Module 2 Lecture Part 1: America's Involvement in the "Great War" or World War One

The Great War & Domestic Concerns facing America in the 1920s

The United States became involved in the Great War for a host of reasons, some indirectly
related to our cultural and economic attachments to the allies, others stemming from
Germany’s un-restricted submarine warfare from 1916-1917. Neutrality had been the official
policy of the Wilson Administration from 1914-16, but eventually the U.S. could no longer
remain isolated from Europe’s entanglement.

Indirectly, the following provides a list of reasons contributing to President Wilson’s request
for a declaration of war in April 1917:

1. Culturally-although many German and Irish immigrants had come to America by 1914-
as a country we were inextricably linked to Great Britain through: political institutions
and theory of government, military organization, and a common language.

2. Economic ties with England weighed much on our decision for alliance, although the
rationale has been debated with more "conspiratorial" overtones then any of the
other reasons for going to war.

3. Pan-Germanic emphasis on culture and the Kaiser’s militarism -both on the continent
and abroad- gave many Americans pause.

4. Britain severed the German transatlantic cable resulting in a wave of anti-German

propaganda coming to our shores relating mostly to the "Rape of Belgium."

Directly…

1. The May 7th 1915 sinking of the Lusitania killing 128 Americans in the "War Zone"
surrounding Britain and Ireland; Germany insisted she carried contraband consisting
of ammunition. History has proven these German accusations correct.

2. On August 19th of the same year the Arabic is sunk. The German ambassador stated
passenger ships wouldn’t be attacked without warring.

3. March 24th, 1916 the French merchant vessel, Sussex, is torpedoed in the English
Channel, injuring several Americans.

4. "Zimmerman Telegram." British decoders intercepted a telegram from Germany to

Mexican officials describing how a German-Mexican alliance -in case of war with the
United States- could result in Mexico gaining access to territories lost during the
Mexican-American War.
After the sinking of the Lusitania, Germany refused to heed American calls against un-
restricted submarine warfare, although later agreeing not to sink passenger vessels. But the
British had been somewhat effective in blockading the German coast, giving rise to food
shortages and economic problems in Germany. Any way that the Germans could reduce the
"noose" around their necks they would; sinking ships headed to Allied ports (presumably
carrying munitions and other contraband) became a necessity for military, if not economic,
survival.

Primarily German submarine policy, in spite of promises made by German officials to halt the
practice, led to President Wilson’s April 2, 1917 request for a declaration of war.
The lexicon of the Wilson administration seemed to now omit the word "neutrality" from its
pages, at least in reference to Germany and the Central Powers.

Why trench warfare?

By the time the U.S. declared war on the Central Powers trench warfare –at least in Belgium
and northern France- had transpired for at least 3 ½ years. In a nutshell, technology made
trench warfare de rigueur during the Great War. Quick fire breech loading field guns could
easily shoot air-bursting shrapnel rounds more than 10x per minute, and the use of machine
guns would effectively eliminate squads of infantry no matter the formation adopted. As a
result a "dig in or die" philosophy among both the Allies and Central Powers in northern
France took hold. Assaults proved difficulty against trenches with machine gunners in place;
often casualties would average 14 assailants per every 1 trench defender.

Since head-on assaults led to high casualty rates, the British and the Germans developed new
combat techniques in hopes of limiting the effectiveness of trench defenders. By 1915 the
British applied "trench storming" tactics whereby non-commissioned officers leading no more
than 14 men consisting of grenade carriers, bayonet men, "grenadiers," and sand baggers
would storm enemy embankments. Neutralizing "sections" in hopes of rendering them
ineffective called for these small units to attack –sometimes under the cover of darkness- and
if successful, blocking their entrance to remaining enemy forces by sandbagging captured
positions. Picture a rectangle portioned into thirds: the middle or second square is the
occupied trench with both right and left squares isolated enemy pockets.

