Important Stuff!

1. Important Stuff! • Midterms are completed • Apologies for the delay, which was entirely my fault • Pay close attention to your TA’s discussion of what we were looking for on the IDs and essay • If you missed a lot of multiple choice, you need to study your lecture and recitation notes, textbook, and Hollitz more closely • Essay Two is due the week after finals: • Read and follow the hand-out • Basic goal: To “make” history the way historians do • Careful and historically informed investigation of historical evidence: Primary materials • Primary materials are to historians what geological strata are to geologists or fossils are to paleontologists • In all cases, the argument that best explains all the available data is likely to be the most widely accepted

2. Important Stuff! • Bit of advice: Begin reading The Autobiography of Malcolm X over break • Note: Because of the FDR film, we won’t be showing The Atomic Cafe • Students who had excused absences for the exam, please see me after class today • Agenda for today and this week: • Review Depression, New Deal, and WWII • Discuss World War III (AKA, the Cold War)

3. 1) The Great Depression

4. What caused the Great Depression? • NOT the stock market crash, though contributed • The inequalities of wealth that had been building since the Gilded Age • Economic health increasingly dependent on mass consumption • Lacking unions or other means to increase worker wages, incomes rise only gradually while productivity soars • With wealth concentrating in hands of top 1-2%, wage workers unable to buy enough, resulting in overproduction • Laissez-faire philosophy of Coolidge (1923-29) • Ideologically refuses to use government to manage economy for sustained growth or discourage rampant speculation

5. What caused the Great Depression? • Number One Cause: World War I • As the “arsenal of democracy” in WWI, U.S. sold vast amounts of war materiel to England and France • Almost all bought on credit, which they were trying to pay back throughout the 1920s • Coolidge refuses to forgive this war debt because of isolationist sentiments • Versailles Treaty: Germany had to pay huge reparations to England and France • U.S. banks provided much of the capital (loans) to the Germans • Germans in turn used this capital to pay off England and France • A fragile triangle of international debt • When U.S. market crashed, bankers called in loans to Germany, which then was unable to pay England and France, who then defaulted on debt repayment to the U.S. • A Vicious Downward Spiral

6. The “Meaning” of the Great Depression • Isolationism was an illusion • League of Nations or not, Global Capitalism had now clearly linked the U.S. to the fate of the world • Laissez-faire policies had even more disastrous consequences in a global system: • Ideologically opposed to government management of even the domestic economy, free market advocates of laissez-faire were completely unable to recognize the need to somehow manage the international economy • The old belief that success and failure was primarily a result of individual hard work, discipline, etc., became even more ridiculous • Depression throws millions of hard-working, responsible Americans out of work • People lose their homes and families through no fault of their own • Can individual Americans truly control their own destinies? • Decisions made not just in New York board rooms, but offices in Berlin and London, dictate the fate of millions • The Independent Yeoman Farmer is truly dead

7. 2) The Promise of a “New Deal”

8. The New Deal • Only possible because of the mass pain and suffering of free-market capitalism’s greatest historical failure (so far) • Narrow window of opportunity to experiment with new ideas about the proper role of government and the meaning of American liberty and freedom • In many ways, a break from the past • But also had roots with the more modest reforms of the Progressive Era

9. What did the New Deal do? • Historians think in terms of the First and Second New Deals: • The First New Deal: • Focused primarily on basic relief of economic suffering and attempts foster economic recovery • The Second New Deal: • Much more ambitious, FDR’s attempt to permanently alter the American political economy • Government to manage the economy for stable growth and to guarantee all Americans a modicum of economic security

10. The First New Deal • Agricultural Adjustment Act • Federal payments to farmers to take acres out of production, raise fewer pigs, etc. • Goal: Limit over-production • Civilian Conservation Corps • Employ idle young men in public works projects • Goal: Give people jobs and pump money into economy • Federal Depository Insurance Corporation • Guarantee private savings in banks • Goal: Regain public faith in safety of banks • National Industrial Recovery Act • Federal regulation of minimum wages, maximum hours • Promises workers right to unionize • Public Works Administration give people federal jobs

11. Did the First New Deal work? • Yes and no • Did not do succeed in getting the nation out of the Great Depression • By 1935, few signs of significant economic recovery • But did take the edge off the worst suffering • Gave Americans “hope in hard times” • Americans believed FDR was on their side, and he wins the lasting devotion of millions • FDR’s overwhelming popularity sweeps in a democratic majority in the Congress • Many of these more radical than FDR and push for bigger changes

12. Radical Threats • After five years of depression, many Americans begin to listen to would-be leaders much more radical than FDR • Consider what happened in many other capitalist nations

13. Germany: Hitler’s hyper-patriotic, nationalistic, and militaristic Nazi fascism

14. Italy: Mussolini’s hyper-patriotic, nationalistic, and militaristic fascism

15. Japan: The military’s hyper-patriotic, nationalistic, and militaristic Japanese-style fascism

16. USSR: Stalin’s anti-fascist, anti-capitalist, state-planned economy which suffered few ill-effects from the Great Depression • Few realized at the time, though, that Stalin had created the most brutal of police states that would kill millions of his own people

