Prosperity in the 1920's under Coolidge and Hoover

Mar 2, 2011 Michael Streich

America's Rich Profited During the 1920's - Library of Congress/unrestricted photo image

Prosperity in the 1920's only extended to the wealthy classes, protected by tax cuts and the rise in the stock market while most Americans lived in debt.

Two years before the great crash of 1929 and the onset of the Depression, President Calvin Coolidge declared that America was entering a new age of prosperity. In 1928, Herbert Hoover campaigned on the slogan “A chicken in every pot and two cars in every garage.” Journalist Thomas Stokes wrote Chip Off My Shoulder (1940) in which he observed that, “America was off down Prosperity Road, a road filled with shiny new automobiles and new little houses…” Everyday Americans that believed poverty was about to be conquered, however, never realized the impact of ephemeral wealth.

Optimism and the Building of an American Economic Utopia

The 1920’s was a period of economic growth, fueled by federal tax cuts, notably for those earning more than $100,000, as well as installment buying that enabled ordinary Americans to drive the new cars and fill their homes with labor-saving devices.

It was a period without any regulation of businesses or banks. It was a time of optimism that encouraged even the most modest wage earner to invest in the ever-rising stock market.

“Coolidge Prosperity” was dominated by a colorless and bland president. America was isolationist, protectionist, and shielded by a conservative judiciary favoring the rights of business. Coolidge recommended privately that the Federal Reserve Board curb the expansion of credit, but his Cabinet and advisers were all “big-money” men who viewed any such attempts as a retreat of capitalism.

The Lack of Presidential Leadership in the 1920’s

Both Coolidge and Herbert Hoover’s greatest flaw was their inability to act as leaders. Both men viewed their national roles as managerial rather than presidential. When depression emerged and millions of Americans lost the security of jobs and homes, Hoover believed that the natural course of events would force a correction and return the nation to prosperity. This is as it had always been during the many “panics” of the past.

Prosperity did not Extend to all Sectors of the Economy

Between 1920 and 1929, American production increased dramatically as did population. Population rose from 106 million in 1920 to 122 million in 1929. At the same time, the cost of consumer goods fell, enabling more Americans to purchase newly produced commodities. Within six years, radio sales increased by 7,440,000 sets. Average hourly wages, however, did not reflect these increases and only rose one cent from 0.56 in 1920 to 0.57 in 1929.

Dramatic decreases in real estate were also evident, dropping over 30% between 1920 and 1929. Although farmers were suffering and workers failed to make substantial gains in wages, corporate net income nearly doubled during the same nine-year period.

Stock market shares rose from 227 million shares in 1920 to 1125 million shares in 1929, but the average dividend fell during the same period by almost half. This statistic alone demonstrates the over-valuation of many stocks.

When the market collapsed, many investors lost millions, but so did ordinary Americans that had been encouraged to invest, particularly those working for corporations that pushed employee stock purchases.

The Chasm between Rich and Poor in America

Prosperity in the Coolidge years did not eradicate poverty or end in a capitalist Utopian ideal. A May 11, 1968 article in the New Republic declares that, “The rich stay rich in the U.S., and the poor, poor, and the gulf between them hardly changes…Millionaires who pay no taxes, and poor people who go hungry – this disparity is the most dangerous social fact in America today.”

Although conditions in the 1920’s were very different from those in 2008, parallels do exist. Americans are losing their homes, unemployment figures remain constant, more Americans than ever receive food stamps, and one of the raging debates concerns tax cuts for the wealthy. A March 3, 2011 MSNBC poll, for example, demonstrated that a tax surcharge on millionaires was favored by nearly 70% of those polled.

The 1920’s was an example of false optimism fueled by an inherently flawed economic system. This is not a criticism of capitalism or the free-market system, but an evaluation of a system that refuses to police itself or see the signs of future problems tied to current greed. Additionally, the 1920’s demonstrated a need for solid national leadership, especially when the crisis began. Neither Coolidge nor Hoover represented that necessary strength of leadership.

