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NOTES ON USA 1919-1941 YR 12 MODERN HISTORYNote: ‘Leuchtenburg’ refers to quotes from ‘The Perils of Prosperity, William Leuchtenburg, 1958’Politics in the 1920’sConservatism, Dominance of the Republican PartyConservatismSignificant Conservative PoliticiansCalvin Coolidge, President of the United States 1922-29Warren Harding, President of the United States 1921-22Herbert Hoover, President of the United States 1929-1933Andrew Mellon, Secretary of the Treasury 1921-1933William Taft, Chief Justice of the Supreme Court, 1921-1930 Conservatism, generally means opposition to radical change, and favours the ‘Status quo’ in society, both in social tradition and the current economic status quo.Main principles of 1920’s ConservatismEconomic Principles, see 1920’s Economic Issues notes:‘Laissez Faire’ (Leave it be), Capitalism, meaning Capitalism with little government regulation or interference Could also be said that it was Hamiltonianism, named after the first Secretary of the Treasury Alexander Hamilton, believed in government policies that most favoured big business‘A president’s only function was to see that the government interfered with industry as little as possible’ (Leuchtenburg, talking about Coolidge)‘Calvin Coolidge... aspired to be the least President the country had ever had; he attained his desire’ (Irving Stone, quoted in Leuchtenburg)‘By allying Government with Business, the Republicans believed that they were benefiting the entire nation’ Low taxesFewer government regulationsCan be seen in the Appointment of many conservatives to the Federal Trade Commission, who ignored or were lenient on many ‘Anti-trust’ (anti-monopoly), and labour regulationsA general respect and appreciation for the Capitalist Free-Market economy of the United States that was during the 1920’sHigh TariffsAnti-UnionistPro-Business‘The Chief Business of the American people is Business’, Calvin Coolidge‘Coolidge’s prescription for government was simple. All prosperity rested on business leadership’ (Leuchtenburg)‘the Republican right wing was determined to call to a halt the social welfare measures and to push legislation favourable to big business’ (Leuchtenburg)‘No political party, no national administration, could conceivably have been more co-operative with big business’ (Leuchtenburg) Social Principles, broadly defined or understood as TraditionalismTraditionalism being the White, Anglo-Saxon, Protestant, Rural society that Traditionalist believed was the true AmericaAll of the beliefs of Social Conservatives in the 1920’s extended from this belief, and legislation was used in an attempt to preserve this kind of America Opposition to Communism and CommunistsSupport for ProhibitionIn the South most of them were ‘Southern Democrats’, conservatives supported the ‘Jim Crow laws’ that discriminated against Blacks. Opposition to Immigration, who were believed to undermine US society‘Dislike of foreigners had been a traditional plank of American Conservatism throughout much of the history of the Republic’ (Snowman, The 1920’s: An Age of Rose- coloured Nightmares)Foreign Policy, generally seen as Isolationist, see Isolationism noted Opposition to the Treaty of Versailles and the League of NationsDistrust of Communists, seen in the Intervention of the USA in the Russian Civil War in 1919, intervene on the side of the anti-communist ‘Whites’Supported the ‘Banana wars’, wars in Central America during this period to maintain American security and interests:The operation of the Panama canalUS Business interestsThe repeated interventions of the USA in Honduras and Nicaragua, to protect the interests of the United Fruit Company US Marine Corps General Smedley Butler, who fought in the Banana wars said in his 1935 book War is a Racket ‘I spent 33 years and four months in active military service and during that period I spent most of my time as a high class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalismIn 1918, the conservative Republicans win control of the House of Representatives and the Senate in Congress. This was at the midpoint of the Progressive Democratic President Woodrow Wilsons Second term, and at the conclusion of the First World War. Woodrow Wilson attempted to have the Treaty of Versailles ratified by the US Senate, as by per the US Constitution, the US Senate must pass all foreign treaties with a two-thirds majority vote. The Republicans blocked any attempt to ratify the Treaty by the Democrats.As a result of this Isolationist Conservatism from the Republicans, the United States never ratified the Treaty of Versailles, and never joined the League of Nations The majority of people in the 1920’s were Conservatives including many Democratic politicians and voter, and such was the success of the Republicans as being the more Conservative party. It was the result of America expressing a desire to return to ‘Normalcy’, WWI and the tumultuous economic and social changes brought upon by Progressive Politics in the previous 30 yearsWarren Harding, a Senator from Ohio, won 37 states and 404 electoral votes with 60.3% of the National popular vote, against his Democratic opponent James Cox The War, the Red Scare, post-war inflation and unemployment, ‘In a word the national had had enough of Wilsonism’ (Leuchtenburg) The 1920 Presidential election was a massive victory for the Republicans and Conservatism, and the Republicans dominated US politics until 1933 and the Depression totally removed them from power. This was because the Republicans were seen as responsible for the 1920’s prosperity, and thus as long as the prosperity continued, Republicans and Conservatism was entrenched as the ruling political party and dominant political philosophy.Conservative political stance was anti-progressive, ‘we have torn up Wilsonism by the roots’ Republican Senator Henry Cabot Lodge‘Harding and his friends set about dismantling or neutralising as many of the social and economic components of progressivism as they could’ (Tindall and Shi America a Narrative History 1999) However, directly as a result of the Great Depression, and the public perception that the Republicans were directly responsible for it, the Republicans and Conservatism lost power and influence as a political philosophy. Republicans lost control of the House of Representatives and Senate in the 1930 midterm elections, the first Federal election since the 1929 Wall Street Crash and the beginning of the Great DepressionRepublican Herbert Hoover lost re-election in 1932 Presidential election Republicans were in the minority for the rest of the 1930’sProgressivismProgressivism was the dominant Political Philosophy from 1892-1920, yet it declined in influence, and was irrelevant, with the exception of rural states in the Midwest and Plains because of Progressive support for farm price intervention and anti-monopolist views.Main Progressive PoliticiansWoodrow Wilson, President of the United States 1912-1920Robert La Follette, Senator for Wisconsin 1906-1925Fiorello La Guardia, Congressman from New York, 1922-1933 Main principles of ProgressivismEconomic principlesFavours Government intervention in the economy to achieve desired outcomesAnti-Trust (anti-monopoly)Supports Unions and the 8-Hour DaySupport restrictions on bad labour practises such as Child labourSupports assistance for farmers through price controlsAnti-business/industrialist, against the concentration of Income and Wealth Supports Progressive/High taxesSocial principlesAgainst prohibitionNot anti-immigration or foreignerForeign PolicyMainly ‘Wilsonism’, the use of American economic and military power to spread democracy and democratic values in the world, drove the US entry into WWISupports the League of Nations and the Treaty of Versailles Progressivism could not recover its terminal decline following the massive defeat of the 1920 presidential election. The Progressive party ran a National Presidential ticket, with Senator Robert La Follette as its candidate. It won 17% of the national vote and carried La Follette’s home state of Wisconsin. Yet as William Leuchtenburg notes;‘In the post-war years, noted one writer, an attack on the trusts seems as outdated as the tandem bicycle, and “trust-buster” was a term as lost in the mists of the past as “free-soiler” Socialism/CommunismSocialism, defined by Wikipedia:The economic and political system that aims to socially or collectively own the means of production (capital) through the state, and abolish the economic/social hierarchical system called ‘class’Socialism was of limited popularity, most so in America. Socialism was the aim of the British Labour Party, which won power in 1929-munism is a more radical form of socialism, defined by WikipediaThe economic and political system that aims to totally abolish private property and all of the goods and services produced in a communist society would be equitably distributed according to a person’s need.In America, in the 1920’s it was the fear of communism that influenced the nation more than communism itselfIn 1917 the Communist Bolsheviks seized power in the November Revolution in Russia, creating the first communist stateIn 1918/19 the Spartacus revolution almost turned Germany into a communist state. In 1919/20, the ‘Red Scare’ gripped American society, thousands of foreigners were deported‘by the autumn of 1919, millions of old-stock Americans had come to believe that the country was faced by the menace of alien revolutionaries’ (Leuchtenburg)Only 7% of the American Communist Party could speak or understand American English, so this fear and association of foreigners with communists and vice-versa was quite justified See Anti-Communism notesEconomic IssuesRepublican Economic PoliciesTax PoliciesThe Republicans aimed to reduce Federal taxes and spending by a significant amountAndrew Mellon, Secretary of the Treasury 1921-1933Previously a very wealthy Financier before becoming Secretary, during the 1920’s he was the third wealthiest man in AmericaCommonly called ‘the Greatest Secretary of the Treasury since Alexander Hamilton’ during the 1920’s Cutting taxes to bring in more money into the US Economy, cut taxes on the top income from 65% to 20%, also cuts in low income tax brackets, estate tax, surtax and profits taxRevenue Act of 1921 was introduced stopped the war time excess profits tax and reduced the surtaxRevenue Act of 1924 raised exemptions in the lower tax brackets reduced normal tax rates and permitted rebates on investment incomeBy 1929, only 2% of workers were paying the Federal income tax, because the rates were so low and applied to incomes on a very high level Further tax cuts were introduced in the Revenue Act of 1926, 1928 and 1929Federal Debt reduced from 24 billion in 1920 to 16 billion 1930 Government expenditures per annum fell from $6.4 billion in 1921 to $2.9 billion in 1928TariffsThe Republicans favoured high tariffs for manufactured Goods. This is because many industrial and manufacturing industries developed in the United States during the First World War, since the industrial capacity of the European nations was entirely focused on producing war materials, and not consumption goods for the US market. US manufacturing also benefitted from the European countries buying war materials and other essential goods from the United States.These industries became exposed after WWI, so the Republicans passed the Emergency Tariff Bill which protected the infant industries, but Wilson vetoed the bill saying ‘If we wish to have Europe settle her debts, governmental or commercial, we must be prepared to buy from her’WWI saw the growth of a number of infant industries; since the European countries were in a war, these industries were automatically protected.Republican President Warren Harding signed the Emergency tariff act Introduced tariffs on foreign textiles, chemicals, minerals and manufactured goods, but failed to introduce tariffs on agricultural goods.Before