Chapter 6

The Twenties: The Decade that Roared

In This Chapter

Expanding exposure in an ever-shrinking world: Radio and cinema

Dealing with Prohibition, stone sober

Changing more than the way we travel: The car

Breaking the bank: The stock market crash of 1929

The 1920s have become famous as a period of wild parties and jazz. The decade was certainly dominated by America and its culture, which is why this chapter mainly looks at this period through the eyes of the United States. During the 1920s many aspects of modern Western life, such as driving a car, going to the cinema, or buying things on credit, first really took hold. The 1920s look a lot more ‘modern’ to our eyes than do the 1910s: The fashions were closer to ours, at least to our formal wear, and the music was beginning to sound more funky. But not everyone went partying and those who did were living on borrowed time. If the 1920s were a party, the world was going to wake up to one big hangover when the decade was out.

Lest We Forget: Dancing in the Shadow of the Great War

However much people let their hair down in the twenties, no one forgot the terrible war they’d just come through, especially in Europe. The rituals of remembrance that we are used to today were first devised in this decade. The British, for example, decided to select at random an unidentifiable soldier to be buried in Westminster Abbey, alongside the nation’s great statesmen and heroes, with full military honours and in the presence of the king, as the ‘Unknown Soldier’ representing all those who had fallen in the war. (He was unidentifiable, of course, because no identifying marks had survived, so completely had his body been mangled.)

Other countries buried their own Unknown Soldiers; France buried hers beneath the Arc de Triomphe in Paris. The battlefields of the war were turned into huge cemeteries, often very peaceful and beautiful; the British ones had words by Rudyard Kipling carved into a sort of altar and were designed by Sir Edwin Lutyens, the foremost architect of the day. Around the world, the 11 November, the date of the armistice in 1918 when the fighting stopped, became a time of solemn remembrance, and ordinary people subscribed out of their own pockets for war memorials inscribed with the names of everyone from their town or village who had gone off to the war and never came back.

The American historian Paul Fussell wrote a study of the way people remembered the Great War. He pointed out that on the one hand these memorials showed that people had been shocked by the horror of the war, but on the other hand the language and imagery they used showed they were trying to dress it up in more heroic terms. So soldiers were never ‘shot in the head’ or ‘blown up’, let alone ‘gassed’ or ‘bayoneted’, which is what really happened to them: They ‘fell’ or were ‘sacrificed’ or were just ‘dead’. You should visit some of these memorials if you can, but bear his words in mind.

Your Mother Wouldn’t Like It: Sex, Lies, and Reel to Reel Film

You can’t really understand what was going on in the twenties until you remember how close they were to the nineteenth century. People were either trying hard to cling on to the certainties of society before 1914 or they were kicking furiously against them. To young people, at least in advanced countries, this was a new era, a time to blow away the cobwebs, try something new, and have fun. To many older people, the young appeared to have lost any sense of moral values. Mind you, older people usually think that about the young. So do the younger people – when they get older.

In the past, people had filled their free time by making their own entertainment. The 1920s was the first point in history when people could turn to mass media for ready-made entertainment. This was the age of radio and motion pictures.

Radio ga-ga

Radio had been developed before the war, thanks largely to the Italian engineer Guglielmo Marconi, as a means of sending messages across long distances. At first it was just used by special wireless operators sending messages to ships or telegraph offices, but after the war it developed rapidly thanks to the ‘radiogram’, a radio receiver you could set up in your own home. Anyone could now ‘listen-in’, though the earliest sets came with headphones, which made you look very odd if the music set you tapping and swaying to the beat, though no odder, I suppose, than people do nowadays when they dance to their iPods. Soon sets came with built-in loudspeakers so people could sit at home and listen together. We’re not talking about a radio in every room, mind: Radio (or ‘wireless’ as it was called; note how that term has come round again!) was something you switched on solemnly, almost as a family ritual, and sat quietly and listened to together after supper.

In those early days radio output was mostly dance music, but broadcasters were experimenting with other types of programmes, including regular news bulletins and drama. Outside broadcasting enabled listeners around the world to hear commentary on events as if they were there: Very good news for sports fans. The British King George V used radio to send a personal message to the whole empire each Christmas; other world leaders also learned how to make use of radio, but they specialised in political propaganda rather than Christmas greetings.