Similarly, the Germans would employ like tactics. A "handgranatentrupp" of 6-8 grenadiers
would attack with lead troops carrying no rifles only pistols, knives, and bombs. Likewise,
their squad leader carried the same type of weapons, only if carrying a rifle it was fired over
the heads of his men. Poison gas (first used by the Germans) served as another tool applied
to combat; at Great Lakes, IL, the Navy put us through this "gas test"…talk about burning!
And that’s with a mask on…for those of you in the military who wear corrective lenses don’t
go in the "chamber" with contact lenses for they will melt and burn your eyeballs….didn’t
happen here because I was forewarned. So, just wanted to pass that bit of info on…

"Lafayette, we are here…"

By the time the American "dough boys"(a term some say dates back to the Civil War when
many enlisted for money, or "dough") arrived in France, British, Australian, and French forces
had successfully halted what history refers to as "Kaiserschlacht," or the Kaiser’s final
German offensive. Regardless of having signed the Treaty of Brest-Litovsk where Russia
agreed to peace with the Central Powers in March of 1917, America’s entrance could prolong
Germany’s war with France and Britain, so any chance of winning the war before we came to
save "Lafayette" would strengthen the Kaiser’s hand. Beginning in March of 1918,
"Kaiserschlacht" combined special "storm trooper," highly mobile units of 74 divisions, 6,608
guns, and 3,534 mortars of the Germany Army, which smashed into the British Fifth Army up
to a depth of six miles along the northern front. 1 At Amiens, the allies halted the German
advance in April; nevertheless, the Germans tried to follow up on the tactical gains made by
their assault, but nothing came close to the magnitude of Kaiserschlacht.

America’s presence at Château-Thierry, the Marne, and the Meuse-Argonne offensive in

spring and summer of 1918 halted any further German advances; on November 11, 1918, the
allies signed an armistice with Germany ending the war. All total, America’s short period of
intervention witnessed 49,000 combat deaths and 59,000 from disease. Big numbers still, but
we came out ahead: France, 1.3 million combat deaths; Germany, 1.8 million dead. On the
Western Front alone the British lost 2.6 million; Austria-Hungary, in her combined
engagements against both the Italians and Russians, 905,000; Russia, anywhere from 500,000
to 2 million killed. Back in 1985, Sting came out with a song entitled "Children’s
Crusade": young men and soldiers, 1914, marching through countries they’d never seen…
virgins with rifles...life’s bitter [trade]…all for a children’s crusade…" ….quite an appropriate,
reflective verse.

The American home front, 1917-18

Voluntary food rationing programs for the war effort –headed by Herbert Hoover who had
successfully administered relief endeavors for Belgium- conducted by the Food
Administration proved successful and propelled Herbert Hoover into the national spotlight.
The War Industries Board run by Bernard Baruch (banker) coordinated industrial production
between business and government for war goods. Here we see a framework for future "New
Deal" regulation of business by govt. which took place during the Great Depression.

Hoping to win popular support for the war, the Committee on Public Information used Mary
Pickford (then called America’s sweetheart) and Charles Chaplin (the "Little Tramp" to
moviegoers) to conduct liberty bond drives. These bonds borrowed money from Americans
who were paid interest for their loans; in turn, the govt. used the money to cover war costs.
Excess profits tax on corporations and loans to the allies served as another means of cash
flow to the U.S. government.

The Fuel Administration sought to conserve oil and coal and establish daylight savings time;
government, in hopes of ensuring the delivery of durable goods, established the Railroad
Administration thus controlling railroad shipments. The War Shipping Board –another govt.
agency- built ships to replace those sunk by German submarines. An interesting (although
previously alluded to) series of partnerships between business and govt. took place during
the war. Something that until 1917 had been unprecedented in U.S. history: govt. control
over the U.S. economy!

Lastly, the Espionage Act established a $10,000 fine for interfering with the draft with up to
20 years imprisonment; 1,500 protesters found incarceration. The act also established early
govt. probes of individuals which later granted the FBI "bugging" authority and allowed for
the harassment of "radicals." Wow! Perhaps an early precursor to………………………????

