Interbellum
 Roaring
Twenties
 Great Depression
 New Deal
Overriding Questions of the Time
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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
Prosperity
 Consumer Culture
 Liberalization of
mores and values

Historians‘ Assessment
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First consumer society based on:
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Long regarded as:
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Mass production, mass consumption, mass
communication
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
decade
 Farmers incomes stagnated or declined
 Increase in value of shares listed on stock
exchange by 400% over decade

Pillars of Boom
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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)
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Dominated by notions
of Anglo-Saxonism
Ku Klux Klan
Scopes Trial
Immigration
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National Origins Act of 1924
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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
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Banks
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overproduction
falling prices
increasing indebtedness
Heavy increase in consumer loans (installments) payments
ran out of liquidity
Decentralized banking system
Industrial sector and construction
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Saturation of markets
Wealth concentration
International Dimension
Social Implications
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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)
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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
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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
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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 houseowners (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

Agriculture
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Agricultural 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
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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
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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, piecemeal, partial successes
Opposition
Populism
 Catholic corporatism
 Unions
 Conservative businessmen
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The Second New Deal (1935-1937)
National Labor Relations Act
 Founding of Congress of Industrial
Organizations (CIO)
 Introduction of categorical assistance
programs
 No national health insurance
 Works Progress Administration
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Historians‘ Assessment
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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
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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