The Politics of Prosperity: The 1920s
World War I may not have made the world safe for democracy, but it did create a favorable situation for the American consumer. The 1920s saw the growth of the culture of consumerism, as many Americans began to work fewer hours, earn higher salaries, invest in the stock market, and buy everything from washing machines to Ford Model T's. The culture of consumerism of the 1920s changed the politics of American society and set the tone for American attitudes about money.
Some questions to keep in mind:
The decade of the 1920s, or as it was called by its contemporaries, "The New Era," was marked by prosperity and new opportunity in the aftermath of World War I. The war began in Europe in 1914, and the United States entered the fray in 1917. A significant reason for U.S. involvement in the war was its economic links to the Allied Powers, especially to Great Britain. Wall Street financial institutions such as the House of Morgan had given loans to Great Britain totaling over $2.3 billion, so Wall Street feared a British defeat even more than Main Street.
Before 1917, American public opinion about the war was generally divided along ethnic lines. Old-stock Americans of Anglo-Saxon heritage were on the side of Britain and France. Americans of German heritage wanted the U.S. to to remain neutral. Many Americans with ties to Eastern Europe, such as Russian and Polish Jews, were, paradoxically, on the side of Germany, as Germany, up to this time, had been more tolerant of its religious minorities than either tsarist Russia or the countries of Western Europe.
The United States, still officially neutral, mostly ignored British search and seizure of American ships for two reasons:
By 1915, President Wilson, while preaching peace, had begun to gear up for warfare, expanding the U.S. army and navy. Because of increased German submarine attacks on American ships, America entered the war on the side of the Allies in 1917, and almost immediately tipped the balance in their favor. In full retreat, Germany asked for an armistice, which was granted on November 11, 1918. The effect of the war on Germany, France, Great Britain and Russia was devastating, both to their economies and in the loss of human life. America, on the other hand, came out of the war relatively unscathed. American soldiers (called "doughboys" because the large buttons on their uniforms resembled a deep-fried bread of the same name) returned home in May 1919 to ticker-tape parades and the promise of a prosperous decade.
Of course there were problems as well. The transition from a war-time to a peace-time economy caused economic dislocation for industrial workers, loss of income for farmers, and renewed racism and nativism against Black Americans and foreign immigrants. Many Americans, however, were able to revel in the new culture of consumerism.
In search of prosperity, Americans elected three Republican Presidents during this decade; each promised to promote the politics of prosperity:
Warren G. Harding
(1865-1923). Elected to the Presidency in 1920s, Harding urged a "return to normalcy." The policies of his administration were generally conservative, especially regarding taxes, tariffs, immigration restriction, labor rights, and business regulation. Corruption and scandal marked Harding's administration, although the public did not know most of the scandals until after he died of a stroke in office in August 1923.Calvin Coolidge
(1872-1933). Coolidge did little as Warren G. Harding's vice president (1921-23), but when Harding's death made him president, Coolidge acted quickly to repair the damage of the Harding scandals and to secure the 1924 presidential nomination. He was easily elected over Democrat John W. Davis and Progressive Robert M. LaFollette. Coolidge decided not to run for president again and retired from politics. Many of Coolidge's policies, including cutting federal taxes and maintaining high tariffs, were very popular during his tenure as president, but in light of the Great Depression, his decisions were later discredited. Herbert Hoover (1874-1964). Having served as secretary of commerce under both Harding and Coolidge, Hoover was elected to the presidency in 1928, helped by the prevailing prosperity in major areas of the country. Hoover had been in office just a few months when the Great Depression began. In 1932 he lost the presidential election to Franklin D. Roosevelt.On the whole, the U.S. economy experienced steady growth and expansion during the 1920s. Three factors of production became especially important:
A self-perpetuating cycle was created:
This upward spiral, which led to a business boom, continued until 1929. There were five main sources of the 1920s economic boom:
During the war, a significant labor shortage, combined with the need for increased production, necessitated new, more efficient methods of production. Old industries, such as petroleum and steel, were stimulated, and there were also a host of new industries, such as plastic and rayon. One measure of these accelerated technological changes is the money spent on new machinery for industry. In 1915 the total annual expenditure was $600 million, which grew to $2.5 billion by 1918.
We've already discussed "Taylorism" in Lecture 11, with its mathematical formula for labor, streamlining of tasks, and increase in production. In the 1920s, American industries implemented scientific management on a grand scale, pouring millions of dollars into industrial research.
As scientific management and new technology increased worker productivity, workers earned higher wages and became better consumers. A new innovation appeared: the installment plan, which encouraged Americans to build up debt in order to buy consumer goods.
In a variety of ways, Americans were displaying a desire to get rich, and to do so with little effort. Thorstein Veblen, an economist, published The Theory of the Leisure Class in 1898. This book was not widely read until the 1920s, but it spoke directly to the psychology of American society, introducing the now-familiar term "conspicuous consumption." Some examples of conspicuous consumption include:
Two factors led to the rising popularity of cars:
The chief figure in this expanding industry was Henry Ford (1863-1947). Ford did not invent the automobile, but he did the most to promote the car by developing more efficient and cheaper means of production. He built his first car in 1896 at home in his garage. Symbolic of the American century to come, the door of the shed was too small and bricks had to be removed to make way for the car. Ford is said to have remarked:
"Americans can have any kind of car they want, and any color they want, as long as it's a Ford, and as long as it's black."
Perceived as a shining model of the American success story, Ford was so trusted by the American public, that in 1928, when he announced the development of the new Model A, half a million Americans made a downpayment on the car without having seen it, taken it for a test drive, or even knowing its final cost.
The automobile had a huge impact on American life, both economic and social.
In 1929 sociologists Robert and Helen Lynd published a study called Middletown, based on field research done in Muncie, IN in 1924-1925. The Lynds showed how, under the influence of industrialization, traditional values and customs were changing, including peoples' attitudes toward the automobile. They found that at all income levels, the automobile had come to seem a necessity, rather than an economic luxury. People were willing to sacrifice food, clothing, and their savings in order to keep the family car.
American businessmen regained the status of folk hero they had enjoyed in the days before Progressivism. Many Americans felt they also had the opportunity to participate in prosperity and they began to equate prosperity and progress.
There were some critics, such as Sinclair Lewis in his novel Babbit (1922). Lewis poked fun at the average businessman as materialistic, amoral, superficial, and conformist.
Other popular novels painted a different picture. Bruce Barton, a prominent figure in advertising, published The Man Nobody Knows: A Biography of Jesus in 1925. He presented Jesus as the "founder of modern business" and the apostles as the "greatest sales force in history."
Relationships between businessmen and government had never been closer than they were in the 1920s. Calvin "Silent Cal" Coolidge piped up:
"Wealth is the chief end of man!"
and slightly less laconically:
"The man who builds a factory, builds a temple. The man who works there, worships there."
Businessmen had two major propaganda mills: the Chamber of Commerce and the National Association of Manufacturers. Both groups preached a return to laissez-faire economics, less regulation of business, and less support of labor unions. The National Association of Manufacturers labelled this program as "The American Way." President Harding spoke for himself and for his successors Coolidge and Hoover when he asked for "less government in business and more business in government."
There were four major ways in which the federal government supported big business.
Not everyone took part in the material successes of the "New Era." This decade also saw growing racism and nativism, growing frustration from those who felt cut off from the wealth. This side of the "Roaring Twenties" is a fascinating and extraordinarily important part of our story.