German Americans

Both the suspicion of and, sometimes, murder of German Americans during this epoch is yet
another important footnote in American history. The root of the crusade against German
Americans centered on the issue of hyphenism, or dual identification with the land of ones
birth and their ancestral homeland. Assimilation has always been a hallmark of our society,
but in times of crisis (man made or legitimate) we sometimes have rushed to forcible
assimilate ethnic groups, fearing that if we do not they may form some sort of "5 th column."

The attack on "hyphenism" (German-American) became a theme of the 1916 presidential

race with Wilson coming out firmly against labeling; Charles Evans Hughes, his opponent,
voiced similar opposition but not as vehemently as Wilson. Neither candidate, however,
wanted to appear conciliatory to "hyphenated Americans." German newspapers, schools, and
clubs usually adopted English names just as a means of proving their loyalty; prudently, the
German Life Ins. Co. of St. Paul, MN, changed its name to Guardian Life Ins. Statues outside of
public buildings referencing Germanic imagery were often replaced.

German-American organizations did question the imperialistic role of Great Britain and how
she may have contributed to the escalation of events taking place, especially her propaganda
concerning Germany’s invasion of Belgium. Yet the country seemed more culturally linked to
Britain. Episodes such as Erich Muenten’s (alias Frank Holt) attempt to kidnap Mrs. J.P
Morgan in hopes that her spouse would use his influence with industrial America to halt
shipments of material to the allies, contributed to the growing unease with so-called
"hyphenated" Americans. San Jose, CA, witnessed George Koetzer tarred, feathered and
chained to a cannon in a park; in Corpus Christi, TX, a Lutheran pastor received a beating by
an angry mob for preaching his sermon in German! Even an Austrian in Avoca, PA, accused of
criticizing the Red Cross got tied up and hoisted by a group of "patriots" 30 feet into air;
before his release, a dousing from a water hose administered further punishment. 2 For the
most part, all the victims proved to be loyal Americans just the same.

Module 2 Lecture Part 2: Red Scare, League of Nations, and America in the 20s

Red Scare

Maybe, just maybe, a little es-pion-aggy isn’t a bad idea. I mean, Jefferson did say a
(paraphrasing) "a little revolution [is] a good thing…" so what’s bad might be good –from
time-to-time. Of course you have to make that assessment…

But from 1919-1920, the country did undergo the first "Red Scare," the second wouldn’t take
place until the McCarthy years of the early 1950’s. The discontent of steel and factory
workers from 1917-18 (much caused by the unionization campaigns by the Industrial Workers
of the World -the Wobblies); racial strife resulting in riots in Chicago and East St. Louis, IL;
bombings on Wall St. in 1920; the short but severe depression of 1921-22, and the presence
of a communist labor party scared many Americans, especially those in government. Other
incidents which took place:

 On April 28, 1919, the mayor of Seattle received a bomb in the mail.

 On April 29, 1919, a bomb in a package addressed to Sen. Thomas Hardwick of GA

blows off his maids’ hands.

 Postal clerks noticed "suspicious" looking packages in mailrooms.

Well, these incidents contributed to a rising anti-immigrant backlash by the early to mid
1920s; hostility toward foreigners and organized labor somewhat halted any additional
progressive reforms that might have occurred.

President Wilson’s Atty. General, A. Mitchell Palmer, believed evidence of a communist plot
to overthrow the government was in the making; Wilson gave him the "go ahead" to look for
communists and other potential subversives. "Palmer Raids" –the first taking place on
November 7, 1919- arrested 250 members of the Union of Russian Workers. Blackened eyes
and lacerations were inflicted. These "Russians," however were in fact theoretically
anarchists but not bomb throwers; nevertheless, their arrest resulted in deportations. The
following month Atty. Gen. Palmer arrested more communists, holding them without
counsel. On several occurrences these people were paraded through streets, subjecting them
to public scorn and ridicule. The Palmer Raids, however, never seemed to nab any real
"Zachrias Moussai’s," even though Bolsheviks are said to have orchestrated the bombing on
Wall St. in 1920. Still, by 1920 the public had had enough of Palmer and his soirées.

