Ch. XIX: Democracy and Dictatorship
In the 1920s people saw the century as one of progress, but the 1930s turned into a search for security and self-
sufficiency--through regulations, controls, plans. Some nations remained democratic but others turned to
dictatorship, for a leader to act, decide--to get results, to restore a nation’s pride.
101. The United States: Depression and the New Deal
A. Hoover limited his actions in the Depression; he saw the needs as temporary and opposed government direct
relief to the jobless. He preferred assisting banks and railroads (credit) and home and farm mortgage relief. The
election of FDR brought the full New Deal, a combination of programs for relief, recovery, and reform:
l. Relief: expansion of aid to farmers and home-owners; direct relief to the unemployed; and then relief projects (PWA and
WPA). He declared a bank holiday, then reopened them under closer supervision; he devalued the dollar; the farmer
received subsidies, and controls; the NRA was created to regulate prices and production. The wide range
of programs was paid for by “deficit financing,” as proposed by John Maynard Keynes-whose idea was “pump
priming” --government spending in a depression to get the economy going; debts would be paid for by increased taxes
during good times. The federal payroll was increased dramatically, and the national debt was doubled.
2. Reform programs (longer range) included regulation for the stock market under the SEC; guaranteed bank
deposits, through the FDIC and the later FSLIC; TVA to aid rural poverty and modernize rural Tennessee.
3. After 1935 the New Deal turned to regulation and reform and away from relief; the Supreme Court found
some programs unconstitutional. Many programs were passed: Social Security (1935), Fair Labor Standards
Act (40-hour week, minimum wage); National Labor Relations Act, doubling the size of unions; graduated
income tax, and concern for alleviating poverty.
B. Government spending tended to restore confidence, but the recovery was very slow-- with a recession in 1937. The
business community was very negative, opposed to the enlarged debt, to the increased regulation and higher taxes, and to
the concessions to labor. But by 1938 the New Deal had been successfully emplaced--and war was clearly on the horizon.
The role of government had been expanded: Was it an enormous, expensive bureaucracy that was wasteful and a threat to
self-reliance, or was it a bold, humanitarian answer to a serious threat to democracy?
102: Trial and Adjustment of Democracy in Britain and France
A. British Politics: The 1920s and the Depression
Britain remained democratic but lost ground. There had been problems before 1914: world-wide industrializing,
colonial resentments, protective tariffs. The war was a disaster, and after a brief post-war boom came depression
and unemployment. The most serious problems were war losses (40% of merchant marine), tariff barriers created
by the new European states, antiquated industry, and labor problems. By 1921, two million were on the
“dole”, though the distress was mitigated by the welfare state. Industry sought to pare back labor’s war-time
gains; the coal strike of 1926 led to a general strike with 3 million out. The government declared an
emergency and the strike failed. By 1922, the Labor Party, committed to socialism by legal methods,
became the second largest under the leadership of Ramsay MacDonald. During the Depression, Britain
avoided extremism and practiced retrenchment--limited government action except to follow policies of
economic nationalism and loans to industry. No recovery was achieved until shortly before the war.
B. Britain and the Commonwealth: Imperial Relations
In the Middle East, Britain controlled the Palestine mandate, with a growing trickle of European Zionists. The
protectorate over Egypt was ended. In Ireland, a brief and bloody battle between the English “black and tans” and the
Sinn Fein (1921-1922) resulted in the creation of the Irish Free State without Ulster in 1922, and fully independent in
1937, though it remained in the Commonwealth until 1949. The Dominions gradually split off: The Statute of
Westminster of 193l recognized Canada, Australia, New Zealand, and South Africa as equals with each other and Great
Britain--though bonds of economic cooperation remained firm.
C. France: The 1920s and the Coming of the Depression
France was concerned with rebuilding and security in the 1920s, mainly under right wing parties emphasizing private
enterprise and private property. The “Radical Socialists” (a moderate leftist party, in spite of its name) came to power
after the Ruhr crisis. Antidemocratic parties on the left (communist) and right (monarchist) exerted noisy, militant
pressure but had no power. Poincare was the main figure; he ordered the occupation of the Ruhr in 1923, balanced the
budget by reduced spending and increased taxes. Returning to power in 1926 he stabilized the franc--
Palmer Chapter 19 1
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