WWI, the Underwood Tariff reduced tariffs and encouraged free tradeThe US became a creditor nation during the First World War because the European nations borrowed from the US to fight the war, the US lost much foreign investment and Europe was still economically weakened by the warThe tariffs made it difficult for the European countries to sell their goods in the United States, which kept the European nations economically weakened, thus making it more difficult to raise the revenue to pay back the US for the loans that were given to Europe during the War.Republicans cut immigration quotas, the Immigration Act 1924, the population growth reduced the number of consumers in the United States, thus farmers suffered.When the First World War ended, the ‘infant’ industries that had developed during the First World War came under threat from the revering European manufacturing industries, and threatened to outcompete them in the US domestic market, potentially ruining the industries.In response to this, the Republican Congress passed the Emergency Tariff Act in 1921, which increased the tariff on foreign agricultural products.In 1922 Congress passed the Fordney-McCumber Act, which increased the tariff rates on foreign goods. They achieved this through two methods:Scientific Tariff: This was a tariff based on the average wages paid in a foreign country; if France paid its workers an average lower wage then this tariff would increase the cost of the imported goods which negated to saving in the cost of production caused by the lower wageAmerican Selling Price: This tariff linked the price of the imported goods to the cost of the same American good, the tariff deliberately increase the price of the imported good above the cost of the same American good, which meant that the American good was always cheaper.The impact of these tariffs was that farmers was that farmers were exposed to foreign agricultural products in the American market, which decreased the prices received by farmers for their productsThe tariffs influenced developments in that it caused farmers income to decrease, which weakened the US agricultural sector as well as farmers and rural communities. The tariffs influenced developments in that it caused the manufacturing industries of the United States to grow enormously, which helped the companies in the manufacturing industries, as well as the communities in which they set up their operations. This contributed to the increased urbanisation, because factories were constructed in industrial cities such as Pittsburg which contributed to their growth.The tariffs influenced developments in that is caused the Economy’s of Europe to fail to totally recover, the tariffs made it almost impossible for European businesses to sell their goods in the United States, so the European economies were unable to totally recover. This also influenced developments in that is weakened Europe’s ability to pay back the United States the loans that they borrowed. Republican Business PoliciesThe Republicans supported a Laissez-Faire approach to business, meaning ‘leave it be’, the Republican attitude was to leave the business sector alone and it would produce better outcomes for society.The Republicans stopped prosecuting companies that were merging, that would have been illegal under restrictions put in place by the Sherman Anti-trust act. The result of this was that from 1919-1929 4000 mergers took place in manufacturing and mining, and the US Economy began to become dominated by a few large corporations. US Steel Corporation controlled ? to 2/3 of iron ore during this period. The Republicans also supported the business community during strikes; the Herrin Massacre and the Great Railroad Strike of 1922 are examples of how the government supported the employers against Union workers on strike during this period.This influenced developments because it allowed the growth of monopolies, business mergers increased, profits also increased 61%, it influenced the development of large corporations. IndustrialisationIndustrialisation is the process by which there is growth in the industrial sector of the economy that causes it to eclipse the other sector of the economy, characterised by increased use of machines, electrification and large increases in productivity, as well as the development of an urban workforce and urban society.The effect was a significant increase in the size and output of the manufacturing sector, and the production of consumer goods. Combined with this was an increase in economic productivity as a result of industrialisation, lowering the cost of production for goods, and increasing the real wages of workers. ‘Industrial production almost doubled during the decade... without any expansion of the labour force; Manufacturing employed precisely the same number in 1929 as in 1919’ (Leuchtenburg)The United States had already been industrialising since the end of the Civil WarBy 1900 already the World’s largest economy, and largest industrial outputManufacturing output up 264% from 1899 to 1929Boom in the:Iron and Coal industrySteel, AluminiumSynthetic chemicals and plasticsAutomobile sector, in 1909 annual output was 4000 cars, by 1927 it was 7,000,000Electricity sectorThe Automobile industry massively affected the US economy in these ways‘Without the Automobile industry, the prosperity of the 1920’s would scarcely be possible’ (Leuchtenburg)Stimulated growth and employment, in the Midwest where the Major US car manufacturer plants were located, as well as surrounding car parts manufacturersIncreased growth in accompanying industries of Steel, Glass, Rubber ‘There was scarcely a corner of the economy that the automobile industry did not touch... created dozens of new enterprises from hotdog stands to billboards’ By 1925, a Ford rolled off an assembly line every ten secondsIn the USA there were one automobile per five citizen compared to1 to 43 for Britain1 to 345 for Italy1 to 7,000 for RussiaConsumerism, including entertainmentConsumerism, defined as the social idea that individuals purchase goods and services for consumption that is not required for sustaining basic needs; rather for enjoyment, entertainment and to save labour.The 1920s was a period of a realisation of the American Dream by ordinary Americans, the American dream defined as economic prosperity and opportunity for Americans in material terms. Characterised by an improvement in the comfort, security and overall prosperity of ordinary life. This was due to the development of methods of mass production which enabled higher economic output, lower prices, higher wages and a far wider range of consumer goods available for sale. Consumerism grew in the United States because of increased demand from ordinary workers, real wages grew 22% in 7 years, and this gave workers a much greater disposable income that could be spent on consumer goods and services. Mass consumerism was mobilised by ‘Big Business’As characterised by an emergence of oligopolies and consequent demise of small family-operated businessPrompted improvements in efficiency, productivity, and growth of inequality in the distribution of income, wealthSpurred by the development of technology and a consequent decline in the demand for workers in manufacturing industries, incline in demand for workers in booming industries such as services Spurred by the development of business strategy, such as:The assembly line approach to production ‘Fordism’, as introduced in 1913-14A ‘Welfare capitalism’ approach to industrial relations A system under which companies provide employees w stock bonuses, profit sharing plans, life insurance, old age pensions intending to maintain industrial contentment. Such as the Combine harvester company giving a 2 week paid vacation in 1925, unheard of at that time. Spurred by the movement of production operations abroad as encouraged by Republican economic policyEg General Electric factories established in Latin America, China, Japan , Australia, effecting a reduction to labour, resource costs and an improved access to raw materials Encouraged an increase in the rate of education retention There was an increase in the prestige of the image of the educated businessman and an increase in employment opportunities and access to education servicesEncouraged a decline in trade unionism Primarily the Growth of prosperity, and welfare capitalism meant that Unions were becoming less attractive and relevant, Unionism dropped to its lowest levels in the 1920’sDue to: growth of ‘welfare capitalism’; prevalence ‘yellow dog contracts’; use of intimidation by major firms; adverse social, political opinion of unions; government efforts to deter unionist activity (eg Gov banned strikes by railroad workers, miners in 1922, 1923)Led to a decline in union membership from 5m (1920) to 3.5m (1929)Mass consumption signalled a variety of social trendsEncouragement to spend elicited by persuasive advertisement, mass production, supply of a wide range of goodsEncouraged conformity in dress, diet, house, as the development of oligarchies inhibited industrial competition and advertisement became nationalAdvertisement was heavily influential of consumer spending patternsEg Edward Bernays, Bruce BartonAppealed to the social aspirations and insecurities of ordinary Americans to sell luxury goodsSpending became item of pleasureIncrease in spending gave rise to increase in creditLending to purchasers was 10th largest business by 1929 The Major of Characteristics of an increasingly consumerist society that was being developed in the 1920’sIntroduction of new products (eg gossip magazines, sodas, hot dogs)Introduction of new leisure activities (eg live sport, music on the radio or gramophone, ‘window shopping’, long distance car trips, trips to the theatre)Emergence of business magnates (eg Henry Ford [automobiles], James Duke [tobacco], George Eastman [cameras])Consumerism became a result of;Widespread economic prosperityDue to growth in disposable incomes and the middle classResulting in an increased demand for goods and better standard of lifeAccess to electricity increased the amount of goods a typical home could use, without access to electricity they could not use many of the new consumer goods that were being produced during this period, electricity enabled Consumerism Loss of self-identityDue to rapid social, economic change embedded in industrialisation and urbanisation, an increasing disparity between rural and urban culture and a post-war influx of immigrantsConsumerism created ‘a form of identity and compensatory satisfaction’ Peter Stearns‘Some immigrants also hoped to demonstrate their long journey had been worthwhile’ Peter Stearns‘African American interest reflected a desire to... fight stereotypes of inferiority’ Peter StearnsConsumerism became an important component of the US capitalist economy because modern Industrialised economies rely on consumers purchasing consumer goods to drive production and prosperity‘The capitalist achievement does not typically consist in providing more silk stockings for queens but in bringing them within the reach of the factory girls in return for steadily decreasing amounts of effort’ Joseph A. Schumpeter Consumer GoodsNew consumer products appeared which encouraged more consumption, and more production.AutomobilesRefrigeratorsRadios- developed before the war, exploded in popularity, in October 1920 the first radio station began, covered the Presidential/Congressional elections later that year. By 1922 3 million households had radios, by the end of the decade 3 out of 4 were sold on creditElectric Toaster, by 1929 one in five owned oneVacuum Cleaners, by 1929 one in four owned one Cigarette lighters Wrist watches Matches Cooking utensils.Many of these new products were associated with the Automobile industry, antifreeze fluids for car radiators, paint sprayers for car chassis and reinforced concrete for highways.Americans also consumed a more varied diet, since there were