Pivotal Tuesdays

by Margaret O'Mara

  The political landscape after the end of World War I also became a challenging one for reform and government activism. The over 100,000 U.S. war dead paled in comparison with the millions of European soldiers killed in the conflict, but many Americans nonetheless believed the price of foreign engagement had been far too high. While ordinary people had scrimped and saved, and sent their boys off to war, the financiers of Wall Street seemed to have made off like bandits, growing their already immense wealth by lending money to Great Britain and the other allies, and financing the great expansion of military production both before and after the United States formally entered the conflict. Adding to the wrenching human costs of the dead and wounded, and the resentment against those who had gotten rich in the process, was the glum economy that had resulted from wartime demobilization. Military spending had been a powerful stimulus to the economy, putting thousands to work and propelling millions of Americans to start migration from rural farms to bustling cities. This movement, particularly that of African Americans escaping the injustices of the Jim Crow South, would continue for another six decades and fundamentally reshape the American political and economic landscape.9

  The postwar economic slowdown pitted worker against worker in a competition for scarce jobs. This, coupled with rising anxiety about the threat of Communism in the wake of Russia’s 1917 Bolshevik Revolution, drove virulent protests against blacks, immigrants, and political leftists and radicals. Against this backdrop of resentment and growing isolationism, Woodrow Wilson embarked on his crusade to convince the United States to join the League of Nations. Wilson’s internationalist vision fell short of winning the support it needed. The enfeebled League went on without the United States in it. Already exhausted by barnstorming the country in support of the League’s ratification, Wilson became debilitated by a series of strokes, and he died shortly after leaving office.

  His Republican successors—Warren Harding and Calvin Coolidge—presided over a very different kind of White House. However, while the Harding and Coolidge eras may have appeared more laissez faire than the two decades of reform that preceded them, even these “conservative” years of the 1920s demonstrated how the definitions of national government responsibility had fundamentally changed. Although it was a consistent opponent of efforts to regulate markets and curb corporate power, the Republican-dominated executive branch of the 1920s presided over bold government interventions like Prohibition, unprecedented immigration restriction and deportation, and government revenue increases through raised tariffs on foreign imports. Moreover, a great deal of progressive social reform continued at the municipal and state levels, as citizen-activists and politicians of both parties pushed through further measures to protect workers, provide aid to mothers and children, and regulate commerce. American industrial society was no longer the free-for-all it had been in the Gilded Age. The era of reform left its mark. Yet the political mood was distinctly different from a decade earlier.10

  The American people turned inward in the 1920s. Increasingly stringent quotas cut off new foreign immigration, especially for people from Southern and Eastern Europe and Russia; grassroots violence against foreigners and people of color escalated. The Ku Klux Klan reached its highest membership levels ever in the 1920s, and it was a national phenomenon, with some of its biggest chapters emerging north of the Mason-Dixon Line.11

  America turned its back on the world because it could afford to do so. After the postwar economic slowdown, the U.S. industrial economy roared back within a few years, led by the boom in automobile industry. Innovations in manufacturing, distribution, and selling made consumer products better, cheaper, and more abundant. To reduce turnover and increase productivity, Henry Ford famously introduced “the five-dollar day” that doubled his workers’ salary and benefits, and conveniently gave them enough in their pockets to purchase one of the Model T cars that rolled off Ford’s assembly line. Decisions by Ford and others who ran giant companies employing hundreds of thousands reverberated across the American economy. To accommodate the needs of both Jews and Christians who desired a day off on the Sabbath, employers like Ford instituted the two-day weekend. Other industries followed suit. By 1929, Detroit was making 4.4 million cars per year. Most American households had a car—almost none had in 1900. The auto industry employed close to half a million people.

  With more leisure time and with cars that allowed them to explore, American workers went to the movies and bought radios, home appliances, clothing, and other consumer products by the millions. Credit flowed easily, allowing families to make big purchases with only a little cash down. Homeownership went up, and speculative real estate bubbles grew. The biggest bubble was in swampy and subtropical Florida, where con men and respectable brokers alike sold small investors on the promise of making a quick dollar on second homes, apartments, and hotels. The popping of the real estate bubble in Florida and around the country in 1926 gave its victims a taste of the financial disasters that lay around the corner.

  Easy credit, spiking consumer spending, and dependence on a few large employers meant that the prosperity of the Roaring Twenties was not built to last. But one would not have known it from the prognostications of the politicians in Washington, who continued to trumpet the message that the United States had entered a “new era” where old economic rules no longer applied. Irrational exuberance extended to the business world as well. Banker Paul Mazur (who, ironically, later became a key advisor to FDR’s vaunted “Brains Trust”) proclaimed in 1928, “there is every probability of a continued virility in the strength of American business.”12 Had they looked more closely at the particulars of this prosperity, however, political and business leaders might have been less bullish.

