Part Four of a draft book I am working on, "World Incorporated: The History of the Supra-National Corporation and its Global Stranglehold on Freedom and Democracy." I am posting the entire manuscript piece by piece as it is written.
Part One, if you missed it, can be read here:
http://www.dailykos.com/...
Part Two can be read here:
http://www.dailykos.com/...
Part Three can be read here:
http://www.dailykos.com/...
Part Four covers the period of the Roaring Twenties.
As usual, I welcome all helpful comments anc criticisms.
(c) copyright 2010 by Lenny Flank, all rights reserved, yadda yadda yadda.
Five: The Roaring Twenties
In the aftermath of the World War, Woodrow Wilson hoped that his visionary dream of international peace, of a “world safe for democracy”, would come true through the League of Nations. It did not. The United States, tired of the war and the economic restrictions it had brought, once again turned inwards and focused on itself. People wanted to isolate themselves again from the world’s problems. The US did not join the League of Nations and, despite its new post-war position as a world power, gave up the role of world leader and retreated back into its pre-war isolationism.
The country converted from a wartime economy to peacetime. Wilson, declaring that Americans didn’t want to be “coached and led”, did almost nothing to direct the transition. The wartime government agencies that had directed the economy were simply shut down; the millions of demobilized troops were simply discharged, to make their way as best they could on their own. But after a faltering start, the post-war American economy expanded rapidly. The decade that followed was referred to by the people living in it as “The Golden Glow” or sometimes as “The Coolidge Prosperity”, after the President who served through most of it. Today, we know it as “The Roaring Twenties”, and at the end of it, the United States had become one of the richest nations on earth, holding a full 40% of the world’s total wealth.
The First World War had brought with it sweeping technological changes, spurred on by four years of battle. Huge mass-production factories revolutionized production of rifles, uniforms and other equipment. Gasoline-powered internal combustion engines led to a mechanized battlefield, with tanks on the ground and airplanes in the sky.
In peacetime, the new technologies built up huge new industries, leading to vastly increased wealth, an improved standard of living—and a new crop of mega-corporations.
Electricity
The ability to utilize electric power was perhaps the most important and far-reaching technological innovation of the 1920’s.
The first generator for electricity was made by Michael Faraday in 1831, but electrical power didn’t become widespread until Thomas Edison invented a practical electric light bulb in 1878. By 1882 Edison was using a homebuilt generator in his lab to power electric light bulbs in several of the surrounding houses.
The British adopted electric lighting more quickly than the US did; the world’s first public electric power plant was in Surrey, England, in 1881, where a generator turned by a water wheel supplied electric power to a number of nearby houses and shops. The next year, Edison opened a steam-driven generator in London that powered the local street lights, and in 1887, some sections of London were receiving locally-generated electricity 24 hours a day. Edison’s invention quickly replaced the kerosene lamp and the gas streetlamp.
Edison’s early system used direct current, or DC, which, because of technical reasons, was limited to a low voltage, and as a result the electricity could not be transmitted very far through wires. In 1887, Nikola Tesla, who had worked for Edison for a time, invented a generator capable of producing alternating current, or AC, which operated at much higher voltages and could therefore be transmitted longer distances by copper wires. A year later, Tesla’s system was modified by George Westinghouse, whose Westinghouse Electric and Manufacturing Company had invented a “transformer”, a device that could change the voltage of an electric current. With Westinghouse’s transformer, Tesla’s AC could be transmitted from a central generating plant to far-away points of usage at very high voltage, and then “stepped down” to a lower and safer voltage before entering the house or workshop.
In 1890, Edison brought several of his small companies together and formed the Edison General Electric Company. Two years later, Edison’s company merged with the Thomson-Houston Company to form General Electric, but in the process, Edison was forced to sell out his control of the company.
Over the next few years, the Westinghouse Company and General Electric fought each other in the “Current Wars”, centering around whether municipal electric systems would use Edison’s low-voltage direct current or Westinghouse’s high-voltage alternating current. Westinghouse won, and by 1900 nearly every sizeable town in the US had AC electric service. Dozens of small electricity-generating companies appeared all over the country to provide electric power, each with its own neetwork of generators and transmission wires, and each servicing the particular town or neighborhood that contracted with them. Over time, these companies began to buy each other up and consolidate their power grids, until by 1929 just 16 utility companies controlled 80% of all the electricity generated in the US.
