Читать книгу The Coming of the American Behemoth - Michael Joseph Roberto - Страница 10

1—The Wonders of American Capitalism in the New Era

MILLIONS OF AMERICANS weary of conflict abroad and turmoil at home went to the polls in November 1920 and elected Warren Gamaliel Harding as their president. Harding received 60.2 percent of the vote, an unprecedented landslide that stood until Lyndon Baines Johnson achieved a greater victory in 1964.¹ Almost from the start of his campaign, Harding promised a return to “normalcy.” But what did that mean? What could be normal for a nation so utterly transformed by its role in a world war and now on its way to becoming the preeminent leader of the postwar global order?

The Great War, as it was then called, had catapulted the United States into a rising global hegemon. But this would not have surprised those who had observed its rise decades earlier, especially Karl Marx and Frederick Engels, the founders of scientific socialism. In Capital (1867), Marx wrote that the Civil War had established conditions that put the United States on a path toward world economic and political leadership. British investment had been central to construction of the Transcontinental Railroad, connecting east and west, between 1863 and 1873. Its completion spurred the growth of the mining and steel industries that became the basis of the modern American industrial economy, most of it financed by U.S., not British, capital. It was Marx who recognized the U.S. economy as “a new, dynamic model of capital accumulation.”² By the early 1880s, he and Engels had determined that America’s untapped natural resources and vast internal market would become the basis for its eventual leadership of the world capitalist economy. The combination of its “gigantic agricultural production” and simultaneous exploitation of “its tremendous industrial resources,” would soon bring an end to “the monopoly of Western Europe, and especially of England.” These were seminal developments not only for the United States but for the rest of the world. As small landowners lost ground to the “competition of giant farms,” Marx and Engels wrote, “a numerous proletariat and a fabulous concentration of capital” were “developing for the first time in the industrial regions.”³ Though economic expansion within “the protected home market” also carried the possibility of a crisis of overproduction, the latter would “serve to hasten the time when America becomes capable of exporting and of entering the world market as England’s most dangerous competitor.”⁴

The pace of these developments quickened dramatically in the 1880s and 1890s as the rise of industrial monopolies established a platform for the emergence of finance capital and U.S. imperialism. In 1936, the Marxist economist and historian Anna Rochester described how the foundation for finance capital in the 1890s had been established twenty years earlier when bankers took advantage of “the whole top-heavy structure of public debt” by financing government and municipal bonds. As the economy expanded in the 1880s, so did the need for a wider range of banking operations in both commerce and investment. While routine business operations relied increasingly on the need for short-term credit, corporations with large aggregations of capital turned to investment bankers to underwrite additional stock and issue bonds. The latter played major roles in the reproduction of capital by underwriting new securities. No one was more successful at this than J. P. Morgan, whose stealth in the art of the deal became evident when he decided to buy new stock for the New York Central Railroad in 1879. Establishing even greater control over much of the nation’s railroads following the crisis of 1893, Morgan had also turned to financing and organizing the great industrial trusts of the General Electric Company in 1892, the U.S. Steel Corporation in 1901, and the International Harvester Company in 1902.⁵

A year before he led the Bolsheviks to revolution in 1917, Lenin cited statistics to argue that the United States had become the world’s leader in the concentration of production and its ownership. By 1909, 3,060 industrial enterprises out of 268,491—1.1 percent of the total—employed 2 million of the 6.6 million workers who made up the total workforce and produced an output valued at $9 billion, almost half of the $20.7 billion in total output. Moreover, these giant enterprises covered 258 branches of industry. Industrial cartels and trusts were now determining the course of U.S. industry. By 1909, U.S. corporations constituted 25.9 percent of the total number of business enterprises but employed 75.6 percent of the total wage earners in America. These corporations generated enormous profits, much of it going to dividends for shareholders. Increasing monopolization led to mergers with banking, giving rise to the hegemonic power of finance capital in the hands of a small financial oligarchy. This in turn contributed to further concentration and hierarchical ownership in the form of holding companies. The latter, among other things, pioneered a corrupt system of balance-sheet jugglery between the mother company and its “daughter companies” that could have concealed “doubtful undertakings from the ordinary shareholder,” while enriching those who controlled the accounting. Lenin also noted that these fraudulent and corrupt methods bred a business ethics forged principally by American capitalists. He saw the pernicious reach of concentrated wealth and power. “A monopoly,” Lenin wrote, “once it is formed and controls the thousands of millions, inevitably penetrates into every sphere of public life, regardless of the form of government.”⁶

