A Patriot's History of the United States: From Columbus's Great Discovery to the War on Terror

by Larry Schweikart

  Motion pictures, another new technology, competed with radio as a main source of public entertainment. “Movies” originated with Thomas Edison in the late 1880s, and in 1903 The Great Train Robbery became “the first movie with a recognizable plot.”11 Almost a decade later, D. W. Griffith produced The Birth of a Nation, about the Civil War, arguably creating the first true modern-era motion picture. But the greatest motion picture director of all, Cecil B. DeMille, captured the grand sweep of the 1920s with his epics The Ten Commandments (1923) and King of Kings (1927).12

  Warner Bros., however, provided the decade’s key breakthrough when Al Jolson appeared in the first film with a sound track, The Jazz Singer (1927). Previously, movies had relied on written text to move the plot along, although posher theaters featured live organists or even orchestras playing along with the screen action. Jolson’s breakthrough opened the floodgates for the “talkies,” instantly ending the careers of many silent film artists who looked appealing, but sounded bad, and demanding more overall of the actor’s craft. With the industry producing up to five hundred movies a year, in a short time Mary Pickford, Douglas Fairbanks, Rudolph Valentino, Charlie Chaplin, and Clara Bow would epitomize the lavish lifestyles and celebrity culture that later was synonymous with Hollywood. Next to The Jazz Singer, though, was the other revolutionary motion picture of the decade—this one starring a mouse. Walter Elias “Walt” Disney, an illustrator and animator, had dreamed of producing a full-length motion picture cartoon. He took a giant step toward fulfilling that dream with Steamboat Willie in 1928, which introduced the world to a whistling Mickey Mouse. Motion pictures and radios were joined by another new consumer item—the telephone. In 1920, for every 1,000 city dwellers there were 61 telephones; by 1928 the number had risen to 92 per 1,000.13

  Wets Versus Drys

  As the idealism of Prohibition faded, and the reality of crime associated with bootlegging set in, the effort to ban alcohol began to unravel. One reason was that enforcement mechanisms were pitifully weak. The government had hired only fifteen hundred agents to support local police, compared to the thousand gunmen in Al Capone’s employ added to the dozens of other gangs of comparable size. Gunplay and violence, as law enforcement agents tried to shut down bootlegging operations, led to countless deaths. Intergang warfare killed hundreds in Chicago alone between 1920 and 1927. By some estimates, the number of bootleggers and illegal saloons went up after Prohibition. Washington, D.C., and Boston both saw the stratospheric increase in the number of liquor joints. Kansas, the origin of the dry movement, did not have a town where alcohol could not be obtained, at least according to an expert witness before the House Judiciary Committee.14

  The leadership of the early Prohibition movement included many famous women, such as Carry Nation, who were concerned with protecting the nuclear family from the assault by liquor and prostitution. She was wrong in her assessment of the problem. Far from protecting women by improving the character of men, Prohibition perversely led women down to the saloon. Cocktails, especially, were in vogue among these “liberated” women, who, like their reformer sisters, came from the ranks of the well-to-do.

  Liquor spread through organized crime into the hands (or bellies) of the lower classes only gradually in the 1920s, eventually entering into the political arena with the presidential campaign of Al Smith. By that time, much of the support for Prohibition had disappeared because several factors had coalesced to destroy the dry coalition. First, the drys lost some of their flexible and dynamic leaders, who in turn were replaced with more dogmatic and less imaginative types. Second, dry politicians, who were already in power, bore much of the blame for the economic fallout associated with the market crash in 1929. Third, public tastes had shifted (literally in some cases) to accommodate the new freedom of the age represented by the automobile and the radio. Restricting individual choices about anything did not fit well with those new icons. Finally, states chafed under federal laws. Above all, the liquor industry pumped massive resources into the repeal campaign, obtaining a “monopoly on…press coverage by providing reporters with reliable—and constant—information.”15 By the late 1920s and early 1930s, “it was unusual to find a story about prohibition in small local papers that did not have its origin with the [anti-Prohibition forces].”16

  Not to be discounted, either, was the fact that the intelligentsia turned against Prohibition. Neo-Freudians—the rage in psychology circles—scorned the reformers, in sharp contrast to the pre–World War I sympathy they’d enjoyed in intellectual circles. Psychologists now saw Progressive reformers as sexually repressed meddlers.