The ready availability of electric power had a profound effect. Both Westinghouse and General Electric became industrial giants by producing a variety of machines and appliances that were powered by electricity. In the home, electric iceboxes, fans, irons, radios, sewing machines, and vacuum cleaners made their appearance. In the factory, electric motors replaced steam engines—electricity powered 50 percent of all factory machinery by 1920, and 78 percent by 1929. Stock prices for electric companies climbed steadily throughout the decade, playing a large part in the dizzying expansion of the stock market.
Automobiles
During the First World War, the railroads had been, for all intents and purposes, taken over completely by the government. They were vitally important in moving military supplies and troops.
When the war ended, there was serious discussion about nationalizing them and turning them into public utilities. Instead, the Wilson Administration decided to give the Interstate Commerce Commission increased power to regulate the railroads. By law, railroads were limited to a 6 percent return—anything over that was placed in a government fund to be used for helping railroads that got into financial trouble.
Before the 1920’s were over, however, the railroads would be virtually dead, the victims of a new mode of transport that would symbolize American economic power for the next 70 years – the automobile.
“Horseless carriages” which were operated by internal combustion engines had existed since the late 19th century, but they were custom-made by hand and very expensive, mere playthings for the rich. During the First World War, however, rapid advances were made in the design and production of gasoline-powered engines, which were used in tanks, aircraft and early automobiles.
It was Henry Ford who turned the automobile from an expensive curiosity to a ubiquitous part of 20th century America. As a young man, Ford had worked for a time for Thomas Edison, where he tinkered with gasoline engines and designed a motor vehicle known as the “Quadricycle”. Ford quit Edison and formed his own company to build the Quadricycle; it failed. For a time, Ford partnered with the owner of a Michigan lumber company, William Murphy, to form the Detroit Automobile Company; when Ford left, Murphy renamed it the Cadillac Automobile Company. In 1903, Ford formed a partnership with the Dodge brothers (who owned a machine shop) and a group of investors to form the Ford Motor Company.
At nearly the same time, a high-school dropout in Flint, Michigan, who liked to tinker with race cars, named William C Durant, was hired as manager of the Buick Company, which had, to that point manufactured fewer than forty automobiles, and turned it into a successful business. By 1908, Durant had bought out 13 other car companies and 10 car-parts suppliers, including Cadillac, Pontiac and Buick, and consolidated them in a holding company he called General Motors. Within two years, however, Durant made some bad decisions, and the financially-troubled GM was taken over by its financiers, who forced Durant out.
Undaunted, Durant partnered with Louis Chevrolet to form a new car company, and after a disagreement, Durant bought his partner out to assume full ownership of the Chevrolet Company. Chevrolet became such a successful company that Durrant was able to buy enough shares in General Motors to regain control again in 1916. After adding several more companies to General Motors, including Chevrolet, Republic Motors, and Delco, Durant was again removed from control in 1920, this time in a takeover by members of the DuPont family. Alfred P Sloane took over as head of GM.
Each Division of General Motors was aimed towards a particular target market—Cadillac was the high-end luxury car, Buick and Chevrolet were mid-price models. GM never made much effort, however, to produce an inexpensive automobile which most people could afford. Henry Ford saw his chance and pounced.
The Ford Model T was introduced in 1908. Originally priced at $825, it was a simple car, but solidly built and reliable. At first, production capacity was only 18,000 a year. As demand increased, Ford introduced the “assembly line” as a way of speeding up production—the advantage of the assembly line was that the car assemblies moved at a constant speed, forcing even the slowest workers to keep up. The cars went through the assembly line so quickly that the only paint that could dry in time was the lacquer-based Japan-black, leading to Ford’s quip that customers could get a Model T in any color they wanted, as long as they wanted black. Ford also paid his workers $5 a day, nearly twice the average factory pay. Partly, this was to avoid unions and strikes in his plants, but it also helped him retain workers who were loyal to him. Employee turnover and absenteeism dropped, and productivity grew. Ford workers were paid well enough to be able to afford cars themselves.
Demand for the Model T soared and production skyrocketed; 170,000 in 1912, 501,000 in 1916, over a million by 1920—over 15 million cars by 1927. The price, meanwhile, had declined to just $360, and Ford made this affordable for nearly everyone by introducing the installment plan, where people could buy a car, take it home, and make monthly payments until it was paid off—a practice that was quickly adopted by other car companies. When Ford announced in 1928 that the Model T would be replaced by the new Model A, 5,000 customers pre-ordered the new car before it had even been built. By 1929, there were some 30 million automobiles in the US. Over half of them were Fords.
In 1918, Ford and his son Edsel bought out all the other major shareholders, turning Ford into the largest privately-held company in the US.