As Anna Rochester argued, the emergence of these great trusts marked the beginning of America’s industrial leadership in the world economy. Industrial production soared, displacing raw materials and agricultural products as America’s chief exports in 1894; four years later, the United States was exporting more of these goods than importing. The United States no longer depended on foreign investment for further growth. Flush from huge profits, U.S. capitalists sought new outlets for productive investment abroad while opening a market for the sale of foreign government bonds at home. Once again, J. P. Morgan led the way by funding Mexican debt in 1899 and financing Great Britain’s South African War in 1900–1901.

All told, these developments had put the country on the road to empire. With the closing of its own frontier and monopoly-finance capital in ascendance, American political leaders pursued the same expansionist policies as their European counterparts, and with greater might. As Rochester concluded, the United States looked to colonize non-capitalist areas and expand its general influence abroad. Victory over Spain in 1900 had delivered the Philippines to permanent U.S. occupation, cementing America’s imperial presence across the Pacific and strengthening its grip over the Caribbean and Central America. By then, the architects of a global empire with nascent powers in the Atlantic and Pacific were guided by a vision of unprecedented global power. To that end, the United States began building naval bases wherever it could and started work on the Panama Canal. The canal was finished in 1914, the year the First World War broke out in Europe.⁷

AMERICA IN THE GREAT WAR: ECONOMIC SUPREMACY AND POLITICAL REPRESSION

The European war had raged for three years before the United States finally joined the Allies (Great Britain, France, Italy, and Russia) as a combatant in April 1917, against the Central Powers (Germany, Austro-Hungary, and the Ottoman Empire). American troops were slow to arrive in Europe, and only half of the million men of the American Expeditionary Force actually fought on the Western Front. But their presence alone marked new challenges and responsibilities for the United States as soon as the Armistice was signed in November 1918. Though it had risen quickly on the world stage, U.S. leadership stumbled into the postwar world, now in shambles. The socialist revolution in Russia shocked and frightened the architects of the world capitalist order in Europe and the United States. American diplomacy under an ailing president, Woodrow Wilson, had reached a crossroads. Despite an immediate isolationist impulse to avoid future European entanglements, there was no avoiding the imperatives that came with being the world’s industrial leader and new banker. From the latter standpoint, America’s leading capitalists agreed that European recovery was vital to U.S. economic interests at home and abroad.

World war had catapulted the United States into the world’s mightiest economic powerhouse. Even before it entered the conflict, America’s support for the Allied war effort had accelerated the concentration of wealth and the supremacy of monopoly-finance capital over the U.S. economy. Indeed, the war had been good for America’s industrial giants and its biggest banks. Capital loaned to the Allies to buy U.S. goods had pumped at least $5 billion of purchasing power, a substantial part of the total national income, into the domestic economy.⁸ Returns on investment, especially in munitions, were stunning. Corporate profits soared. Wealthy owners and managers got richer. Better yet, there was enough to go around. Workers made more money and lived better. Farmers reaping the rewards of booming agricultural prices borrowed from local banks to buy new machinery and cultivate more land. The pace of these developments quickened when the United States entered the war. As American soldiers fell on the Western Front, a select few of their countrymen made big killings in the marketplace. By 1919, a year after the war ended, America’s corporations were producing 87 percent of all manufactured goods in the domestic economy.⁹ Eighteen of the largest two hundred corporations saw net earnings rise to $337 billion during the war. Profits in the steel and iron industries were three times more than original investments. Earnings in the electrical and appliance industries were even better, rising almost two hundred times above their initial investments. Meanwhile, more Americans were adding to their personal wealth. According to income tax returns, the number of millionaires had almost quadrupled.¹⁰

Then the war ended, and so did the prosperity. Wartime contracts worth billions were canceled immediately, sending industry and agriculture into an uncertain and threatening future. Quickly the boom turned into its opposite. Ruinous inflation, unemployment, and labor unrest shook the economic and political order. The cost of living skyrocketed, but wages and salaries failed to keep pace. Disgusted with their inability to gain any advantages with employers, more than four million workers in various states went out on strike or merely walked off their jobs in 1919. From a general strike in Seattle to striking steel workers in Pittsburgh and coal miners in West Virginia, America’s working class challenged the power of the bosses.

