The USA between the Wars

A. THE ROARING TWENTIES

 Wanted to limit their links with Europe so the country retracted into isolationism.
 Industrial boom
 Causes

Industrial goods such as steel, tin, glass, chemicals and machine-tools were produced on a huge scale. Most noticeable was the
boom in consumer goods: Radios, telephones, watches, cameras, washing machines etc. were produced in large numbers.
Advertisements encouraged people to ‘keep up with the Joneses’ and buy the latest novelty, which millions of people could not
afford before the First World War.

 The car industry: In Detroit, Henry Ford set up a fully automated factory (Fordism). Cost: $850 (1908)> $290 (1925).
 The cinema industry: In Hollywood, thousands of silent black and white films were produced (Charlie Chaplin).
 Government policies: Industry was helped by the economic side of the isolationist policy: Americans wanted to help
their own industries and make trade difficult for foreigners. The government set up high tariffs on imported goods, so
that the price was too expensive for the American public. In this way, American industry was protected, because their
products were cheaper and sold better. Moreover, trade unions declined (5M in 1920, 3M in 1932).

 Consequences

Everybody did not enjoy the boom: The use of machinery (like the combine harvester) in agriculture meant that farmers were
producing food too cheaply (>low standard of leaving), leading to rural exodus. Black Americans (suffering from segregation,
discrimination, rural exodus, persecuted) did not share in the boom either. Many of them had moved to the cities in order to
find a job, but they worked in low-paid factory jobs, and poor people could not buy consumer goods.

A movement of intolerance and racism was born during the interwar periods. First of all, from 1921 the ‘open door’ to
immigrants began to close: the number of immigrants allowed into the USA was gradually cut. Moreover, western and northern
Europeans’ quota system made it easier for them to enter the USA, by contrast to Europeans from southern and eastern Europe.
The WASPs (White, Anglo-Saxon Protestants = N-W Europeans) had always held power and feared losing control to Jews and
Roman Catholics. This lead to a movement of racism: Ku Klux Klan (1920s): White racist organisation.

Prohibition: 1919, the manufacture and sale of alcoholic beverages considered as illegal. As the alcohol trade was a very
profitable business, gangsters (like Al Capone) took it over. They settled their business rivalries in gunfights. Prohibition also
turned many Americans into criminals. The root of social trouble > violence in biggest cities (Chicago). The state did not get taxes
and Roosevelt put an end to it.

 Why booming?

 Important changes in factories : setting up of production lines and conveyor belts: Mass production > faster production
> lover prices of goods. Fordism: introducing new technology-methods of production and making sure workers had
decent salaries (purchasing power).
 The advertising
 Undamaged by the war: vast sources of raw materials and abundant supply of labour: The work ethic (US mentality).
 Government economic policies: let business look after itself a policy of laissez-faire. Let market forces regulate the
economy, not the government. Lower income tax led to a higher purchasing power for people, meaning more money to
invest in new projects.
 Protectionism: high taxes on incoming goods in order to make Americans buy American goods.
 Improvements of the American infrastructure (railways…).
 B. THE WALL STREET CRASH: A VICIOUS CIRCLE

1929: Wall Street Crash. In the 1920s, dividends went up because so many people wanted to buy. By 1929, it was clear that
American industry was making goods faster than it could sell them and that profits were falling. Cautious people began to sell
shares. On October 1929, prices of shares suddenly fell. Many Americans had borrowed money to buy shares, hoping to pay
back their loans when their shares rose in price. When shares fell, they could not pay back the loans: they were financially
ruined. But if enough customers could not pay back their loans to the bank, the bank could go bankrupt, losing ordinary people’s
savings in the bank. The country entered THE GREAT DEPRESSION.

C. FRANKLIN D. ROOSEVELT AND THE NEW DEAL

FDR’s New Deal is based on 3 ideas: to help those people hard hit by the depression (RELIEF), to revive American business
(RECOVERY) and to build a better America (REFORM).

a) Agricultural adjustment act (AAA): AAA set up a quota system: each farmer was to produce only a certain amount.
Thus, farmers could sell their production at a higher price. AAA also helped farmers who were having difficulty making
the mortgage (hypothèque) payments on their farms. An effort was made to bring electricity to farms.
b) National Industrial Recovery Act (NIRA): Industry was covered by the NIRA. It encouraged workers and employers to
get together to work out a code of fair conditions (wages and hours).
c) Home Owners Loan Corporation (HOLC): The government took over people’s mortgages, and increased its spending to
get the economy going again.
d) Public Works Administration (PWA): PWA spent money ($1M by 1938) on all sorts of projects: airports, hospitals,
bridges… Another organization, the Works Progress Administration (WPA), organized schemes on a smaller scale:
schools, libraries and roads.
e) Federal Emergency Relief Administration (FERA): FERA was founded to give quick relief where it was needed most.
Millions of dollars were spent on providing nursery schools for the children of the poor and schemes to provide
employment.
f) Civilian Conservation Corps (CCC): CCC set up so that young men could work for several months in the American
countryside.
g) Tennessee Valley Authority (TVA): Construction of dams on the Tennessee River, resulting in navigation, prevention
from flooding, irrigating areas, and providing hydroelectric power.
h) Social Security Act (1935): Set up pension schemes for old people, widows, disabled and unemployed people.

Was the New Deal a failure?

For some people, FDR did not go far enough: unemployment and poverty remained high. The faults of the New Deal are the
faults of democracy. The New Deal showed that democracy was not powerless in the fact of great problems.

FDR gave the federal government a job to do: to look after the weaker members of society (the old, the ill, the unemployed,
the poor) and to build a better country. For all its faults, the USA is an idealistic country: the New Deal restored Americans’
faith in their ideal of democracy.

SUCCESSES
Keynesian economic policies bought many successes:
creation of jobs, improvement of the infrastructure, projects
like the Tennessee Valley, state aid for agriculture, banking
system.
Abolition of child labour, and creation of pension for old,
widows, disabled, unemployed people (Social security act
1935)
FAILURES/WEAKNESSES
Didn’t solve the problem of unemployment + poverty.
(entrée in WWII put an end to unemployment)
“Everybody is against the ND, except the voters”
Roosevelt and the government were criticised for taking off
too much power, and to interfere in the economy and affairs
of individual states.

Providing relief for the destitute and the unemployed and
then the creation of millions of new jobs.
Confidence was restored in the American government,
Roosevelt preserved democracy.
Improvement of workers’ conditions: trade unions had a
legal status, working hours reduced (NIRA)
Left wing criticism: the reform did not go far enough; he
could have established a social system, more
nationalization+ state control.
Right wing criticism: Blue Eagle tax: business less profitable,
fewer profits for industrialists.