Gasoline
The Standard Oil empire of John D Rockefeller had been built on the use of kerosene in lamps. By the 1920’s, the exponential growth of electric lights had eliminated one of the oil industry’s primary products. Fortunately for the corporations, however, the phenomenal growth of the automobile industry led to a new form of black gold—gasoline. In addition, the replacement of coal with diesel oil, especially in ship engines, and the development of oil-burning furnaces for heating homes instead of coal stoves, increased the demand for oil.
When the Standard Oil trust was broken up by the Supreme Court in 1911, it was replaced by 34 different companies which were all now in competition with each other. Standard Oil of New Jersey became Esso (the odd-sounding name was simply the pronunciation of the old Standard Oil’s initials, “S-O”), which would later change its name to Exxon. Standard Oil of New York became Socony, which later changed its name to Mobil. Standard Oil of California became Chevron. Other pieces of the Standard trust became the American Oil Company, or Amoco, and the Vacuum Oil Company, which re-merged with its former sister Socony (Mobil) in 1931. In addition, in the absence of Rockefeller’s predatory domination, new companies were able to form, including the Sun Oil Company, later known as Sunoco, and the Texas Oil Company, better known as Texaco.
Increasing demand for oil drove a relentless search for new sources. Oil fields were soon found in Arkansas, Oklahoma, California and Texas, creating huge new fortunes overnight. So much oil was drilled, in fact, that the supply began to glut, and oil prices declined even as demand doubled. In the past, this had been prevented by Rockefeller’s single-handed control of the oil supply. Now, however, there was no one who could perform that role—none of the remaining oil companies was strong enough to limit the supply. In desperation, the oil corporations turned to the state governments in the oil-producing areas, which, under the excuse of “conserving the oil resources”, began regulating production through a series of quotas, thereby helping to stabilize prices and profits.
State and local governments also provided service to the oil and automobile companies by building a network of paved roads. The increased mobility provided by this network led to the growth of the suburbs, as the well-to-do left the crowded city for the countryside.
A more and more common sight along America’s roads was the gas station. Initially, the oil companies sold their gasoline in five-gallon cans, which drivers had to pour by hand into their automobile gas tank. Within a short time, however, specially-built pumps were produced, which were located at convenient spots along roads as “filling stations”, where drivers could refuel. These then expanded to offer services such as repairs and replacements for tires and other parts, rest rooms, free maps, and other attractions, and became known as “service stations”. They were also turned into advertising platforms, often built in distinct styles to catch the motorist’s attention. Billboards soon appeared at the side of many roads, drawing attention to the service stations just ahead. Although the service stations were independently owned, they were exclusively supplied by just one oil company, a continuation of the “vertical integration” pioneered by Standard Oil.
Petrochemicals
The economical refining of gasoline from petroleum was made possible by the discovery of a chemical process called “cracking”, which produced, as a by-product, a series of other chemicals, including toluene, ethylene, isopropyl, and propylene. These “petrochemicals” led to the appearance of entire new chemical industries, and three corporations quickly rose to dominate them.
The DuPont Chemical Company had been formed in 1802. Its primary product was gunpowder; the company manufactured over half of the gunpowder used in the Civil War and became one of the richest corporations in America.
When the cracking of petroleum made large amounts of toluene available, DuPont expanded its facilities to manufacture another explosive, tri-nitro-toluene, or TNT. TNT was quickly adopted by the military, and also became widely used by commercial industries such as mining. Toluene also had non-explosive uses – it was utilized in the manufacture of paint thinners, rubber, printing ink, glues and lacquers.
Towards the end of the 1920’s, DuPont’s work on petrochemicals led to the discovery of neoprene, a synthetic rubber, and, by 1935, the discovery of the first synthetic textiles, polyester and Rayon.
The Dow Chemical Company was formed in 1897, by a Canadian chemist who had found a new way to extract the chemical potassium bromide, used in medicine and also in photography, from underground brine pools. At the time, the bromide market was dominated by the German company Deutsche Bromkoinvention, which tried to kill the American upstart by dropping its exported American prices below cost. Dow responded by buying up the cheap German bromide in the US and transporting it to Europe to sell it at the higher European price. By 1902, Dow Chemical had also become the leading American supplier of chlorine bleach (which is made with bromide), and, after a price-cutting war with British manufacturers, Dow dominated half of the bleach market in the US. The company also made magnesium metal, phenol, and other medical, industrial and agricultural chemicals.