Sources:

• Historical Statistics of the United States, Colonial Times to 1957, Government Printing Office, 1960
• Thomas Stokes, Chip Off My Shoulder (Princeton University Press, 1940)
• George Soule and Vincent Carosso, American Economic History (Holt, Rinehart and Winston, 1957)
• T.R.B., “The Rich Always with Us,” New Republic, May 11, 1968
• Gordon Thomas and Max Morgan-Witts, The Day the Bubble Burst: The social History of the Wall Street Crash of 1929 (Penguin Books, 1979)

Copyright Michael Streich. Contact the author to obtain permission for republication.

TEDDY ROOSEVELT'S FIRST TERM

 Upon the death of William McKinley by an assassin’s bullet in 1901, Theodore Roosevelt, referred to as “that damned cowboy” by Ohio Senator Mark Hanna, became President of the United States. Roosevelt saw the presidency very differently from his immediate predecessors. Roosevelt believe in presidential prerogative power, the ability to do anything not specifically prohibited by the Constitution or by any statue. Roosevelt changed the view of the presidency and in the process exercised leadership challenging Senate stalwarts but accomplishing significant results.

 

Theodore Roosevelt’s First Term

 

Roosevelt’s perception of the president was rejected by the powerful leaders in the Senate and it would not be until his 1904 electoral victory that the Congress supported the initiatives of his “Square Deal.” However, Roosevelt set the tone and some important reform legislation was passed.

 

Referring to the “bad trusts” and their operators as the “malefactors of great wealth,” Roosevelt instructed his Attorney General to use the 1890 Sherman Anti-Trust Act to break up the Northern Securities Company, a conglomerate that worked to restrict trade. In Northern Securities v. United States, the government prevailed, marking the first time the Sherman Act was effectively used to “tame” the trusts.

 

The Elkins Act of 1903 further strengthened railroad regulation by monitoring unfair discrimination and imposing fines. The Newlands Act of 1902 provided government assistance for western irrigation projects and in early 1903 the Nelson Amendment established the Department of Commerce and Labor as well as giving the president the right to publicize corporate wrong doing. Roosevelt used the opportunity to appoint Oscar Strauss as the first Jew to serve in a presidential Cabinet.

 

The Pennsylvania Coal Strike

 

In 1902 a strike by anthracite coal miners threatened to cripple the nation. Led by John Mitchell, strikers refused to negotiate, demanding a 9 hour workday and a 10% increase in wages. Public sentiment supported the workers at a time newspapers were highlighting atrocious working conditions throughout many American industries, most notably the rampant use of child labor.

 

Senator Mark Hanna’s offer to mediate the strike was rejected. Senator Henry Cabot Lodge of Massachusetts wrote the president stating that the lack of coal shipped to New England in the face of winter was creating serious concerns. He also reminded Roosevelt that the mid-term elections were rapidly approaching.

 

Roosevelt summoned Mitchell, the mine owners, and J. P. Morgan to the White House where he mediated an end to the strike. Out of the negations came a commission that would hold hearings on labor disputes with liberal attorney Clarence Darrow representing the rights of workers. Roosevelt’s mediation illustrated his view of the presidency as a type of stewardship.

 

Foreign Affairs

 

Although risking a serious confrontation with Imperial Germany in 1902 over Venezuela’s debt default, the nation remained at peace. In 1903, Roosevelt began efforts to build a Central American canal, fulfilling part of Admiral Alfred Thayer Mahan’s blueprint for U.S. world power in his book, The Influence of Sea Power on History.

 

When the Colombian Senate rejected an American offer to build the canal in Panama for $10 million with an annual contribution of $250,000, Roosevelt supported a coup in Panama, led by Philippe Varilla. U.S. warships blocked Colombian naval vessels as the Republic of Panama was established and immediately recognized by the U.S. It was part of Roosevelt’s “big stick” mentality.