But a sad product of the Red Scare came about with the trial of Sacco and Vanzetti, two
Italian anarchists arrested for murder and attempted robbery at a shoe company. Both found
guilty not for murder and robbery, but because they were anarchists; supposedly the judge in
the case referred to the defendants as "those anarchists bastards." On August 23, 1927, Sacco
and Vanzetti received death by electrocution. Although there is some dispute as to whether
both committed murder, in the court of public opinion at the time, their true crime revolved
around political affiliation…let’s hope in this age we have in fact learned something from this
rather tragic episode in our history…probably not too much, however. 

Wilson’s failure: League of Nations proposal, 1919-1920

The Rolling Stones prophetically stated you can’t always get what you want…but you might
get what you need. In reference to President Woodrow Wilson, attempts at making America
a member of the League of Nations –a body of countries who would respect and preserve the
territorial independence of its neighbors- coincided nicely with the first half of Mick Jagger’s
verse. Application of military and economic sanctions if necessary, armament reductions, and
the establishment of a court of international justice would also function as League duties.

The 14th Point of his message to Congress in January of 1918, Wilson urged the creation of
such a body with the United States as an active participant. Yet he under-estimated the
sentiment in the country at the time against the potential for future global engagements, nor
did he anticipate the penchant for vengeance manifested by the allies at Versailles.

Republican victories in Congress during the off year election of 1918 (and again in 1920)
somewhat reflected the mood of the country when it came to foreign affairs: the public
interest over domestic concerns regarding strikes, regulation, prohibition and not to mention
(but to write down anyway) racial discord took precedence –at least in the minds of voters-
over presidential utopian ambitions guaranteeing world peace. Besides Wilson professed to
speak for the people, leaving Republican Senate leader Henry Cabot Lodge in Washington
while he negotiated terms at Versailles about the League and other matters only hampered
his ability at selling the idea to Congress. Furthermore, the European ministers (Lloyd George
of Britain and Clemencau of France) proposed the adoption of a "war guilt" clause in their
treaty with Germany which also required reparation payments. It all seemed vengeful,
leading to potential conflicts between nation states; America –after having spent much in
blood and treasure in 1917-18- did not have the stomach for.
Many in the Senate, however, did support the idea of a League of Nations but a cadre of
"irreconcilables"- like Sen. William Borah of Idaho- cuddled to their isolationist sentiments; to
them a League? No way! Other irreconcilables included Robert Lafollette of WI and Hiram
Johnson of CA. Others like Sen. Lodge had their reservations, but would support the league
proposal if Congress, not the president, could choose which conflicts America would commit
troops. In essence, Lodge’s plan ran counter to the League charter Wilson had pushed at
Versailles, this irritated the president. The bone of contention, therefore, centered
around "Article X" which could require the U.S. to intervene (militarily) to protect a member
nation under attack. In the wake of the carnage suffered during such a short period in France
during WWI, the idea of putting our troops in harms way did not sit well with many,
particularly the opposition party in congress. 

Of course politics creeps its ugly head into all things and this was no exception; Lodge is
looking for some "wedge" issue for the 1920 presidential election and the League debacle
gives him just that. On November 19, 1919 the proposal is put to the floor of Congress with
Lodge’s amendments; Wilson instructs all Democratic senators to vote against it. Neither
Lodge’s "reservation" bill nor Wilson’s original idea pass the Senate, the League went down
to defeat (but not by 20,000 Leagues…hey, it’s 5:30AM on Sunday and I’m tired, OK). So the
United States never joined the League, and not until 1921 did we sign separate peace treaties
with Germany and Austria-Hungary

Back to Mick Jagger…had Wilson compromised on some of the points the United States might
have joined; moreover, he did not take the pulse of the country which had become more
isolationistic. Lodge, too, had been dogmatic in his "reservations." Nonetheless, presidential
hubris seemed to outweigh senatorial politics. "Either we should enter the League fearlessly,
accepting the responsibility and not fearing the role of leadership which we now
enjoy," Wilson stated in a letter to Democrats on March 8, 1920. He continued "…contributing
our efforts toward establishing a just and permanent peace, or we should retire as gracefully
as possible form the great concert of powers by which the world was saved." 3

…but hey, remember, Mr. President, you might get what you need!