In the late 1920’s, Dow began researching for new uses of petrochemicals, and its research led to the development of ethylcellulose and polystyrene, which became one of the foundations of the plastics industry.
The most recent of the chemical giants was the Union Carbide Company, founded in 1917. It was the first of the big companies to focus largely on petrochemicals, particularly propene and ethylene. Propene was used to produce acetone and phenol, which were important industrial chemicals. Ethylene was used to manufacture several different chemicals, including ethyl alcohol and ether. Ether, used as an anesthetic, revolutionized surgical medicine.
Like the rest of the industry, Union Carbide was researching ways of using petrochemicals to make plastics. And by the early 1930’s, the company had perfected the manufacture of a phenol compound named Bakelite. It was the first commercially-successful plastic, and led directly to the enormous growth of the plastics industry (based entirely on petrochemicals) over the next few decades.
Telephone
When the telegraph was developed in the latter part of the 19th century, it provided the first means for humans to have rapid reliable long-distance communications. In the Civil War, the telegraph played a major role; Union troops strung up thousands of miles of telegraph cable to provide a rapid means of exchanging information and passing along orders. It also revolutionized the newspaper industry, which was now able to publish first-hand accounts from battlefields hundreds of miles away, just a day or two after the event.
After Alexander Graham Bell and his assistant Thomas Watson invented the telephone, they formed a partnership with a number of investors which was called the Bell Patent Association. In 1877, the partnership was reorganized into a corporation named the Bell Telephone Company. Bell and his wife were the major stockholders; Bell’s father-in-law Gardiner Hubbard was the company president. In 1880, Bell merged with a few other communications companies to form the American Bell Telephone Company. A year later, Bell bought a controlling interest in the Western Union Telegraph Company (which had itself a few years ago tried unsuccessfully to buy Bell’s company). In 1885, the company was reorganized as American Telephone and Telegraph, or AT&T. By buying up competing phone companies, AT&T captured nearly the entire market.
During World War One, the US government took over the entire telephone and telegraph networks, using them for military communications. After the war, the new technology expanded rapidly. By the end of the 1920’s almost half of all homes in the US had phone service, and there were almost six times as many long-distance phone calls made per year as telegrams. The government, which considered the telephone network to be a “natural monopoly”, passed the Graham Act in 1921 exempting AT&T from anti-trust laws, and allowed AT&T to build the entire phone infrastructure, stepping in only if rates became excessive. By 1925, AT&T was the largest corporation in the US.
Radio
The early telegraph systems were dependent upon wires to carry their electric signal. It wasn’t until 1897 that Guglielmo Marconi developed a method of transmitting Morse code signals through the air, and formed the Marconi Wireless Company. Wireless telegraphy was quickly adopted by the military, and was also widely used by ships at sea to send each other messages. In 1907, Marconi established the first commercial trans-Atlantic wireless system, beaming telegraph radio signals from Newfoundland to Ireland.
Within two years, methods had been found to allow wireless systems to broadcast sounds such as music or the human voice, rather than the single interrupted tone used by the telegraph Morse code. Charles Herrold, a California electronics professor, began broadcasting music, which could be picked up with small crystal-radio receivers. During World War One, the development of the vacuum tube allowed for more powerful radio transmitters and receivers, making voice communication possible over long distances. Radio became an important tool for military communications, and the US Army seized control of all radio resources during the war.
By 1920, commercial radio stations were broadcasting in Detroit (Station WBL) and Pittsburgh (Station KDKA), and production of home radio receivers became a booming business. By 1922, radio stations were broadcasting regularly scheduled programs, and over 1 million radio sets were in American homes—sales of radios reached $850 million. The first Rose Bowl football game, in January 1923, was broadcast live on radio station KHJ. Other corporations jumped to take advantage of the new medium, either by paying to have company commercials read on the air, or by sponsoring a radio show.
After the war, the Navy gave the equipment it had seized from the Marconi Company’s American subsidiary to General Electric, and GE formed the Radio Corporation of America. In 1926, RCA began buying up radio broadcasting stations, including a number sold to it by AT&T when that company decided to focus on the telephone business. In 1926, the RCA and AT&T networks were combined into the National Broadcasting Company (NBC). Shortly after, another group of radio stations combined to form the Columbia Broadcasting System (CBS).
One problem faced by the early radio industry was that the independent radio stations had all been broadcasting haphazardly on whatever frequency they chose, and it was not unusual for two nearby stations to be on the same frequency, blocking each other out. To end this, the Federal Government in 1927 formed the Federal Radio Commission (later to be renamed the Federal Communications Commission), which was given authority to license radio stations, giving them free access to the airwaves “in the public interest” and assigning each station a particular frequency and power level to avoid interference. By 1930, radio was the primary way through which most Americans received their news and information.