Government, in tandem with Big Business, responded decisively to the worker insurgency. As Bruce Minton and John Stuart wrote in The Fat Years and the Lean (1940), “The true role of the state became clear.” It had become “the weapon … of the industrialists, the financiers, the small minority in Wall Street,” who had taken “almost complete possession of the governing agencies.” The state became “the hired policeman of the employers.” On their behalf, government launched a crusade to rid the nation of all public enemies, especially the communists and anarchists who were blamed for infecting workers with radical ideas. Attorney General A. Mitchell Palmer set out to eradicate these “termites of revolution,” who, he claimed, were fed by Lenin and the “Red hordes.” Justice Department agents “careened through America, violating every principle of the Bill of Rights.” The most significant of the “Palmer Raids” occurred on January 2, 1920, and resulted in the arrest of more than 2,700 men and women, many of whom were jailed for months without being charged. According to Minton and Stuart, 556 were held for deportation, with many deported without proper hearings. The combined arrests included 1,400 members of the Industrial Workers of the World (IWW); 300 were convicted for violating laws against criminal syndicalism and anarchy.¹¹

Big Business stood squarely behind Palmer. “The recent action of the Government in the deportation of undesirables is to be commended,” wrote Stephen C. Mason, then president of the National Association of Manufacturers (NAM). “It is the only punishment that fits the crime of anarchy, sedition, or revolution by force, and the Government should comb the country with a fine-tooth comb and not let up until the last one of these pests is sent back to the country from which he came.”¹² Businessmen blamed the same public enemies but singled out immigrants for infecting American workers—old-stock, Anglo-Saxon—with alien thinking and uppity Negroes who forgot their place in white society. “There is only one way to treat this disease,” wrote U.S. Steel chairman Elbert H. Gary whose own workers had struck hard, “and that is to stamp it out, to meet it boldly wherever it can be found, to expose it and to give it no chance for development.”¹³ The NAM waged concerted economic and political warfare on labor organizations. In the midst of the 1919 strike wave, it established an Open Shop Department designated to promote another of its creations, the American Plan, which took aim at the union movement and the closed shop. Its premise was as political and ideological as it was economic by assuming that “all law abiding citizens have the right to work when they please, for whom they please, and whatever terms are mutually agreed on between employee and employer and without interference or discrimination upon the part of others.” Throughout the 1920s, the American Plan was used to promote company unions where workers were deprived of any bargaining powers. It pushed successfully for greater use of the “yellow-dog contract” that forced workers to agree not to join a union and, in some cases, to pledge not to strike. Meanwhile, it promoted the doctrine of “True Americanism” that aimed to define the difference between the old-stock citizens considered the backbone of the nation and alien forces that threatened them. Big Business and state power came together effectively in court-ordered injunctions that made it illegal for workers to strike or even engage in collective bargaining. Despite minor concessions to some workers, the combined power of the state and Big Business proved too much for the working class.¹⁴

As business and government joined hands, organized labor sought a seat at the table. During the Great War, prosperity had seeped downward to select parts of the working class. This was especially true for workers who were directly involved in wartime production, and earned higher wages and lived more comfortably. But even before peace came in 1918, organized labor struck a deal with Big Business that held up until the 1929 crash. The unions in the American Federation of Labor (AFL), long committed to a reformist and limited agenda in their dealings with employers, had argued that labor’s fulfillment of wartime production demands had earned it a rightful place in decision making with government and business. Samuel Gompers and other AFL leaders had demonstrated loyalty to American capitalism by their hard line against the IWW and other radicals who had tried to convince American workers not to support an imperialist war against their brethren in Europe. At the same time, the AFL kept rank-and-file workers in line by winning concessions for higher wages and better working conditions. But the ideological disposition of the AFL was far deeper than its routine activities. In its deliberate aim to reject any hint of socialism and promote what it considered a viable alternative to it, the AFL under Gompers’s leadership sought harmonious relations with capital in the hope that it would lead American workers into a corporate-capitalist economic partnership with Big Business.¹⁵

Government repression and the support it got from business leaders certainly helped to promote other sources of political reaction in the immediate postwar period. The American Legion, counterpart of European para-military groups whose members helped to build the ranks of fascist organizations, declared war against all suspected insurrectionists, and directed its members to attack socialists and other radicals, especially the IWW.¹⁶ After a decades-long crusade led by Protestant fundamentalists and some Progressive Era reformers, Prohibition became the law of the land in January 1920. Anxiety and fear over changing economic conditions gripped much of rural society left behind in the great urban surge. Nativism defined the political landscape throughout small-town and rural existence. White America deemed all others as alien and thus potential targets. Violence unconnected to labor struggles increased. By 1920, the reactionary tide in America was growing in strength and fury.