Radio remained the major source of information and entertainment for people around the world until it was eclipsed by television well after the Second World War. This technology has proved very adaptable, thanks to in-car systems, portable transistors, and personal stereos, and local radio is often an important part of the life of a community. Fears that film and television would kill off radio have, thankfully, proved unfounded.

Hooray for Hollywood!

When early moviegoers first saw film of a train approaching at speed, apparently they all screamed and leapt out of the way. This story may well be true: Even today’s highly technologically-aware cinema audiences can be taken in and scream in terror at what they see coming towards them on the screen.

Film historians argue endlessly over exactly who deserves the credit for creating the first moving pictures (the leading contenders are the Englishman Edward Friese-Green and the French brothers Auguste and Louis Lumière) but what’s not in doubt is that by the First World War cinema was already well established.

In the United States, filmmakers had quickly discovered the potential of the American West for making action movies, often using real ex-cowboys. In British India, filmmakers offered to make films for the government (in return for government funding, of course) to show the benefits of British rule and counter the claims of the Indian nationalist movement, and in 1900 an enterprising bunch of filmmakers shot exciting action footage of the Boer War. Okay, it was filmed on the hills around Manchester with actors, but hey. A few years later filmmakers put together a mixture of real and staged footage (some doubt still remains about certain sections) to produce a startlingly vivid film of the Battle of the Somme. It was shown both to audiences in Britain and to soldiers at the front. One of them, who saw the film in a makeshift cinema just behind the front line, wrote that it was so realistic that the only thing missing was the sound of the guns. But the incessant shelling in the background more than made up for that.

The Bolsheviks, great believers in new technology, were quick to learn to use cinema for propaganda. Special ‘agitprop’ units went into the Russian countryside, setting up their projectors and screens inside tents and inviting the local peasantry in for a glimpse of the future through crude animations with a simple communist message. We’re not talking Toy Story standards here, but remember how breathtakingly new this all was to people at the time.

The development of cinema isn’t just a topic for film buffs: It played a crucial part in creating a new world culture. Thousands more people could see a film than could ever see a live performance; what’s more, they all saw exactly the same film, with no local variations. Films became a sort of social and international bonding process, drawing people from all classes and in all countries together in a common cultural experience. So the fact that the image that people around the world were seeing was often an American one is important. You might be laughing at Laurel and Hardy, but you couldn’t help noticing that the nice suburban house they were busy wrecking had good quality furniture and all the latest gadgets. Very interesting to people who had neither.

A star system is born

D. W. Griffith, the great director, took over a small village in California with the rather pretty name of Hollywood to shoot his films in. Griffith was astonishingly prolific: Between 1908 and 1913, he shot some 450 films. These were short films, of course: In those days, you got five or six such ‘shorts’ for your money before the main feature. Griffith then experimented with longer films, including his controversial 1914 masterpiece Birth of a Nation, a hymn to national unity set in the American Civil War, which had a strong plot line and epic battle scenes. Unfortunately the film also had the appallingly racist premise that American blacks were an untrustworthy and murderous bunch, intent on kidnapping white women for their own nefarious ends, and that the nation’s only hope lay with the Ku Klux Klan. Inevitably, the new medium threw up big stars but it also made big bucks for the studios: MGM, Columbia, Paramount, and Universal were all up and running in the twenties. Many stars felt restricted by the studios’ demands and in 1919 Griffith joined up with three of them, the comic Charlie Chaplin, the dashing hero Douglas Fairbanks, Jr. and the beautiful Mary Pickford (byline: ‘The world’s sweetheart’) to found United Artists, a new company that would actually be run by the stars themselves. The company lasted; the ideal didn’t.

I can do angry, I can do sad. I don’t do subtle

The earliest films had no sound: A generation of pianists grew up who could improvise appropriate music to fit whatever was happening on screen. The actors in these early movies had mostly come from the stage, where melodrama called for big movements and gestures; this style suited the movies just fine.

Silent movies were surprisingly versatile:

Slapstick comedy: The ideal genre for silent cinema. The producer Mack Sennett, who created the hapless Keystone Kops, was the king, though some of the most highly polished comedies came from Buster Keaton and Harold Lloyd, whose high-rise stunts can still leave your palms sweating.