In 1929, RCA expanded further when it purchased the Victor Talking Machine Company, and the RCA-Victor subsidiary became the largest producer of phonograph players in the United States.
Motion Pictures
When photography was invented in the mid-19th century, it had enormous impact. During the Civil War, Matthew Brady’s photos of dead soldiers on the battlefields brought the horror of war home in a way that had never been done before.
The technology for motion pictures existed since the 1890’s. In 1894, Thomas Edison opened the first commercial motion picture venture, the Kinetoscope. But it was the French companies Lumiere and Pathe-Freres who dominated cinema with short films that often featured special effects and “trick camera shots”.
By 1905, permanent movie theaters called “nickelodeons” were appearing in the United States. They exhibited half-hour reels of various one or two minute film segments that were spliced together. More and more, these were being produced by American companies. One of Edison’s most famous segments was titled “The Execution of May Queen of Scots”, in which an actress placed her head on a chopping block, an executioner swung his axe, and “Mary’s” head tumbled to the floor (the film was made by stopping the camera and substituting a dummy for the actress). Women in the audience reportedly fainted at the sight.
By 1913, film producers were relocating their companies from New York to California, attempting to escape lawsuits from Edison in New Jersey, who relentlessly tried to protect his patent rights. By the 1920’s, Hollywood had become the center of the motion picture industry, putting out some 800 films a year. Charlie Chaplin, Buster Keaton, Douglas Fairbanks and Mary Pickford became worldwide stars. In 1927, the Warner Brothers film company released “The Jazz Singer”, the first “talkie” with an integrated sound track.
By 1929, a handful of film companies dominated Hollywood. They were United Artists, Columbia Pictures, Paramount Pictures, Universal Pictures, RKO (which was owned by RCA), Loew’s Incorporated (which owned Metro-Goldwyn-Mayer, or MGM), Warner Brothers, and the Fox Film Corporation (later renamed 20th Century Fox).
For the next 30 years, Hollywood would be dominated by the “studio system”, in which each company signed its directors, producers and actors to exclusive contracts, and exhibited its films in chains of movie theaters that were owned by the studios themselves. By the beginning of the 1930’s, movie theaters were attracting some 100 million people every week.
Economic Conditions
The American economy grew in the Roaring Twenties at a phenomenal rate. Gross National Product grew by 4.2 percent a year. Labor productivity grew by 1.2 percent a year, and average return on capital grew by 23.1 percent a year.
Many people, however, got squeezed – wages for women workers climbed only 1.7 percent, compared to 8.7 percent for men. The cost of living, meanwhile, rose sharply, with food prices rising 84% and clothing prices climbing 114%. As a result, much of the discontent that had marked the Progressive Era, still remained.
Farmers
The First World War was a boon to America’s 32 million farmers. The US Government, eager to supply all the food that England needed, set agricultural prices at generous levels to encourage the farmers to produce as much as possible. After the war, the government removed the price controls but, as war-torn Europe continued to demand American food supplies, the prices on grain and meat remained high.
New technologies and methods helped farmers increase their output. Research carried out by the US Department of Agriculture led to improved varieties of wheat and corn that increased output per acre by as much as 300%, and also to improved health care measures for livestock that increased the number of pigs and cattle. Electricity and the internal combustion engine, especially in the tractor, changed the way farm work was done.
When Europe’s own food production began to stabilize in 1920, however, American farmers lost their ready market. As new methods increased farm output, demand began falling. The result was a crunch which was exacerbated by the 1920 financial panic. Agricultural prices began falling, farm income fell by two-thirds, and farmers—many of whom had borrowed heavily to expand their production—were caught in a vise. Farms were foreclosed, and the number of acres under cultivation fell.
The Labor Wars Continue
During the war, wages had been set at high levels by the Wilson Administration, and corporations had been forced to accept unionization of their workers in an effort to buy labor peace and uninterrupted war production. By 1919, the Federal influence was gone, and unions and bosses were on their own. As Sam Gompers, the head of the American Federation of Labor, saw it, unions and management were partners who shared a common interest in the company, and now that the unions had put their interests aside for the common good during the war, it was management’s turn to make some sacrifices for the good of their workers.
Instead of conciliation and cooperation, however, the labor movement got one of the fiercest episodes of repression ever seen in the United States.
