President Obama, American History
and Keynesian Economics
In 1910, the world’s first airplane had been flown over land at Kitty Hawk. The first automobile was chugging its way across the dirt roads of small town America. The railroads had been expanded from coast to coast doing for America in that day what the internet has now done for the world, namely, linked a large group of people together who otherwise may have never gotten to meet. The world was a new and promising place with the industrial revolution transforming the very landscape of reality from that which had been known for the last thousand years or so.
Religious liberalism was also gaining strength in Europe and was now influencing America with its own form of optimism. It held a promise to bring the new age of the world into a more opportune future from the narrow, legalistic views that the world had known up until that time. In the background, Darwin’s writings were being accepted as fact, and along with that, the promise of man’s evolution manifesting itself at least on the sociopolitical level. American education, infected with the ideas of John Dewey, was reaching out to all points around the globe with terms such as instrumental-ism and radical empiricism. “Happy Days Are Here Again”, was the tune of the day, so to speak, and the era is now known to scholars of history as the “Cocksure era”.
Even economics in those days were something we can only imagine today. One could purchase a dozen eggs for twelve cents. Sirloin steaks were twenty-four cents a pound. A turkey dinner cost twenty four cents. Taxes were minimal, trade moved along briskly. Along with the automobile, we had the appearance of the telephone, the typewriter, the sewing machine and the self-binding harvester for farming.
Thirty five years now separated the American public from the Civil War, and those still living saw their country become a major industrial nation almost over night. The public believed that it was America that had been marked by God himself to lead the regeneration of the world. It was America’s divine mission and our right to profit with all the glory and happiness America could receive as trustees of the world’s progress, as guardians of world peace.
By the time America had moved into the 1920’s, the world was still an affluent place, but there were questions that began arising. Those “happy days” were beset with growing discontent. The working world was deluged with almost 3,000 strikes and lockouts in major business. The demands of militant labor were mixed with other strident voices for issues such as woman suffrage, birth control, the civil rights movement’s inception, progressive education and also the embarrassing joke of prohibition. And get this, it’s the 1920’s and there are a million or more socialists who are lobbying for the overthrow of capitalism, which they believed had become so corrupt that it was an inflamed boil on the buttocks of the world.
In 1914, we saw the beginning of World War I. Ten million or so would die in that war with over 20 million wounded on the battlefield. There was the related starvation and sickness epidemics that began immediately after the war had finalized. Although there was much national pride, soaring battle hymns and gloriously crafted uniforms that accompanied the call to defend the world from the unrighteous, it was in reality a time of bloody death and carnage the world had never thought possible. National attitudes would be forever changed. The view of the future had gone sideways on the public paradigm.
Social Darwinist took a big hit in their philosophy of progress being inevitable as the war had shown them perhaps that they were grossly mistaken. However, ever the optimists, there was always a way to spin victory from the jaws of defeat and they simply held fast to their beliefs despite the apparent setback.
Marxists jumped for joy over the war. Socialists saw the conflict as proof indeed that the capitalist system was breaking down and proving their assertions of social organization correct. They had long held that capitalism, like a comic book super villain, carried within itself the seeds of its own destruction. Socialism grew in the United States and also in Europe. Colorful rallies were held where victory songs were sung for Socialism as a whole. There was a HOPE for a new world order lead by the ideas of socialism.
Also at this time, favoring the socialists, Russia had fallen to Communism and the first Communist dictatorship. When Lenin returned to Russia, he lifted his voice in fiery speeches that played up to the disillusionment of the public with the Czar and promised them great CHANGE for the future. In their broken state, the people found only the will to agree with Lenin, and they could not resist the idea of following a man with a plan. In 1918, one of the greatest revolutions on the planet began. Lenin took hold of Russia! Communism had only about 40,000 followers at this time and yet with such a small number, they took over the entire country. One hundred and fifty million people slipped into a sort of “Communist dark ages”, many would never be heard from again. Lenin moved Communism from the realm of ideas to actual control of the levers of power. Little did anyone know at this time what a harbinger of disaster for the world this period of Russian history would be for most of the rest of the century.