Charlie Chaplin made his name in silent comedy with his ‘little tramp’ character, who stood for all the put-upon ‘little people’ of the world, though to my mind he always looked a tad too well dressed to be entirely convincing as a tramp.

Romance: The comedy was often a curtain-raiser to the big romantic picture. Rudolf Valentino set female hearts a-flutter with his manly chest bared in The Thief of Baghdad and The Sheikh, while men gazed adoringly at Greta Garbo or Mary Pickford.

Historical epics: Lack of dialogue was no hindrance to mounting epic dramas with massive sets and thousands of extras. D. W. Griffith’s Intolerance, which was meant to be his ‘Oops. Sorry’ for Birth of a Nation, was so expensive it bankrupted the studio – not the last time an epic turkey would do that. Epics came with a built-in moral: In Ben Hur, whose chariot race had people leaping onto their neighbours’ popcorn, it was Christianity; in Sergei Eisenstein’s Russian Revolution epics, October and Battleship Potemkin, it was the superiority of the communist system and the dangers of leaving baby buggies on flights of steps.

Science fiction: The German director Fritz Lang created a terrifying vision of the future as an oppressive dystopia (that’s a utopia gone badly wrong) in his 1926 film Metropolis, which showed people reduced to unthinking drudges and barely-human slaves. His vision proved eerily prescient of what happened to people a few years later in the concentration camps and the gulags.

Horror: Audiences could enjoy some seriously creepy moments in the classic German horror flicks The Cabinet of Dr Cagliari (1920) and what is still one of the scariest vampire films ever made, Nosferatu (1922).

The first ‘talkies’ appeared in 1927 and Al Jolson burst into ‘Mammy’ in the middle of The Jazz Singer. Another notable talkie of that year was a rather scary British film called The Lodger, loosely based on the Jack the Ripper murders and directed by a young Englishman called Alfred Hitchcock. I wonder what happened to him?

Thanks to the cinema America and its capitalist values, rather than Russia and its communist ones, became most people’s image of how a better society ought to look. But although America seemed rich and powerful, it also kept its distance: It brought in immigration controls and reduced its overseas commitments, although it did retain a presence in world affairs. So for people around the world, America seemed like a far-away wizard, who could solve all their problems if he only knew about them, rather like the one in The Wizard of Oz. And like the Wizard of Oz, what you saw of twenties America in the movies didn’t necessarily match up to the reality.

We’re the young generation

In 1921, Roscoe ‘Fatty’ Arbuckle, one of Hollywood’s biggest comedy stars, found himself in the headlines for all the wrong reasons when a young actress was found dead after a sex, drugs, and booze-fuelled party at his house. This event was just the latest scandal for news reporters only too happy to retail the seamier side of Hollywood life and for church-going Americans denouncing the sinfulness of the movies all the way to the news stand. But America’s parents weren’t just worried about what was going on behind the scenes; they were increasingly worried about what was going on in the back row.

Young Americans in the 1920s had three big advantages their parents hadn’t had:

Cash to spend: Thanks to America’s booming economy and near full employment.

The cinema: Which meant going out for the evening rather than staying in under your parents’ gaze.

A car: Which meant you had somewhere private however you decided to spend the evening.

Particularly worrying was the behaviour of young women. They adopted the ‘flapper’ look, with hair cut short in a bob, like a boy’s, and slimline dresses only just below the knee, which revealed a lot more than a glimpse of stocking. They smoked – in public, too – they rode motorbikes, and they spoke in slang (if this is all too much for you, look away for a paragraph or two). They danced the Charleston, which shocked the older generation not only because it involved shaking your legs and body in wild abandon, but also because – shock, horror – it was derived from black music. American parents suspected their daughters (often rightly) of reading Married Love, the best-seller from the British gynaecologist Marie Stopes, who had established the world’s first birth control clinic and who encouraged women to take more control of their own bodies. To traditionally-raised Americans, the 1920s seemed to add up to a whirlwind of debauchery and promiscuity. Where would it all end?