The corporations flatly refused union demands for increased wages. The result was a tidal wave of strikes, beginning in 1919, in nearly every major industry. At one time or another, over 4 million American workers—one-fifth of the entire labor force, was on strike. The most important of these were the 1919 Seattle General Strike, the 1919 Steel Strike, and the 1920-21 Mingo County Coal Wars.
The Seattle General Strike
In 1919, the unions in Seattle were some of the most militant in the entire country—the area had been a stronghold of the IWW for several years. Pamphlets supporting the Bolshevik Revolution were passed out on street corners; dockworkers refused to load a ship with weapons that were to sent to the anti-Bolshevik White Russian Army. So when the wartime wage and price controls were lifted in November 1918, the Seattle shipbuilding unions immediately demanded pay increases; the companies offered a pay increase, but only for the skilled workers in craft unions. In response, all 35,000 shipyard workers walked off the job on January 21, 1919.
An ordinary clerical error then turned the situation explosive. During the war, the shipping companies had been conglomerated by the Federal government into one entity, the Emergency Fleet Corporation. The EFC had not yet been dismantled, and now its head, Charles Piez, sent a message to the central organ of the shipbuilders companies, the Metal Trades Association, declaring that the EFC would cancel the contract of any company that granted a wage increase. By mistake, however, the message was delivered to the Metal Trades Council – the local labor union committee.
The shipbuilder unions interpreted the EFC’s interference as a sign that the Federal Government was on the side of the companies, and asked the Seattle Central Labor Council to call a general strike. The response was nearly unanimous, and some 110 AFL locals walked off their jobs. The entire city ground to a halt.
The General Strike Committee became the de facto city government. Arrangements were made for essential industries, such as hospitals, garbage collection and food distribution, to continue under the direction of the unions, as union committees took over the necessary factories and kept them running. Trucks delivered milk and food supplies, enough for 30,000 meals a day, while displaying placards that read “exempt by order of the General Strike Committee”. The food was delivered to certain restaurants and other locations around the city, where workers with union cards could eat at discounted prices. The streets were patrolled by unarmed groups of war veterans, many in uniform, who kept the peace and quelled disturbances. The crime rate fell by half.
To the terrified corporations and the Federal Government, it looked as if the Socialist Revolution were breaking out right there in Seattle, and their reaction was swift. Over a thousand Federal troops were sent to occupy key points in the city, an armed force of 2400 special deputies was formed by local government, and 600 extra officers were added to the police force. The Strike Committee, fearing a bloodbath, called for an end to the strike, but when the rank and file union members refused, the Strike Committee continued to run the city. Now, however, they began to receive pressure from their own union superiors in the AFL, as the conservative union leadership rejected the radical methods of the Strike. Isolated by their own union officials, and with Army troops still in the streets, the General Strike committee finally voted on February 11 to end the strike. They had governed the entire city of Seattle for almost a month.
The Steel Strike
In 1892, the Amalgamated Association of Iron, Steel and Tin Workers (AA) had tried to organize the Carnegie Company’s Homestead Steel Works and, after a number of workers had been killed by armed Pinkerton guards, were beaten. By 1919, however, with the support of the national AFL leadership, the AA, led by former IWW organizer William Z Foster, was ready to try once more to organize the steel workers. This time, their target was the huge US Steel Company.
In September 1919, the union presented a demand for pay increases to US Steel Chairman Elbert Gary, and also asked President Wilson to mediate. Wilson, however, was in France lobbying for his League of Nations, and Chairman Gary refused to even meet with union negotiators. In response, the union called a general steel workers’ strike; over half the steel workers in the country walked off the job, idling steel mills from Colorado to Pennsylvania.
The steel company, playing on the climate of fear that the Seattle General Strike had produced, painted the strikers as communists and anarchists, and public opinion began to lean against the strikers. The Federal Government was preparing to send in troops when, on September 26, President Wilson suffered a mild stroke and was incapacitated. That gave the opportunity for state officials to act on their own. Strikers in several states were beaten and arrested on flimsy charges. Street fighting in Gary, Indiana, led to the declaration of martial law and the city’s occupation by the National Guard. The national AFL also turned against the strike, cutting off strike pay and pressuring Foster to give up. By January 1920, the strike was over and the union had been broken.
The Mingo County Coal Wars
One of the longest and bitterest fights in American labor history took place in the West Virginia coal fields in 1920 and 1921.