Religious liberals, at the time, promised that mankind had now made its greatest mistake. The views of Wellhausen, concerning the evolution of religion, were now pressed even more vociferously . They now promised that with the past behind us, mankind could move ever onward and upward, and the roaring twenties expanded on this idea with aplomb.
Economics became the linchpin clarion call to all of humanity. The promise was now: prosperity to everyone, a turkey in every pot. After the war, there had been a brief depression, but then the economy expanded geometrically in “God-like” fashion. There were new products on the market and everyone wanted to be part of the “in crowd” of progress. New products meant new employment, and in turn with the new employment, the money to purchase the products. Mass production, a new idea at the time (if you can imagine such a thing in our time), began to crank out radios, refrigerators, cars, bathroom fixtures and items that only a hundred years earlier would have been considered “magic”. The public bought them up like free pancakes at the church picnic.
Corporate profits were immense, and if you remember the movie “Its a Wonderful Life”, common folk could become monetary big shots overnight if investing in the right stocks. U.S. Steel was doing so well at this time, that it reduced its workday to eight hours from twelve, .... yes twelve. It hired 17,000 additional workers in 1923, raised its wages and still showed an increase in profits.
Income was up everywhere and even the once striking industrial worker saw a higher standard of living. Prices were stable, insurance and savings were up, and chain stores were spreading like wild fire, the results can still be seen in any mall in America today; and even around the world. Prosperity seemed to have no ceiling.
Economic activity grew so quickly that it seemed any ordinary Joe could get into the stock market and make a killing by tomorrow. In 1928, the prices of stocks had soared to unheard of levels, tens of thousands of people bought into the market for their piece of the pie. With the cost of an apple at the grocery store around 5 cents, and the stock market giving common workers such as valets and nurses $30,000 to $250,000 in profit overnight, the country was swooning with the possibilities.
One and a half million Americans began dreaming about riches that their forefathers could have imagined only in their daydreams during childhood. The rise of stock prices brought with it delusions of “living like a King” to the everyday worker, with promises of luxuries and lifestyles, much of which we today find common place and almost a right instead of a privilege to have.
The evil of credit buying also reared its ugly head for the first time, known at this time as “buying on time”. Between 1920 and 1929 credit purchasing and payments rose to 6 billion dollars annually. Ninety percent of all luxury items were now purchased on time. It’s interesting that since prices were so low and the average worker was making more than enough now to keep himself well off that credit would even be an issue, but it was, and this just goes to illustrate the tendency to be seduced by the idea of “have it today and pay for it tomorrow”. People of the day, however, ignored warnings of mortgaging the future for goods today that would only lose value with time. Paradoxically, the concept of the day for credit buying was that the more debt you had the more you proved your fine line of credit.
We also owe our current inundation with electronic media today to this period of history. Just as we love the internet with an almost “drug addict” kind of fixation, the radio was making big waves in society at this time. The radio could bring into your home a voice from around the world and nothing was a bigger social hit than news and entertainment that could be received right in the living room. Radio began in 1920 with the reporting of the Presidential election out of Pittsburgh. It was such a big hit that by the time 1929 arrived there were 618 radio stations across America. Radio sales were around $600 million and home entertainment, once a fantasy to grandparents everywhere, had taken a hold it would never let go of (as you an I are now well aware of). So much for the barn dance and the traveling circus.
And of course, as is always the case, with broadcasting came advertising. Radio advertising fueled immense expansion for business that could take advantage of it. Can you imagine our society without some kind of broadcast advertising? This time was the “golden dawn” of advertising and the beginnings of employments like commercial graphic design, photography, and film or video creation, which are now unfortunately being bludgeoned by the very media that helped to create them. However, at this time, the roaring twenties were truly ROARING.
So what happened? How did things change so drastically as history now reports? Black Tuesday, October 29, 1929 happened, that’s what.
More on this next time
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