business • Unintended Consequences Continued • Black Market developed • Resulted from shortages of non-essential goods • Other countries in the war also experienced this

6. Government and Business • Choice A- Free-market approach • Might be more efficient in long-run • Production would probably not meet needs of war effort • U.S. could lose the war before the market meet the demand • Although B and C had weaknesses, they worked

7. Government and Business • Choice D- Socialism • Might have worked during wartime • What happens when the war is over? • Government-run businesses have history of failure in 20th century • Soviet Union • Cuba • Eastern Europe

8. Government and Financing • The government did both A and B. • Doubled income tax from 1% to 2% • Surcharge on income over $20,000 to 13% • Increased taxes on alcohol and tobacco • Increasing corporate taxes • Inheritance tax of 10% on amounts over $50,000 • Government needed to borrow to pay most costs • People purchased war bonds • Appealed to patriotism • Government pay the amount plus interest

9. Government and Financing • Unintended consequences • Deficit rose to $1 billion per month • Greater than yearly federal budget before the war • Federal debt 20 times greater after war • Future taxes and spending cuts needed • Prices doubled (inflation) during the war • Bond drives help the rich • Tax exemption on bond interest, rather than being taxed at a higher rate • Burden of tax shifts to wealthier people

10. Government and Financing • Choice C • Would have prevented the U.S. from fighting the war effectively • War was expensive-need new strategies to raise money

11. Government and Labor • The government chose D • Created agency called National War Labor Board (NWLB) • Included 5 business and 5 labor leaders • Gave workers the right to unionize and bargain collectively • Workers pledged not to strike • There were thousands of strikes anyway • If unions refused to work after talking to NWLB • Government took strong action • Arresting workers • Threatening to send them into army

12. Government and Labor • Unintended Consequences • Strikes increased during war • 1914- 979 • 1917-4233 • Union membership increased almost 50% • Wages almost doubled • Moderation, rather than radicalism, became the norm in unions

13. Government Control of Information During World War I- Problem 1 • The Government chose C • Committee on Public Information (CPI) • Also called Creel Committee after its leader George Creel • Emphasized positive news in the war • Used patriotic posters, pamphlets and movies • “Four-minute men” • 75,000 volunteer army of respected community leaders • Delivered pro-war speeches at local gatherings • Felt positive information would make censorship unnecessary

14. Government Control of Information During World War I- Problem 1 • Successes of CPI • Americans mostly supportive of war effort • Morale remained high • Negative impacts of CPI • Some considered releasing carefully selected information as censorship • Movies depicted Germans as evil • Creel caught lying about info at least once

15. Government Control of Information During World War I- Problem 1 • Unintended Consequences • CPI’s emphasis on danger of German spies created atmosphere of fear • Life became difficult for German Americans • Committee stressed “100% Americanism” • People should be entirely committed to the war effort • Led to discrimination against dissenters and nonconformists • Distrust of immigrants lasted beyond the war • Led to deportations and anti-immigration laws

16. Government Control of Information During World War I- Problem 1 • Unintended Consequences • Some Americans became more skeptical of government • Historians worked for the CPI and focused on the idea of Germany starting the war

17. Government Control of Information During World War I- Problem 2 • Government passed Espionage Act in 1917 and Sedition Act in 1918 • Wilson feared dissent would undermine war effort • He fought for censorship of the press • Espionage Act • Crime to spy against the U.S., sabotage the U.S., refuse military service if drafted, or obstruct military recruitment • Prohibited mailing of subversive papers

18. Government Control of Information During World War I- Problem 2 • Sedition Act • Prohibited any communication intended to cause contempt to government • Many considered the acts a violation of the First Amendment • People feared that these acts would be used beyond the war effort • Both acts were enforced

19. Government Control of Information During World War I- Problem 2 • Schenck v. United States • Socialist with anti-war views published pamphlet opposing draft • Supreme Court upheld conviction for violating Espionage Act • Pamphlet posed clear and present danger during wartime

20. Government Control of Information During World War I- Problem 2 • Unintended Consequences • The laws remained in force after the war • Attorney General A. Mitchell Palmer used these in the Palmer Raids against radicals • They were deported • They were not German spies; They were socialists, communists, and suspected anarchists • The Sedition Act was repealed in 1921 but the Espionage Act remained in effect decades after the war • Parts of it are still in effect in the 21st century.