The Perils of Prosperity, 1914-1932

William E. Leuchtenburg

• Publisher: University of Chicago Press
• Year: 2010
• ISBN:
  9780226473727
• Topic: Business
• Subtopic: Business General
• Index: Business

Beginning with Woodrow Wilson and U.S. entry into World War I and closing with the Great Depression, The Perils of Prosperity traces the transformation of America from an agrarian, moralistic, isolationist nation into a liberal, industrialized power involved in foreign affairs in spite of itself.William E. Leuchtenburg's lively yet balanced account of this hotly debated era in American history has been a standard text for many years. This substantial revision gives greater weight to the roles of women and minorities in the great changes of the era and adds new insights into literature, the arts, and technology in daily life. He has also updated the lists of important dates and resources for further reading."This book gives us a rare opportunity to enjoy the matured interpretation of an American Historian who has returned to the story and seen how recent decades have added meaning and vividness to this epoch of our history."—Daniel J. Boorstin, from the Preface

1

Armageddon

In the autumn of 1815 the Northumberland, bearing the captive emperor Napoleon Bonaparte, dropped anchor before Saint Helena Island and opened a century of peace in western Europe. Localized wars there were—bloody enough in the American Civil War and the Franco-Prussian struggle—yet war itself appeared more and more to be an anachronism, a dying institution. In 1913 David Starr Jordan, director of the World Peace Foundation, observed: “What shall we say of the Great War of Europe, ever threatening, ever impending, and which never comes? We shall say that it will never come. Humanly speaking, it is impossible.”

Even the assassination of Archduke Franz Ferdinand, heir to the Austro-Hungarian throne, by a young Bosnian terrorist in June, 1914, did not seem to mean war. “Never since Christ was born in the Manger,” wrote a Maine newspaperman as late as July 30, “was the outlook for the universal brotherhood of man brighter than it is today.” Through the summer of 1914, Americans watched the growing crisis almost with indifference. When, after weeks of gestures and countergestures, war came, it seemed like a bomb dropped from the sky into a pleasant country picnic. In Harper’s Weekly, Norman Hapgood wrote, “For Germans and French, with a whole complex and delicate civilization in common to be using death engines to mow down men and cities is so unthinkable that we go about in a daze.” People, commented Jane Addams afterwards, “went about day after day with an oppressive sense of the horrible disaster which had befallen the world and woke up many times during the night,” and in the first year of the European conflict, Henry James told a friend, “It’s vain to speak as if one weren’t living in a nightmare of the deepest dye.”

The only reasonable explanation was that Europe had gone berserk. The European powers, declared the New York Times, “have reverted to the condition of savage tribes roaming the forests and falling upon each other in a fury of blood and carnage to achieve the ambitious designs of chieftains clad in skins and drunk with mead.” If the war had any rational basis, Americans thought, it could be found in the imperialist lust for markets. “Do you want to know the cause of the war?” asked Henry Ford. “It is capitalism, greed, the dirty hunger for dollars.” “Take away the capitalist,” Ford asserted, “and you will sweep war from the earth.” Americans rejoiced in their isolation from Old World lunacy. “We never appreciated so keenly as now,” wrote an Indiana editor, “the foresight exercised by our forefathers in emigrating from Europe.”

President Woodrow Wilson urged a course of complete neutrality: he even asked movie audiences not to cheer or hiss either side. The war, he said, was one “with which we have nothing to do, whose causes cannot touch us.” Wilson cautioned the American people to be “impartial in thought as well as in action,” but this proved impossible. German-Americans and Irish-American Anglo-phobes sided with the Kaiser. So did some of the progressives, for Britain suggested monarchy, privileged classes, and their ancient enemy Lombard Street (seat of international financiers), whereas Germany (the Wisconsin reformers’ model for a generation) connoted social insurance, the university scientist, and municipal reform. Sympathy for the Central Powers, however, was a minority theme. Overwhelmingly, American sentiment went out to the Allies. Men who as schoolboys had read Gray and Tennyson, who knew Wordsworth’s lake country as though they had tramped it themselves, who had been stirred by stories of Sir Francis Drake and Lord Nelson, could not be indifferent to the English cause. Nor did any nation evoke a greater attachment than France, the country of Lafayette, the land that had come to the aid of the Colonists in their struggle for independence.

Moreover, the United States had eyed German militarism nervously ever since the accession of Kaiser Wilhelm II in 1888. When Germany invaded Belgium in the early days of the war, Americans were outraged not only by the violation of the borders of a neutral nation but by Chancellor Bethmann-Hollweg’s indiscreet remark that the treaty with Belgium was “just a scrap of paper.” The execution of Nurse Edith Cavell, the destruction of the Cathedral of Rheims, and the mass deportation of French and Belgian civilians to forced labor completed the picture of a Prussian militarism which in its deliberate Schrecklichkeit menaced Western civilization. Nevertheless, despite the indignation over Belgium, the United States had no thought of intervening. Even the bellicose Theodore Roosevelt, who would soon be the leader of the war hawks, wrote: “Of course it would be folly to jump into the gulf ourselves to no good purpose; and very probably nothing that we could have done would have helped Belgium.”