  All of these factors led toward the inexorable repeal of Prohibition with the Twenty-first Amendment in 1933. Still, for history written since the 1960s, where an open society was deemed the highest good and any restrictions on personal freedom were viewed as inherently autocratic, Prohibition left a more mixed legacy than is commonly portrayed. In the first place, it was not designed to stop private individuals from drinking, but only to eliminate the source of (as the reformers saw it) evil and misery, the saloon. Moreover, historians have displayed a nearly irresistible urge to saddle white rural Protestants with Prohibition, despite its female, upper-to upper-middle-class urban origins. A concurrent lack of attention was given to the measurable results of Prohibition. The U.S. Department of Health, Education and Welfare, for example, prepared a report called “Alcohol and Health” in 1971, which showed that per capita consumption of alcoholic beverages fell by at least 40 percent in 1920, marking a permanent reduction in drinking.17 Economist Clark Warburton’s 1932 study analyzed a wide array of data, all of which were refined further by other economists in 1948. The conclusion of these studies was that alcohol consumption declined by 30 to 50 percent, or roughly what the 1971 HEW report had claimed.

  Other benefits of Prohibition are overstated. Arrests for public drunkenness fell, leading to lower public expenses for dealing with drunks; the rates of alcoholic psychoses fell; and medical problems related to drinking in almost every category plummeted so much that medical journals scarcely mentioned it as a public health problem.18 Yet these statistics ignored a lag time of disease—especially illnesses such as psychoses and liver problems, which are cumulative and would not have shown up until the late 1920s, if then.

  What about the crime wave associated with Prohibition? Norman Clark points out, “There is no reason to suppose that the speakeasy…in any quantifiable way, replaced the saloon. In fact…most Americans outside the larger cities never knew a bootlegger, never saw a speakeasy, and would not have known where to look for one.”19 Federal expenditures for law enforcement rose at an annual rate of 17.5 percent during the Prohibition years, with liquor-related enforcement costs exceeding budgets and revenues from licenses every year.20 Defenders of Prohibition argued that crime was growing anyway, and that gambling, not liquor, remained organized crime’s major money source. Prohibition may have accelerated the rise of the gangsters, but it did not cause the rise of organized crime.

  Prohibition therefore provided ammunition for both sides of the public health debate in subsequent generations; thus it usually came down to issues about personal rights. Critics pointed to its later failures; supporters, to its early successes.

  Bulls and…Bulls

  Prohibition’s social sideshow had little effect on the continued technological advances of the twenties and their spillover effect on the stock market and the American economy. Improved productivity in the brokerage and investment firms expanded their ability to provide capital for the growing number of auto factories, glassworks, cement plants, tire manufacturers, and dozens of other complementary enterprises. Moreover, both traditional manufacturing and the new industries of radio, movies, finance, and telephones all required electricity. With electric power applied as never before, the utilities industries also witnessed a boom. In 1899, for example, electrical motors accounted for only 5 percent of all the installed horsepower in the United States, but thirty years late
r electrical power accounted for 80 percent of the installed horsepower. One estimate found that electricity could increase productivity on a given task by two thirds.

  That automobile/electrical nexus probably would have sustained the Great Bull Market by itself; but added to it were several other unrelated industries, including radio broadcasters, who reached 7.5 million sets by 1928. Radio broadcasting stood uniquely among all industries in that it depended entirely on advertising for its sustenance. Advertising revenues on radio had accounted for $350 million by the middle of the decade, reflecting the growing power of Madison Avenue and professional advertising. For the first time, advertising and professional marketing entered the mainstream of American society, shucking the aura of hucksterism associated with P. T. Barnum.