fresh vegetables available all year round and higher incomes increased the demand for more luxury foods. In 1905 41 million cases of food were shipped, in 1930 it had increased to 200 million. As urbanisation increased; consumption of canned fruits increased, also canned vegetables, milk and other canned food products. In 1916 the grocery store was invented, it rapidly expanded during this period, it allowed consumers to choose from a wider variety of goods that could be purchased from a single store, rather than going to many smaller specialty stores to purchase everyday goods, this created economies of scale in consumer goods and brought down the price, enabling more consumption by consumers.Between 1917 and 1927 sales jumped124% in drugstores287% in groceries 425% in clothingLeisure and Entertainment in the 1920’s Higher disposable incomes and an inclining quality of life prompted the growth of consumerist activities as a means of leisureSport and physical activity The 1920’s was also a period of the expansion in spectator sports, this was because of the radio that was owned by 3 million households broadcasted sports and higher incomes gave people the ability to pay to attend sporting events. Prompted increasing sales of sport equipment, the introduction of spectator sports such as baseball (1870-), football (1900-), horseracing (1860-), boxing (1860-) and the emergence of new sports heroes (eg Gene Tunney, Babe Ruth, Red Grange, Bobby Jones)Baseball drew about 10m fans per year to gamesBy the end of the 1920’s American football had gate takings of $21 million each yearEntertainment- During the 1920’s Music Prompted increasing sales of sheet music, phonographs and phonograph recordings, and an increasing volume of spectators of musical acts (eg vaudeville and jazz concerts)Cinema Over 20,000 movie theatres were constructed during the 1920’s, in 1922 40 million movie tickets were sold each week, this increased to 100 million in 193023,000+ movie theatres across America in by late 1930’sIntroduction of new holidays supported increasing sales, consumer demandEg proclamation of Mother’s Day by President Wilson in 1914 to support inclining consumerism and promote significant women’s issues The Department Store and Mail-Order CataloguesThe introduction of the department store actively promoted consumerismGoods, novelty items put on display; introduction of new luxury goods; promoted fashions and trendsMail-order catalogues provided consumers w an opportunity to buy from homeEg Sears and Roebuck mail-order catalogues Popular products included toy soldiers, dolls, cuddly animal toys (eg ‘Teddy bears’), bicycles, snack foods, pianosAfrican Americans and ConsumerismConsumerist opportunities made available to AA in the 1920s w the Great Migration, inclining employment opportunities, rates of education and levels of skillEg cosmetics were used to ‘make African Americans look less African’ Peter Stearns Believed by some to drive AA into povertyProvided AA w a chance to demonstrate newfound sense of national identity, culture, priceEg AA participation in vaudeville and the introduction and development of blues and jazz Eg AA participation in professional sports leagues (AA boxer Jack Johnson reigned as the national heavy weight champion between 1908 and 1915)Conspicuous ConsumptionSuggested by economist Thostein Veblen in The Theory of the Leisure Class (1898)Reached wide American audience by the 1920s and became colloquially known as ‘keeping up with the Jones’’Analysed psychology of American consumptionEvidence of conspicuous consumption in 1920s America can be seen in a substantial rise in the purchase of non-necessities Eg RadioFirst public radio station aired from Wisconsin State University in 1920First commercial radio station, KDKA aired in Pittsburgh in 1920The National Broadcasting Company was established in 1927 (first national radio network)Programs featured sport, news, entertainment shows, advertisementsA source of national unity, providing a common source of information and entertainment, and promoting certain trends or fads in popular cultureBy 1922, 3m American households had a radioMotion picturesHighly influential force in shaping popular culture having encouraged consumerism and new patterns of leisure, and promoted national trends in clothing and hairOne of the 10th largest industries in the 1920s40m tickets sold each week in 1922 (this increased to 100m in 1929 and 115m by 1930)New electrical appliancesGuaranteed a better quality of life for middle class American housewivesNew products included: vacuum cleaners, dishwashers, washing machines, refrigeratorsFord and the AutomobileThe automobile became available to American society as a consumer good in 1897 w the development of new technologies such as petrol refining and electronics‘Without the new Automobile industry, the prosperity of the Roaring Twenties would scarcely have been possible’ (Leuchtenburg)Mass consumerism was heavily promoted by the introduction of the carConsiderably impacted upon ordinary America, as it created:A greater access to remote and rural communities thereby benefiting farmers The processes of urbanisation and suburbanisation, and its consequent positive and negative effectsGrowth in employment opportunities for the middle and working classesAn increase in range of recreational activities available to ordinary Americans Pollution and other adverse environmental trendsThe growth of conspicuous consumption, defined as leisure consumption, buying goods and services for the primary reason of showing them off and deriving status from these goods. Henry Ford founded the Ford Motor Company in Detroit in 1903, which produced 100 cars per day in 1908Ford served as an innovative force in the automobile industryEg utilised vanadium steel from 1906Ford cars were thus made stronger and faster Eg introduced the assembly line approach to mass production or ‘Fordism’ in 1913-14This signifies a system in which each worker is assigned a specific task along a conveyor belt This effected an increase in industrial efficiencyEg decrease in the time taken to produce 1 car, from 12.5 hrs in 1913 to 1.5 hrs in 1920, or from, 1 car produced every 3 mins in 1913 to 1 car produced every 10 secs in 1920This effected a reduction in the cost of production and an increase in supplyCost of a Model T reduced from $1,290 in 1909 to $290 in 1928Increase in total cars registered from 8m in 1920 to 23m in 1929Utilised ‘instalment buying’ to extend demandEnabled consumers to purchase cars through the payment of periodic ‘instalments’Modernisation of industrial relations Ford employed an increasing amount of AA, largely due to the unskilled nature of assembly line workEg AA employed under Ford increased from 50 in 1916 to >2,500 in 1920m to >10,000 in 1926Ford employed an increasing amount of unskilled workers, rising to 22% of his workforce by mid 1920sFord revolutionised working practicesMay be considered fair in some respectsWorking week reduced from 48hrs, 6 days in 1920 to 40hrs, 5 days in 1926‘Ford’s original labour policies made him the American god to employees... in 1914 the national wage was $2.40 a day. Ford paid a minimum of $5... By 1926... he had quadrupled the average wage to nearly $10’ (Alistair Cooke)Ford Sociological Department ensured that employees were healthy and that employee’s houses were sanitary through spot checksLeisure activities such as dances organised for workers May be considered poor in some respectsEg employee of River Rouge plant Mike Widman recalls;Opening gates locked at 8amWorkers under constant surveillance by plain-clothes inspectorsPermission had to be asked to be able to go to the toilet Eg employee of Highland Park plant Jim Sullivan recalls;‘If you were on that line and you had a certain job to do... and you didn’t get your pat in there, you were in trouble’The automobile industry significantly impacted upon American societyPositive impacts include:Increasing car sales prompted economic prosperityContributed >10% to manufacturing production and employed 4m workers in 1930Car manufacturing led to development of various other industries such as:Oil (95% used by car industry)Rubber (80% used by car industry)Plate glass (75% used by car industry)Leather (65% used by car industry)Encouraged suburbanisation and a subsequent incline in the quality of life of the middle classPrompted the construction of infrastructure such as new roads, state/national highwaysPrompted a change in leisure patterns, enabling road tripsAssisted rural workersEg the Model T or ‘Tin Lizzy’ (introduced in 1980) was highly practical and popularSuspension enable travel over dirt tracks and unmade roadsCould be connected to farm machineryEasy to repair15m mass produced between 1908 and 1927 such that it was 1 in every 2 cars sold by the mid-1920s‘Your car has lifted us out of the mud. It has brought joy to our lives’ wrote a farmer’s wife to Henry Ford in 1918Prompted the development of shopping centres and a consequent ship in shopping patternsNegative impacts include:Increasing levels of borrowing and debt, stimulating speculation and giving rise to the Great Depression60% of Automobiles were bought on instalment, 3 out of 4 radios alsoFuelled real estate speculationChanging patterns of crime w the mobilisation of gangsters through use of the getaway car’Useful Quotes on Consumerism ‘Ten years after the war, conspicuous consumption became a national obsession’ (Leuchtenburg)‘The growth in popular culture and consumerism reflected economic changes that had important consequences for class structure and lifestyle. Within the decade, the radio and the movie nationalised popular culture’ (Leuchtenburg)‘Old time values of Thrift and saving gave way to a new economic ethic that made spending a virtue’ (Tindal and Shi)‘Inventions in communications and transportation, such as motion pictures, radio, telephones and automobiles not only fuelled the boom but brought transformation in society’ (Tindal and Shi)‘Workers were paid the highest wages of any time in history’ (Leuchtenburg) ‘The key to economic prosperity is the organized creation of dissatisfaction’ Charles Kettering, executive at General Motors 1929.How did Consumerism influence developments in the USA 1919-1941?As with all of these essays, there will be a rapid change in the information and tone of the essay when explaining the effects after October 1929 and throughout the Great Depression.Consumerism, defined as the social idea that individuals purchase goods and services for consumption that is not required for sustaining basic needs; rather for enjoyment, entertainment and to save labour. Consumerism, both its causes and effects was a major influence on developments in the US Economy and Society from 1919-1941, however Consumerism’s nature changed rapidly after the Wall Street Crash 1929 and throughout the Great Depression of the 1930’s.Influences on US EconomyIndustrialisation- During the period there was the final period of the industrialisation of the US economyLarge increases in productivity and output in the manufacturing sector producing consumer goods, needed to be complemented by increasing levels of consumption of consumer goodsLeads to growth in Advertising, with the aim of increasing consumption by increasing the desire for consumers to obtain the goods being advertised ‘The key to economic prosperity is the organized creation of dissatisfaction’ Charles Kettering, executive at General Motors 1929.Real Income increases- Real incomes grew 22% in 7 years from 1922-1929, due to declines in the cost of consumer goods because of industrialisation, increasing productivity and mass production. Reduction in cost of goods meant that ordinary people were now able to buy luxuries such as cars, radios, which drove a consumerist economy‘The capitalist achievement does not typically consist in providing more silk stockings for Queens but in bringing them within the reach of the factory girls in return for