I don’t like it: It must be foreign

Americans in the twenties were increasingly disturbed by some of the more radical new ideas coming out of Europe. They already knew they didn’t like the sound of socialism and communism (see Chapter 4 to see why). Two court cases reinforced their suspicions of foreign ideas:

Criminal trial of Leopold and Loeb (1924): Two college students from extremely wealthy families, well educated and with every advantage in life, were arrested for the brutal and apparently senseless murder of a fourteen-year-old boy. They made no attempt to deny it; they’d killed him, they said, to demonstrate their innate superiority, though they weren’t quite superior enough to do it without getting caught. Their defence attorney, the celebrated Clarence Darrow, was able to argue – successfully – that they’d been heavily influenced by the philosophy of the German thinker Friedrich Nietzsche, whose writings were in fashion at the time. Nietzsche held that certain people are naturally superior, in intellect and general worth to society; no surprise that Leopold and Loeb, who spent the trial sniggering at everyone and looking very pleased with themselves, had lapped this idea up (and also no surprise that the Nazis used Nietzsche to justify their racial theories). Darrow managed to save his clients from the electric chair, but to most Americans the case seemed to show how fancy foreign ideas could corrupt all-American boys. Better to have as little to do with the rest of the world as possible.

The Scopes monkey trial (1925): In the unlikely setting of small-town Tennessee, a high school biology teacher called John Scopes found himself in deep trouble for teaching his pupils about Charles Darwin’s theories of evolution and natural selection. The Bible-believing school board was outraged that a high school teacher could so challenge the literal truth of the Book of Genesis and took Scopes to court in what became known around the world as the ‘monkey trial’. In heat that was so sweltering the judge moved the sitting out of doors, the court listened to arguments not about what went on in a high school classroom but about the very existence of God and the authority of the Bible. Traditional God-fearing Americans were dismayed when Scopes’s defence lawyer, Clarence Darrow (the same man who defended the murderers Leopold and Loeb; Darrow enjoyed difficult cases!) pointed out illogicalities and contradictions in the Bible. Scopes still lost his job, but the case had challenged the religious basis for American life that went back to the days of the Pilgrim Fathers.

Increasingly Americans didn’t like the look of European culture either, which seemed to be either Sigmund Freud telling them that repressing sexual desire is bad for you and that all boys want to sleep with their mothers (‘At least wait until I’ve finished cooking dinner, son’) or Picasso painting portraits and landscapes that seemed to be made up of boxes. Even worse were the ‘Dada’ poets, who just put words in a hat and took them out at random. And these guys got published.

By the 1920s many Americans were more than ever convinced that foreigners just meant trouble. Attitudes hardened towards immigrants and many Americans were delighted when the government introduced tough immigration controls in 1921 and 1924. We’ve had quite enough of your poor and huddled masses, thank you.

The Noble Experiment: Prohibition

Soon revivalist preachers such as Aimee Semple McPherson were carrying the message to America to stand up for morality and decency and denouncing the rising tide of moral filth that threatened to engulf the country. And in 1919 America’s moral majority did indeed score a remarkable success. It completely banned the sale, production, and consumption of alcohol, even at home, between consenting adults. They called this idea prohibition.

One important point must be stressed about prohibition: Alcohol and drunkenness constituted a genuine and massive problem in the United States. Picture the saloons in westerns: Swing doors leading into a large room with men playing poker, women in their undies with feather boas round their necks, a honky-tonk piano in the background, and a shiny long bar for sliding bottles of whisky along. Wrong. Outside of big hotels, most saloons were small, not much bigger than a couple of sheds, and they were there for one purpose and one purpose only: For people to spend money and get drunk. Fights certainly broke out, but they were shorter and nastier than in the movies: Real chairs and bottles don’t smash harmlessly over people’s heads. But the people who suffered most were the families of the men who went drinking: They depended on the wages their menfolk were busy drinking away. The problem wasn’t confined to the West: Excessive drinking blighted the whole country.

A huge anti-saloon movement grew in the nineteenth century, led by the churches. Women took a leading role and so did employers: To them, a drunk worker was a bad worker. The idea was to close down the bars and saloons, though not to outlaw a social glass of sherry at home. However, as individual states began to outlaw alcohol, the prohibition movement gradually grew in strength – beer was mostly German, so during the war you could accuse beer drinkers of helping the enemy – and the brewers and distillers found they were having to fight vigorously to stay in business. So a couple of senators hit on what seemed a good idea to show up the absurdity of the extreme anti-alcohol brigade: Propose a law to make any consumption of alcohol illegal. Ho ho, they thought, everyone will see what a stupid idea prohibition is. Congress didn’t see the joke and passed it. Oops. By the 18th Amendment to the US Constitution, buying, selling, making, or drinking alcohol was made illegal. They called this amendment ‘the noble experiment’.