  All this growth, energy, and American industrial success alarmed the Europeans. In 1927 at the International Economic Conference in Geneva, which met at the behest of the French, proposals were put forward for “an economic League of Nations whose long-term goal…is the creation of a United States of Europe.” This was, according to the chairman, “the sole economic formula which can effectively fight against the United States of America.”21 English writer J. B. Priestley complained a few years later that British roads “only differ in a few minor details from a few thousand such roads in the United States, where the same toothpastes and soaps and gramophone records are being sold, the very same films are being shown [here].”22 Europeans seemed uniformly wary of the rising American economic might, with books such as America Coming of Age (1927) warning of the rising giant across the Atlantic. We should not discount these reactions, because they underscored the fact that the U.S. economy was robust and reinforced evidence that the stock market boom was not an illusion.

  Rather than a frenzy of speculation, the Great Bull Market reflected the fantastic growth in genuine production, which did not fall; consequently, stocks did not fall either. Using an index of common stock prices for the year 1900 equaling 100, the index topped 130 in 1922, 140 in 1924, 320 in 1928, and 423 in October 1929. Individual stocks refused to go down. Radio Corporation of America (RCA) never paid a single dividend, yet its stock went from $85 a share to $289 in 1928 alone. General Motors stock that was worth $25,000 in 1921 was valued at $1 million in 1929. Was that all speculation? It is doubtful: GM produced $200 million in profits in 1929 alone; and electricity, which was ubiquitous by 1925, promised only steady gains in utilities securities.

  Certainly the securities firms gave the market a push whenever possible, mostly through margin sales in which an individual could put down as little as 10 percent early in the decade to purchase stock, using the stock itself as collateral for the 90 percent borrowed from the broker. By middecade, most firms had raised their margins to 15 percent, yet margin buying continued to accelerate, going from $1 billion in 1921 to $8 billion in 1929. But it wasn’t only the rich investing in the market. In 1900, 15 percent of American families owned stock; by 1929, 28 percent of American families held stock. One analysis of those buying at least fifty shares of stock in one large utility issue showed that the most numerous purchasers, in order, were housekeepers, clerks, factory workers, merchants, chauffeurs and drivers, electricians, mechanics, and foremen—in other words, hardly the wealthy speculators that critics of the twenties would suggest.23

  The fact that many Americans were better off than they had ever been before deeply disturbed some, partly because the middle class was rapidly closing in on the monied elites. Writers like F. Scott Fitzgerald sneered that Americans had engaged in the “greatest, gaudiest spree in history.” Others, employing religious models, viewed the prosperity of the 1920s as a materialist binge that required a disciplinary correction. But the facts of the consumer-durables revolution reflected both the width and depth of the wealth explosion: by 1928, American homes had 15 million irons, 6.8 million vacuum cleaners, 5 million washers, 4.5 million toasters, and 750,000 electric refrigerators. Housing construction reached record levels, beginning in 1920, when the United States embarked on the longest building boom in history. By the middle of the decade, more than 11 million families had acquired homes, three fourths of which had electrical power by 1930. During the 1920s, total electrical-product sales had increased to $2.4 billion. Per capita income had increased from $522 to $716 between 1921 and 1929 in real terms, and such a rising tide of affluence allowed people to save and invest as never before, acquiring such instruments of savings as life insurance policies.

  Indeed, the notion—first offered by John Maynard Keynes in his General Theory of Employment, Interest, and Money (1936) and later championed by John Kenneth Galbraith in The Great Crash (1955)—that consumer purchasing fell behind the productivity increases, causing a glut of goods late in the decade, doesn’t wash. In 1921 the consumer share of GNP was $54 billion, and it quickly rose to $73 billion, adding 5 percent at a time when consumer prices were falling. It gave consumers the available cash to own not only stocks and bonds, but also to control five sixths of the world’s production of autos—one car for every five people in America—and allowed a growing number of people to engage in travel by air. In 1920 there were only 40,000 air passengers, but by 1930 the number had leaped to 417,000, and it shot up again, to 3.1 million, by 1940.