steadily decreasing amounts of effort’ Joseph A. Schumpeter Credit-Culture- However accompanying this increase in consumerism was the expansion in the use and availability of credit to buy consumer goods. This was due to the desire of ordinary people to ‘buy now, pay later’, which increased the level of debt in the economy60% of Automobiles were bought on instalment, 3 out of 4 radios alsoIncreased the level of debt in the economy, in the long term weakened the economy and helped bring about the Great Depression Described by Tindall and Shi ‘Old time values of Thrift and saving gave way to a new economic ethic that made spending a virtue’ ‘This was the first great economic boom: its impetus and direction came from the mass consumer market... American has a lot of money to lend and Americans were anxious to borrow’ J. RobertsAfter the Wall Street CrashConsumption and consumer spending massively declined This caused businesses to lower production, lay off workers and further entrenched the downward economic spiralThus it can be said that consumerism helped create the economic prosperity of the 1920’s and the end of consumerism brought the Depression of the 1930’sSignificant decrease in the ‘consumerist’ ideals, primarily since most families were no longer able to afford to buy luxuries or sustain the consumerist lifestyle.US SocietyMost of the influences on US Society that consumerism made was in the period of 1919-1929. Major changes were changes in Lifestyle of the average American:Increasing urbanisation coupled with technological developments changed the lifestyle of the Average AmericanMore likely to live in a house in a major city with the following thingsAutomobilesRefrigeratorsChanges in Diet of the average American a more varied diet,Fresh vegetables available all year round Higher incomes increased the demand for more luxury foods. In 1905 41 million cases of food were shipped, in 1930 it had increased to 200 million. As urbanisation increased; consumption of canned fruits increased, also canned vegetables, milk and other canned food products. In 1916 the grocery store was invented, it rapidly expanded during this period, it allowed consumers to choose from a wider variety of goods that could be purchased from a single store, rather than going to many smaller specialty stores to purchase everyday goods.Entertainment and popular culture Popular culture became nationalised, because of fast communication and dissemination of entertainment meant that trends, fashions were spread across the countryModes of entertainment changed, from books and newspapers to: The 1920’s was also a period of the expansion in spectator sports, this was because of the radio that was owned by 3 million households broadcasted sports and higher incomes gave people the ability to pay to attend sporting events. Prompted increasing sales of sport equipment, the introduction of spectator sports such as baseball (1870-), football (1900-), horseracing (1860-), boxing (1860-) and the emergence of new sports heroes Gene Tunney Babe RuthRed Grange Bobby JonesBaseball drew about 10m fans per year to gamesBy the end of the 1920’s American football had gate takings of $21 million each yearMusic Prompted increasing sales of sheet music, phonographs and phonograph recordings, and an increasing volume of spectators of musical acts (eg vaudeville and jazz concerts)Cinema Over 20,000 movie theatres were constructed during the 1920’s, in 1922 40 million movie tickets were sold each week, this increased to 100 million in 193023,000+ movie theatres across America in by late 1930’sConsumerism through the Automobile had the effects on lifestyleThe Automobile resulted in:A greater access to remote and rural communities thereby benefiting farmers The processes of urbanisation and suburbanisation, and its consequent positive and negative effectsGrowth in employment opportunities for the middle and working classes in the automobile and related industriesAn increase in range of recreational activities available to ordinary Americans Air Pollution and other adverse environmental trendsThe growth of conspicuous consumption, defined as leisure consumption, buying goods and services for the primary reason of showing them off and deriving status from these goods. PoliticalAs a result of consumerism, it became necessary to merge Business and Government interests together, since businesses were the providers of goods and jobs to Americans, with the interest of maintaining the consumerism of the period. The Government had an interest in maintaining the prosperity of the 1920’s, partially brought on by a consumerist attitude thus the two ambitions became merged, and thus the government and business worked together Promoted the integration of Government and Business interests, becoming almost identicalAn example of this is the quote provided by Charles Wilson, former CEO of General Motor and later Secretary of Defence, ‘I thought what was good for the country was good for General Motors and vice versa’Can be seen later in the NRA, in which the Government and major businesses co-operated in order to maintain higher wages, prices and employment to stimulate consumption, a return to consumerism and economic growth. American CapitalismThere was a short yet severe recession from 1921-22, but by 1923 that was behind the nation. The Roaring 1920’s was a period of unparallel economic prosperity. American prosperity at the time was centred on what Herbert Hoover called ‘rugged individualism’, believing in the success and power of the individual to change society and achieve prosperity through their own individual merit and success. A key component of this 1920’s American capitalism was the relationship between US Society and the Businessman, in which the Businessman achieved even greater prominence and status, which was accompanied with the perceived prosperity brought by the Businessman throughout the 1920’s. ‘a climate of prosperity and optimism, the businessman began to look upon himself as the Lord’s anointed’ (American Heritage, 1970)‘The man who builds a factory builds a temple, The man who works there worships there’ (Calvin Coolidge)‘Ford personified the legend of the resourceful American, who by making it to the top on his own, benefits mankind... he was in short the Good Businessman’ (Leuchtenburg)Welfare CapitalismWelfare Capitalism was a common belief in the 1920’s, that the businessmen and industrialists would provide benefits and welfare-like services to employees.Paid Holiday Leave1926 International Harvester created the two week annual vacation with pay for its employeesHigh pay, 1914 Henry Ford’s $5 a day at a time when most industrial workers were paid $11 a weekReasonable working hours and the 5 day weekLife InsuranceOld-age PensionsEmployee stock or profit sharing systemsEducation and social clubsSports teamsHousingChildcareThere were two reasons for this:Satisfy employees, as to discourage unionisationRetain good employees, reduce turnover in staff which would increase productivityHenry Ford, the aim was more Paternalistic:Discourage ‘unhealthy and antisocial vices’, such as alcoholEncouraged dance classes and other productive and pleasant activitiesAnother component was the Republican economic policies and the relationship between Big Business and Government Throughout the 1920’s the Republican administration increasingly set their agenda in line with that of Big Business. This was the ‘Hamiltonian’ approach, named after Alexander Hamilton the first Secretary of the Treasury, that the government and business would work together, through tariffs and favourable treatment to promote economic growth and prosperity.This was done in a number of ways:Taxes were lowered on businessesTariffs were raised, protecting industrial sector businesses from foreign competitionThe Federal Government supported Business in strikesIn September 1919 the Boston Police went on strike and violence broke out in the city, The Governor of Massachusetts Calvin Coolidge sent a telegram to Samuel Gompers, the leader of the strike saying ‘There is no right to strike against the public safety by anyone, anywhere, anytime’There were major strikes by steel workers and coal miners, in September 1919, organised by William Foster 340,000 steelworkers, factory and dock workers went on strike. 1920 Alabama Coal Strike, National Guard helped end the strike by arresting a Union Leader1921, Battle of Blair Mountain, President orders the US Army to intervene to end strike by 15,000 coal miners in West Virginia, fierce gun battle breaks out, dozens killed and hundreds woundedGreat Railroad Strike 1922, President Harding reached a compromise that heavily favoured the government and railroad companies, National Guard actively patrols and prevents further strikes and pickets by railroad workers. The Republicans appointed Conservatives to the Federal Trade Commission and Federal CourtsLenient on Anti-trust prosecutions Bailey v. Drexel Furniture Co, Supreme Court Ruled that the 1919 Child Labour Federal ban was unconstitutionalIn Foreign Policy the Republicans supported the ‘Banana wars’, wars in Central America during this period to maintain American security and business interests :The operation of the Panama canal by the United StatesUS Business interestsThe repeated interventions of the USA in Honduras and Nicaragua, to protect the interests of the United Fruit Company US Marine Corps General Smedley Butler, who fought in the Banana wars said in his 1935 book War is a Racket ‘I spent 33 years and four months in active military service and during that period I spent most of my time as a high class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism Could also be said that it was Hamiltonianism, named after the first Secretary of the Treasury Alexander Hamilton, believed in government policies that most favoured big business‘A president’s only function was to see that the government interfered with industry as little as possible’ (Leuchtenburg, talking about Coolidge)‘Calvin Coolidge... aspired to be the least President the country had ever had; he attained his desire’ (Irving Stone, quoted in Leuchtenburg)‘By allying Government with Business, the Republicans believed that they were benefiting the entire nation’ ‘Government looked only to the single interest of business’ (Leuchtenburg)‘The Chief Business of the American people is Business’, Calvin Coolidge‘Coolidge’s prescription for government was simple. All prosperity rested on business leadership’ (Leuchtenburg)‘the Republican right wing was determined to call to a halt the social welfare measures and to push legislation favourable to big business’ (Leuchtenburg)‘No political party, no national administration, could conceivably have been more co-operative with big business’ (Leuchtenburg) During the 1920’s it became necessary to merge Business and Government interests together, since businesses were the providers of goods and jobs to Americans, with the interest of maintaining the consumerism of the period. The Government had an interest in maintaining the prosperity of the 1920’s, partially brought on by a consumerist attitude thus the two ambitions became merged, and thus the government and business worked together to maintain the prosperity of the USA, whilst serving corporate interests. ‘Detroit became the Mecca of the Modern world’ (Leuchtenburg), of course now it is a shithole‘the chief index of a man’s worth was his income’ (Leuchtenburg) AgricultureThe US Agricultural sector experienced a ‘golden age’ from about 1900-1914. This became a reference for rural politicians, hoping to enact legislation to return farm prices and profits to the golden age era.The Agriculture sector of the US economy struggled in the 1920’s; most farmers did not share in the general prosperity of the 1920’s. Prices for agricultural goods fell consistently throughout the 1920’s for a number of reasons, generally related to an excess of supply, which was the thesis behind