 

Teddy Roosevelt’s first administration represented significant achievements and forever changed the role of the President. Americans loved Roosevelt, chuckled at his antics, and supported his efforts to earn respect throughout the world.

 

Sources:

 

H. W. Brands, T.R. The Last Romantic (Basic Books, 1997).

Edmund Morris, Theodore Rex (Random House, 2001).

James Ford Rhodes, The McKinley and Roosevelt Administrations 1897-1909 (The Macmillan Company, 1922).

Page Smith, America Enters the War: A People’s History of the Progressive Era and World War I  Vol. 7, (McGraw-Hill Book Company, 1985).

 

Italian Immigration and Ethnic Food in America

How Pastra and Pizza Altered Eating Habits for Millions of Americans

Dec 25, 2009 Michael Streich

Italian immigrants left a newly unified country where food was both scarce and sacred, finding abundance in America and turning that bounty into American Italian Food.

On any night in Boston’s North End or New York City’s Little Italy, tourists stroll past quaint “mom-and-pop” restaurants and unless the savvy visitors have secured reservations on the busy nights, they can only hope for an open table somewhere in the back of the establishment’s dinning area. Italians have been cooking for tourists even while still in Italy. Immigration patterns that brought 4.1 million Italians to America between 1880 and 1920 resulted in the creation of a dynamic ethnic cuisine, fused from the various and disparate sections of a newly unified Italy in the late 19th Century, which ultimately became “Italian food.”

Immigrant Italians Forge an Ethnic Food Culture in America

When the New York City tourist landmark Mamma Leone’s closed in early 1994, hungry visitors had to look elsewhere for an Italian food icon, spaghetti and meatballs, although the popular dish was actually an American invention. Mamma Louisa Leone founded the restaurant in 1906 at a time few such establishments existed, and those that did catered more specifically to the burgeoning Italian communities in America’s urban centers.

Food was one of the most important elements in Italian immigrant families, primarily because most immigrants came from parts of Italy where meat was only consumed three times a year and the daily diet was meager. This produced, according to New York University professor Hasia Diner, a “widespread reverence for food” that has strong ties to patron-client relationships. Diner states that, “food, rather than the money to purchase it, was the currency in the class-based world of employers and employees.”

Italian immigrants, settling in close-knit urban communities in America, not only brought this respect and knowledge of local food traditions with them, but helped to integrate local Italian dietary choices into the larger community. This was accomplished through the many social venues associated with church and benevolent societies as well as the local food market. The food market, like bakeries, butchers, and green grocers, amalgamated the different ethnic specialties and tastes under one roof.

Family, Hospitality, and World War II

The importance of family within Italian communities was highly important and demonstrated most vividly at the dinner table. Families ate together. Wives prepared the meals and even the most unskilled of workers took what was served seriously. In many ways, the central position of food in the kitchen was a reaction to the “old country” where variety and choice simply did not exist in the many poor communities. In fact, it was stories of American abundance, notably food, which filled letters sent back to Italy and attracted further immigration.

Hospitality was also an important aspect tied directly to food and its preparation. German immigrant Ingrid Piehl recalls living off Bergenline Avenue in West New York, renting a small apartment from an Italian landlord. It was not uncommon for her own small family to be invited for a Sunday dinner that lasted several hours. Italians, even second and third generation, maintained a tradition of hospitality that was evidenced by large meals offering a variety of courses.

The ending of World War II brought home many GI’s that had experienced Italian cuisine while liberating Italy and they searched for it in Italian communities. This was the birth of the universalization of pizza. Pizza, long associated with Naples, was not new to America but it took the GI’s to popularize it and turn it into one of America’s most sought after ethnic food.

The Quest for Authenticity

Italian food today, as part of mass production, scarcely resembles the tastes and simplicity of the Immigrant experience. The Olive Garden chain attributes its newest creations to the company owned Culinary Institute in Tuscany where company chefs learn “authentic cooking secrets.” Perhaps the best authentic Italian food, however, can still be found in Italian-American kitchens where recipes, passed down since the days of immigration, continue traditions impossible to duplicate outside of the family enclave.