As the struggle in Europe settled down to a war of attrition between great land armies, it quickly became clear that victory would go to the alliance that could maintain control of the seas. Britain, the preeminent naval power of the world, lost no time in taking advantage of its strategic position. Starting in November, 1914, it mined shipping channels in the North Sea, forced all merchant vessels to thread a narrow channel under their control, arbitrarily curbed the right of neutrals to trade with other neutrals, defined even foodstuffs as contraband, and boarded and searched American ships as they had done in the War of 1812.

President Wilson could have taken a strong line with Britain, which did not dare provoke a serious quarrel with her chief source of supply, but he thought it would be unneutral behavior, at a time when the Germans had overrun Belgium, to deprive Britain of her naval superiority. Moreover, Wilson could not help but be influenced by his own sympathies, however much he tried to control them. He had modeled himself on English statesmen, he was an extravagant admirer of British government, and he even courted his second wife by reading passages from Bagehot and Burke.

Many of Wilson’s closest advisers, too, were firmly committed to the Allies. Robert Lansing, first Counselor and then Secretary of State, deliberately delayed the resolution of disputes in order to avoid a showdown with Whitehall. Lansing was convinced that American democracy could not survive in a world dominated by German power. Wilson’s alter ego, Colonel Edward House, was scarcely less pro-Ally, and, whenever notes of protest were sent to London, the strongly pro-British ambassador, Walter Hines Page, watered them down. On one occasion, Page took an American protest to Sir Edward Grey and said: “I have now read the despatch, but I do not agree with it; let us consider how it should be answered!” The result was the same as if the United States itself had embargoed all trade with the Central Powers. Commerce with Germany and Austria fell from $169 million in 1914 to $1 million in 1916.

Conversely, trade between the United States and the Allies flourished to such an extent that it jeopardized American neutrality. The outbreak of war at first produced a serious recession in this country, but by the spring of 1915 Allied war orders were stoking American industry and opening up new markets for farm products. Boom times came to the United States as trade with the Allies jumped from $825 million in 1914 to $3,214 million in 1916. Before the war was many months old, the Allied cause and American prosperity became inextricably intertwined. When Allied funds were quickly exhausted, the United States confronted the alternatives of permitting the Allies to borrow from American bankers or of allowing purchases to fall off sharply, with the probable consequence of a serious depression. At the outset of the war, Secretary of State William Jennings Bryan had warned that money was “the worst of all contrabands because it commands everything else,” and Wilson, anxious about the country’s gold reserve, had banned American loans and let it appear that he shared Bryan’s concern. In March, 1915, however, the government relented and permitted the House of Morgan to float a half-billion-dollar loan. By spring of 1917, the Allies had borrowed over $2 billion, much to the discomfort of the Germans.

In February, 1915, Germany struck back at the Allied blockade by declaring a war zone around the British Isles and announcing that its submarines would destroy all enemy vessels in the area, “although it may not always be possible to save crews and passengers.” Neutral ships in the war zone would be in danger, the Germans warned, since the British often flew neutral flags. Wilson responded that the Kaiser’s government would be held strictly accountable for loss of American life or property. Under this pressure, Berlin eventually backed down. Not until 1917 would German-American relations be troubled by a threat to U.S. lives and property on American vessels.

Instead, diplomats faced a new problem: the determination of Americans to sail on the ships of belligerent nations. Americans persisted in booking passage on British liners, which carried munitions into the war zone, and Wilson brushed off attempts to ban such travel. On May 7, 1915, came the inevitable tragedy. The queen of the Cunard fleet, the Lusitania, unarmed but carrying a cargo of hundreds of cases of munitions, was torpedoed by a U-boat off the Irish coast; eighteen minutes later it sank with a loss of 1, 198 lives, 128 of them American.

The United States was horrified. Yet few Americans wanted war, and, with the country divided, Wilson resolved to avoid a rupture with Germany. “There is such a thing as a man being too proud to fight,” the President said, to the disgust of Theodore Roosevelt and the bellicose nationalists. “There is such a thing as a nation being so right that it does not need to convince others by force that it is right.” Nonetheless, Wilson sent three vigorous notes. In June, Germany, fearing war with the United States, ordered submarine commanders to spare all large passenger liners, including those of the enemy, but in August a U-boat commander violated orders and sank a British White Star Liner, the Arabic, with the loss of two American lives. When Wilson sent an even stronger protest, Germany gave assurances that the Arabic incident would not be repeated, that no unresisting passenger ship would be sunk without warning or without care for the safety of passengers and crew.