  In truth, the Roaring Twenties were not roaring for everyone. The nation was really two Americas, divided and unequal. While average income levels rose overall between 1921 and 1929, the top 10 percent of earners saw their incomes rise much more steeply than those of everyone else, and by 1928 they had a 46 percent share of the national income. Average income statistics masked the large numbers of Americans who were barely getting by in the 1920s. At a time when the minimum income deemed necessary for a decent standard of living was $2,500, 71 percent of American families made less than that.13

  Another dimension of the American divide was geographic. The 1920s were perhaps the high-water mark for the great American city. For the first time, more than half the nation’s population lived in urban areas, and the great industrial metropolises became the centers of the decade’s prosperity. Good manufacturing jobs paid well enough for families to buy cars, and gave enough time off to go to the movies and baseball games. Soaring new skyscrapers rose upward from city streets, downtown shopping districts bustled, and old slums gave way to new parks and parkways. Women cut their hair. Jazz music reigned. Prohibition was openly flouted.

  The ascendance of urban culture masked the persistence of rural landscapes, where over 40 percent of Americans still lived in 1930. There, more than 80 percent of the population did not have indoor plumbing and 98 percent of farmhouses did not have electricity. Threatened by the “decadence” of the cities they read about in newspapers and watched at the weekly picture show, rural people even more strongly clung to traditional values. They supported the continuation of Prohibition. Some joined organizations like the KKK, many more—in countryside and city—joined churches, and evangelical movements and charismatic religious leaders drew many thousands of followers.14

  More significantly, on the American farm, hard times had begun well in advance of Black Thursday. Just as new technologies had helped pump up manufacturing productivity, powerful and sophisticated new harvesters, combines, and tractors had opened millions of acres to cultivation in the 1920s. In doing so, they had not only sharply reduced the need for farm labor, but had helped spur a wave of overproduction that drove down commodity prices and depleted soils. The economic effects rippled over the countryside, from farmers to merchants to small-town banks. Again
and again throughout the 1920s, Congress introduced bills creating price supports for beleaguered farmers, only to be vetoed by the Coolidge White House.15

  Despite the triumphal messages he delivered on the stump in 1928, Herbert Hoover had watched all these things with some worry over the course of the 1920s. On New Year’s Day 1926, as commerce secretary, he had warned, “psychology plays a large part in business movements, and overoptimism can only land us on the shores of overdepression.”16 Compounding the problem of this magical thinking was a dearth of reliable statistical information on the American economy. There were not monthly or weekly measurements of employment or output. Reliable poll data were nonexistent; economic statistics were far less dependable or predictive.

  Figure 9. Unemployed men queuing outside a depression soup kitchen opened in Chicago by Al Capone, 1931. The scope and depth of the Great Depression left few Americans untouched, and left traditional sources of authority and welfare unable to cope with the effects of mass unemployment. National Archives.

  The instability and deep inequality that had characterized the not-so-Roaring Twenties meant that the there was little to stop the American economy from sliding into a deeper economic hole in the wake of the 1929 crash. And by 1931 that hole had opened up. An independent-minded Federal Reserve had declined to infuse new capital into shaky markets, as central banks often did during economic crisis. Wall Street’s crisis spread to Main Street by 1930, as small community banks started failing, one by one, adding up to over 9,000 closures over the next three years.

  Then, in 1931, the enfeebled economies of Europe started to go off the edge. The previous year, Hoover had signed into law a protective tariff that, ironically, had its roots in a desire to help beleaguered American farmers by fending off foreign competition. This highly restrictive measure, while adhering to Republican economic orthodoxy, proved devastating. Of all the policy actions Hoover took in response to the Depression, the tariff had the biggest effect—one that was negative, rather than positive. Deeply indebted to American banks since the end of the war, and lacking any means to pay off their debts, European economies went into a tailspin as the drying up of Stateside credit cut off the stream of capital to debtor nations and the tariff restricted their ability to sell to American consumers. The tightly interdependent global economy was a house of cards, and its collapse had devastating economic consequences.17

  From the perspective of today’s monetary economists, the government’s choices in the crisis seem stunning. They go against all that is now known about economic stimulus and monetary policy on both left and right. From the perspective of the early 1930s, it makes more sense. Federal expenditures were only 3 percent of Gross Domestic Product (by 2010, they were 40 percent). State and local governments spent about five times more in total than the entire federal budget. The Federal Reserve was independent from the executive branch. Making matters worse were the results of the 1930 midterm elections, which left the House of Representatives evenly split between Democrats and Republicans. Under rules then in force, the Congress could not be seated until the deadlock was broken. Eventually, the Democrats squeezed out a one-seat margin, but not until the House had been out of session for thirteen months. Thus, for more than a year of spiraling crisis, the business of legislation ground to a halt.