Sources:

• “America Eats: History on a Bun,” History Channel (A&E Network, 1999) DVD
• Roger Daniels, Coming to America: A History of Immigration and Ethnicity in American Life (Perennial, 1991)
• Hasia R. Diner, Hungering for America (Harvard University Press, 1991)
• Unpublished memoir of Ingrid Piehl

 

Building the American Dream in the Gilded Age

Middle Class Consumerism Formed a Rags to Riches Mentality

Jan 1, 2010 Michael Streich

Industrialization and urbanization contributed to a growing middle class that pursued prosperity and home ownership in order to achieve the American Dream.

The United States had always been seen as the land of opportunity. From the earliest colonial settlements, America represented a haven of freedom and resources that, if properly cultivated, would lead to success and prosperity. The American Dream, however, took on an entirely new reality during the decades following the Civil War. The Gilded Age was a time of growing prosperity for a newly specialized middle class within the climate of industrialization and urbanization. Rapid progress and ever more modern technology promised the realities of the American Dream in a changing society.

Gilded Age Factors that led to the American Dream

In Meredith Wilson’s “The Music Man,” anxious residents of River City, Iowa sing one of the musical’s most popular songs, “Wells Fargo Wagon.” In the past, the wagon had brought a box of maple sugar, grapefruit from Tampa, and salmon from Seattle, among other things. The song illustrates several aspects of middle class Victorianism. Mobility allowed a greater diffusion of food items, many shipped from distances that were not possible until the national raid road system linked the country.

At the same time, factories were churning out goods that were affordable for the middle class and made life simpler. These goods included everything from new electric clothes washers with attached wringers, typewriters, clothing, and even soap. The first Sears Roebuck and Company catalog appeared in 1893 and contained nearly 1,000 pages of goods.

Industrialization and urbanization changed social class structures in America, growing a middle class of skilled workers, managers, and other professionals like teachers, doctors, and lawyers. The message of the popular Horatio Alger books of that time was simple: the American Dream of “rags to riches” was attainable and everyone could aspire to become a Vanderbilt, Rockefeller, or Andrew Carnegie.

The Middle Class and Rising Immigrant Numbers

European Immigrants, notably from Italy, Central Europe, and Mediterranean Europe, flocked to America by the millions, lured by the promise of jobs, albeit unskilled in most cases. To these “wretched refuse,” the streets of America were paved with gold. What they found was quite another story as they established their own inner-city ethnic neighborhoods and frequently fought the scorn of Americans threatened by cheaper laborers.

Unskilled immigrant and American labor became associated with the growing Labor Movement, the formation of worker unions often identified as socialist and anarchist. These movements threatened the consumerism of the American Dream and voters showed their displeasure at the polls, giving majorities to political parties depicting strikes and riots as unbridled lawlessness. The 1894 mid-term election and the 1896 presidential election are examples of this.

The Dream of Home Ownership

As the middle class and professional classes grew, the ability to purchase a home increased. Because homes tended to be cheaper within the greater urban suburbs, middle class workers gravitated to such communities. In most cases, they were close to factories and easily accessible by trams operating throughout the city. Home ownership became a symbol not only of status, but of economic independence. An 1887 advertisement featured “A Beautiful House for $1200,” sponsored by the Building Plan Association of New York.

Industrialization and Middle Class Consumption

It was the people of the emerging middle class in post-Civil War America that helped create the consumer goods they were buying, whether through catalogs like Sears or in the many glittering department stores that dominated the main streets of large and small American cities. Despite periodic recessions such as in 1893, progress won out over the dire prophecies of doom advanced by critics of the system. The idea of “The American Dream” became fixed in the national psyche and would propel future generations to seek a better living than that enjoyed by their parents.

