A Ku Klux Klan initiation ceremony, 1920s.© Jack Benton—Hulton Archive/Getty Images
William Jennings Bryan (lower left, with fan) and Clarence Darrow (centre right, arms folded) in a Dayton, Tennessee, courtroom during the Scopes Trial, July 1925.Library of Congress, Washington, D.C.On the darker side, antiforeign sentiment led to the revival of the racist, anti-Semitic, and anti-Catholic Ku Klux Klan, especially in rural areas. During the early 1920s the Klan achieved a membership of some 5,000,000 and gained control of, or influence over, many city and state governments. Rural areas also provided the base for a Christian fundamentalist movement, as farmers and small-town dwellers who felt threatened and alienated by the rapidly expanding, socially changing cities fought to preserve American moral standards by stressing religious orthodoxy. The movement grew steadily until 1925, when John T. Scopes, a biology teacher in Dayton, Tennessee, was tried for violating a law common to many Southern states prohibiting the teaching of the theory of evolution. Although Scopes was found guilty of breaking the law, both the law itself and fundamentalist beliefs were ridiculed during the course of the trial, which attracted national attention (see Scopes Trial).
One fundamentalist goal that was achieved was the passage in 1919 of theProhibition (Eighteenth) Amendment" class="md-crosslink"> Prohibition (Eighteenth) Amendment, which prohibited the manufacture, sale, or transportation of intoxicating liquors. Millions of mostly Protestant churchgoers hailed Prohibition as a moral advance, and the liquor consumption of working people, as well as the incidence of alcohol-related diseases and deaths, does seem to have dropped during the period. On the other hand, millions of otherwise law-abiding citizens drank the prohibited liquor, prompting the growth of organized crime. The illegal liquor business was so lucrative and federal prohibition enforcement machinery was so slight that gangsters were soon engaged in the large-scale smuggling, manufacture, and sale of alcoholic beverages.
New York City Deputy Police Commissioner John A. Leach (right) watching agents pour liquor into the sewer following a raid, c. 1920.New York World-Telegram and the Sun Newspaper Photograph Collection/Library of Congress, Washington, D.C. (neg. no. LC-USZ62-123257)
As in legitimate business, the highest profits came from achieving economies of scale, so gangsters engaged in complex mergers and takeovers; but, unlike corporate warfare, the underworld used real guns to wipe out competition. In 1931 a national law-enforcement commission, formed to study the flouting of prohibition and the activities of gangsters, was to report that prohibition was virtually unenforceable; and, with the coming of the Great Depression, prohibition ceased to be a key political issue. In 1933 the Twenty-first Amendment brought its repeal.
In the meantime, prohibition and religion were the major issues of the 1928 presidential campaign between the Republican nominee, Herbert Hoover, and the Democrat, Gov. Alfred E. Smith of New York. Smith was an opponent of prohibition and a Roman Catholic. His candidacy brought enthusiasm and a heavy Democratic vote in the large cities, but a landslide against him in the dry and Protestant hinterlands secured the election for Hoover.
Al Smith in an undated photograph.Encyclopædia Britannica, Inc.
The Great Depression
In October 1929, only months after Hoover took office, the stock market crashed, the average value of 50 leading stocks falling by almost half in two months. Despite occasional rallies, the slide persisted until 1932, when stock averages were barely a fourth of what they had been in 1929. Industrial production soon followed the stock market, giving rise to the worst unemployment the country had ever seen. By 1933 at least a quarter of the work force was unemployed. Adjusted for deflation, salaries had fallen by 40 percent and industrial wages by 60 percent.
People gathering on the steps of the building across from the New York Stock Exchange on Black Thursday, October 24, 1929, the start of the stock market crash in the United States.AP
The causes of the Great Depression were many and various. Agriculture had collapsed in 1919 and was a continuing source of weakness. Because of poor regulatory policies, many banks were overextended. Wages had not kept up with profits, and by the late 1920s consumers were reaching the limits of their ability to borrow and spend. Production had already begun to decline and unemployment to rise before the crash. The crash, which was inevitable since stock prices were much in excess of real value, greatly accelerated every bad tendency, destroying the confidence of investors and consumers alike.
Great Depression: apple sellerMan selling apples during the Great Depression.Encyclopædia Britannica, Inc.
Hoover met the crisis energetically, in contrast to earlier administrations, which had done little to cope with panics except reduce government spending. He extracted promises from manufacturers to maintain production. He signed legislation providing generous additional sums for public works. He also signed the infamous Smoot–Hawley Tariff Act of 1930, which raised duties to an average level of 50 percent. These steps failed to ease the depression, however, while the tariff helped to export it. International trade had never recovered from World War I. Europe still depended on American sales and investments for income and on American loans to maintain the complicated structure of debt payments and reparations erected in the 1920s. After the crash Americans stopped investing in Europe, and the tariff deprived foreigners of their American markets. Foreign nations struck back with tariffs of their own, and all suffered from the resulting anarchy.
In the 1930 elections the Democratic Party won control of the House of Representatives and, in combination with liberal Republicans, the Senate as well. Soon afterward a slight rise in production and employment made it seem that the worst of the depression was over. Then, in the spring of 1931, another crisis erupted. The weakening western European economy brought down a major bank in Vienna, and Germany defaulted on its reparations payments. Hoover proposed a one-year moratorium on reparations and war-debt payments, but, even though the moratorium was adopted, it was too little too late. In the resulting financial panic most European governments went off the gold standard and devalued their currencies, thus destroying the exchange system, with devastating effects upon trade. Europeans withdrew gold from American banks, leading the banks to call in their loans to American businesses. A cascade of bankruptcies ensued, bank customers collapsing first and after them the banks.
Hoover tried hard to stabilize the economy. He persuaded Congress to establish a Reconstruction Finance Corporation to lend funds to banks, railroads, insurance companies, and other institutions. At the same time, in January 1932, new capital was arranged for federal land banks. The Glass–Steagall Act provided gold to meet foreign withdrawals and liberalized Federal Reserve credit. The Federal Home Loan Bank Act sought to prop up threatened building and loan associations. But these measures failed to promote recovery or to arrest the rising tide of unemployment. Hoover, whose administrative abilities had masked severe political shortcomings, made things worse by offering negative leadership to the nation. His public addresses were conspicuously lacking in candor. He vetoed measures for direct federal relief, despite the fact that local governments and private charities, the traditional sources for welfare, were clearly incapable of providing adequate aid for the ever-rising numbers of homeless and hungry. When unemployed veterans refused to leave Washington after their request for immediate payment of approved bonuses was denied, Hoover sent out the army, which dispersed the protesters at bayonet point and burned down their makeshift quarters.