Dying – for a drink

Before we bring in all those gangsters and g-men (gangster slang for FBI agents) you see in the movies (Hollywood wasn’t slow to see the potential for making money out of prohibition), you need to realise one important point: In many parts of the country, especially in rural areas, prohibition worked. People supported it, they didn’t try to get round the law, and cases of drunkenness slumped. These areas stayed proudly ‘dry’ throughout the period prohibition was in force and often stayed so after it ended. But in other areas, especially in the cities, prohibition quickly became a law and order nightmare.

Many people simply made their own alcohol, or tried to. They set up stills deep in the woods to make ‘bootleg’ liquor (so called because some people smuggled it in specially widened boots) out of potatoes or anything else they could get their hands on. The trouble was, you never knew quite what they had used – and, often, neither did the distillers. Some people died in terrible agony after drinking ‘liquor’ masquerading under fancy names such as Moonshine or Mountain Dew. Some poor saps even turned to industrial alcohol, which is poison. What thirsty Americans really wanted was proper alcohol, genuine beer or spirits, and anyone who could get it for them was going to make a fortune. At which point, some very shady gentlemen stepped forward who were only too happy to oblige.

Mobsters, Inc.

Criminal gangs had existed in America long before prohibition, as anyone who’s seen the film Gangs of New York will know. They tended to be based in particular immigrant communities and they maintained a strong sense of their separate identities: You got Irish gangs, Sicilian gangs, Calabrian gangs, Russian Jewish gangs, and so on. They usually kept to their own particular areas of operation, but prohibition gave them an unprecedented opportunity to expand.

First, the gangs had to get hold of the liquor. They did a certain amount of their own distilling or brewing but for the most part they imported it illicitly, usually from Canada. That’s why Chicago, just a nice boat ride down Lake Michigan from Canada, was such an important centre for gangland activity. Just selling the stuff under the counter was a bit boring: Much better to set up a secret nightclub, called a ‘speakeasy’, where people could drink and have a good time too. With musicians, bartenders, waiters, dancers, cleaners all to be hired, not to mention someone to keep an eye out for the cops, speakeasies became very big business. Rival gangs soon moved into each other’s territory and horrified Americans began to read regularly of drive-by shootings, bombings, and assassinations. If the authorities seemed unable to do anything about it, the reason was simple: The gangs had bought, blackmailed, threatened, and bribed so many police officers and local politicians that they could do more or less as they liked – and they did.

Some gangster leaders became celebrities. Al ‘Scarface’ Capone was the most famous, the ruthless Sicilian mafia boss who for most of the decade virtually controlled Chicago. Even after the St Valentine’s Day Massacre of 1929, when Capone’s men, some of them wearing police uniforms, murdered seven members of a rival gang in a garage, the FBI couldn’t gather enough evidence to convict him of murder or extortion. Finally it was left to the Treasury Department to nail him for tax evasion (criminals tend not to pay tax on their illegal earnings) and even then they had to do a last-minute switch of courts because Capone’s men had infiltrated the jury.

By the end of the decade it was clear that the good intentions behind prohibition had gone disastrously wrong. When the Depression set in, the Democrats, who recognised a vote-winner when they saw one, included repeal of prohibition in their electoral programme and in December 1933 Congress finally passed the 21st Amendment to the Constitution, repealing Federal prohibition and leaving individual states free to prohibit or allow the sale of alcohol as they pleased.

So You Thought Slavery Had Been Abolished, Did You?

The twenties were a very bad time for America’s black community. In the South, blacks were already kept in dire poverty with special laws and tests to prevent them from voting. Now they faced a sudden revival in the Ku Klux Klan. The Klan had originally been formed after the Civil War, to terrorise the former slaves, but it had died away. Saying exactly why the Klan revived is difficult: It was probably a reaction against immigration and socialist ideas. The revived Klan attacked Jews and Catholics, but saved its particular efforts for attacking black communities, burning homes and churches, and lynching any black person who was accused of cheeking or harming a white person, especially if it involved any sexual contact.

Often these lynchings were carried out quite openly (the Klan even sold souvenir postcards): Klan members knew that the local courts would never convict them – and they were right.