In early 1920, the United Mine Workers union, led by John L Lewis, had won a series of strikes and gained pay increases as much as 27 percent. One area that had not been organized, however, were the coal fields in Appalachia, and Lewis decided to launch a campaign there. He sent veteran labor organizer Mary “Mother” Jones, a grandmotherly woman who had organized decades earlier for the Knights of Labor and the IWW. By May, 3000 miners in Mingo County, West Virginia, employees of the Stone Mountain Coal Company, had signed union cards. The company responded by firing union members and ordering them evicted from company-owned housing, and by bringing in a private army from the Baldwin-Felts Detective Agency.
On May 19, after the private detectives carried out a number of evictions, they were met at the Matewan train station by the town’s mayor, by the chief of police Sid Hatfield (of Hatfield and McCoy fame), and by his deputy chief of police, all sympathetic to the union. A number of armed strikers gathered, unseen, in the surrounding buildings. In the ensuing gunfight, two miners and seven Baldwin-Felts detectives were killed, including Albert Felts and his brother Lee. In August 1921, Hatfield was acquitted of murder charges, but was shortly later ambushed and killed, as he entered a courthouse, by Baldwin-Felts detectives.
Three weeks after Hatfield’s death, a group of 14,000 armed strikers marched to help miners in nearby Logan County. They were faced by Sheriff Don Chafin and 2,000 heavily-armed special deputies. The armed clashes that followed were known as the Battle of Blair Mountain. And it was, literally, a battle. Armed clashes killed 30 deputies and as many as 100 strikers. At one point, US Army bombers under the command of General Billy Mitchell were sent from Maryland to drop high-explosive and mustard-gas bombs on the strikers.
After the fighting stopped, over 1000 union members were tried for murder and treason. Many were released by sympathetic local juries; many were sentenced to long jail terms. The mine workers union was crushed.
The Red Scare
The labor unions lost every major strike of 1919, and the corporations seized the chance to cripple the labor movement once and for all. Any suspected unionists were fired and blacklisted. New employees were made to sign “yellow dog contracts”, allowing them to be fired if they joined a union. Many corporations began to preach labor-management cooperation, and set up their own “company unions” to keep labor peace. By 1920, union membership had plunged.
It was the political leadership, however, that dealt the strongest blow to the union movement. The near-revolutions in Seattle and the national Steel Strike had shaken the US government to its core, and it responded with the most severe period of repression that the US has ever experienced. In January 1920, Attorney General A. Mitchell Palmer, aided by the head of his General Intelligence Division, J. Edgar Hoover, launched a coordinated nationwide raid in 33 cities, rounding up socialists, communists, IWWs, anarchists, union organizers, leaders of immigrant groups, organizers of ethnic benevolent clubs and fraternities, suffragettes, pacifists, and anyone else deemed “disloyal”. Some 3000 people were arrested in the initial raids; subsequent arrests totaled another 4000. They were held without bail and without lawyers. Only 556 of them were ever eventually charged with anything. Many were deported without trial.
Like most fear-mongering demagogues, Palmer over-reached himself. He made speech after speech declaring that he had uncovered a huge communist plot to launch a rebellion on May Day 1920. But when the day passed without incident, Palmer simply looked shrill and ridiculous. Within a year, nearly all the people arrested in the Palmer Raids were quietly released.
The hysteria, however, continued. In 1921, two Italian anarchists named Sacco and Vanzetti were arrested and charged with the murder/robbery of a local market owner. There was virtually no evidence tying them to the crime, but for most Americans that didn’t matter—as self-professed anarchists they should be killed anyway. After six years of legal proceedings, and despite clemency appeals from all over the world, Sacco and Vanzetti were executed in 1927.
The fear and paranoia released by the Red Scare was not focused solely on the labor movement. Xenophobia ran rampant, and immigrants became the targets of hatred and fear. Before 1919, over a million immigrants had entered the US each year. In 1921, however, the US passed laws imposing quotas on immigrants from different areas; people from England and Germany were allowed to enter in large numbers, while the immigrant quota for southern and eastern Europe was very small. Japanese and Chinese were excluded entirely.
Another migration was taking place internally. African-Americans from the Deep South were moving in large numbers to northern cities in search of jobs and to escape the segregationist Jim Crow laws. In places like Philadelphia, Chicago, and New York, they crowded into urban ghettoes, and found that racism in the North was not much better than racism in the South. Race riots broke out in several cities. While WEB DuBois and Booker T Washington wrote in favor of Black civil rights, Marcus Garvey formed the Black Star Shipping Line to allow African-Americans to leave the US and find freedom in the African nation of Liberia.