The submarine wrought havoc with Wilson’s neutrality policy and ultimately brought the United States into the war. It was an accepted principle of international law that no naval vessel would destroy an enemy merchantman without first giving warning and providing for the safety of those aboard. This was reasonable enough when merchant ships were defenseless, but in the late summer of 1915 the British started arming its merchants and ordering them to attack; a single shot, or even ramming, could destroy a fragile submarine. A U-boat commander could not distinguish an armed from an unarmed vessel, and Britain and Italy were arming even their passenger liners. Wilson himself recognized the difficulty for a time. “It is hardly fair,” he wrote Colonel House in October, 1915, “to ask submarine commanders to give warning by summons if, when they approach as near as they must for that purpose, they are to be fired upon.”

When on February 10, 1916, however, the Germans, not unreasonably, announced they would sink all armed merchantmen, Wilson took a stern line. Asked by House Democratic leaders what would happen if a U-boat sank an armed vessel on which Americans were traveling, the President said he would break relations with Germany and that this might well mean war. Wilson’s course was inconsistent, unrealistic, and, in view of his acquiescence in Allied transgressions, unneutral. Yet the Allied and the German maritime policies were not strictly comparable. If Britain seized American ships, the United States always had recourse to law and might obtain an indemnity; nothing would restore the loss of life from the ships Germany sank. Wilson felt justified in protesting mildly against seizure but issuing ultimatums about sinkings. Moreover, granting that passenger liners sometimes carried munitions and that after a time they were armed, the German policy of sinking them was unconscionable. The U-boat commander who deliberately fired on the Lusitania did not fear attack, for the Lusitania was unarmed. The Germans were using terror as a weapon. They ruthlessly took the lives of noncombatants and they exulted over their acts.

Yet many American leaders still sought to avoid war over this issue. Bryan, who had resigned as Secretary of State because he thought Wilson’s second “Lusitania note” too provocative, headed a movement to prohibit Americans from sailing on belligerent vessels. “Germany has a right to prevent contraband going to the Allies,” Bryan had written Wilson, “and a ship carrying contraband should not rely upon passengers to protect her from attack—it would be like putting women and children in front of an army.” When Germany announced it would sink all armed merchant ships, strong support developed in Congress behind resolutions introduced by Senator Gore of Oklahoma and Representative McLemore of Texas to warn Americans not to travel on belligerent vessels destined for war zones. In the House, sentiment ran 2–1 for the resolutions, but Wilson brought such enormous pressure to bear against them that they were sidetracked in March, 1916. “Once accept a single abatement of right,” he wrote, “and many other humiliations would certainly follow.”

In that same month, a U-boat torpedoed an unarmed French channel steamer, Sussex, with heavy loss of life; no Americans were killed, but several were injured. This blatant violation of the German promises made after the Arabic incident created a diplomatic crisis. Wilson appeared before Congress on April 19 to read an ultimatum to Germany that unless it abandoned unrestricted submarine warfare against all vessels, even armed belligerents, the United States would sever diplomatic relations. The Kaiser, convinced he did not yet have enough U-boats to risk war, decided to appease the President. Germany replied on May 4, 1916, that its submarines would no longer sink merchantmen without warning and without humanitarian precautions, so long as they did not resist. But, the Germans added, this so-called “Sussex pledge” was conditioned on America’s persuading the Allies to give up their blockade, which was intended to starve Germany into submission. If the United States did not, Germany would retain freedom of action.

Wilson chose to ignore the German conditions and to accept the pledge. He thereby achieved a great (however temporary) diplomatic triumph. The main threat of war—the U-boat—was removed. Yet Wilson had adopted such a strong line that if Germany resumed submarine warfare, which, given the continuation of the British blockade, it was likely to do, America would almost certainly be plunged into war. The decision for peace or war was taken from Washington and given to Berlin.

For nine months after the “Sussex pledge” not only did relations with Germany greatly improve but troubles with the British mounted. American opinion, incensed by the ruthless suppression of the Irish rebellion of April 24, 1916, particularly the execution of Sir Roger Casement, was angered still further by Britain’s intensification of economic warfare. The British opened American mail, dealt cavalierly with U.S diplomatic protests, and blacklisted American firms suspected of trading with Germany. By July, 1916, Wilson was confiding to Colonel House: “I am, I must admit, about at the end of my patience with Great Britain and the Allies.” By the autumn of 1916 it appeared that the United States might be drifting toward an open break with Britain.

As the 1916 Presidential election approached, Wilson’s Republican critics made a strong bid to defeat him by arguing that in his attempt to preserve peace he had sacrificed national honor. In their effort to dislodge Wilson, the Republicans had the support of the head of the Progressive party, Theodore Roosevelt, who viewed Wilson as a “demagogue, adroit, tricky, false, without one spark of loftiness in him, without a touch of the heroic in his cold, selfish and timid soul.” When the Republicans nominated Charles Evans Hughes for the presidency (Hughes had distinguished himself first as a reform governor of New York and then as Supreme Court Justice), Roosevelt secured the Progressive nomination for him as well.

