Even after the war ended, the United States needed to raise money. The Allied Countries owed the United States billions of dollars, but they were not able to pay. The government launched a fifth Liberty Loan campaign on April 21, 1919, to sell bonds to the American people. This campaign was called the Victory Liberty Loan, since the United States and its allies had won the war.
World War I had more impact overseas than it did on the United States’ physical territory and economy. No battles took place here, and civilians, except those overseas or on the seas or in a few incidents of sabotage on American soil, were not killed. In addition, the United States had become a nation with financial credits, not debts. The Allied Countries owed America more than $7 billion ($110 billion in today’s money). In addition, America advanced the Allies $3 billion ($47 billion today) to recover after the fighting stopped. Because Europe and Britain had relied so heavily on the United States for funding—and because their economies were devastated by the war—America came to replace Britain as the leading economic power in the world. As a participant in the war and the deliberations in Versailles, America assumed a role as one of the world’s leaders.
The United States had not been a world leader in the nineteenth century. For decades, farming was the main occupation. But by the end of that century more and more Americans were working in cities and factories, producing goods they could sell to Americans and the rest of the world. The country was growing economically stronger year by year. Yet the United States avoided involvement in the wars of Europe or in colonizing the world. It tried to isolate itself, or stay separate, from world politics, even though sometimes it could not. For example, the United States fought wars with Mexico, settled American businesses in Hawaii in the late nineteenth century, and negotiated the end of the 1905 Russo-Japanese War. (Theodore Roosevelt received the Nobel Peace Prize for this. Woodrow Wilson received the same prize in 1919.) Yet isolationism was an important part of American foreign policy. While the United States fought the Spanish-American War in 1898—and gained the Philippines and Cuba—it still tended to concentrate on building the U.S. economy and industry and not dealing as a power with the rest of the world.
Just after noon on September 16, 1920, a bomb exploded on Wall Street in New York City, outside banker J. P. Morgan’s bank. The bomb was loaded with dynamite and was in a horse-drawn wagon. Almost forty people died, and wreckage filled the streets, as shown in this photograph. While the government eventually suspected Italian anarchists—although some thought the bombers were communists from the Bolshevik Revolution in Russia—no group has ever been held responsible.
When World War I began, isolationist feeling was still strong. The fact that the United States officially declared its neutrality instead of taking sides was a sign of this isolation. Many Americans prided themselves on the fact that they were not involved, that they had built a unique country that could continue to prosper without worrying about what was happening overseas.
But the world had changed. The United States was involved, because its economy depended on war business with the Allies. President Wilson saw it in more idealistic terms. The American people “have sought to prepare themselves by the very principles and purposes of their polity [form of government] . . . ,” Wilson said in 1917, “ever since the days when they set up a new nation in the high and honorable hope that it might in all that it was and did show mankind the way to liberty.” That the United States had a destiny to bring freedom to the world was a popular sentiment of the time.
At the end of the war, many Americans again leaned toward isolationism. The United States had its own problems. In 1919, there were more labor strikes and race riots than there had been before the war. The Communist takeover in Russia encouraged some labor leaders and American socialists to speak out. On the other hand, many Americans feared that communism would take hold in the United States. In the spring of 1919, bombs were sent to several government leaders. Ordinary citizens, seeing no difference between labor unions and radical agitators, attacked both groups (at parades, at rallies, and in their offices) as well as individuals, some of whom were lynched. The federal government did not strongly object to this private violence. When A. Mitchell Palmer became attorney general, he launched a crusade against all he believed were communists. He had the Federal Bureau of Investigation (FBI) gather information on more than 200,000 organizations and leaders. Because it was easier to deal with foreign-born immigrants, who had fewer rights than American citizens, Palmer went after them. The government raided offices and rounded up supposed communists. The biggest raids, on January 2, 1920, arrested more than 4,000 people in thirty-three cities. Many of these were arrested without warrants. They were detained in centers and sometimes deported—sent back to their home countries.
The U.S. government formed the World War Foreign Debt Commission on April 18, 1922, to devise a plan for European countries to pay back their World War I debts. Secretary of the Treasury Andrew Mellon (second from right) led the group. Herbert Hoover (far right), secretary of commerce and future president of the United States, also served on the commission. The United States never recovered all the money owed to it.