Washington-Naval Conferences, 1921-22

Though it may appear that the United States wanted little to do with world affairs other than
to engage in trade after World War One, that simply wasn't the case. We emerged as the
world's largest creditor nation after the war -prior, we had been one of the world's debtors-
so to help promote world peace and, no doubt, economic stability, a series of conferences
were held in Washington in hopes of reducing the likelihood of armed conflict. Spearheaded
by Secretary of State Charles Evans Hughes-the Republican candidate for president who lost
to Wilson in 1916- the meetings sought, one, to recognize the territoriality of foreign nations
to their overseas possessions (namely colonies in Asia and the Pacific) and two, reduce the
size of "capital ships" (warships) in hopes of lessening their formidability.

Recall a lesson or so back we discussed Alfred Thayer Mahan's ideas on sea power in its

necessity to protect and defend a nations' colonial interest and domestic shores. Hughes and
others in attendance understood that while such a policy had merit, its prolonged use just
might lead to further global conflict. Furthermore, alliances like the Anglo-Japanese Treaty of
1902 between Great Britain and Japan were disbanded. Such agreements seemed only to
foster the likelihood of co-operations between nations for the purposes of mutual defense,
not global alliances on how to reduce the probability of armed, naval conflict. 

As an example, the "Five-Power-Treaty" reached an agreement among Great Britain, the

United States, Japan, Italy, and France that the tonnage for warship construction could not
exceed a 5:5:3 ratio. Meaning Britain and the US could build ships consisting of tonnage less
than or equal to 500,000 with Japan, France and Italy no more than 300,000 (the proposal
had called for Italy and France to have no more than 175,000 tons but a compromise was
reached at 300,000). Given the United States and Great Britain had greater coastal (and
colonial) areas to defend, the conference allowed larger tonnage allotments for the two
nations.

The "Four-Power-Treaty" recognized that Great Britain, the United States, France and Japan
would respect all territorial claims in Asia and consult one another before a signatory took
pre-emptive action in the region. This aspect of the conference officially terminated the
Anglo-Japanese Treaty mentioned earlier, a boon in a way to the United States that had
become leery of Japan's intentions in Asia. Had Japan and Britain maintained the pact, a
conflict between the U.S. and Japan could warrant Britain's intervention. Not something the
U.S.A. would look forward to in the least. 

FInally, the "Nine-Power-Treaty" would respect China's sovereignty making sure Britain, the

United States, France, Italy, the Netherlands, Portugal, Belgium, Japan with China as a
signatory, would all respect China's territory. In essence, it assured that the "Open Door
Policy" first implemented by Secretary of State John Hay in 1901 granting no particular nation
exclusive control of China's markets, would continue as long as possible into the twentieth
century. 

Although the conference did not put a moratorium on the construction of battle cruisers and
aircraft carriers, it did stipulate that warship construction be curtailed for ten years. Plus, it
was an effort to show that America in the wake of not joining the League of Nations did want
to maintain a presence on the world stage. At the very least it proved "good theatre" if
nothing else...at least it tried to lessen the probability of conflict. 