the New Deal’s attempts to improve the agricultural sector by decreasing output. Developments in farm technology increases output, creating an excess of supply and falling prices, this technology included:TractorsAutomated HarvestersBetter fertilisers and seeds The US government encouraged farmers to increase production during WWI, to compensate for lost European production and to provide exports to European markets, once again creating a post-war glut of agricultural capacity and output leading to low pricesAgricultural prices during the War were highThus relative to WWI conditions, American farmers were doing poorlyMany farmers took on large amounts of debt during the war, after the war and as farm incomes declined, leaving farmers severely strained to pay back debtsAs a result, farm incomes declined during the 1920’s ‘Effects600,000 farmers went bankrupt in the 1920’sNumber of farms declined from 6.4 million to 6.2 million from 1920-1930Farm acreage fell by 13 million acres‘Many farmers simply gave up’ (Freeman, 1990)Massive internal migration from rural areas to urban areasIn 1920, 11.39 million Americans were employed on farms, 27% of the total workforceBy 1930 it was 10.32 million Americans, 21.2% of the labour force Political ResponsesFarming communities banded together to increase their political clout. The Progressive party was popular among farmers due to their policies of government intervention to increase agricultural pricesThe ‘Farm block’ of rural Republicans was formed, many were conservative Republicans including Arthur Capper and William S. KenyonLegislation was enacted to improve the situation in rural communities.War Finance Corporation, 1921- Revived to support the export of farm surplusesPackers Stockyard Act, 1921- Gave the Secretary of Agriculture to act against the manipulation of farm pricesEmergency Tariff Act 1921- Imposed higher tariffs on imported corn, meat, wheat, wool and sugar, initially sought to be for only 6 months, then extendedThe Farm Co-Operatives Act 1922- Allowed farm produce to be sold through Farmers collectives (a Union for Farmers), with stores buying at current prices and stockholder farmers sharing the profits from their own purchases. These Co-operatives were exempted from Anti-Trust legislation and became major businesses, for example the California Fruit Growers’ Exchange controlled almost 90% of California’s citrus fruit tradeHowever, one bill that was not enacted, vetoed several times by Republican Calvin Coolidge in 1924, 1927 and 1928 was the McNary-Haugen Bill. This bill would have made the Federal government purchase farm surpluses at agreed prices and export these surpluses abroad at lower prices. This bill sought to increase farm prices to the 1900-1920 period of prosperity where farm prices and profits had been high. Coolidge vetoed it on the basis that it was special interest cronyism. THE GREAT DEPRESSIONTO WHAT EXTENT WERE REPUBLICAN ECONOMIC POLICIES THE CAUSE OF THE GREAT DEPRESSIONThe Great Depression began in Octobe r1929 folowing the Wall Street Crash, Republican Tax policies encouraged excess savings and over-investmentAndrew Mellon Secretary of the Treasury enacted a policy of reducing the level of taxation in the US economy. Form 1921-1929 Top tax rate was reduced from 65% to 20%, 80% of individuals no longer paid income tax, ended the excess profits tax and reduced the surtax. The reduction in Tax income had three effects1. It created excess savings, which was used for investment, high income earners have a lower marginal propensity to consume that low income earners, thus save more as a percentage of their income than low income earners, by 1929 the top 0.1% had 34% of all of the US’s savings. These savings contributed to the 1928-1929 stock market bubble ‘surplus capital (of which there was a great deal in the wake of the Mellon Tax cuts and rebates’ often found lending money on Wall Street’ (McElvaine 1993) 2. It reduced the level government spending, and therefore control over the economy, reduced the government’s ability to expand or contract demand 3. It reduced the redistributive power of the government, the government allowed the wealthy to increase their wealth, doing nothing to redistribute the wealth to low income earners. This created growing inequality, and the purchasing power of low income earners did not keep pace with that of high income earners, ‘purchasing power of workers and farmers was not enough to sustain prosperity’ (Leuchtenburg, The Perils of Prosperity 1955). The declining relative purchasing power was not enough to keep demand at a level sufficient to keep the economy growing, thus a slowdown in consumption and production occurred, thus causing the Great Depression. Republican business and tariff policies weakened the US economy to the crisis that occurred in 1929. The Republican policies favoured big business and high tariffs, the policies they enacted benefitted big business, but places the US economy in a position where it was weak in 1929, thus prone to the downturn that occurred.1. The Republicans policies favoured businesses because ‘by allying the government with business, the Republicans believed that they were benefiting the entire nation’ (Leuchtenburg, The Perils of Prosperity, page 103), Republicans believed benefitting businesses would increase production and commerce, thus growing the economy. The Republicans were unable to remove anti-trust legislation because of progressive opposition in Congress, so Republican President Harding, Coolidge and Hoover appointed Conservatives to the Supreme Court, Department of Justice and Federal Trade Commission who would not prosecute businesses for breaches of Anti-trust legislation. The result of this policy was a growing monopolisation of industry in the US; by 1929 200 corporations owned more than 49% of America’s corporate wealth. This caused a lack of competition, which led to increasing prices and inflexibility in responding to demand. The result of this was after spending slowed in 1929, corporations did not decrease prices, but decreased production, resulting in increasing unemployment and a decrease in demand. This increasing unemployment and decreasing demand continued which made the Great Depression worse after the crash of 1929. Thus the Republican policies in regards to businesses did contribute to the causes of the Great DepressionRepublican Tariff and International Business policiesRepublican tariff and international business policies helped cause the Great Depression. Republicans pursued a policy ‘to be the world’s banker, food producer and manufacturer, but to buy as little from the world in return’ (McElvaine), however ‘these ‘beggar they neighbour tactics were suicidal’ (McElvaine). The Republican created high tariffs on imported goods, reducing the volume of European goods sold in the US, which meant European economies were unable to gain sufficient income from sales in the United States, and they were unable to rebuild capital that was destroyed in WWI. This situation was summed up by historian Robert McElvaine ‘If the United States would not buy from other countries, there was no way for other countries to buy from Americans, or to meet interest payments on American loans’. After the downturn of 1929, US businesses were unable to find sufficient export markets in Europe to supplement the decrease in demand in the United States, as said by Historian Robert Edsforth ‘In retrospect... if the United States had been able to find or create growing markets for American farm produce and industrial goods overseas, the Great Depression may have been avoided’. The Smoot-Hawley Tariff Act 1930 made this situation worse, by raising tariffs further on foreign goods, causing retaliatory tariff increases from Europe, which made it impossible for US business to be competitive in Europe Markets. This caused retaliatory tariff increases in foreign nations, significantly decreasing global trade. Thus the Republican tariff and international business policies helped cause the Great Depression, and after the crash of 1929, they made them worse.OTHER CAUSES OF THE GREAT DEPRESSIONWall Street Crash caused by SpeculationThe Over speculation in the Stock market was a cause of the Great Depression. The stock market boom began in 1928, and it attracted large amounts of capital at a time where production and consumption in the US economy was beginning to slow. Yet the Dow Jones Industrial Average increased from 191 in early 1928 to 381 in September 1929, doubling in less than two years. The increase in the stock market was fuelled by speculation and ‘the stock market had entered a fantasy world’ (Tindal and Shi). Credit was provided by Banks to investors to fund the purchase of stock, margin lending increased from $5 billion in the middle of 1928 to $8.5 billion in September 1929, and as a result US Banks were exposed to any losses made on the stock market. This allowed the boom of the 1920’s to extend for another two years ‘by 1928 the Stock Market was carrying the whole economy’ (Leuchtenburg), and thus the crash of October 1929 inevitably dragged down the entire US economy as well. Compounding this was that the crash of 1929 caused the Dow to halve by November 1929, causing the wealth of the United States to fall by billions, individuals and businesses that purchased stocks on margin were left with depreciating assets and massive unpayable debts. As a result the Major US Banks were ‘loaded with dubious assets’ (Leuchtenburg) which was a major factor in the massive bank losses and collapses that occurred from 1930-33. The Bank collapses destroyed 15% of all bank deposits in the USA, and described by Historian William Leuchtenburg ‘Nothing did more to turn the stock market crash of 1929 into a prolonged depression than the destruction of business and public morale by the collapse of the banks’, which dragged the US economy further into Depression. Thus the Wall Street Crash and Over speculation were causes of the Great DepressionProduction-Consumption Gap caused by the misdistribution of incomeDuring the 1920’s manufacturing and consumption increased rapidly, Manufacturing output increased by 42% between 1919 and 1929, because of increasing productivity and new industries such as the automobile industry. However during the 1920’s, an extreme Misdistribution of Income developed, in which the ‘purchasing power of workers and farmers was not enough to sustain prosperity’ (Leuchtenburg). Whilst real wages increased 22% from 1922-29, ‘Profits got the lion’s share of the rewards’ (Sparks), showing that developing in the 1920’s was an extremely unequal distribution of income in the, in which the wealthiest 10% of individuals in the USA had the same amount of wealth as the bottom 70%. Despite real wages growth workers ‘received wage increases disproportionate to the increases in profits’ (Leuchtenburg), resulting in declining relative purchasing power, meaning that there was not enough income received by the average worker to keep demand for goods and services growing. Therefore the higher levels of production and productivity were not complemented by an equal increase in real wages, which would have enabled American workers to increase their consumption of manufactured goods. The lower relative purchasing power meant that the supply of goods and services exceeded the demand for them, thus there was overproduction. The gap that formed between consumption and production meant that businesses were discourages from investing or producing new stock. This overproduction forced businesses to cut back on production, which forced them to lay off workers, which decreased the demand for goods and services, thus beginning the downward economic cycle that caused the Great Depression. Thus the Overproduction Gap between production and consumption was a cause of the Great Depression Excess savings and investment generated by Republican economic policiesOne of the Major Republican economic