Figure 1.--The Roaring Twenties were fueled by whole new industries. The most important was commercial radio which brought entertainment into the home. It was a huge hit. The firset sets had eraphones like we see here in the very eraly-20s. These sets quickly evolved into more family friends sets that did not need ear phones . The radio virtually instantenously became the center of the family living room. And along with the music, dramna, comedy, and neww came commercials which helped fuel an unpreccented industrial expansion.

The inter-War Era was sparated by two decades that could not be more different. The Roaring 20s of the 1920s and the Great Depression of the 1930s. Much more has bee written about the Great Depression than the Roaring 20s. This means in aan era where there is concern about slow growth, a decade with one of the impressive ans vigoros record of growth and expansion is largely ignored, if not vilified. One economis identifies it as 'the first truly modern decade'. Dramatic economic developments occurred during the decade. An important new industry appeared almost instanenously after the War. Work by the World War I beligerants on wireless opened the way for a whole new modern industry--radio. This was part of two widespread and very important developoments. First, rapidly expanding electric generating and utility networks led to new development consumer appliances and of lighting as well as heating appraoches for bith homes and undustry. This was a trend dengun un thev1910s, but explodedvin the Roraing 20s. Second, commercial radio and to a lesser extent the movies began to end rural isolation. Here another factor wa both local and long-distance telephoning, although here it was more of a New Deal achievement in the 1930s. One of the most important development was the adoption of the automobile ass part of the American life style. And Americans did not just want basic black Tin Lizzies. They wanted style and peformance and the Big Three in Detrout gave them just that. And Amerucan cities began to change Suburbs had been growing even in the late-19th century. But they were tied to rail or trolley lines. The aitomobile opened vast new areas to suburban develooment. And America began to build highways with improved surfaces to meet the needs of both car and increasingly truck owners. Recreation also began to change and becoming an important part of the economy. Traveling during summer vacations, Hollywood movies, and professional sports became to shift to important industries. Other important changes were innovations in business organization and manufacturing technology. The Federal Reserve System created in 1913 began tomplay an increasingly imprtant role. The United States was an important economic force before Wirld War I, but in the 20s powered to a dominant position in international trade and global industry. All of this came to a screaching halt with the Wall Street Crasg (October 1929). business. These things make the 1920s a period of considerable importance independent of what happened in the 1930s. The Great Depression of the 1930s was the worst economic slump ever to affect the United States. It was not just a national economic crisis, but one which spread to virtually every country. The greatest calamity to befall Americans in the 20th century was the Great Depression--a worse calamity than even two world wars. The Depression began with the Wall Street stock market crash in October 1929. Soon business were going under and Americans were losing their jobs. All Americans were affected. Eventually about one-third of all wage earners were unemployed and many who kept their jobs saw their earnings fall. President Hoover who had engineered a humanitarian miracle in Europe during World War was unable to break away from the mindset that the Government should not intervene in the economy. President Roosevelt was elected by a landslide in 1932. He brought energy and new ideas to Washington and the Federal Government initiated programs that would have been rejected out of hand only a few years ago. Roosevelt was willing to use the Government to solve economic and social problems besetting Americans. The people loved him, electing him to an unprecedented third and fourth term. The propertied class or "economic royalists" as he called them, hated him. Roosevelt's program was called the New Deal and the many programs initiated help change the face of the United States: Social Security, the Tennessee Valley Authority, rural electrification, the Works Progress Administration (WPA), protection for union organizers, and many others. The conservative-dominated Federal Courts struck down WPA, but many New Deal programs endure to this day. The great novel to emerge from the Depression was John Steinbeck's The Grapes of Wrath which addressed the problems of rural Americans and the dust bowl. Urban Americans of course also suffered. While the New Deal brought relief to many desperate Americans, the Depression lingered until orders for war material from Europe began to flood into America in the late 1930s. The rest of the world was also affected by the Depression. Britain and France also struggled with the economic down turn. The response in Germany and Japan was totalitarian, militarism, and finally war.

The Roaring Twenties (1920s)

The inter-War Era was sparated by two decades that could not be more different. The Roaring 20s of the 1920s and the Great Depression of the 1930s. Much more has bee written about the Great Depression than the Roaring 20s. This means in aan era where there is concern about slow growth, a decade with one of the most impressive and vigoros record of growth and expansion is largely ignored, if not vilified. What is most celebrated in popular culture is big cars, Hollywood, prohibition, and gangsters,but actually there were enormous econpmic advances. One economist identifies it as 'the first truly modern decade'. Dramatic economic developments occurred during the decade which propelled industry forward as never before. Agriculture suffered, but it was a stunning decade for industry. Not only did established industries expand, but important new industries appeared almost instanenously after the War. Barnstorming led to an importanntnew industry. Aviation emerged from the War as an exciting new industry in which america led the world. Work by the World War I beligerants on wirelesscommunicatuin for milirary purpses opened the way for a whole new modern industry--commercial radio. This was part of two widespread and very important developoments. First, rapidly expanding electric generating and utility networks led to new development consumer labor saving home appliances and of lighting as well as heating appraoches for bith homes and undustry. This was a trend dengun un thev1910s, but explodedvin the Roraing 20s. Second, commercial radio and to a lesser extent the movies began to end rural isolation. Here another factor wa both local and long-distance telephoning, although here it was more of a New Deal achievement in the 1930s. One of the most important development was the adoption of the automobile ass part of the American life style. And Americans did not just want basic black Tin Lizzies. They wanted style and peformance and the Big Three in Detrout gave them just that. And Amerucan cities began to change Suburbs had been growing even in the late-19th century. But they were tied to rail or trolley lines. The aitomobile opened vast new areas to suburban develooment. And America began to build highways with improved surfaces to meet the needs of both car and increasingly important truck owners. Recreation also began to change and become an imporant part of the economy. Traveling during summer vacations, Hollywood movies, and professional sports became to shifted from minor activiries to important industries. And the headline grabbing personages reflected these changes, not obly movie stats but people like Babe Ruth--the Sultan of Swat and Charles Lindbergh--the Lone Eagle. Other important changes were innovations in business organization and manufacturing technology. The Federal Reserve System created in 1913 began tomplay an increasingly imprtant role. The United States was an important economic force before Wirld War I, but in the 20s powered to a dominant position in international trade and global industry.