1920s: Culture, Economics and the Stock Market Crash

Now let’s speak of happier times…if you were a farmer, well, not quite as happy…

President Warren G. Harding presided over a short but severe contraction in the business
cycle from 1921-22, followed by an era of prosperity which lasted –with couple of small
intermittent downturns- until late 1929. Calls for a return to "Normalcy" permeated the
thinking of Americans trying to forget the twin impacts of war and debate over whether or
not America should enter the League of Nations; by mid 1922, production had regained
strength and the depression, which had resulted due to a glut in the supply of goods during
war time, began to recede. Prosperity took hold.

We tend to think of the twenties with its tax cuts supposedly for just the rich, stock market
speculation, and bath tub gin as one wild bacchanalian rivaled only by a Roman "party" (the
polite word). True, these were good times economically and culturally for most Americans;
no doubt, racial issues did tend to "rear their ugly head (s)," but in comparison to decades
prior and subsequent, racial tolerance appeared the norm.

Culture flourished. For example, Harlem, New York, experienced a renaissance in culture
fueled by black artists, poets, photographers; Called the "Harlem Renaissance" black cultural
icons like Duke Ellington (composer), Zora Neale Hurston (writer) and Langston Hughes (also
a writer) provided America with a sophisticated expose of black America often not depicted
in the broader culture.

Silent movies seemed mostly to convey tranquility within the country, promoted by the
comedic displays of Buster Keaton, Harold Lloyd, and "Our Gang Comedy." Females swooned
at Rudolph Valentino in the Sheik; allegedly my grandfather tore up my grandmother’s
picture of Valentino after they both saw the movie, jealousy I guess. I did take her to
see Blood and Sand when she turned 96, she loved it!

So for awhile let’s recognize the more pleasant aspects of the decade…then, well, you’ll see…

Welfare Capitalism

We take for granted employee benefits allowing for two weeks paid vacation, health care; in
some companies, kitchens-cafeterias subleased to vendors. Well, the roots of this corporate
largess date back to the 20’s. Bausch and Lomb set up eye clinics for their employees (now
that’s pretty understandable), other companies provided glee clubs, and baseball teams,
group insurance, and paid vacations. Profit sharing plans allowing employees to "buy into"
the company took hold as well. So the term welfare capitalism was the granting of
perquisites to employees as a means of showing gratitude by management and the board of
directors. Altruism or self-interest? Probable a little of both, with more weight skewed in the
direction of the latter.

A happy employee was a non-union employee. Better to give now then have him strike later,
which could wind up costing you more money in the long run. At the helm of this philosophy
is the Dept. of Commerce headed by Herbert Hoover (we’re talking c.1922-23). Under
Hoover’s aegis, the dept. promoted business-government partnerships that would adopt
reforms both capital and labor could live with. Contrary to popular opinion, Hoover did
believe in the regulatory power of government, he even hosted trade associations in hopes of
persuading industry to adopt fair labor standards. In fact, Hoover pushed for high wages
enforced by inflexible contracts that would not allow pay cuts during economic downturns.

Let’s not try and paint too rosy a scenario….business and her government allies did not want
to deal with unions, especially the more radical element. Non-union workers were a different
story, and with the prosperity of the times, not many workers even considered the
importance of unionization. Wages were good for a while (later, real wages, or what your
money purchases after adjusting for inflation, declined) and firms made money.

Innovations took hold in several industries. Synthetic plastic development grew during the
war, bakelite (a substance with high chemical and electrical resistance) contributed to a run
up in the price of Radio Corporation of America’s (RCA) stock. Production of protective
lacquers reduced auto finishing from days to a few hours! And Henry Ford started the 5-day
workweek in 1926. Ford also developed economies of scale, whereby production costs tend
to decline on a per-unit basis usually associated with large scale facilities- when his plant
rolled off one Model T per hour! Thus, making the cars so cheap that even the average
worker could afford one! That’s American ingenuity, baby!!!!

Shall I go on? OK….the decade experienced the growth in chain stores like A&P, Woolworth’s,
and Owl Drugs. Branch banking (a system of franchise like outlets accepting deposits and
originating loans) grew from 1,280 in 1920 to 3,516 by 1930. Amadeo Peter Gianni developed
a chain of 500 banks throughout California under the name Bank of America National Trust
and Savings Association…I mean, can I become Italian just for one minute here, guys? Talk
about ethnic pride! This is way too cool!