policies was the reduction, achieved under the Republican appointed Secretary of the Treasury Andrew Mellon. Mellon enacted the policy of reducing the level of taxation in the US economy, form 1921-1929 Top tax rate was reduced from 65% to 20%, ended the excess profits tax, gift tax and estate tax. The effect of this policy was that effectively a large amount of income was transferred from the Federal Government to Wealthy Americans and this created excess savings, which was used for investment, high income earners have a lower marginal propensity to consume that low income earners, thus save more as a percentage of their income than low income earners, by 1929 the top 0.1% had 34% of all of the US’s savings. These savings contributed to the 1928-1929 stock market bubble ‘surplus capital (of which there was a great deal in the wake of the Mellon Tax cuts and rebates’ often found lending money on Wall Street’ (McElvaine 1993). This savings was also used for capital investment, particularly in the Automobile and the manufacturing sectors ‘the prosperity of the 1920s had been sustained in very large part by two great industries(Automobiles and their related industries) which provided millions of jobs and absorbed huge quantities of investment capital’ (Leuchtenburg).By 1927, the vast quantity of automobiles in the USA indicated that all consumers who had the means of purchasing an automobile had purchased one, the market was saturated and sales were declining, which was also the case for many other consumer goods in America. In 1929 the investment in these sectors was saturated, whilst consumption was declining, the industries of the American economy ‘the automobile industry- and satellites like the rubber-tire business-were badly overbuilt’ (Leuchtenburg) by over investment and savings. Since large amounts of capital and labour was employed in the Automobile sector, when it declined due to overproduction and a saturated market, thousands would become unemployed and the value of the investments and assets would decline. This decline of the Automobile and Manufacturing sector was significant because millions of Americans were relied on the these industries for their income, the decline of industry was contagious, spreading to other sectors of the US economy, plunging American into the Great Depression. Weak US Banking SectorA key factor that turned a normal recession into the Great Depression was the Weakness of the US Banking Sector. During the 1920’s ‘no other industrial nation in the world had as unstable or as irresponsible a banking system’ (Leuchtenburg)This was a result of most states in the USA had ‘unit banking laws’, that prohibited the expansion of banks through branches. This meant that most of the Banks in America were small banks, limited to one branch operating in one city or community, relying on a small collection of deposits for solvency and venerable to problems if a small group of debtors is unable to pay. The result was that from 1929-1933, as unemployment increased and farm income decreased, small banks were unable to collect their debts causing them to collapse. From 1929 to 1933 5000 Banks in the United States collapsed, along with their depositor’s money, further reducing the income of individuals and compounding the downward economic spiral of the Great Depression. States without unit banking laws suffered comparatively little small and medium sized Bank closures. As a result the Major US Banks were ‘loaded with dubious assets’ (Leuchtenburg) which was a major factor in the massive bank losses and collapses that occurred from 1930-33. The Bank collapses destroyed 15% of all bank deposits in the USA, and described by Historian William Leuchtenburg ‘Nothing did more to turn the stock market crash of 1929 into a prolonged depression than the destruction of business and public morale by the collapse of the banks’, which dragged the US economy further into Depression. Thus the Wall Street Crash and Over speculation were causes of the Great DepressionFailures of US Monetary PolicyFailures of US Monetary Policy, both before and after the crash caused a normal recession to turn into the Great Depression. Prior to the Crash, the US Federal Reserve held their discount rate (the Rate the Reserve charges US Banks) low, reducing interest rates creating cheap credit and increased consumption which created the economic boom of the Roaring 1920’s. However a large amount of the investment was ‘malinvested’, particularly in the Automobile sector, and Real Estate and Stock market speculation. During 1928 and 1929 the Federal Reserve raised their discount rate from 3.5% to 6%, causing an increase in borrowing costs for investors, making profitable investments unprofitable. The effect of this was a removal of money from the Stock market in October 1929, causing the Wall Street Crash, and the beginning of the Great Depression. However what turned ‘a normal run of the mill recession into a Depression’ (Friedman) was further failures of US Monetary Policy by the Federal Reserve. This was explained by Nobel Prize Winning economist Milton Friedman, that the Federal Reserve that it allowed the quantity of Money in America to decline by a third, because one third of US Banks failed. The Federal Reserve failed, instead of increasing the quantity of money to prevent deflation and a downward economic spiral, the Federal Reserve did nothing. Deflation in the US economy resulted in lower agricultural and consumer prices, resulting in a decrease in industrial production, and farm income which created massive increases in unemployment that reached 24.9% in 1933. Thus the mismanagement and failures of the Federal Reserve resulted the Great Depression Republican Tariff and International Business policiesRepublican Tariff and international business policies helped cause the Great Depression. The Republicans aimed to maximise exports and minimise imports through a tariff and trade policy ‘to be the world’s banker, food producer and manufacturer, but to buy as little from the world in return’ (McElvaine).The Republican created high tariffs on imported goods, reducing the volume of European goods sold in the US, which meant European economies were unable to gain sufficient income from sales in the United States, and they were unable to rebuild capital that was destroyed in WWI. This situation was summed up by historian Robert McElvaine ‘If the United States would not buy from other countries, there was no way for other countries to buy from Americans, or to meet interest payments on American loans’ and ‘these ‘beggar they neighbour tactics were suicidal’. Because of these policies, after the downturn of 1929 US businesses were unable to find sufficient export markets in Europe to supplement the decrease in demand in the United States, as said by Historian Robert Edsforth ‘In retrospect... if the United States had been able to find or create growing markets for American farm produce and industrial goods overseas, the Great Depression may have been avoided’. The Smoot-Hawley Tariff Act 1930 made this situation worse, by raising tariffs further on foreign goods, causing retaliatory tariff increases from Europe, which made it impossible for US business to be competitive in Europe Markets. This caused retaliatory tariff increases in foreign nations, significantly decreasing global trade. The Republican foreign economic policies, whilst did not cause the Great Depression, prevented the development of international prosperity which would have allowed US businesses to develop new markets in the case of a severe downturn in America(3) Social tensions: immigration restrictions, religious fundamentalism, Prohibition, crime, racial conflict, anti-communism and anti-unionismImmigration restrictionsRationaleReaction to communism/anarchismMigrants, being impoverished, were susceptible to socialist ideas‘Alien slackers’War demanded cultural homogenisation and nationalismTargeted Catholic and Jewish immigrants from south-western EuropeLegislative Process1917 literacy test – over Wilson’s vetoEmergency Quota/Johnson Act 1921Quota of 3% of each nationality counted in 1910 censusNational Origins/Immigration Act of 1924Quota of 2% of each nationality counted in 1890 censusIn 1927 top limit was dropped from 164000-150000Ambiguous ‘national origin’ terminology Administrative horror- D. Shannon65,721 (GB) vs 6,524 Poland or 5,802 (Italy)Did not prevent immigration from ‘Catholic’ Mexico, Cuba, French Canada Key bodiesAmerican LegionQuotesAmerica must be kept American- CoolidgeReligious fundamentalismJohn Scopes trial (monkey trial)) – Dayton 1925Clarence Darrow & the ACLU v W Jennings BryanHL Mencken of the Baltimore Sun, and The American MercuryFined $100, paid by Baltimore SunOverturned by Tennessee Supreme Court on a technicalityAnti-Evolution LeagueTeaching of evolution banned in Oklaholma, Florida, Tennesee and North Carolina, Arkansas, MississipiT. T Martin – ‘Keep Hell out of the High Schools’RevivalismAimee Semple McPherson – ‘Four-Square Gospel’Al Smith lost 1928 election because of his CatholicismKu Klux KlanLed by William J Simmons, Hiram W Evans Significant clout in Texas legislatureVirtually owned IllinoisProhibitionPrecedent in Britain, France and MaineWomen’s Christian Temperance UnionTemperance Society of the Methodist Episcopal ChurchAnti-Saloon LeagueRural people, middle-class reformersVolstead Act/the 18th AmendmentPrivate stock not allowed to be confiscatedHoover’s clout with the Belgian embassy‘Mississippi would vote dry and drink wet while ever it could stagger to the polls’ – Will RodgersRationalePovertyClass ConflictRacial agendas (blacks and immigrants targeted)Legislative ProcessWebb-Kenyon Act 1913 – prohibited the transport of liquor into dry areas, over Taft’s vetoLever Act 1917 – prohibited liquor production to conserve grain during the warEighteenth Amendment adopted Dec 1, 1917Ratified January 1919Volstead Act 1919 – after New Years 1920, illegalised beverages with over 0.5% alcoholBaby Volstead Acts – state legislation, repealed by someIneffectivenessHigh degree of corruption in federal Prohibition BureauPorous borders with Canada, Carribean‘low capital requirements of bootleggers’ – David ShannonImpactIncreased American contempt for lawFuelled crime/corruptionDenaturants, methale/wood alcoholCrimeFuelled by prohibitionRacial ConflictBlack AmericansProhibition was thought to apply to immigrants and blacksJim Crow/segregation lawsGrandfather clauses in votingPoll taxesDetroit race riotsJazz culture1 million blacks left in Great Migration (1910-1930)Marcus Garvey – Back to Africa Movement, United Negro Improvement Association6 million members by 1923Booker T Washington, WEB DuboisNAACP- National Association for the Advancement of Coloured PeopleNiagara MovementAnti-lynching bill filibustered out of CongressKu Klux KlanUsed consumer tactics, professional recruitmentZeniths in 1924Stephenson charged with manslaughterBill against lynching gets filibustered out of CongressUnions denied membershipSegregation in the armed forcesSegregated accommodationDiscrimination by Federal Housing AuthorityIf a neighbourhood is to retain its stability, it is necessary that properties continue to be occupied by the same social and racial classes.Central and Southern European Migrant groupsNative Americans (Indians)Largely on reservations, which were marginal landsSegreation in armed servicesDawes Act 1887Asian Americans esp JapaneseRace riotsAnti-communismMail bombs/ Palmer bomb – April/JunePalmer raidsHabeus corpus suspended250 members of Union of Russian Workers arrested and beatenLabor Department deported 249 aliens to Russia6000 people arrested, 600 deportedSacco-Vanzetti CaseElectrocouted in 1927Socialist partyCommunist Party of AmericaJohn ReedCommunist Labor partyCombined comprised <0.5% of populationMayor Ole Hanson’s suppression of the Seattle Central Labor Council generals strike Feb 1919League of Nations branded as Red internationalismFive