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Roaring Twenties and Great Depression

by Roger Bourke White Jr., copyright July 2015

Introduction

The Post World War One era -- the 1920's and 30's -- was as surprising as World War One was, but in a very different way. (here is my essay on WWI)

In the US there was first a surprising series of booms broken up with small busts, the Roaring Twenties, then the surprisingly big bust of the 1930's, the Great Depression. And all through this time Americans experienced many changes in how they lived, what they worked for, and what they thought about the world around them.

In Western Europe there were economic cycles similar to those of the US, plus the shock of the huge casualty count and destruction the war created, plus the challenges of maintaining the French and British empires after they had called upon so much help from their colonies to fight the war. There was lots of thinking changing going on here as well, but the thoughts were different from those in the US. They were more socialist-oriented, in its many flavors.

In Central and Eastern Europe there was first the challenge of continued fighting -- the war didn't end in these areas with the German surrender in 1918, it continued on for two-to-four more years in the form of chaotic revolutionary fighting. And then came the challenge of dealing with the social and economic turmoils of these social revolutions sweeping the region as the fighting ended. The changes in how people lived, what they worked for, and what they thought about were even more dramatic those of the US and Western Europe. And because they had such brief prosperous times before it started, the Great Depression was even more traumatic for these regions.

All these changes in living and thinking styles of the 20's and 30's are the topic of this essay.

Dealing with another Industrial Revolution

The first Industrial Revolution, the one of the 1800's, was initiated with the rise of the steam engine. In the 1920's what came to the fore were electricity and the internal combustion engine -- the sort used in cars and trucks. These new inventions were even more life changing than the steam engine had been a century earlier. People could drive cars outside, use washing machines in their homes, and get on telephones everywhere to talk with close neighbors and distant associates.

In sum, automobiles and trucks and electricity were bringing about big changes in how people lived and what they were thinking about. But all was not sweetness and light. These new kinds of prosperity were mixed in with lots of labor unrest caused by lots of flux in the jobs being created and lost. These new innovations meant that jobs were changing a lot as well, and the relations people had with their various communities were changing. The book The Great Gatsby (1925) talks about the social changes happening in these times -- how they amazed the people living through them. (the book, not the movies, the movies are about how to party hearty)

Another example of big change was introducing tractors to farmlands. This brought about big productivity gains, but it also displaced a lot of farm workers. And because of the dramatic productivity gains, farm prices were chronically below expectations, and food exports were vital to maintaining whatever prosperity could be found in the industry. Steinbeck's "Grapes of Wraith" (1939) was describing the farmers' plight of the 1920's as much as it was the 1930's.

But even with all this turmoil things kept getting better. They key to all this improvement was: cooperation.

The Lesson of World War One: Cooperation

World War One was surprising in many ways. One of those was using the war threat to learn Big Cooperation. (my term) Thanks to the new communications techniques of the era (propaganda), Americans and Western Europeans learned how to cooperate in many new ways. Because of the war threat they put aside many differences that they had been arguing about pre-war, and everyone came together to do what it took to win the Great War.

This lesson learned continued on through the 1920's, and this was the foundation for a lot of the prosperity. Because of the inherent cooperation learned during World War One, the booms were spectacular, the busts were small, the recoveries from them were fast, and the overall optimism remained high.

This is why the 1920's "roared".

But as the 1920's became the 1930's, times changed and people changed. A new generation was growing up and coming to maturity, and in the 1930's a new style of thinking emerged. This one was less pleasant and less productive. This one was acrimony.

The US cultural theme: Slipping from prosperity into acrimony

In the 1920's there had been problems, but they had been worked through quickly and growth continued. Starting in 1930, the economic problems did not solve themselves as they had in the 1920's. The problems lingered on instead of solving. Very different. And this difference transformed people's thinking. At first it was annoying, then positively scary by 1932.

Roosevelt was elected in the 1932 election because Americans were so scared at what was happening economically. The conventional solutions were not working, so Americans were ready to try something completely different, and Roosevelt was one of many politicians offering that.

To put this in context: These early Depression years were what I call a Time of Nutcases.

Time of Nutcases

This is a time when a community is deeply scared by its current condition, and well aware that the "conventional solutions" that have been tried up to now haven't solved the problem. If conventional solutions aren't working, it is time to pay serious attention to alternatives.

This means paying attention to those people who previously have been shouting in the wilderness about their fringe ideas. They were previously ignored because their ideas were too crazy. Ninety percent still need to be ignored because they are too crazy. But mixed in with the dross are a few gems, and one or two of these may be the solutions to the current problems. ...But which ones?

When this kind of thinking is strong, it is A Time of Nutcases.

What does acrimony have to do with this?

What was happening was instead of working together to solve this economic decline, people were arguing and "defecting" in the Prisoners Dilemma meaning of that word -- they were not working together to solve their problems, they were pursuing what they saw as self-interest, and let others fend for themselves.

One example of this defecting was nations enacting high protective tariffs. In the US this was the Smoot-Hawley Tariff Act of 1930. The thinking behind this was, "If we don't import stuff, we will make it here at home, and that will make more jobs here at home." Good logic in that... in the scary context of the day... but in practice, this thinking lead to a deep cut in total jobs world-wide as international trade dropped to near zero. This meant that this choice was having the opposite effect of what it was supposed to, but the people of the day didn't see it that way.

This is an example of an acrimonious solution.

In the same way farm policies and labor relations were becoming more acrimonious, and not solving the problem of how to recover, grow the economy, and create more jobs.

What Roosevelt offered in place of a business recovery was a government recovery -- the government would take on many more tasks, and in the process hire many more people to do them, and that would stimulate the economy.