Sources:

• Page Smith, The Rise of Industrial America: A People’s History of the Post-Reconstruction Era (Penguin Books, 1984)
• William Bruce Wheeler and Susan D. Becker, Discovering the American Past, Volume Two, Fifth Edition (Houghton Mifflin Company, 2002)
• Howard Zinn, A People’s History of the United States (on-line edition)

 

The Populism of William Jennings Bryan

Dec 19, 2010 Michael Streich

William Jennings Bryan's Populism - Library of Congress Image

William Jennings Bryan opposed imperialism, fought for electoral reform, and championed the everyday farmer and worker forgotten by big government.

William Jennings Bryan’s populism was frequently viewed as a step toward socialism. During the House debate on the repeal of the Sherman Silver Purchase Act, Bryan’s characterization of corporations as, “imperious, arrogant, [and] compassionless” resulted in one observer labeling Bryan as the “advance guard” of a French Revolution. But Bryan was no Marat. Bryan’s populism always upheld the welfare of everyday Americans and toward that end he championed political and social reform.

Bryan’s Opposition to Imperialism after the Spanish American War

In matters of aggression, Bryan was a pacifist, although he requested a colonelcy at the start of the Spanish American War. Once the war ended, Bryan saw clearly the motives for imperialism. The United States was producing more than it could use internally and needed expanded foreign markets.

Bryan, however, argued for increasing the purchasing power of working Americans. He also saw that colonial possessions would hurt unskilled American workers whose jobs could be moved overseas where wages were even lower than in the many factory towns in industrialized America. Imperialism could promote unemployment at home.

Imperialism also contradicted the principles of American democracy. Like the Anti-Imperialist League, Bryan deplored the reinterpretation of the “City on a Hill” vision that was to be tarnished through William McKinley’s pacification program in the Philippines.

Electoral Reform and Increased Political Participation in America

Four of Bryan’s issues would result in changes to the Constitution, although not directly due to his efforts. The Sixteenth Amendment (1913) allowed Congress to collect taxes on incomes. Direct election of U.S. Senators became law in 1913 with the Seventeenth Amendment. The Eighteenth Amendment legalized Prohibition while the Nineteenth gave women the right to vote.

Bryan also fought for direct primaries, the recall, the initiative, and the referendum, causes championed by early 20th Century Progressives like Wisconsin’s Bob La Follette. According to Bryan, “Never be afraid to stand with the minority when the minority is right, for the minority which is right will one day be the majority.” Bryan’s principles were influenced by the rural, pastoral perceptions observers often contrasted with urban life. This was the old Jeffersonian vision and, at least in the election of 1896, Bryan received strong voter support from rural Americas. This was the republic of the people and not the money interests Bryan addressed in his Cross of Gold speech.

Misunderstood Conservatism of William Jennings Bryan

Although Bryan came out in 1906 for government ownership of American railroads, he was no radical. Bryan was a product of American Protestantism and an evangelical until his death, using his last energies to speak out against evolution during the 1925 Scopes “Monkey” trial. As Woodrow Wilson’s first Secretary of State, he called for a moratorium after the June 1914 assassination of Francis Ferdinand in Bosnia to avert what all observers felt would be a general European war.

Bryan’s conservatism was rooted in his populism. All Americans were entitled to economic prosperity and a nation of full employment. Many years later, President Franklin D. Roosevelt spoke of the “forgotten man.” For Bryan, the toiling industrial workers and the depressed farmers were the forgotten men and women of the Gilded Age.

The charge of socialism and revolution has often been aimed at reformers whose goals are to improve the lives of disenfranchised and impoverished citizens. Bryan was only one among many in American history to suffer from such accusations. In the 21st Century, Bryan would fit well with both the socially conservative Tea Party as well as progressives that champion universal health care. The essence of Bryan’s populism was and still remains with the American people.

Sources:

• Robert W. Cherny, A Righteous Cause: The Life of William Jennings Bryan (University of Oklahoma Press, 1994)
• Paul W. Glad, McKinley, Bryan, and the People (J.B. Lippincott, 1964)
• Michael Kazin, A Godly Hero: The Life of William Jennings Bryan (Anchor, 2007)
• Page Smith, The Rise of Industrial America: A People’s History of the Post-Reconstruction Era (Penguin, 1990)
• Speeches of William Jennings Bryan, Volume 1 & 2 (Nabu Press, 2010)

Copyright Michael Streich. Contact the author to obtain permission for republication.