The situation was no better in the North. Many black Americans had moved to the northern states in search of work, and they soon found that racial attitudes could be just as hostile there. The Chicago race riots of 1919 were sparked off by a black man straying onto the whites-only part of the beach.

Black music was popular in the twenties, and black jazz musicians played at all the best clubs and dance halls, but this only helped to underline most white people’s image of their black fellow-citizens: Good at providing background music for other people’s enjoyment. This attitude would take a long time to change.

You Need Wheels

Before the Great War cars were luxury items, built by highly skilled craftsmen and only affordable for the rich. Henry Ford – one of the most important Americans of the decade, and the century – had broken down the process of building a car into a sequence of separate tasks; instead of hiring craftsmen, he used large numbers of unskilled workers who stayed put while the car came to them along a conveyor belt. Ford’s contributions are important for two reasons:

Providing motorised transport that ordinary people could afford revolutionised American life and attitudes more than anyone could have predicted.

Ford’s methods of mass production turned American industry upside down, gave the American economy a massive lead over the rest of the world, and even inspired foreign leaders such as Mussolini and Stalin.

Ford had gone into production before the Great War, but in the twenties his business increased enormously. In 1919, 6 million cars were on the road in America; by 1929, that number had risen to 29 million.

You can have any colour you want, so long as it’s black

Ford’s methods meant employing many more workers, but he reckoned this would be more than covered by much bigger sales. He was right. He kept prices right down by keeping to one or two designs (you could buy the famous Model T, or ‘Tin Lizzie’, in the popular open-top version or as a small family saloon) and one colour: A dazzling display of black. It sold very well.

You can have any opinion you want, so long as it’s mine

Ford had a very simple way of attracting the large number of workers he needed: He paid them well. Ford workers earned $5 a day, about twice what other workers earned, the hours were reasonable, and employees could join a profit-sharing scheme. The flip side was that Ford didn’t allow any disagreements and certainly no trade unions. He employed a private police force to seek out anyone trying to set up a union and anyone who did was sacked.

Ford was a true visionary who transformed American society. But he also helped create the idea that, as long as business was profitable and gave its workers a share in its material benefits, their civil rights didn’t really matter. Unsurprisingly, Ford’s methods appealed strongly to Joseph Stalin, who sent special representatives over to America to study them closely. You can find out more about Stalin and about America’s attempts to get a trade union system going in Chapter 4.

Let’s get this country on the road

Even Henry Ford cannot have anticipated quite how much his invention would change America. To start with, his production methods stimulated a massive demand for supplies of:

Steel: The demand for steel (no posh wooden chassis in Ford’s vehicles) meant massive expansion for the US steel industry.

Rubber: Rubber tyres meant a great boost for the Malayan rubber trade.

Oil: Oil wells were being dug in Texas and Oklahoma, though large oil deposits were also turning up in various parts of the Middle East.

Black paint: Of course.

A lot of domestic production and international trade had gone into Ford’s cars before the first car went onto the production line.

After people had bought their cars (how they afforded them is explained in the later section ‘The Boom Town rats’), they needed somewhere to fill up. All those blacksmiths and farriers and wheelwrights who were suddenly out of business quickly retrained and set themselves up as garage mechanics and petrol stations. Travellers needed somewhere to stay along the road, so chains of motels sprang up, not all of which were kept by strange young men rather too fond of their mothers. Publishers and booksellers got in on the act with new guidebooks and road maps. Small fishing communities suddenly became popular seaside holiday destinations, where you could join thousands of others, all owning identical cars, and all sit on the same beach. Fun!

Not all of the money being produced in America stayed in the country. A lot of it was invested abroad. As Europe recovered from the effects of the Great War, many American investors saw their chance to sink money into European rebuilding schemes and rake in a huge profit. Sometimes they lent far more money to European towns or businesses, especially in Germany, than the Europeans could ever hope realistically to pay back. This situation meant that Europe’s own recovery in the 1920s depended very heavily on the strength of America’s economy.

Money, Money, Money

America in the twenties became the financial capital of the world. Its whole life seemed to revolve around business and money-making. The new symbol of America was no longer the humble log cabin but the skyscraper, buildings taller than the world had ever seen and built not for people to live in but for firms to do business in.

Farmers and workers didn’t do so well in the twenties, but America’s political leaders were more interested in helping the big bosses of American business to get even bigger.