17. The distinctly un-militaristic, un-nationalistic, and un-fascistic (though none the less patriotic) FDR, with his Scotty Fala and an unknown young victim of polio

18. Radical threats at home • Remember: The U.S. evinced definite strains of fascistic ideas in the 1920s • 100% Americanism and radical nationalism • Intolerance for a diversity of ideas • Suppression of civil liberties • Red Scare: Fascism was anti-communist • Eugenics: Controlled human breeding for pure Anglo-Saxon blood • The KKK—White Sheets become Brown Shirts? • One notable exception: Lacked militarism

19. Home-grown American radicals: • Francis Townsend • LA doctor who called for generous federal monthly payments to the elderly to take them out of the labor pool

20. Home-grown American radicals: • Father Charles Coughlin • Detroit radio priest who called for the nationalization of major American industries • Deeply anti-Semitic, blamed economic troubles on a conspiracy of Jewish bankers (Adolf Hitler anyone?)

21. Home Grown American Radicals Huey Long Demagogic Louisiana Senator who wanted to “soak the rich” Confiscate large private fortunes, levy a steep progressive income tax Promised government would provide every average American family with a minimum household income of $2,500

22. FDR’s New Political Philosophy • In this climate of world fascism and home-grown radicalism, FDR’s “radical” Second New Deal was clearly very moderate—a middle way between total state control and laissez-fair; the amazing flexibility of American democracy • Avoids fascism and communism • Redefines the meaning of “liberalism”: • The simple old days when Americans could be truly independent and self-sufficient were gone • Most Americans could no longer guarantee themselves and their families a modicum of security • Left to its own devices, it appeared that free-market instabilities often led to fascistic or other dictatorial attempts to provide fearful people security in an insecure world • Therefore, it must be the task of democratically elected governments to guarantee some basic level of economic safety and security—if not, democracy itself would likely perish

23. The Second New Deal • Not about relief or recovery, but rather about creating a secure new political economy • Cyclic unemployment was a permanent and inevitable feature of modern industrial capitalism • Therefore, must have federal mechanisms to help the unemployed • Government to be the employer of last resort

24. The Second New Deal • 1935 Emergency Relief Appropriation • Allocated an unheard of sum—4 billion dollars—to provide federal jobs for the unemployed • (Robert) Wagner National Labor Relations Act • Guaranteed the right of labor to unionize and required industry to bargain fairly with recognized union representatives • Logic: Empower workers to get a fair deal from industry so pay, benefits, etc., are more economically viable • AVOIDS having the government directly regulate wages, hours, etc.

25. The Second New Deal • Social Security • Required all 48 states to establish some system of unemployment insurance • Provided old age pensions • Americans over 62 would be guaranteed a (very modest) pension • Self-funded by a payroll tax: workers contribute to their own future retirement • FDR believed this would make it impossible for any future politician to get rid of Social Security • What politician would be foolish enough to deny American seniors the benefits they themselves had paid for?

27. What did FDR and the New Deal do? • Created modern liberalism: A central purpose of government is to provide its citizens with economic security • For the first time, federal government less interested in preserving the rights of capitalists and corporations than in guaranteeing the security of the mass of average American people • Did so without destroying the creativity and wealth-generating power of industrial capitalism (indeed, post-war period sees the biggest economic boom in American history) • Nevertheless, some of the wealthy elites resented the New Deal and thereafter constantly fought to roll it back and reestablish elite control • Created an economic regulatory system and social safety net that—so far—may have prevented another economic downturn as severe as the Great Depression

28. What did FDR and the New Deal do? • Created the New Deal Democratic political coalition that would dominate until the 1980s • Lower class, middle class, farmers, labor, African Americans, urban north and “Solid South” • Greatly increased the size and power of the federal government • Likewise, also increased taxation, potentially unfair or illogical regulations, etc. • New Deal liberalism justified bigger government as a necessity to balance the power of big business, manage the economy, and guarantee every American a measure of economic security • Big Question: Would big government nonetheless eventually come to limit the freedom of Americans more than protecting those freedoms?

29. What did FDR and the New Deal NOT do? • Did not result in significant long-term redistribution of wealth • Did not create a system of substantial state ownership of industry, railroads, etc. • Did not end the Great Depression • In some cases, did more harm than good • Although large federal spending (Keynesianism) did spur modest economic growth, the economy was still weak by 1940 • Needed MASSIVE federal spending, which came only with the start of WWII

30. 3) World War II: The Big Picture • Took the U.S. out of the depression and left it the most powerful economic force on the globe • By 1945, U.S. sole intact global industrial powerhouse • Germany, France, England, Japan, etc., will be eager customers for U.S. goods for a decade or longer • Begins an extraordinary era of American economic prosperity • Clearly establishes the U.S. as a major player in global power politics • Unlike after WWI, the U.S. does not retreat into isolationism • By 1949 U.S. is engaged in WWIII with the Soviet Union, leading to a seemingly permanent war-time footing • Centrality of the federal government in funding big science and industry is widely accepted • Manhattan Project demonstrated seeming necessity for federal role in the science of mass destruction • Creation of a Military-Industrial Complex

31. Questions?