He also invited both business and labor groups to set up business-controlling boards that would enact regulations with the goal of restricting business and labor practices so more people would have to be employed to accomplish a specific task. As an example, if a task took ten hours for a worker to complete, and workers were restricted to just eight hours a day, then the task would take two days to complete, or a second worker would have to be hired.

In 1936 he got academic justification for this instinctive solution theme when John Maynard Keynes published his theories on how the economy was affected by government stimulation.

He got academic justification, but the results were still really poor. There were jobs created, and Roosevelt became a hero of the people for creating them, but the economy didn't prosper -- business was not growing, so it was not creating many jobs. In 1937 what little growth that had occured since 1933 was lost again in yet another recession.

The times were acrimonious, indeed.

The European cultural theme: Slipping from Socialism into acrimony

The Western Europeans, much more than Americans, were enamored with the ideals of socialism. They were much more concerned about social safety nets to protect workers from the dislocating traumas that this new industrial revolution was creating.

When the Depression spread to Western Europe, the solutions were just as acrimonious as those enacted in America. Europeans, for instance, first invented the sit-down strike.

In spite of the acrimony Britain and France hung on to democracy as the governing form. For the Italians and Germans, a different road was followed.

Then the German and Italian solutions to acrimony: Fascism

Fascism these days is looked upon as a totally spooky way of governing people that created terrible wars and even more terrible concentration camps. It did, but those were late developments in the concept's short life history. In its early days Fascism was just another form of socialism and the product of the early 1930's Time of Nutcases in first Italy, then Germany and Japan. (another name for Fascism is National Socialism)

What it had going for it in the early days was a way of providing a Big Vision that the people of these various countries could get behind. This was a revolution. The goal was for government to tell big business what to do, help those orders happen, provide some spectacular bread and circuses programs directly to the people, grow national pride by growing the military, and the combination of all-of-the-above would grow the economy better than the currently failing conventional attempts.

It worked for a while, but it turned out to be a Slippery Slope style of government. (my term) The leaders could not keep delivering what they had promised. The solution became a desperate form of "Blame Them" (my term) which ultimately lead to starting wars, and then basking in the nationalist glow of winning them. This producing warm, fuzzy feelings at home was the goal of Germany's Blitzkreg war style.

The Russian solution to acrimony: wars and purges

The Russians started down the road of a Communist solution even before World War One had ended -- which sure added a lot of confusion to what was happening on the Eastern Front in the last months of the war! The road to "a workers paradise" in Russia was a rocky and violent one from the beginning. At first there were competing warlords and poltical groups, and then there were competing views as to what "communism" really meant in terms of what businesses, farmers and government should be doing.

As the outright fighting wound down, the solution to these differences of opinion was "purging" in various violent ways. People and groups were accused of being counter-revolutionaries and then dealt with like they were dangerous criminals or traitors to the cause. The result was a violence-filled transition from Russia being monarchical and mostly agricultural to Russia becoming the Soviet flavor of Communist and adding a lot of heavy industry, such as steel mills, to the economic mix. The change happened, but these were "exciting times" to be living in what was now called the USSR.

Like the governments that chose Fascism, the Soviets found themselves on a Slippery Slope, but not quite as steep as the Fascist forms. This allowed Stalin to follow Hitler's lead when he got adventurous and reap similiar advantages, without looking quite as scary on the international scene.

And, in the end, all the adventurism lead to Stalin and the Soviets fighting with Hitler and the Nazis. Thanks to Blame Them thinking, both sides looked upon this as a contest quite worthy of fighting.

The surprise benefit of World War Two: Ending acrimony

World War Two was surprising in many ways. But one of the interesting ones in relation to the Great Depression was reducing acrimonious thinking in Western Europe and America.

As Hitler's adventurism was dramatically succeeding around the German borders starting in the mid-1930's, the people of Germany were surprised, as were the people of Britain and the US. With time, all of these people changed their thinking. They started thinking about cooperating to solve their domestic disputes so they could come together to deal with this surprisingly successful international threat.

The cooperation became pervasive under various forms of "Win the War" slogans, much as what had happened in World War One. But this time people were much better practiced, so the results were even more spectacular.

This cooperating continued after the war was won because the Cold War kicked in so quickly after World War Two ended, and, based on what was learned in the lead-up to World War Two, it also provided powerful incentive to cooperate.

The Cold War years were economically booming years for most of the world because the feeling of needing to continue to cooperate continued to be strong.

Conclusion

The Roaring Twenties and the Great Depression were surprising times because of their contrasts. During the 1920's people were healing from World War One, and while they did so they continued to cooperate a lot. A decade later, in 1930, the feeling of needing to cooperate was replaced with a feeling of "I've got my rights." being felt by a lot of different people, and a lot of arguing ensuing -- a lot of acrimony.

This acrimony was why the economies of the world had such a hard time recovering from the stock market crash of 1929. Then the long-running acrimony, and the long-running economic downturn of the 1930's scared a lot of people. The result was a Time of Nutcases, in which many strange solutions were tried to solve this now-mysterious, now-neverending downturn. Those solutions included Fascism, Communism and the New Deal.

All the solutions turned downright scary by the late 1930's. And the Fascist and Communist solutions in addition turned to military adventurism, which brought on World War Two.

World War Two solved the Great Depression by changing people's thinking. People got scared in a different way, and started cooperating again. This lead to increased productivity and economic growth. That growth continued through the Cold War years because the US and USSR threatened each other in ways that were similar to the pre-war threats of the 1930's.

And then... came the 1960's and the Generation Gap. It was time for yet more new thinking to take center stage.

 

--The End--

 

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