President Truman Seizes the US Steel Mills by Executive Order in 1952

 

President Harry Truman’s April 8, 1952 Executive Order 10340 authorized Secretary of Commerce Charles Sawyer to seize the U.S. steel mills in advance of a strike that was to have begun the next day. Truman justified the seizure on the basis of the Korean War and the need to ensure uninterrupted steel production used for war material. Owners of the steel companies took the matter to the federal courts, obtaining an injunction against Truman’s Executive Order. Ultimately, the Supreme Court ruled against the president on June 2, 1952 in the case Youngstown Sheet and Tube Company v Sawyer.

 

The U.S. Steel Industry versus the Unions before the 1952 Strike

 

The wage dispute between labor unions representing steel company owners had been in negotiation for almost three months through the Wage Stabilization Board. Federal arbitrators could not bring either side together on terms agreeable to both parties. Union negotiators highlighted the fact that in 1951, U.S. steel companies had earned their largest profits in thirty years.

 

Why President Truman Acted to Seize the Steel Mills

 

Truman’s actions were predicated on the on-going Korean War and his view that the country was in a national emergency. His “extraordinary” action, as termed by the Supreme Court majority opinions, followed similar actions by Woodrow Wilson in World War I and Franklin D Roosevelt in World War II. Truman’s defense rested on the notion of presidential prerogative power, used skillfully by Teddy Roosevelt early in the 20^th Century.

 

But the Supreme Court disagreed, citing the complete lack of statutory authority and refusing to accept the broad interpretation of presidential powers taken from Article 2 in the Constitution that sought to equate Truman’s actions with his role as Commander in Chief. Further, the court noted, in its 6-3 decision that other remedies existed.

 

Truman Refused to Invoke the Taft-Hartley Act

 

The Taft-Hartley Act was passed by Congress in 1947 over President Truman’s veto. Truman viewed the act as anti-labor. The Taft-Hartley Act included provisions for an 80-day “cooling-off” period. Truman, however, believed that steel company owners had already squandered several months during the failed negotiations under the Wage Stabilization Board.

 

Issues Discussed by the Supreme Court in the Majority Opinions

 

Justice Hugo Black, an FDR appointee, highlighted the Constitutional separation of powers, rejecting presidential prerogative power and the notion that the role of Commander in Chief justified the seizure of private property. There was no evidence that a national emergency existed to the extent that such a seizure was constitutional. Unlike World War II, Korea was not a declared war.

 

It was also noted, by Justice Felix Frankfurter, that during the Congressional debates and committee work resulting in the Taft-Hartley Act, Congress explicitly rejected giving the President such seizure power. Thus, Truman’s actions violated “the clear will of the Congress.”

 

Long Term Effects of the Youngstown Case

 

Rejecting Truman’s arguments was a step in neutralizing the growing trend of an imperial presidency. The court may also have been aware that with the dawning of the Cold War, future global conflicts would be inevitable. Truman’s argument of prerogative power, if left uncontested, could be used by future presidents to justify seizures whenever a conflict loomed.

 

Finally, the court reset the equilibrium between the legislative and executive branch, reminding Americans that presidents do not make law but can only recommend law or used their veto power once a law is passed by Congress and sent to the White House for signature.

 

Sources:

 

Alfred H. Kelly and Winfred A. Harbison, The American Constitution: Its Origins & Development, fifth edition (W.W. Norton & Company, 1976)

Arthur F. McClure, The Truman Administration and the Problems of Post-War Labor 1945-1948 (Associated University Press, 1969)

Donald McCoy, The Presidency of Harry S Truman (University Press of Kansas, 1984)

Published in Suite101 September 25, 2010 by M.Streich. copyright. No republication without written permission.