1 The Falcon Cannot Hear The Second American Civil War: 1937-1944 By William Manchester Edited by Ephraim Ben Raphael Sources; The Glory and the Dream by William Manchester The Great Depression by David A. Shannon Hard Times by Studs Terkel And others Turning and turning in the widening gyre The falcon cannot hear the falconer; Things fall apart; the centre cannot hold; Mere anarchy is loosed upon the world, The blood-dimmed tide is loosed, and everywhere The ceremony of innocence is drowned; The best lack all conviction, while the worst Are full of passionate intensity. —William Butler Yeats 2 Prologue 1929 In September 1929 the United States of America was at the top its game. Europe, devastated by the First World War, was still climbing out of revolutionary turmoil of the late ‘Teens and early Twenties. National economies worldwide were wracked by uncertainty and instability, feeding simmering unrest. But in America business leaders spoke of the New Era, of the map to a New El Dorado that would allow for an ever-expanding economy, full employment, and the elimination of poverty. They scoffed at the communists in Russia with their state planned economy; America was proof that capitalism worked. The country had no enemies; Great Britain — the world’s only superpower — was a staunch ally and Lloyd’s of London offered 500-to-1 odds against any invasion of the United States. The general mood was one of optimism, complacency, and comfort. Yet within a decade America would be broken against itself, foreign troops would march down its boulevards and half-a-million Americans would die in the worst genocide to be witnessed by the New World since the annihilation of its native peoples. A New York parts factory in 1928, at the time American industry led the world. How could this happen? The seeds of destruction did not come from abroad, but from within the nation. As Abraham Lincoln said in 1838 “if destruction be our lot we must ourselves be its author and finisher”. It was the false underpinnings of the New Era that brought the house of cards down. In the aftermath of the World War the techniques of mass production combined to increase the efficiency of per man-hour by over 40%. This enormous output of goods clearly required a commensurate increase in purchasing power — that is to say, higher wages. But over the 1920’s income failed to keep pace with production. In the golden 3 year of 1929 Brookings economists calculated that to supply the barest necessities a family would need an income of $2,000 a year — more than what 60% of American families were earning. The general mood of the time however, was such that overproduction was no problem; the sense was that “a good salesman can sell anything.” This meant that customers of limited means were encouraged to buy products anyhow via a massive overextension of their credit. As zealous commercial travelers sold anything and everything to people who lacked the means to pay for it, the rich (and many who were not rich) speculated overwhelmingly in stocks. Arthur A. Robertson watched aghast as investors bought $500,000 of stock with only $500 down. For eight or ten dollars the smart investor could get one hundred dollars worth of stock on margin. As a consequence the slightest shake-up became a calamity as people lacked the money to cover their investments. Then on October 29, 1929 it came time to pay the piper. A mob outside the New York Stock Exchange on October 29, 1929. The bottom fell out of the market and stock prices plunged, going down to no more than a few percent of their former value. In one day alone the New York Stock Exchange lost between eight and nine billion dollars. That afternoon a group of New York bankers succeeded in temporarily halting the plunge, but confidence had already leaked out of the market. Five days later the panic began again and this time there was nothing anyone could do to stop it. “There has been a little distress selling on the Stock Exchange,” Thomas Lamont, Secretary of Commerce, commented in a truly remarkable display of understatement, “but conditions are still sound.” He was whistling in the dark, with few interruptions stocks would continue to fall for the next eight years. 4 Thomas Lamont on the cover of Time Magazine, November 1929. Honey-combed by millions of little loans to consumers, the economy went into a downward spiral. To protect investments prices had to be maintained, as a consequence sales fell, so costs were cut by laying off employees. The unemployed could not buy the goods of other industries, therefore sales dropped further. Lower sales led to more layoffs which further shrank purchasing power, until farmers were pauperized by the poverty of industrial workers, who in turn were pauperized by the poverty of farmers. “Neither has the money to buy the product of the other,” a witness testified before congress, explaining the vicious cycle. “Hence we have overproduction and under consumption at the same time and in the same country.” And the United States took its first hesitant steps down the road to civil war. 5 Things Get Bad 1930-31 In the beginning of the year 1930 prominent persons whose word was apt to be taken seriously, declared their confidence in stocks and underlying business soundness. Even comic strip characters weighed in, “Who says business is bad?” asked Little Orphan Annie. Not Nicholas Butler, the president of Columbia University; Dr. Butler assured Columbia men that “Courage will end the slump.” Not the president of U.S. Steel; he said the “peak” of the Depression had passed. Not Owen D. Young, board chairman of General Electric; he announced that the “dead center of the Depression” had come and gone. Not a spokesman for the National Association of Manufacturers; he observed that “many of the bad effects of the so-called Depression are based on calamity howling.” Not Secretary of the Treasury Andrew Mellon who asserted that there was “nothing in the present situation… menacing or [warranting] pessimism.” And certainly not Secretary of Commerce Thomas Lamont; he reported that “The banks of this country are in a strong position” and contented himself with listing the gains that the year 1929 had made over 1928 and predicting prosperity “in the long run.” It was going to be a very long run. By March of 1930 there were between 3,250,000 and 4,000,000 unemployed in the United States of America, by March 1931 those numbers had doubled to between 7,500,000 and 8,000,000. Appreciable downward changes in m manufacturing wages began in the fourth quarter of 1930, there was a general understanding among employers that high wages were necessary for recovery and so they held off on making cuts for as long as they could. This changed in August 1931 when U.S. Steel cut the salaries of its employees by 10 to 15 percent and was soon followed by the rest of the steel industry. Throughout 1931 3586 concerns cut wages for some 654,687 workers, by the end of the year hourly earnings had hit 54 cents per hour. Average weekly earnings fell even faster, in 1929 the average weekly salary of an industrial worker was above $28.50, for 1930 $25.74, and a mere $22.64 for 1931. Working hours fell from 48 per week in 1929 to 44 in 1930, to a mere 38 in the last months of 1931. Increasingly even those who were still employed watched their circumstances become more and more precarious. Unemployed workers warming themselves over trashcan fire. 6 It was in the growing masses of the unemployed that the seeds of radicalism began to take hold. In 1930 the Unemployed Councils of the USA (UCU) was first organized by the American Communist Party, then a tiny organization with about 10,000 members. Similar to the soviets of unemployed workers that emerged during the 1905 Russian Revolution, the UCU was a loosely organized body based around neighborhood councils composed of alienated and disillusioned unemployed. Little co- operation existed between respective UCU councils, and in fact most of the membership had not much interest in communism. Demanding public works, relief, and state aid, the UCU was often little more than an expression of American progressive thought. However, communist organizers were very active in the movement and they were able to present their teachings for the first time to a large number of Americans — clearing ground for the expansion of the party. A meeting of the St. Louis Unemployment Council. Note the multiracial nature of the membership. On March 6, 1930 the “International Struggle against Worldwide Unemployment” was called by the Communist International. Across the United States some 100,000-200,000 members of the UCU turned out to protest calling for “Work or Wages” and demanding that President Hoover do something to address the issue of unemployment. Law enforcement cracked down on the organization, arresting many of its leaders including William Z. Foster, but the diffuse nature of the UCU’s structure meant that the government response helped the councils more than it hurt them. The free publicity caused Unemployment Councils to swell, and although the Communist Party would attempt to establish a more rigid hierarchy for the councils later that year they were never truly able to control their creation. 7 From left to right; William Z. Foster, Robert Minor, and Israel Amter. The three communists and leaders of the UCU being arrested on March 6, 1930 for connection to the Unemployment Day Protests.