  The soaring level of investment in securities and the business boom fostered the legend that both Harding and Coolidge were rabid probusiness types. Attackers have especially, and selectively, repeated Coolidge’s comment that “the business of America is business” and his suggestion that “the man who builds a factory builds a temple.” What did Coolidge really say about business when all of his comments were put into context? “We live in an age of…abounding accumulation of material things. These did not create our Declaration. Our Declaration created them. The things of the spirit come first.”24

  Criticized by historian Arthur Schlesinger Jr., who served as the “court historian” for Franklin Roosevelt and John Kennedy, as wanting a “business government,” Coolidge in fact said that America needed a government that “will understand business. I mean a government able to establish the best possible relations between the people in their business capacity and the people in their social capacity.”25

  Silent Cal had a few weaknesses, including his intolerance for the insubordinate (but ultimately accurate) predictions of Colonel Billy Mitchell and his support of tariffs. Overall, though, it was Coolidge’s moral compass and self-control over executive power that allowed the bulls to dominate Wall Street. Contributing to the Great Bull Market, however, were successful foreign policies that also helped usher in a decade of peace that contributed to the prosperity.

  A “Tornado of Cheering”

  Following the Great War—the worst war in human history up to that point—few nations had the resources or the desire to fan even the smallest embers of conflict. The Republican administrations sought to go even further, however, by ensuring peace through active negotiations to limit weapons, encouraging discussions among the former enemies, and assisting the German Weimar Republic when it experienced rampant inflation in the mid-1920s. These were not isolationist positions in the least, nor did they characterize small-government views associated with the Republicans, especially when it came to the German question.

  Germany, saddled with tremendous (and, in many ways, unreasonable) war reparation debts from World War I, had been consigned to a form of national servitude to Britain and France after the conflict. Among other penalties, Germany had to provide France with thousands of locomotives and railroad cars, free, and give to Britain hundreds of thousands of tons of shipping—again, at no cost. Because the Treaty of Versailles demanded that Germany pay billions of marks to France, Germany simply devalued the mark and printed currency in geometric increments, handing the French, in essence, worthless money. When the French converted the marks into francs and then shipped the converted marks back home to Germany, hyperinflation ensued. In a matter of months, German currency plummeted to such lows in value that peo
ple burned money in fireplaces and stoves because it was cheaper than using the money to buy wood.

  France moved in to take over German industries in the Ruhr Valley, and tensions escalated. Fearing another war, the United States devised a 1924 plan implemented by Charles G. Dawes. A banker who had coordinated procurement in Europe during the war, Dawes had become a household name following his kinetic postwar testimony before Congress. Grilled about paying top dollar for supplies, Dawes leaped from the witness chair, shouting “Helen Maria! I would have paid horse prices for sheep, if sheep could have pulled artillery to the front!”26 When the wire services carried the line, they garbled the “Helen Maria” phrase—a Nebraska farm saying—so it read “Hell ’n’ Maria.” Dawes quickly became an icon in American pop culture. Such a man was perfect to head the committee to untangle the reparations mess. Coolidge, admonishing the members before they left, said, “Just remember that you are Americans!”27

  By April 1924, the Dawes committee had completed its work. It proposed that German reparations be lowered, that the Deutschemark be pegged to the gold-based American dollar, that half of future reparations come from taxes, and that the United States lend Germany some of the money to get back on its feet. Dawes thus defused the situation, sharing the Nobel Peace Prize the following year with Sir Josiah Stamp, another member of the delegation (who had done the number crunching). The Dawes Plan perhaps staved off war, and certainly the loans returned to American business to purchase U.S. products.28

  Concerns over naval power also dominated postwar policy. After the war, Congress had refused to continue to appropriate money for the Naval Act, which would have created the largest fleet in the world. Secretary of State Charles Evans Hughes rightly saw naval affairs as the most critical elements of America’s near-term security. No nation in the world could have launched air attacks on the United States in the 1920s, and landing any ground troops would have required an armada as yet unseen in human history. Increasingly, however, America depended on trade, and any threat to U.S. trade routes concerned Washington.