  Hoover was a firm believer in the usefulness of government action, but even his relatively modest forays into interventionism were met with fierce resistance from financiers and politicians who believed these sorts of upheavals were necessary to release unproductive labor and capital from the marketplace. Hoover approved the tariff because his fellow Republicans overwhelmingly supported it, and he had reelection on the horizon. In light of the flurry of New Deal reforms that came afterward, Hoover seems conservative and myopic. In that moment, as he so assiduously argued later, he did all he thought he could do.18

  The scope of the nation’s economic problems challenged conventional wisdom and demanded a redefinition of the politically possible. People who had been economically secure their whole lives now faced unemployment, homelessness, and dire poverty. Keeping in mind the effect of psychology on business outlook, President Hoover sought to rebrand the downturn as a “depression” rather than a crisis or a panic, as the latter terms were so deeply associated with economic traumas of the nineteenth century. The name stuck, and soon the depression became Great. Unemployment kept getting higher, more businesses and banks kept failing, hunger and poverty kept rising. By early 1933, about 1 in 4 Americans had lost their jobs.

  Amid this crisis, voters did not care much about how political leaders did something. They just wanted them to do something to fix it. In 1932, both parties had to reckon not only with the magnitude of this crisis but also with a divided America that had divergent ideas about culture, society, and the economy. Their presidential candidates put forth two very different answers to the problem.

  The Individualist

  In the lists of “worst presidents” that emerge from time to time, Herbert Hoover invariably makes an appearance. So many of the most dire aspects of the Great Depression have become associated with his name, most notably the vast shantytowns of the unemployed called “Hoovervilles” that sprang up throughout urban America. He failed to relieve joblessness and poverty, and some actions he took actually made the Depression worse. Over the years, an image emerged that was more caricature than character study: a bumbling, out-of-touch, hard-hearted fellow who left a giant mess behind him. It has obscured the remarkable career Hoover had before the Depression and the fact that he once was one of the most admired men in America.19

  Hoover was the sort of person who appears frequently in American mythology but rarely in real life: the truly self-made man. Born the son of a blacksmith in West Branch, Iowa, in 1874, Hoover was orphaned at an early age and sent to live with an uncle in Oregon’s Willamette Valley. By the time he was a teenager, he resolved “to be able to earn my own living without the help of anybody, anywhere.”20 He went to Stanford, which had been founded just that year and was a tuition-free university—perfect for a penniless kid from Oregon. He graduated, still broke, and went to work as a day laborer in the California gold mines.

  Ferociously smart and intensely hard-working, Hoover was promoted quickly: from miner to writer of mining reports to a position as mine manager. His rise after that was even faster. In 1897 he took a job with a British mining conglomerate and moved to Australia and China as an engineer. Within three years, he had impressed his employers so much they made him a partner. He relocated to London and spent the next several years roaming the globe to oversee existing mining operations and scout out new ones. He retired at thirty-two, a multimillionaire, but continued to travel widely as a “doctor of sick mines.” When not on the road, he enjoyed the good life of Edwardian London, attending sparkling dinner parties and mingling with the rich and aristocratic.21

  When war broke out in 1914, Hoover and his wife Lou Henry found themselves stranded. President Wilson quickly recognized that this smart, wealthy American could be valuable eyes and ears on the ground in the foreign capital, and that someone with his logistical expertise was exactly what the United States needed in this chaotic moment. Hoover seized the moment. He already had been thinking about how to become involved in “the big game back home,” and this presented a ripe opportunity. His first government job was to find a way to get marooned American expatriates home. His second was even bigger: providing relief to the 10 million civilians in Belgium and northern France who were stuck between the German and Allied lines. It was a massive logistical operation, and he excelled at it.22

  Hoover later called the job the most unpleasant thing he ever had to do. Witnessing the breadlines of hungry war refugees brought him to tears. Yet he was proving himself invaluable, and he admired Wilson. When the United States entered the war, the president recruited Hoover to run the U.S Food Administration—a giant operation controlling food production and consumption on the home front as well as getting
food to wartorn European Allies and neutral nations.

  The appointment was not without controversy. Hoover had been out of the country for years and no one knew whether he was a Democrat or a Republican. Some members of Congress questioned why Wilson had put so much power in the hands of “a gentleman from England.” Some questioned whether Hoover was actually a citizen. Yet to the Progressives on both sides of the aisle, Hoover was the perfect example of an effective technocrat who put commitment to public service over allegiance to a particular party. For Hoover’s part, he kept silent on where his party preference lay.23

  Hoover’s work during the war showcased his management talents as well as his marketing savvy. His agency used slogans and mass-marketing to persuade citizens to join in the cause. War relief posters proclaimed, “food will win the war.” In stark contrast to later derogatory associations, Hoover became so famous that his name became a verb, as families “Hooverized” by rationing food.24

  Figure 10. “Food Will Win the War,” U.S. Food Administration, Education Division, c. 1917. President Wilson recruited successful businessman Herbert Hoover to run the U.S. Food Administration during World War I. Presiding over a campaign unprecedented in its logistical accomplishments and marketing savvy, Hoover became a household name. National Archives.