The 1920s part II

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The 1920s part II

• Economics and politics

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Post WW I

• WW I left huge scars on America in political
  terms
• America refused to sign Treaty of Versailles
• Wanted to isolate themselves from Europe
• Revolution in Russia results in Lenin and
  communism taking over in 1918
• Whats communism?

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Red scare

• Americans feared spread of communism
• Red Scare fear of radicals trying to take over
  the US
• Seattle played a big role in this in 1919
• 35,000 shipyard workers strike
• Press claims the communists were taking over
  Seattle
• Mayor threatens to call out National Guard
• Threat works, strike ends

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Two big court cases

• Schenk v US
• Schenk had urged soldiers to not enlist in army
  and desert if they were in the army
• Supreme Court declares it OK to silence free
  speech if there is a clear and present danger
  to the nation
• Gitlow v New York
• New York had convicted Gitlow of promoting
  revolution
• Supreme Court upheld this limitation of free
  speech, and also said the Bill of Rights applied
  to state issues, not just federal issues

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Sacco and Vanzetti

• Most controversial legal case in US history (at
  least until post 9-11 Guantanamo)
• A guy shot and killed a shopkeeper in
  Massachusetts in 1920
• Police arrest two Italian immigrants, Sacco and
  Vanzetti
• Coincidentally, S and V were socialists
• Evidence may have been planted on them
• Found guilty, and despite several appeals, put to
  death in electric chair in 1927

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Urge to be normal again

• Red Scare really frightened Americans
• People wanted things to be like they used to be
• Election in 1920 led to Republican candidate
  Warren Hardings winning on a platform of
  returning America to normalcy
• Shift to Republican presidents lasts until 1932.

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Republican rule

• Republicans controlled Congress
• Three Republicans elected President
• Harding, Coolidge and Hoover
• Harding appoints former president Taft as Supreme
  Court Justice
• First time that has ever happened
• Foreign affairs basically, stay away from them
• Isolationism is born

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Isolationism in 1920s

• US is now a huge economic power
• Started imposing tariffs on imported goods from
  Europe
• This made it impossible for Britain and France to
  pay their war debt
• Also impossible for Germany to pay reparations
• US rolls back tariff, and starts to help Germany
  get back on its feet
• Britain and France furious at this, but US
  recognized if Germany wasnt helped, another war
  could start

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Domestic issues

• Reflecting isolationism, Americans start to
  embrace nativism, or favoring people and ideas
  that are born in America
• Immigration nearly stopped from Eastern and
  Southern Europe as well as Asia
• National Quota Act established
• For each country, total immigrants for one year
  could not exceed 2 of that nationalitys
  presence in the US in 1890
• This favored Irish, British and Scandinavians,
  discriminated against Italians, Russians, Poles
• No Asians, period
• Yes, it is openly racist and not changed until
  1964

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End of Harding

• One big scandal Teapot Dome
• Secretary of the Interior gave oil drilling
  rights on Federal land to private companies in
  exchange for 300,000 in gifts and loans
• Stress from this caused Harding to have a heart
  attack
• Died in office in 1923

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Calvin Coolidge

• Hardings VP Coolidge becomes president
• Very quiet, unsmiling, reserved
• Finishes Hardings term, runs and gets elected in
  1924
• Keep Cool with Coolidge was his campaign slogan
• The chief business of America was business,
  according to Coolidge

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The Business President

• Coolidge rolled back many taxes, cut public aid
  for many
• Refused to help flood victims in Mississippi
• Refused to tighten bank credit on people taking
  out loans to gamble in the stock market
• Let everything work itself out
• We will see how it worked itself out in 1929

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Hoover

• Coolidge decides not to run for re-election in
  1928
• Hoover famous for charity work he did after WW I
  in Europe
• Ran against Democrat Alfred Smith (NY governor)
• Smith was Roman Catholic
• First time a Catholic ran for president
• Hoover supports Prohibition
• Women voting in biggest numbers ever support
  Hoover over this issue
• Hoover carries the rural Protestant population,
  Smith the urban and Catholic population
• People figured the good times of the 20s would
  continue

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Business boom

• Lots of money floating around
• Average wages rose 27 between 1914 and 1926
• Increase in spending leads to bigger profits for
  business, which leads to higher wages, which
  leads to more spending
• Result huge buying spree in the 1920s

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Spending spree

• Higher wages
• Clever advertising
• New products
• Lower costs to make them
• Credit available

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Credit

• Until mid 1920s, people usually just paid cash
  for everything
• Borrowing money to buy things was considered
  immoral and irresponsible
• New products often cost a lot of money
• Installment plans invented just pay a certain
  amount every month, plus interest
• By 1929, Americans used credit for everything
• 60 of all cars sold on credit
• Up to 90 of many household appliances as well

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New products

• Electricity was a huge boon for household
  appliance industry
• Number of people with electricity in their homes
  went from 16 to 63 in the 1920s
• General Electric (GE) becomes one of the worlds
  largest companies
• From 1919 to 1929 sales went from 1bln to 2.5bln

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Advertising

• Before 1920 ads simply stated features of a
  product
• Shift to how the product can enhance your life
• A woman is only as old as her complexion
• Air Mail is socially correct
• Twice the cleaning, twice the leisure
• In addition to catchy phrases, advertisers felt
  they were educating people

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• Advertising activity

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Economy gets shaky

• Hoover presidency in late 1920s
• 1925 total value of stock market was 27bln
• In 1928 alone stocks increased by 11bln
• By October 1929, total value 87bln
• Everybody wanted to get rich quick
• Writers promoted the idea that it is Americans
  duty to get rich

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Danger signs

• Mostly the rich got richer poor people didnt
  get significantly wealthier
• 1929 200 companies controlled half of American
  business
• 24,000 families (.01 of pop) controlled 34 of
  the nations savings
• 71 earned less than 2,500 per year (poverty
  level)

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Gambling

• Personal debt due to excessive credit soars
• Debt rises from 47bln in 1920 to 72bln in 1929
• People cant pay their bills
• Gambling money in the stock market seems to be a
  way out speculation
• Buying on margin buy stock for a fraction of its
  cost, sell it when it gains value
• Q whats the risk with that?
• Lots of people, including Democratic politicians
  fear its all going to blow up

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Things fall apart

• October 1929 people start selling stock that had
  become overvalued
• Ripple effect caused others to dump stock
• Bankers pooled together to buy up stock,
  keeping the market afloat
• Doesnt work, prices continue to drop as more
  people sell their stock
• Black Tuesday (10/29/1929) 16.4 million shares
  sold (normal day was 4 million)
• By November 13th, 30 bln wiped out of the stock
  market

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Why did this hurt the little people?

• Risky loans hurt banks high-risk business
  couldnt pay back cash to banks
• Consumer borrowing credit got over-extended
• Bank runs people panicked and took cash out of
  accounts (no trust in banks)
• Bank failures banks simply closed no cash to
  pay off loans
• Savings destroyed by 1933, 9 million savings
  accounts wiped out

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Why did this hurt so much?

• Cuts in production business couldnt borrow
  more money to make more goods
• Rise in unemployment business laid off workers
  since no goods were being made
• More cuts in production no employees, nobody in
  factories
• Vicious circle.
• Economy contracts depression
• This depression lasts from 1929 to 1941