Palmer went too far in violating civil rights. After objections from Congress, the press, and civil rights organizations, the raids ended. But the use of federal government agencies to seek out disloyalty and censor dissent did not. One of the legacies of World War I was to enhance the role of the Justice Department and the FBI in searching out possible threats to national security, a role that continues to this day. (The federal government bureaucracy also grew; for example, it now had to continue to collect income taxes—taxes Americans pay on the money they earn, which help to pay for defense, education, and other government programs.)
Another less tangible but dangerous result of fear of radicals was that many Americans began to equate demands for workers’ and civil rights with being communist and un-American. Fear of immigrants, whether or not they were radical, grew worse after 1919. The Quota Act of 1921, and later the Immigration Act of 1924, limited the number of Italian, Jewish, Russian, eastern European, and many other non–western European immigrants to a few thousand people a year.
Despite some resistance after World War I, the United States could not avoid the fact that much of the rest of the world was devastated and needed help to rebuild. Nor could it ignore its place as the world’s economic leader. In fact, the country wanted the power to dominate banking and trade, and to encourage free and open markets ready to buy its goods. This had been one of President Wilson’s Fourteen Points. It also insisted that the Allies repay the debts they built up during and after the war—some $10 billion ($137 billion in today’s money). But the Allies were broke. The Soviet Union (what Russia had become after the Communist revolution) would not pay the old Russia’s debt. Germany, which by the Treaty of Versailles owed the Allies for all the damages war had brought (“reparations”), had less money than Britain and France. What all these countries needed was investment to build up their economies. The United States continued to loan and invest some money in foreign ventures, but it was not enough. Germany used the money it borrowed from American bankers to pay Britain and France, not to build up its own economy. Britain and France then paid that money to the United States. The United States issued more loans to Europe. This was a circle that would have no end.
While the United States’ economy grew in the 1920s, European economies did not. The U.S. Congress also passed two tariffs—taxes on goods imported from other countries—in 1922 and 1930. These tariffs protected American manufacturers by making European products more expensive. Americans bought fewer foreign products, thus hurting those economies. Trade slowed nearly to a halt. By 1930, there was a worldwide Depression affecting every country, including the United States. The reasons for the Depression were complex, but one of them was the American financial policy after World War I.
The United States learned again that it could not remain separate from the rest of the world, even though some Americans still supported an isolationist foreign policy. By World War II the country was a political as well as financial leader. But ever since World War I, America’s stated reasons for engaging in politics, for going to war, or for taking part in the United Nations have reflected the ideals of Woodrow Wilson. In 2002, President George W. Bush proclaimed the United States should provide the world with “a single sustainable model for national success: freedom, democracy, and free enterprise” and that the “values of freedom are right and true for every person, in every society.”
These may be only ideals. They may not be the ideals of the nations we are in conflict with. They may not give us the results that we expect. Countries, including the United States, go to war for many reasons, among them: to maintain their power, protect themselves from foreign invasion, keep control over other countries they traditionally dominate, improve their economies, and spread their religious beliefs. Americans still question whether the United States should—or even can—take on trouble spots all over the world. Perhaps there will always be reasons to go to war, but there will also be valid reasons not to. The debate between personal freedom and national security continues.
After twenty months of war, Americans were excited to see World War I end. This celebration of the armistice took place on Wall Street in New York City on December 5, 1918. But the legacy of our involvement in the war has lasted into the twenty-first century. The United States became an economic and political global power that still exerts tremendous influence on world events and policies today.
Today, as the country faces terrorist threats, American leaders again echo the words of Wilson. “Just as we stood for freedom in the twentieth century, we must stand together for the right of people everywhere to live free from fear in the twenty-first century,” said President Barack Obama in 2009. Addressing a group of South American leaders in 2011, he added: “We’re people of faith who must remember that all of us—especially the most fortunate among us—must do our part, especially for the least among us. We’re citizens who know that ensuring that democracies deliver for our people must be the work of all. This is our common history. This is our common heritage.”
Other countries look to the United States for support and guidance, or seek to undermine or destroy us, because we have influence, and because we are a world power. This is the legacy of World War I.
The District of Columbia War Memorial was dedicated and opened on November 11, 1931, exactly thirteen years after the armistice. The names of 499 Washington, D.C., residents who died in the war are carved into its base. Many towns and cities in the United States and Europe built monuments, large and small, to honor those who fought in World War I and to preserve their memory.