socialists expelled from NY legislature, despite Charles Evans HughesConstitutional rights violated, states enacted sedition lawsAnti-unionismAmerican Plan of employment, yellow dog contact, open shop, liberty of contractRed Scare, strikes of 1919 led to linking unionism and subversionKill the unions with kindness, industrial democracy, welfare capitalismProfit sharing, bonuses, pension, recreation, health programsClayton anti-trust act limited to injunctions against individual workersTHE EFFECTS OF THE GREAT DEPRESSION(2) Effects of the Depression on different groups in society: workers, women, farmers, Afro-AmericansWorkers25% unemployment nationally in America65%in Detroit, 80% in Toledo and Cleveland1/3 of banks failed, resulting in 15% of deposits being lost25% wage cutsreliance on state handouts, had to swallow pridebonus army perceived as a quasi-communist revolutiondouglas marcarthur – ‘mob … animated by the essence of revolution’psychological impact – men felt inadequate (something wrong with a man who can’t support his family)monopoly board game became popular-get rich quick in your imaginationmining families in the mountains of Appalachia reduced to berries and dandelionslooked to cinema for distractions/ cinemas encouraged to produce ‘happy films’ by New York Mayorcinema key propaganda tool for NRANational Mine Wroerks Union (communist)Communism ‘gaining a foothold’ – Theodore Bilbo (Gov- MSS)However party membership never rose above 100 000Hunger marchesWomenretained their employment moreso than men (23.2% unemployment vs 39% northern men)women were usually breadwinners (services was stronger than industry)shift in domestic power balance, men did not take to this well25% of workforcefederal agencies had anti-women employment policy despite efforts of Frances Perkins, Eleanor Rooseveltunions were also unwilling to admit womenmarriage rate/fertility rate dropped22% decline in marriages, 15% decline in birthsbelow replacement rate for first time in US historydivorce rate fell – divorce fee1.5 million women were abandoned by their husbands – 1940 reportresurgence of conservative attitudes towards family unitthe new ideas of the twenties – behaviourism/feminism underminedflappers ceased to exist as a cultural iconPractically every woman, whether she is rich or poor, is facing today a reduction of income. –Eleanor RooseveltWomen who sought relief or paid employment risked public scorn or worse for supposedly taking jobs and money away from more deserving men.-Susan WareSweatshops, child labour – exploitationWomen’s fashion – less makeup, more affordable dresses, lower heelsFarmers750 000 farms abandonedPenny (forced) AuctionForeclosing magistrates threatened with lynchingFarmers Holiday association (militant)Block highways, empty milk cans, attacked deputiesIowan governor placed six counties under martial lawShare Croppers UnionPouring milk into the streets, blockading food going to marketAnti-Okie law in CaliforniaDustbowl 43% of farmers were migrated, some of which were expatriatedkeep warm by burning cornAfro-Americansinvariably first to be retrenchedwomen fared better than men as ‘domestic hands’jargon of ‘slave market’New Deal programs such as Federal Music Project, Federal Theatre Project, Federal Writers facilitated Harlem RenaissanceHarry Hopkins (WPA) worked with NAACP to protect rights of blacksDesert Republican PartyAnti-lynching bill filibustered 1937a study in Harlem revealed that 65% of African-American children were malnourished. Stealing jobs from ‘real’ AmericansJim Crow laws refused African-Americans accommodation in hotels, motelsBlacks normally involved in textiles or sharecropping9/10 African American women involved in worst hit industries – textilesScottsboro case – Share Croppers UnionRESPONSES TO THE GREAT DEPRESSIONPresident HooverPresident Hoover was a Republican and believed in laissez-faire capitalism, that the market must run its course and the crisis would resolve itself. This belief was not without precedentThe Panic of 1907 was relieved by sudden liquidation of bad loans and assets, and a combined Bank purchase/Bailout by J.P Morgan and his associatedRecession of 1921-22, severe recession yet resolved itself without government intervention, following the recession was the Roaring 1920’sBoth occasions in the recent past did not require government intervention, and thus Hoover believed that it was not required to end the current crisis.There was calls from the Financial sector for ‘ruthless deflation’ (Leuchtenburg), a deflationary monetary policy, Secretary of the Treasury Mellon said ‘liquidate real estate, liquidate stocks ... the whole system will be stronger in the end’. However, later on; President Hoover ‘insisted on a more activist role’ (Leuchtenburg).Hoover 1932-1933Met with business leaders in early 1930, secured promises from them to keep wages highStepped up Federal ConstructionUrged State and local governments to increase their spending Reconstruction Finance Corporation, created in January 1932Created to lend funds to banks, railroads and financial institutions, probably saved some banks and railroad companies form collapseHoover 1932-1933Banks shored upBig commercial banks bailed outNo local bank guaranteesReconstruction Finance Corporation (RFC) made loans to railroads, life insurance, building, farm mortgages, banksSmoot-Hawley passed to protect what remained of American industryGovernment spending cut/taxes increased in order to balance the budgetQuit buying agricultural surpluses in 1931Did not retire gold standardGlass-Steagall Banking Act 1932Broadened commercial loans that Federal Reserve could supportFederal Home Loan Bank Act 1932Relief for mortgage holdersFederal Farm BoardEmergency Relief and Construction Act 1932300 million to state relief, 1.5 billion public works (state/fed)offset by state/local cutbacksMoratorium on war debts/reparations-2.7 bill budget deficit 1932vetoed federal relief and Emergency Committee for Employment proposalHowever, all of these measures by Hoover were on ‘too small a scale, failed to get the economy rolling again’ (Leuchtenburg) THE NEW DEAL, RESPONSE TO THE GREAT DEPRESSION UNDER ROOSEVELT In May 1933, Federal Emergency Relief Act, FERA, direct financial assistance to the unemployed, unemployment insurance, never been done by the Federal government beforeMay 1933, Agricultural Assistance Act, limited success, payments to farmers to not farm, 1937 farm income doubles, may have been because of Dust BowlWagner Act 1935, gave workers the right to form unions and bargain collectively, employers forbidden to interfere in Union Activity. Total change in American Capitalism, government intervenes to support workers and Unions. Social Security Act August 1935, paid by payroll tax on employers, ‘the most far reaching of New Deal Initiatives’ (Tindall and Shi)Works Program Administration 1935, created work for the dole program, replaced FEMA, helped 9 million people over 9 years Was not effectiveThe Depression of 1937 showed that the economy was NOT healed by New Deal policies, the recovery of 1933-1937 was unsustainable, the New Deal helped the economy recover as long as Government was inplace.In 1939, 20% Americans were out of workHenry Morgenthau, FDR’s Secretary of the Treasury ‘We have never made good on our promises. After 8 years we have just as much unemployment as when we started... and an enormous debt to boot!’Civilian Conservation Corps (CCC)Employed 3 millionPaid wages of $30, $25 forwarded to familiesCheck crime ratesRacial segregationTexas, 5% black because told only whites can applyTennessee Valley Authority (TVA)Directed by David LilienthalDamming: ‘Great Lakes of the South’Hydroelectric infrastructureCheap electricityCheck utility price-setting powerSoil conservation, industry, forestry, river navigation, fertiliserExploit productivity of the Tennessee Valley in the long termWork-relief, grassroots democracy, won local supportThe Agricultural Adjustments Administration:Aimed to increase agricultural prices through the destruction of farm surpluses, excess livestock and paying farmers not to cultivate their farmlandDid not achieve lasting recovering in the farm sector, did not provide relief to all farmers, economically questionable to raise prices by constricting supply, $100 million in handouts whilst destroying produce. Politically and socially wrong to be destroying food whilst people were starvingThe dust bowl may have caused prices to rise because competitor farmers were destroyed in the states of Oklahoma, Kansas, Texas and others... Declared Unconstitutional by Supreme Court in 1936The NRA:The NRA aimed to end ‘ruthless competition’, which was seen by Businessmen, Unions and government to be driving down prices, wages and deterring investment and an economic recoveryThe NRA implemented codes which mandated certain prices, wages, quality controls and regulated business practises to end the ‘ruthless competition’. Also implemented the first minimum wage and limited working hours Does not achieve industrial recovery, the codes increase the cost of business by 40%. In the 6 months after the NRA began operating industrial production fell 25% after increasing 25% in the previous 6 months before the NRA was introducedStrike rates increased as workers were unsatisfied with the NRA not assisting them Black markets developed as businesses refused to operate under the codes Declared Unconstitutional by the Supreme Court in 1936Works Progress AdministrationAlso government program to provide jobs for the Unemployed on public works ect... In Kentucky WPA workers catalogued 350 ways to cook spinach, they were paid to do this, example of waste and mismanagement‘I’ve got 4 million at work, but don’t ask me what they’re doing’ Harry Hopkins, head of the WPASocial Security Act 1935Created Old Age, Unemployment, Disability insurance/pensions, funded by the creation of a payroll taxPart of ‘The Second New Deal’ Implemented because:High unemployment, millions of American families without income, needed assistanceDepression caused total collapse of private charity due to bankruptancies and declining incomes, Government needed to step in an provide for the needyMany elderly people lost their retirement investments and savings in the Depression, could not go back to work and thus needed an incomeAlso believed that it would encourage old workers to retire, freeing up employment for the youngAlso stimulates Aggregate Demand and the economyTwo negatives:Payroll tax is a tax on employers on the number of employees they have, directly disincentives employment and hiring, which was desperately needed during the DepressionRemoved $2 billion from the economy when it began in 1937, first Social Security Pension checks were not mailed until 1940, therefore it leaked income from the economy, possibly contributing to a delayed recovery Wagner Act 1935Also known as the National Labor Relations Act of 1935, known as a part of the ‘Second New Deal’, aimed to strengthen the power of UnionsThe Wagner Act forced businesses to recognised Unions and negotiate with them as a part of the collective bargaining processUnion membership increased from 3.6 million in 1930 to 7.2 million in 1937, then 8.9 million in 1939Pros- Sought to increase wages, which was hoped to increase consumption and stimulate and economic growthProvided protections for workersFar reaching institutional change in the economy that secured the rights of American workers long after the end of the Great DepressionCons-Directly caused major industrial unrest in 1937Committee on Industrial Organisations (CIO), formed to unionise industrial sector workers, more aggressive than American Federation of Labor and other UnionsSome Communists/Socialists were elected to high positions in the new industrial unionsCaused strikes in the: Automobile- The Flint ‘sit down strike’ of 1936/7 by the United Auto Workers (UAW), UAW memberships grows from 30k to 50kSteelGlassRubberDeterred business investment