That was the good stuff….and to this life some rain must fall…

The Bad and the Ugly side of the 1920s…

A resurgence in Ku Klux Klan activity occurred in the 1920’s. In practice, not the Klan of
Reconstruction days looking to intimidate anyone who voted Republican, but in theory, still
espousing a "white’s only" doctrine usually cloaked in America First" rhetoric, and often
resorting to violence in hopes of achieving their ends. Bolshevism and socialism threatened
American society with their assaults on religious practices, the free enterprise system, and
American social mores; the Klan, consequently, viewed itself as a bulwark against this
aggression. Parades and speeches, job rallies, and actively campaigning for the 18th
Amendment outlawing alcohol consumption became a part of Klan routine in the 1920’s.
Many influential people became members: future president Harry Truman and Supreme
Court Justice Hugo Black to name a few. Even the late senator from W. Virginia (deceased
within the last ten years), Senator Robert Byrd, once belonged to the KKK.

Klan influence had grown so strong that by 1924, they actively disrupted the Democratic
Convention, the first presidential convention ever broadcast via radio, when they initiated
fights on the convention floor. Part of the brouhaha concerned the Klan pushing an anti-
immigrant, pro prohibition platform. Such outbursts and a lack of cohesion among Democrats
led to Republican Calvin Coolidge’s victory that fall.

The Scopes Monkey Trial of 1925 and even the Presidential Election of 1928 –neither of which
were KKK influenced- did touch on America’s sensitivities toward religion. The instruction of
evolution as opposed to creationism in rural Tennessee challenged America’s values of
Puritanism and autonomy. Pitting the twin titans of Clarence Darrrow (noted labor atty)
against William Jennings Bryan (three time presidential contender) proved a battle royal for
the forces of evolution and those supporting creation. Darrow represented Scopes, with
Bryan acting on behalf of the state. In spite of exposing Bryan’s ignorance of elementary
science on the witness stand, Darrow lost his case and Scopes paid his fine. The heartland
seemed to win a victory here with modernity taking a back seat.

Al Smith, the 1928 Democratic nominee for the president, lost because of prosperity, not
because of religion. However, Smith agreed with the "wets" (anti-prohibitionists) which was
in direct confrontation with his own party’s platform supporting continued prohibition. Plus
realignment had begun to take place in the Democratic Party as immigrants –disturbed by the
Republicans collective support of anti-immigrant legislation and religious fundamentalism in
the heartland- started supporting Democratic politicians, especially in major urban centers.
Catholics, too, troubled by Republicans and their fundamentalist constituency, also registered
Democrat in large numbers. Furthermore, blacks in cities like New York and Philadelphia
began, though not en masse, looking to the Democrats reversing the decades old lock the
Republicans had on "the black vote." They, too, had become critical of how Republican
politicians either had -like in the south- abandoned their interests, or as in the mid-west,
became very pro-rural which often meant supportive of the KKK. 

So why did respectable people often join the Klan? Simple. Red Scare, feelings of assault on
American culture by too much foreign immigration, that followed by a growing sense of
isolationism tempering the mood of the country at the time. Already President Warren
Harding had signed the 1921 Immigration Restriction Act basing immigration quotas on no
more than 3% of a groups 1910 population statistics. Three years later an even more
restrictive act followed, moving the base year back twenty years with a 2% quota; immigrants
from the far east being the targets. Was the KKK the cause or an expression of these
sentiments? …your call… (you don’t get off easy, do you?)

Farmers

After their "hey day" (I must be getting old because these corny sayings seem to spill out of
my type worn figures without any intention of punning…see, "corny" for farmers…I need a
break) when they fed most of the world during World War I –because Europe could not do
the same- farmers lost much economic clout when European nations started to produce once
more. Yes, the Farm Bureau Federation, a progressive force in Congress, did organize
congressmen from farm states to establish a voting bloc in Congress, but many of their
proposals lacked support from either their colleagues or the three Republican presidents.

