June 5, 2012 at 6:17 am, by Carl
With the anniversary of the invasion of Normandy, the famous D-Day moment from the European Theater of World War 2, it is quite appropriate that we look at the second part of the last Great Crisis our country faced: The Great Depression and World War 2. Last year, I finished my latest book, Tracking the Storm. The following post is the eleventh installment (find the earlier sections here). You can download a pdf if you enjoy reading on your computer or also purchase a printed copy of the book.
The reality that speed of communication globally was going to be an issue was never more apparent than on Black Thursday in 1929. Things moved so quickly that people were able to hear about the implosion in their economic lives while travelling on ocean liners. Of course, the sheer amount of information also overwhelmed the system so that eight hours after the Stock Market closed, the ticker tape was still tapping out the bad news. Though there were some hopes of recovery over the weekend, Black Tuesday, October 29, dropped the bottom out. As the country reeled, President Hoover acted like the Presidents of old; he did little. Unfortunately for him, the country had changed so much that doing little was not going to work in the minds of the people.
Just like the period of the 1750s-1770s when the colonies had changed yet the Parliament could not comprehend those changes–thus their political decisions were consistently bound for conflict–the decisions from Congress over the next 2 years only made the Depression worse. By 1932, Hoover himself brought forth important changes, increasing national work programs as well as direct aid to the poor, yet those changes were too little too late. Over the summer, developments clearly indicated that Hoover would be unable to manage the situation, with the worst being how the veterans of World War I were treated during the Bonus Army fiasco.
The election in 1932 opened the door for Franklin Delano Roosevelt to become President. Unlike his cousin Theodore, he would run as a Democrat, but much like TR, he was a Progressive through and through. Between 1933 and 1936, FDR unleashed what was known as the New Deal. In short, he did everything Hoover had tried–cheerleading, aid to big businesses, federal work projects, aid to farmers, aid for mortgages, direct aid to the poor—he just did more. The difference between Hoover and FDR is not in their actions, but in a matter of degree. FDR tried anything and everything, starting and stopping programs, and he did them in huge amounts. The bad news, though, was that nothing FDR did really worked any better than Hoover.
Yes, by 1934, unemployment was lower (though in FDR’s first year, unemployment reached 25%), and more people had some sort of financial aid, either in direct loans or some sort of government work project. Yet, by the late 1930s, the economy was still stuck with little growth. Any attempt to stop government aid sent unemployment up and the economy down in a tailspin.
Second Strand of the Great Crisis
If we stopped the story here, we would have to conclude that for the first time, the crisis that we faced overwhelmed the country. The “war” was not fought to victory. Yet, as I had stated already, another strand must be woven to see the full overview of the journey to this crisis. Interestingly enough, the dates become very connected. FDR was elected to office in November of 1932, but the inauguration happened March 4, 1933. A month before, January 30, 1933, Adolf Hitler took office as the Chancellor of the German government, a position similar to the British Prime Minister—an elected official asked to create a government based on the popularity of the party within the national governing body, the Parliament in England, the Reichstag in Germany.
The Treaty of Versailles is one of the most impacting diplomatic decisions in world history. Today, in 2012 as I write this now, we are still dealing with the results of that diplomatic fiasco. Japan, Russia, Italy, Korea, Vietnam, the Middle East, the Balkans and of course Germany all left 1919 angry at how they were treated, or ignored, by the dominant players in Paris: England, France and the USA. Worse, the USA Senate failed to ratify the very treaty that then President Woodrow Wilson had built. England left the conference economically weakened and militarily no longer able to police the world. France had been a shell of herself since the French Revolution and was now incapable of leading, having only succeeded in her arrogance to give Germany a reason for revenge.
The 1920s were not “roaring” in Europe, and though the US attempted to help through a series of convoluted acts in the middle of the decade, the Depression sunk Europe to new lows. The German middle class, in particular, lost everything. Workers throughout Europe were turning to communism, the new and exciting version of socialism that had succeeded in taking over Russia in 1917. Others, both poor and the former middle class, were turning to the conservative socialism called “fascism,” with its extremely loud calls of nationalism.
While Hoover struggled with the Depression in 1931, the Japanese marched into Manchuria, taking the province from a weak and divided China. Americans could have cared less, though the League of Nations, a precursor to the United Nations (and just as weak and ineffective, perhaps more so), did attempt to halt Japan and Italy (who was equally looking at North Africa for its own room to grow). By 1933, both Japan and Germany left the League.
By the time 1935 rolled around and FDR was planning for his second run for office, Italy had invaded Ethiopia, an decision that built a stronger relationship between Italy and Germany, now both “outsiders.” Congress would pass its first Neutrality Act in 1935, then another in the election year of 1936. Germany started to show her cards by moving troops into the Rhineland, that stretch of land on the West of the Rhine neighboring France.