One of the ironies of the 1916 campaign is that the Republicans attacked the President for a lack of concern with the need to build up the armed forces at the very time when Wilson was under fire from radicals precisely because they thought he had become so chauvinistic. When Martin Glynn, former governor of New York, prepared his keynote address for the Democratic convention in June, Wilson instructed him to emphasize Americanism and the flag, and Glynn dutifully did so. The delegates, however, sat unresponsively as he went through his spread-eagle remarks. Glynn also felt called on to give some defense for Wilson’s series of diplomatic notes, which the Republicans had scored as un-American timidity, and he cited a number of precedents for Wilson’s actions. Fearing he would tire his audience with further examples, Glynn started to pass on to another subject, but delegates rose from their seats and shouted, “No! No! Go on!” An old campaign war horse, Glynn rose to the occasion. Each time he offered an example from the past when, provoked to the point of war, a President sent a diplomatic note instead, the crowd would yell, “What did we do? What did we do?” And Glynn would shout back, “We didn’t go to war! We didn’t go to war!”

The developments at the Democratic convention caught Wilson by surprise. On the very day of Glynn’s speech, Wilson had led a preparedness parade in Washington with a flag draped over his shoulder. He felt exceedingly uneasy about the new Democratic slogan, “He Kept Us Out of War.” (“I can’t keep the country out of war,” Wilson protested to Secretary of the Navy Daniels. “They talk of me as though I were a god. Any little German lieutenant can put us into the war at any time by some calculated outrage.”) Despite his doubts, Wilson made good use of the peace theme by charging Republicans with being the war party. On the combined appeals of peace, prosperity, and progressivism, Wilson won a narrow victory. The passion for peace proved so strong that Hughes was frequently forced to softpedal his attacks on Wilson’s foreign policy and Roosevelt’s belligerent nationalism was a handicap. The Republicans, noted the Saturday Evening Post after the election, “woefully misread the public mind. They thought it was truculently heroic, and writhing under a sense of national disgrace, when, in fact, it was merely sensible.”

As peace sentiment in America reached a high pitch, Wilson stepped up his efforts to bring the war to an end. All through the war, Colonel House had crisscrossed Europe in search of a formula for peace. Early in 1916, House and Sir Edward Grey, the British Foreign Secretary, drafted a memorandum providing that Wilson, on hearing from the Allies when the time was opportune, would call a peace conference. If the Germans refused to attend such a parley or if they would not agree to reasonable terms, the United States would “probably” enter the war on the side of the Allies. Wilson’s adamant stand against Germany in regard to armed merchantmen early in 1916 stemmed chiefly from a desire to maintain his usefulness as a mediator by not antagonizing the Allies. But in May, 1916, all the President’s careful plans were blown sky high when the Allies decided not to pursue further the program outlined in the House-Grey agreement. Wilson’s ultimatum of April, 1916, had given Britain and France reason to believe that a break between Germany and the United States was imminent. Furthermore, the Allies were unwilling to risk a peace conference at a time when Germany held Belgium, northern France, and much of eastern Europe without a firm pledge from the United States to fight unless Germany evacuated these areas.

Irked by the Allied rebuff, Wilson now decided on mediation without prior consultation with the Allies. To make clear his independence from the chancelleries of London and Paris, Wilson adopted a severe attitude toward the Allies. He won legislation from Congress in September, 1916, to permit him to deny clearance and harbor facilities to nations that discriminated against American commerce and to use force to carry out these powers. He also got the Federal Reserve Board to caution American bankers to use care in financing the Allied war trade. When Germany was derelict in upholding the “Sussex pledge”—in two cases, which Berlin held were “mistakes,” American lives were lost—the President disregarded the provocations.

Wilson had decided on a bold change of policy to free himself from the tangle of maritime rights. He wanted greater maneuverability than a foreign policy geared to German submarine attacks offered. In the last eight months of 1916, Wilson said almost nothing about freedom of the seas, his chief concern since 1914, and stressed instead the impact of the war on democratic ideals and the future of Western civilization. The only way to avoid involvement in the war, the President concluded, was direct American mediation, even at the cost of surrendering the tradition of U.S. isolation from Europe’s disputes. In a speech in October, 1916, Wilson counseled: “When you are asked, ‘Aren’t you willing to fight?’ reply, yes, you are waiting for something worth fighting for; you are not looking around for petty quarrels, but you are looking about for that sort of quarrel within whose intricacies are written all the texts of the rights of man; you are looking for some cause…in which it seems a glory to shed human blood, if it be necessary, so that all the common compacts...