Interbellum

Roaring Twenties Great Depression New Deal

Overriding Questions of the Time How could an economy be organized

that guaranteed continued growth, rising prosperity and social security for all?

Were American traditions – political principles and modes of life – still compatible with technical and knowledge-based progress and with general modernization?

How much responsibility did the US as the strongest economic power and the potentially strongest military power have vis-à-vis the international community? Which policy is the best in America’s interest and in the interest of the world community?

The Roaring Twenties

ProsperityConsumer CultureLiberalization of

mores and values

Historians‘ AssessmentFirst consumer society based on:

Mass production, mass consumption, mass communication

Long regarded as:Period of political passivity and social stagnation

Nowadays:Emphasis is on activism, innovation,

modernization

Basic economic data

Increase in GNP by 5% per year Increase in productivity per worker and hour

by 35% over decade Increase in workers‘ net income of 30% over

decadeFarmers incomes stagnated or declined Increase in value of shares listed on stock

exchange by 400% over decade

Pillars of Boom Automobile

industry Electrical

industry, oil, chemicals, rubber

Infrastructure

Mass Communication

The Great Migration

Symbols of Modernity(University of Michigan 1921, Cinncinnati suburb c. 1920 Chrysler Building 1930)

Urban Culture

Antimodernism, Cultural Conflict and Social Protest(Photos: Ku Klux Klan march through DC; lynching 1930; Scopes trial 1925)

Dominated by notions of Anglo-Saxonism

Ku Klux Klan Scopes Trial

Immigration

National Origins Act of 1924 Maximum ceiling of 164.000 immigrants per year Country quotas based on 1890 census No restriction on immigration from Canada and Mexico

The Crisis of Democratic Capitalism

Stock market crash of October 1929

Reasons Agriculture

overproduction falling prices increasing indebtedness

Banks Heavy increase in consumer loans (installments) payments ran out of liquidity Decentralized banking system

Industrial sector and construction Saturation of markets Wealth concentration

International Dimension

Social Implications

No nation-wide public unemployment insurance

Exodus of many farmers, especially from the Southwest, to California and Northern cities

Psychological dimension: deep-seated belief in individualism and freedom made people belief that fall into poverty or unemployment was ‘fault’ of individual and not a systems failure

Election of 1932 Had American democracy, institutions and beliefs a future? Would politics, institutions and society be able to cope with the

fundamental problems?

Franklin Delano Roosevelt (1882-1945)

Promised a „New Deal“ for the American people Said that what Americans had to fear was fear itself Only President serving 4 terms

Style of Leadership Turned White House into

decision-making center of American politics

Professional expertise (brains trust)

Important role of Eleanor Roosevelt

Sensitive to public opinion

The First New Deal 1933: Banking and Finance

The Banking sector, finances and currency Emergency banking Act which prescribed stricter control of banks by the

federal Treasury (this immediately led to an increase in deposits in banks) Insurance of deposits by the Federal Deposit Insurance Corporation 1934: Securities and Exchange Commission as controlling institution over

Exchange to counter excessive speculation and insider deals Home Owners Loan Corporation: refinanced mortgages of private house-

owners (some 20% of house-owners took loans) Drop of the gold standard and devaluation of the dollar to combat deflation

and raise domestic price levels (downside: collapse of efforts to stabilize the international currency system)

Problem: No policy of deficit-spending and policy of economic nationalism. Thus: financial and economy policy only partially successful

The First New Deal: Agriculture

AgricultureAgricultural Adjustment Act of 1933: combination

of restrictions on cultivation of certain crops and subventions; low-interest loans to farmers

Problem: no effective federal distribution system

The First New Deal: Industry Industry

National Industrial Recovery Act. Each branch of industry could – in contravention of the rules of the Anti-Trust Act – establish so-called Codes of Fair Business Practices in order to prevent “ruinous competition” by agreeing on prices and production levels.

Unions were to be allowed to bargain for minimum wages, maximum work hours, ban on child labor and they were granted the right to collective bargaining (declared unconstitutional by the Supreme Court in 1935 but enacted as executive action)

Problem: Federal government creates rules for a corporatist economy in which capital and labor reach compromises.

The First New Deal: Labor and Social Relations

Labor market and Social Services Establishment of a number of employment agencies

(Civilian Conservation Corps) Increase in the amount of public investments

(infrastructure, Tennessee Valley Authority) Problem: relatively uncoordinated efforts, piece-

meal, partial successes

Opposition

Populism Catholic corporatismUnionsConservative businessmen

The Second New Deal (1935-1937)

National Labor Relations Act Founding of Congress of Industrial

Organizations (CIO) Introduction of categorical assistance

programsNo national health insuranceWorks Progress Administration

Historians‘ Assessment Depression was not overcome by New Deal No structural changes in the American economy Public work programs employed far fewer women than men,

labor codes prescribed lower wages for women African Americans in the South were left alone. FDR did not

even manage to enact a federal Anti-Lynching Law. African Americans in the North profited from the New Deal –

shift of political allegiance towards the Democratic Party Native Americans: end of partition of land and forced

assimilation

The New Deal in Comparative Perspective

Administration did not intend a revolutionary change of society (unlike Germany under Hitler, or, to a lesser degree, France under the socialist/communist government)

Vast majority of the people supported evolutionary changes. Dominant value system was not chattered: individualism, self-initiative, competition and mobility

No establishment of a centralized welfare bureaucracy (left to the 1950s Republicans and the 1960s ‘Great Society’)

New Deal convinced majority of Americans that state and politics cared for them, and this feeling turned, over time, into a conviction that the state has certain obligations towards citizens in need

Executive becomes stronger (advent of the ‘Imperial Presidency’ [historian Arthur Schlesinger, Jr.]), no longer primarily confined to foreign policy, but to domestic, economic and social policies as well.

New Deal reinforced the democratic experiment