For Hitler, this was merely the start of his efforts to rebuild Germany. Certainly, he had clear, horrific plans in mind for racial cleansing in Germany, and he did want to grow the country, the idea he called Lebensraum. Yet, in many respects, he was facing the same problem as FDR—how to restart a broken economy. Just like FDR, he turned to work projects, so the autobahn was born. Like FDR, he supported larger industries, so Volkswagon started rolling small little beetle-looking cars off the assembly line. Unlike FDR, Hitler plans worked well; the country’s economy roared, thus Hitler knew that to maintain control, he had to keep the people happy. He seemed to understand well, perhaps better than FDR, that war always helped an economy.
Between 1937-1939, the world raced towards more open conflict. Hitler had his troops involved in the Spanish Civil War, giving his generals a sort of “pre-season” game while England and France stayed home. He would unite with Austria, take back German land from the darling of the Versailles crowd, Czechoslovakia, then use the appeasement of the British Prime Minister as an allowance to take the rest of the Czech land (setting Slovakia free, as she had wished to be back in 1919). In the spring of 1939, Germany would invade Prague, then on the first of September, after being rebuffed by a surprisingly resilient Poland, he would invaded that country.
Russia, another “outcast” from the Versailles debacle, would join Germany in ripping apart Poland. The Poles, for their part, had perhaps been set-up by British and French promises. Over the next two years, Germany and her friends in Europe (Russia and Italy) would dominate. The USA watched fearfully, all the while growing stronger economically by selling military supplies to the allies. She was also watching nervously to the Pacific where Japanese military leaders would overthrow their government in 1940.
1941 would become the year in which the rest of the world joined the war, as you probably already know. Germany, unable to destroy England, due to both English resilience, the protection of the English Channel and the military aid from the USA, turned on Russia. For Hitler, this was both a racial decision driven from his views shown in Mein Kampf as well as an economic decision. If war ceased, the German economy might start to slow. During the build-up to war, and the first two war years, Germany had the strongest economy on earth. Not surprisingly, the German people were very happy with the leadership of Hitler, though perhaps a tad bit concerned about some of the social policies and rules. As long as Hitler could keep the good times rolling at home, the people would support him and perhaps ignore the many ominous signs. To keep those good times rolling, Hitler knew he had to keep the economy humming, and to do that, he needed war to happen. Plus, the Russians had plenty of raw materials, and if anything, World War 2 is largely about oil and industrial raw materials.
That need for supplies of industry was precisely why the Japanese finally, and perhaps fatally, decided to attack Pearl Harbor. Their movement into Manchuria had led, in the late 1930s, into full-scale war in China, and though there was not much resistance from the Chinese, there also was no organized government to actually surrender. Japan was not able to ever fully conquer every square mile of a country several times its size, and that country had no real leader able or willing to just surrender in the face of such terrible loss. To further prosecute the war, the Japanese needed more and more raw materials—oil, tin, rubber, metal, gasoline. For that, the Japanese needed the USA.
Or, they needed their own supply. They could get most of what they wanted in two places, north of them in lands controlled by Russia, or south of them in lands loosely controlled by England and the Netherlands. As the Japanese surveyed the landscape, though attacking Russia would help their ally Germany, attacking the islands to their south would be much easier. The only hitch in that direction was that the USA controlled the Philippines Islands, and the Japanese believed (probably erroneously) that the USA would attack them if they initiated any attack on the South Pacific islands.
Thus, on December 7 1941, while the Germans and the Russians grappled outside of Moscow, Japanese forces attacked the US Navy at Pearl Harbor in Hawaii. Though the initial shock was great, within 5 months, the tide had already been turned at the battle of Coral Sea in the spring of 1942, the Marine fights at Guadalcanal and the battle of Midway later in June 1942. Economically, the USA would explode with growth as millions of dollars, much of it newly minted or borrowed, were poured into industry. By 1945, 80 years after 1865, the war against the Great Depression and against the Axis would be over; the USA would emerge as one of the world’s superpowers.
Yet, the cost was very high, both in human life and in the old American concepts of herself. Small federal government? Gone. Protection by our two great oceans? Gone. Simple capitalism? Gone. Aversion to standing armies? Gone. Limit to the destruction of man? Gone. George Washington’s dream of no entangling alliances? Gone. FDR had indeed “saved” the country, both from economic disaster and dictatorial tyranny, but to do so, he had changed the country, and perhaps the entire world.
You can read the rest of chapter 11 in Tracking the Storm; the book provides powerful clues about what is coming, rapidly, to the United States. There is little doubt that a storm is approaching the country, the outer edges of the winds already swirling around us. What does that portend for the nation? Through the clues of history, we can find direction and steps to undertake to prepare. Many believe there won’t be a storm, or maybe that the worst is over. With history as a guide, I demonstrate that we haven’t yet even reached the Great Crisis.
Gripping and “a scary yet necessary read,” Tracking the Storm moves through the past 400 years of Anglo-American history to illustrate the various clues provided that show the steps to the coming crisis. I will tell the story of political instability, economic distress, rapid technological changes and a growing philosophical divide that challenged previous generations. At the end of each Great Crisis, the nation had been radically changed. Pick up your copy of Tracking the Storm today!