Government and Industry: The Blame

In the aftermath of the Wall Street Crash and tragedy of the Great Depression there was an effort to identify who was responsible. And the virtually unanaimous answer from media and academia was businees, industriial leaders, and Predident Hoover and the pro-business Republicans -- in short capitalism. And they usually did not say just capitalism, but identified it as unbridled capitalism. We see this ay the beautiful FDR memorial in Washington. As you enter, you see a eaterfall which falls starigh down, dymplizing unrestrained capitalism. The Roaring Twentiies were vilified as an era of excesses rgat caused the Drepression. Business and bankers were held responsible for the Depression. Some Amerivans began to see the Communist Soviet Union -- a land of happy, dancing peasants and workers, as well as Fascist Italy and the Corporate State as better ecinic models than American capitalism. There wa little or assessment of Governmebt policies other than the need for relief. We nowcjnow that it was the Government that turned a perfectly normal economic down turn into the Great Depression. The principal agency responsible for this was the Federal Reserve which moved to significantly restrict the money supply. The Federal Reserve was very new at the time and the consequences of actions like restructing the money supply were not well understood. Webnpw know it had a huge adverse impact on the economy. Ben Bernanke, a member of the Federal Reserve Board of Governors in 2002, acknowledged publicly what economists have long believed. The Federal Reserve’s mistakes contributed to the 'worst economic disaster in American history.' [Bernanke]. It was not only the Fed. Congress passed the Smoot Hawley Tariff (1930) supported by Democrats and Republicans. It essentially exported the Depression. What caused the Depression is one question. Why it lingered so long in America, longer than in many other countries, is another important question. After all if the New Deal had the ansers to 'unbialded capitalism', why did it not end the Deptession in a short period. This issue has not been throughly investigated but New Deal rhetoric like targeting businessmen and labeling them 'economic royalists' as well as massive increases in taxes are certainly factors. Now we are not a relentless chris of the News Deal. There were many needed and and valuable New Deal reforms and agencies, including most importantly Socual Security and also the CCC, FDIC, REA, SEC, and other agencies. And we are not questioning the need for relief--it was vital. What we question is the New Deal policies trying to move move aawy from a capitalist economy were a different matter. There is a widespread believe in America promoted by the left wing authors that dominate academia and the media that the New Deal ended the Depression. It did not. In fact the Roossevelt Recession (1927-38) brought back high unemployment. What ended the Depression was the Allied victory in World War II and the post-War economic boom, both largely enginnered by free market capitalism.

The Great Depression (1930s)

All of the expansion and growth came to a screaching halt with the Wall Street Crash (October 1929). business. These things make the 1920s a period of considerable importance independent of what happened in the 1930s. The Great Depression of the 1930s was the worst economic slump ever to affect the United States. It was not just a national economic crisis, but one which spread to virtually every country. The greatest calamity to befall Americans in the 20th century was the Great Depression--a worse calamity than even two world wars. The Depression began with the Wall Street stock market crash in October 1929. Soon business were going under and Americans were losing their jobs. All Americans were affected. Eventually about one-third of all wage earners were unemployed and many who kept their jobs saw their earnings fall. President Hoover who had engineered a humanitarian miracle in Europe during World War was unable to break away from the mindset that the Government should not intervene in the economy. President Roosevelt was elected by a landslide in 1932. He brought energy and new ideas to Washington and the Federal Government initiated programs that would have been rejected out of hand only a few years ago. Roosevelt was willing to use the Government to solve economic and social problems besetting Americans. The people loved him, electing him to an unprecedented third and fourth term. The propertied class or "economic royalists" as he called them, hated him. Roosevelt's program was called the New Deal and the many programs initiated help change the face of the United States: Social Security, the Tennessee Valley Authority, rural electrification, the Works Progress Administration (WPA), protection for union organizers, and many others. The conservative-dominated Federal Courts struck down WPA, but many New Deal programs endure to this day. The great novel to emerge from the Depression was John Steinbeck's The Grapes of Wrath which addressed the problems of rural Americans and the Dust Bowl. Urban Americans of course also suffered. While the New Deal brought relief to many desperate Americans, the Depression lingered until orders for war material from Europe began to flood into America in the late 1930s. The rest of the world was also affected by the Depression. Britain and France also struggled with the economic down turn. The response in Germany and Japan was totalitarian, militarism, and finally war.

Sources

Bernanke, Ben, "On Milton Friedman's Ninetieth BirthdayOffsite link," Remarks by Governor Ben S. Bernanke at the Conference to Honor Milton Friedman, University of Chicago, Chicago, IL (November 8, 2002).

Created: 2:07 PM 8/7/20200
Last updated: 2:07 PM 8/7/2020