in rapidly unionising industrial sectors, possibly delaying economic recoveryEvaluate the effectiveness of New Deal policies in dealing with the social and economic problems caused by the Great DepressionSocial problem: PovertyThe New Deal was effective at solving the economic problem of the Financial Crisis, and mostly successful at solving the social problem of poverty. Yet the New Deal was unable to solve the economic problem of unemployment and unable to bring the United States out of the Great Depression, which was achieved by World War Two. The New Deal was only partially effective at solving the social problem of poverty. Prior to the New Deal, the task of Welfare for the poor and unemployed was left to the individual States in the USA, as well as private charities. Yet as a result of the Great Depression, the need for welfare charity rose, and the taxes and private donations that paid for this assistance decreased significantly, private charities could only replace 1% of the total wages lost to unemployment from 1929-1933, whilst State and municipal governments could not provide adequate assistance for the unemployed, and could barely pay their own employees, for example Chicago’s school teachers were not paid from November 1932 to March 1933. The New Deal initially provided income support for the unemployed relief through Federal agencies, yet the ‘New Dealers wanted to use federal power to more equitably distribute income, wealth and economic power and provide a minimum of economic security for all Americans’ (Edsforth, 2000). Thus, the Social Security Act 1935, created old age pensions, disability and unemployment insurance, funded through a payroll tax implemented in 1937. This was intended to provide a permanent safety net for Americans from poverty, and was partially successful in alleviating the poverty caused by the Great Depression. However it can only be deemed to be partially successful, because the number of Americans in poverty did not fall because of Federal aid, but rather the end of the depression and growth in employment. Thus the New Deal partially solved the social problem of poverty, but only the end of the depression truly ended the poverty crisis. EconomicUnemployment The New Deal was unable to solve the problem of high unemployment, which was 24.9% in 1933, despite the fact that providing relief and a permanent recovery from high unemployment was a top priority for the New Deal. The New Deal created the Public Works Administration, the Civilian Conservation Corps and the Tennessee Valley Authority, some of many authorities. These Administrations were designed to construct public works projects such as roads, dams, railways, levees, canals, all with the intention to create employment for the millions unemployed in the process of constructing infrastructure. This is the principle of Keynesian Economics; Government deficit spending on infrastructure to create employment stimulated the economy, because the wages paid to men being employed by the government has a ‘multiplier effect’, creating new jobs as the money flows around the economy. The Public Works Administration had a 2 year budget of $3.3 billion (5.85% of 1933 US GDP), employed 4 million people, whilst the Civilian Conservation Corps employed 3 million unemployed young men in unskilled labor planting trees, constructing roads, parks and buildings. The unemployment rate did begin to decrease, falling 10%, to 14.3% in 1937. However in 1937, New Deal public works spending cut, because it was belied the US economy was able to fully recover without massive government spending. The US economy entered the ‘recession within a depression’, unemployment jumped to 19%. This showed that the New Deal was able to reduce unemployment and create what appeared to be an economy recovery, but the reduction in New Deal spending revealed that the New Deal was ineffective in creating a genuine, private-sector driven, economic recovery. In 1939 Unemployment was 17.2%, lower than what it was when Roosevelt came into office in 1933, but far higher than the 1929, or any level that would show that the US economy has recovered from the Great Depression. Thus ‘The New Deal failed to generate enough employment and income to stimulate a real recovery’ (Edsforth 2000). In fact it was WWII that ended the unemployment crisis and ‘at last put an end to the Depression-something the New Deal had been unable to do’ (Demarco 1998). This was due to young men entering the armed forces, which grew to 11.4 million in 1945, up from 370,000 in 1939, which had the effect of mobilising young men who would have otherwise been unemployed. Also, US industrial production soared 226%, as American factories and workers were employed producing War munitions and vehicles, which combined to reduce unemployment to 1.9% in 1943. Thus the New Deal did not effectively solve the problem of high unemployment, it was WWII that ended the unemployment problem. Financial Crisis in US BanksFollowing the Wall Street Crash in 1929, there were a number of bank failures in the United States that had continued until Roosevelt took office. The first failed due to loan exposure to the collapsing stock prices following the Wall Street crash. From 1930-33 agricultural prices and farm income fell which ‘forced more farm foreclosures and more bank failures’ (Edsforth, 2000). This financial contagion spread both in the United States and overseas, the largest bank in Austria Kreditanstalt collapsed in 1931, and the New York Bank of the United States collapsed, taking with it 400,000 deposits. By early 1933, a major financial crisis threatened the entire US economy. Roosevelt’s first legislation of the New Deal, aimed at solving this financial crisis was the Emergency Banking Act, passed 9th March 1933, which gave the US Treasury the power to take over failing banks, the president the power to declare a National Emergency to prevent banks from operating without the President’s Approval. This was designed to restore confidence and stability in the US banking system, since the US Treasury could step in an ensure that banks would not fail. The Emergency Banking Relief Act ‘successfully tackled the financial crisis, the most urgent of the problems FDR faced ... (it) immediately restored the public’s confidence in the banking system, money began to flow in them’. FDR later signed the Glass-Steagall Banking Act 1933, which aimed to reduce the level of risky speculative investment, increase the capital reserves available to banks and set up the Federal Bank Deposit Insurance Corporate to secure individual deposits. These pieces of New Deal legislation successfully secured the US Financial system, preventing a major banking collapse which would have sent the US economy further into depression. AgricultureThe Agricultural sector was severely depressed throughout the 1920’s, as a result of overproduction causing low prices, which fell even further as domestic and global demand fell after the Wall Street Crash and Great Depression began. The New Deal attempted to solve the problem of Depression in the rural economy, which was believed to be caused by overproduction causing low prices and farm income. This was done through the Agricultural Adjustments Agency (AAA), which aimed to increase prices by destroying surplus crops and livestock as well as paying farmers to leave farmland uncultivated, which was hoped would decrease supply relative to demand and increase agricultural prices and farm incomes. Agricultural prices increased steadily from 1934-37, which may be partially attributed to the AAA. However as the ‘Dust Bowl’ wiped out millions of acres of farmland in Oklahoma, Texas, Kansas and other rural states, the Dust Bowl decreased agricultural production in those states, causing prices to rise across the nation as less farm produce was produced, as well as the US economy and demand recovering steadily from 1934-37, these factors can also be attributed to the recovery in agricultural prices. However the AAA is seen as a very controversial government program, since it destroyed otherwise useful produce that would have been sold to poverty stricken urban workers at low prices, and (not as a result of this though) the Supreme Court ruled the AAA to be unconstitutional in 1936, and the program was suspended. The New Deal also subsidised farmers following the 1936 AAA court ruling, and provided assistance to farmers by delaying the foreclosure of farm mortgages by law. Thus, the New Deal may have improved the situation in the agricultural sector of the economy by raising farm prices, yet this is disputed due to other correlating factors. (4) Nature, aims and strategies of US foreign policy 1919-1941NatureConfused – driven by public opinionMonroe DoctrineEconomic and diplomatic dissonanceXenophobiaAimsNeutrality and isolationismPreserve the Open Door in ChinaReconciliation with South AmericaStrategiesClark MemorandumNon-recognition of territorial gains – Stimson DoctrineIndependence to the PhilippinesWashington Naval Conference and disarmamentNeutrality ActsLudlow AmendmentKellog Briand PactBrief Overview of US foreign policy developments1919Rejection of Versailles. ‘The Irreconcilables’No league BUT observer status by 19231920sInfluence of the peace movementPoliticalWorld CourtAmerican judges serve but voted downWashington Naval Conference 1921/223/5/9 Power agreementsRole of Charles Evans Hughes/MellonIsolationist/Internationalist or economically motivatedKellog-Briand Pact 1928Role of France63 Nations sign upEscape hatchesMore for US domestic consumption. Does not achieve much.Latin AmericaIntervention in NicaraguaPayment to Colombia of $25mill for canalEvacuation of Dominican Republic, Haiti, NicNationalisation of US assets in MexicoClark MemorandumInformal renunciation of Roosevelt CorollaryImmigration restrictionsEconomicDawes Plan 1924, Young Plan 1929US underwrites German/European recoveryBUT Fordney McCumber 1922, Smooth Hawley 1930Abrogation of free trade with the Philippines, Cuba1930sPoliticalBreakup of League of Nations, militarism in Italy, Japan, GermanyNye Committee‘Merchants of death’ explanation for US entry to WWINeutrality Acts‘High water mark’ of US isolationismmoral embargoes – Spanish Civil 37, Ethopia 35not applied to Sino-Japanese WarBUT by 4th Neutrality Act, the intent is ‘watered down’ for ‘cash and carry’‘the new law… indicated the end of American isolation from world conflicts’ – Akira IriyePanay incident 1937Tests ‘isolationism’Apology and indemnityQuarantine’ speech 1938 – ChicagoShows FDR gravitating towards warBUT ‘Two Oceans Navy Bill’ – (defensive)BUT ‘cash and carry’, ‘lend lease’, ‘great arsenal of democracy’The New Deal’s triple A foreign policy; it will plow under every fourth American boy – Senator WheelerLudlow Amendment 1937 – defeated by 209 to 188Economic1932/33 London Economic ConferenceFDR pulls out; wants to devalueDoes not stabilise world currencyUnusual because FDR is internationalistJohnson Debt Default Act 19341940sReintroduction of ‘peacetime’ conscription in US 1940‘undeclared war in the Atlantic’ 1941Kerney, Greer sunkAmerican aircraft in GreenlandAmerican destroyers escort convoys as far as Greenland/IcelandPlacentia Bay conference – The Atlantic CharterExchange of overaged destroyersEmbargo of oil/metals to JapanPearl Harbour 1941/ entry into Second World WarManufacturing aircraft, ammunition for BritishVirtually all Red Army trucks were manufactured in the US(4) Impact of domestic pressures on US foreign policy 1919-1941IsolationismCharles Lindbergh – America FirstImperialismMost opposed to 1890s imperialismMark TwainPacifismPrivate boycott of Japan/GermanyNationalismSinclair Lewis – It could happen here (Fascism)Immigration restrictions/xenophobiaEconomic provincialismContradictory tariff and internationalist loans schemeExacerbated by the Depression – FDR’s stance on revaluation of the dollar ................
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