The migration of African-Americans, combined with the anti-Catholic feelings directed at many foreign immigrants from Italy or Poland, led to a massive growth of membership in one of America’s first terrorist organizations—the Ku Klux Klan. By 1925, the KKK had over two million members and many more sympathizers; Klansmen, preaching “one hundred percent Americanism”, were openly holding mass marches in Washington DC. Some were openly serving in Congress.
While the Klan was trying to restrict democratic rights, American women were enjoying increasingly more freedom. For decades, corporate money had flooded into efforts to prevent women from gaining the right to vote. The brewing and distillation industries feared that women would vote in favor of Prohibition; other industries feared that women’s suffrage might tip the balance in favor of social reforms such as unemployment insurance, old-age pensions, and an end to child labor.
Once women did win the right to vote, in 1920, the door was open for greater freedoms. Young “flappers” abandoned social conventions and embraced unconventional behavior—drinking and smoking, sexual freedom, and equality with men in all areas.
Turning the Clock Back
By the beginning of the Roaring Twenties, the corporations, both the new ones and the old ones, had one overriding goal—to return to the days of unregulated laissez-faire where they held all the power and monopolized all the wealth. By the end of the decade, they had gotten their wish. On nearly every front, the gains made by the Progressive Era had been rolled back, due to the efforts of three Republican Presidents.
As the Democratic Party under William Jennings Bryan had adopted more and more of the Populist agenda, the Republicans found themselves embracing more and more of the pro-business corporate agenda, including laissez-faire economics, lower taxes on businesses, protectionist economic policies with high tariffs, and elimination of the power of labor unions and other opponents of the corporations.
At the 1920 Republican Convention, none of the top three candidates was able to win a majority of delegates. In the end, the party bigwigs met in the proverbial “smoke-filled room” and reached an agreement under which Warren G Harding, an utter unknown, got the nomination. His campaign slogan was “Return to Normalcy”; his platform centered around undoing the social reforms of the Progressive Era, a return to pre-war isolationism in foreign policy, and “Americanism” at home. Harding declared that he wanted “less government in business, and more business in government”.
In an election that both the Democrats and the Republicans sought to make a public referendum on Wilson’s activist agenda, Harding got 60% of the vote, the Democrat James Cox got 34%, and the Socialist Eugene V Debs, who was in jail on sedition charges, got 3%.
Shortly after taking office, Harding’s administration was involved in a bribery scandal, though much of it wasn’t known to the public until later. Harding issued an executive order transferring the Teapot Dome oil field, in Wyoming, from the Navy (which kept it as a reserve) to the Interior Department. A year later, Interior Secretary Albert Fall was bribed by Sinclair Oil to lease the field to them. Another oil field in California was leased to oil baron Edward Doheny after a bribe. In separate scandals, the head of the Veteran’s Bureau and the head of the Office of Alien Property (which oversaw the property confiscated from deported immigrants), were both convicted of taking bribes.
By the time these scandals became known, however, Harding was already dead. He had suddenly collapsed and died on August 2, 1923, while on a trip to San Francisco.
Calvin Coolidge, who was sworn in as President upon Harding’s death, was another virtual unknown. He was nicknamed “Silent Cal” for his quiet demeanor. Legend has it that when the writer Dorothy Parker sat next to him at a dinner party, she told Coolidge that she had made a bet that she could get him to say more than two words. “You lose”, was Coolidge’s reply.
To the corporations, however, Coolidge said what they wanted most to hear. “The business of America,” Coolidge declared, “is business.”
When Coolidge decided not to run again in 1928, his Commerce Secretary, Herbert Hoover, got the Republican nomination and defeated Al Smith by basing his campaign on support for Prohibition and a continuation of “Coolidge’s Prosperity”. As advertising executive and public relations consultant Bruce Barton said at the time, “Americans knew they may have more fun with Smith, but that they would make more money with Hoover.”
The Roaring Twenties were indeed great times for the corporations to make money. While income tax rates on the wealthy went from 77% in 1917 to just 24% in 1929, the number of millionaires went from 21 in 1920 to 15,000 in 1927. (John D Rockefeller, however, remained as the only American billionaire.) Pay levels for corporate officers skyrocketed, and the income gap between worker and management grew steadily. A large number of mergers occurred, particularly among the middle ranks of the industries.
The corporations had two organizations, the Chamber of Commerce and the National Association of Manufacturers, to lobby the government and the public for what they called “The American Way”—laissez-faire economics and less support for labor unions and government programs.
For the corporations in 1929, it must have seemed as if the good times would go on forever . . .