The West Wing

America’s position of financial dominance carried with it serious responsibilities. It was down to America’s leaders how well the country would fulfil them.

Warren Harding

Republican leader Warren Harding won the 1920 presidential election. He realised that Woodrow Wilson had made the Democrats unpopular by taking such an active role in foreign policy and that Wilson’s League of Nations idea looked likely to tie America down to foreign involvement for the foreseeable future. Okay, said Harding, the Great War was an emergency, but it’s over now: Time to get back to ‘normalcy’. It was a simple message and it worked.

Harding was one of the nicest men to sit in the Oval Office, though nice guys don’t always make the best presidents. Harding certainly didn’t. He didn’t seem to be very aware of what was going on, even under his very nose. Mind you, having an affair may have diverted his attention; allegedly, he and his lady friend once had to hide in a cupboard in the White House. Perhaps more important, Harding didn’t seem to be aware of the corruption in his administration, even though accusations were being made against it. He surrounded himself with friends from his native Ohio, including his old pal Albert Fall, whom he made Secretary of the Interior. Then he took the management of the US naval oil reserves at Teapot Dome, Wyoming, away from the Navy Secretary and gave it to Fall. Who then leased out the running of the depot and pocketed the profits. When this corruption was finally revealed, Fall went to prison and Harding – who had died in 1923 – just looked very naive.

‘Silent Cal’ Coolidge

Harding’s vice president was Calvin Coolidge. Coolidge got the news that he was the new president while he was staying overnight with his father, who was a district judge. Dad got down the family Bible and administered the oath of office to his son there in the kitchen, by the light of a kerosene lamp, both of them in their dressing gowns. It was the sort of homely scene Americans loved. It was also about the only memorable thing Coolidge did as president.

Coolidge was a man of few words and fewer actions. One story tells how a woman told him she’d made a bet that she could make him say three words together. ‘You lose,’ said ‘Silent’ Cal. Keeping quiet wouldn’t have mattered so much if Coolidge had been more active, but he genuinely believed that the president’s job was to keep government and Congress out of the way of business and let the economy govern itself. ‘The business of America,’ he once said, ‘is Business,’ which, at six words, was something of a record for a Coolidge sentence.

Historians disagree about Coolidge. Some say that his approach to the economy was about right, and that governments should maintain a hands-off approach. That’s certainly the classical school of economic thought, which underwent a big revival in the 1980s. Others point to the terrible economic collapse which followed so soon after Coolidge stood down from office and point out that he can hardly escape his share of the blame. If he had taken more steps to provide safeguards, they say, especially for ordinary savers and investors, the Crash, when it came, wouldn’t have had quite the catastrophic consequences it did.

Herbert Hoover

Herbert Hoover didn’t have long in office before the Wall Street Crash brought the American economy down on his head (see the later section ‘Crash!’ for more on these events). He was a highly competent administrator and had done tremendous work organising relief provision for refugees in Europe after the First World War. Hoover had a good grasp of economics and he was much more flexible and imaginative than Coolidge: He didn’t like government interfering in the economy but he was prepared to get the government involved in organising and leading private companies’ efforts to deal with a crisis. But Hoover had a rather lordly view of the importance of his office and wasn’t good at appearing open or approachable to ordinary people. When the Crash came, Hoover’s efforts were actually very good, and most historians reckon that if his advice had been followed much of the trouble could have been avoided. But it’s probably too late to rescue Hoover’s reputation in history as the man who couldn’t cope.

Down on their luck on the farm

America’s farmers were definitely not sharing in the general prosperity. Their problems had started during the Great War, when the Europeans had found themselves badly short of grain. The Americans planted and harvested huge quantities of corn for export to Europe, which was fine until the war ended. Suddenly the European demand for American grain slumped, for three reasons:

European farmers could start growing grain again

American tariffs were deterring Europeans from trading with the US anyway

Europeans started importing grain from Canada, Argentina, and Australia

But American farmers still had huge areas of land under cultivation for grain and they kept growing more and more of it. That situation just meant that prices fell: Good news for consumers but disastrous for farmers.

To make the situation worse, many farmers had borrowed heavily to buy extra land to cultivate during the war, which sent them even deeper into debt. They had no choice but to keep growing grain, in the hope that the price would rise. But the more they grew, the less likely that outcome was.