Saddled with mortgages and high taxes, farmers witnessed their share of the nations’ GDP
begin to dissipate. It was as if they became irrelevant. The McNary Haugen Bill introduced in
Congress would have bought surplus farm production and sold it abroad. It also called for
price supports for commodities; Calvin Coolidge vetoed the bill believing govt. had no role in
the marketplace when it came to agriculture. Not until the New Deal under Franklin
Roosevelt would farmers gain some recognition (thank God I didn’t end on a pun!). Not as if
all Republicans in congress and the senate at the time turned a death ear to the plight of
farmers, Robert La Follette, an example of a "farm state" Republican, advocated for relief
efforts like McNary-Haugen. Like other "Progressive Republicans" some of whom had
constituency's in the farm states, La Follette often found himself at odds with Coolidge and
the conservative wing of the Republican party over farm relief. 

Stock Market Crash, October 1929

As alluded to in the lesson, the 20s were a period of economic prosperity but all good things
must...at least sometimes...temporarily...come to an end. The prosperity of the period no
exception. 
By mid decade real wages had begun to fall -that's when you compare your salary to the price
level, if prices continue to rise your salary buys less. There had been a real estate boom in
Florida leading to over inflated prices by 1926 leaving many land speculators albeit,
temporarily, broke. The Mellon Tax Cuts (named after Secretary of the Treasury Andrew
Mellon) particularly the 1926 legislation (there had been several throughout the decade) led
investors to invest more in stocks then durable goods, the latter investments that could
create jobs and grow the economy. Also, the act did not cut the capital gains tax rate, the tax
applied to long-term holdings on investments. Furthermore, like today, stocks could be
purchased on margin meaning the borrower (investor) places a certain amount "down" and
the brokerage firm "lends" the remainder. Unlike today's margin requirement (set by the
Federal Reserve Bank) of 50%, in the 20s it was 10! Follow me...if you wanted to buy $20,000
in stock in, say, 1928, your broker assuming you had the credit -and other securities as
collateral- could lend you up to $18,000. 

So applying some quick math: The "fair market value" in the above example is twenty grand
of which you've "borrowed" eighteen leaving you with two thousand dollars in "equity." If
the fair market value continues to rise, BOOYAH, you're doing well! But physics has laws, you
know, like "what goes up, must come...." you get the idea, right? If the stock value goes down
to, maybe, $15,000, when you deduct the amount you owe you don't have any equity (-
3,000). In such cases the brokerage firm may issue a "Margin Call" inferring that you put up
more cash or contribute more securities. Of course...if stock prices are collapsing (like in the
concluding paragraph) its hard to raise cash by selling securities that keep falling in price...you
know, gravity!

Oh, as for the capital gains tax rate, if the rate is not lowered there's little incentive -if any-
for an investor to sell his shares. If you do you're subject to taxes on the gains you made on
the stock; if you've got a lot of profit locked in because the market has overperformed during
the preceding four years, you could be subject to a HUGE tax bite. Had the Mellon cut in '26
lowered the capital gain tax rate, then that might have taken some "air out of the balloon"
before it...get the picture? The picture: a lower rate may have incentivized investors to "sell"
there shares, pay the taxes and buy more stock. But if the tax isn't lowered and you keep
accruing gains, that means you'll pay higher taxes! So investors didn't want to cash out
fearing the tax reprisals. 

By early 1929, the market had shown signs of over valuation since speculators had been
driving up stock prices. There were a couple of brief sell-offs, but a major collapse happened
in October 29th, "Black Tuesday," following a week of sell-off's where investors lost millions.
On Black Tuesday, all the speculation leading to margin purchases, lack of interest in selling
due to pent up capital gains, and just plain 'ole profit taking led to the market's collapse...and
the onset of the Great Depression.