The plight of America’s farmers should have been a warning that all was not as well as it looked with the American economy. But America was much more concerned with its growing, happening cities and was increasingly turning its back on its historic roots in the West.

The Boom Town rats

History is full of examples of spectacular investment crashes. Somehow no one ever seems to learn that a booming economy cannot boom forever and the more rapidly it grows, the more dramatically it will collapse.

Never-never land

America’s economic boom depended entirely on credit. Banks lent people the money to buy the furniture and clothes and cars that people around the world saw in the movies. People talked airily of buying ‘on the never-never’, thinking that payment day would never actually come. Easy credit provided a huge market for American goods, but it also meant that thousands of Americans were actually deeply in debt. If the credit ever dried up, they were in equally deep trouble.

Bonanza!

Shareholding came naturally to a people used to living on credit. The idea was that you bought some shares in a company and then sat back while the company’s production (not that you bothered yourself much about that) drove the value of your shares steadily upwards. Anyone could join in. Businessmen found themselves rubbing shoulders on Wall Street with shopkeepers or lift boys: Everyone wanted to buy shares while they were still fetching good prices. Many of these smaller investors had to borrow money known as ‘margin’ to enable them to buy shares, so they were in debt twice over. Never mind: They’d pay it off easily with their profits.

Here comes the snake oil

Most of the companies people were investing in were perfectly reputable ‘blue chip’ concerns, but soon characters appeared offering glittering terms to investors in bogus projects. Everyone likes the idea of owning land, so the dodgy dealers invited investors to put money into what appeared to be big, exciting new building projects, complete with plans and maps and artists’ impressions. In fact most of these parcels of land didn’t exist or else were in the middle of the Florida swamps. One scam claimed to be a new housing development near an entirely fictitious American city! But no one read the small print, never mind looked in an atlas: They handed over their money, got their share certificates, and rang home with the good news while the company agents looked for the next mug.

Crash!

Pinpointing what started the loss of confidence is difficult, but suddenly, in late October 1929, everyone stopped buying and wanted to sell. Prices began to wobble, and then, as people lost confidence, tumbled. When the scams (see the preceding section) came into the open, investment collapsed. No one was buying any shares, even in the blue chip companies, and on 24 October the whole stock market crashed. ‘Wall Street,’ declared one newspaper, ‘lays an egg.’

For people who had invested their personal fortune in companies, the crash was a disaster: They were ruined and many of them committed suicide by jumping from hotel windows. The smaller investors had also lost everything they invested, and they were faced with the little problem of paying back all the money they’d borrowed to buy the shares in the first place. But that’s just what happened to the shareholders: Why did the Wall Street Crash bring the whole American economy grinding to a halt?

President Herbert Hoover insisted that the crisis was not as bad as it seemed because America’s basic economy was sound – that is, American factories were still producing and selling. Strictly speaking he was right, but that fact was irrelevant because America didn’t act as if its economy was sound:

Run on the banks: Everyone rushed at the same time to withdraw their money from the banks and the banks, which had themselves invested their customers’ money, went bust. This ruined anyone with money in the bank, even if they’d never touched the stock market.

Investors and creditors call in their loans: Anyone who’d lent money to anyone else now demanded it back immediately. These demands didn’t just hit shareholders: Other countries were also affected, especially Germany, which had received big American loans (refer to Chapter 4). Now they were faced with crippling demands for repayment.

Protective tariff: Congress passed a heavy tariff on foreign goods coming into the US, so as to guarantee the market to American producers and help them recover. Unfortunately, this kept cheap foreign goods out, and Europe and Japan immediately placed their own tariffs on American goods. America could no longer export, so companies began to go out of business, resulting in massive unemployment.

Hunger: With international trade at a standstill, American agriculture completely collapsed. Farmers were still overproducing but couldn’t afford to sell at such low prices, so they had to destroy much of the food they produced. With no State social security, America’s millions of unemployed had no money for food and had to queue up at outdoor soup kitchens.

President Hoover put his faith in the ‘rugged individualism’ that had conquered the West and would, he hoped, see America through the crisis. He looked to business to exercise voluntary codes to provide work and help for the unemployed. Business didn’t do so. The decade ended with America and the world falling ever deeper into economic meltdown. Prospects for the new decade looked very bleak.