The greatest force of this reaction and extremism rising up from the middle classes was the so-called second Ku Klux Klan. Established in 1915, its membership remained small until early 1920 when its ranks suddenly swelled. From its birth on Stone Mountain just outside Atlanta, the Klan had spread beyond the South to cities and towns across the United States. According to historian Nancy MacLean, “The North Central and Southwestern states enrolled the most members, followed by the Southeast, the Midwest and Far West, and, finally, the North Atlantic states. By mid-decade, the total reached perhaps as high as five million, distributed through nearly four thousand local chapters.”¹⁷ Its mass consciousness, which was deeply rooted in the ideological outlook of its white middle-class members, reflected the anxiety caused by the march of Big Business’s growth on the one hand and their fear of the masses, especially people of color, on the other. There were so many to hate—Catholics, Jews, Mexicans, Asians, Italians, and the Reds. Still, the Klan remained at heart the guardian of white supremacy and reserved its most terrorist treatment for blacks. Lynchings and massacres of African Americans rose dramatically in 1919; more than seventy black veterans of the Great War were lynched or burned alive.¹⁸ Many more went unreported. At least a dozen blacks were lynched in a fifty-mile radius of Sparta, Georgia, in a three-month period. Always, African Americans courageously fought back. Across the South, sharecroppers rebelled against debt peonage and the murderous response of white landowners, who feared the loss of black labor from the Great Migration to the cities of the North. Meanwhile, those who had migrated stood their ground against the growing abuse and violence of white supremacy. Urban riots struck more than forty cities, which prompted some black residents to arm themselves and defend their neighborhoods.¹⁹

WARREN G. HARDING: A SIMPLETON AND CAPITALIST MODERNIZER DECLARES “AMERICA FIRST”

Such was the state of the nation in June 1920 when the Republican Party chose Warren Harding as their candidate for president. Harding was destined for a “troubled presidency” when he entered the White House in 1921 amid crises at home and abroad: a general economic nosedive, the great collapse of agricultural prices, widespread labor unrest, an increase of lynchings in the South, and, of course, the Red Scare.²⁰ Harding’s clear intent as a candidate and incoming president was to lead the country in a return to “normalcy.” “By ‘normalcy’ I don’t mean the old order,” he declared, “but a regular steady order of things.”²¹ Normalcy for Harding did not mean “a retreat into the past but an orderly system for progress.”²² As an experienced politician, Harding knew what he was doing. When he told Americans that what they wanted was “not nostrums, but normalcy; not revolution, but restoration,” Harding was expressing the desire of the mainstream to move on from the political maelstrom of 1919. To do that required a new vibrancy in American life conducive to business success and the road toward progress. His personal charm and gregariousness enabled him to slap the back of anyone who mattered at the moment. For historian Sean Dennis Cashman, Harding was nothing more than an “amiable simpleton manipulated by sinister forces.”²³ But he was more than that. Harding was the first of three Republican presidents during the prosperous 1920s, whose idea of normalcy served as an ideological cover for the titans of American capitalism to expand their powers at home and abroad. Although not the first president to swear that he would make “America First,” the slogan carried new weight as the Republican Party made it central to Harding’s campaign. This made Harding the perfect front man for capitalist modernization on the grandest scale ever because he actually understood his role in facilitating it.

We see this clearly in Harding’s speech to Congress when he aspired to be what the Saturday Evening Post wanted most in a president when it declared that America needed “a businessman” in the White House.²⁴ On April 12, 1921, the new president reminded lawmakers that he had said as much during his campaign:

I have said to the people we meant to have less of Government in business as well as more business in Government. It is well to have it understood that business has a right to pursue its normal, legitimate, and righteous way unimpeded, and it ought have no call to meet Government competition where all risk is borne by the Public Treasury. There is no challenge to honest and lawful business success.²⁵

Harding explained that the federal government would take the lead by becoming more like a business, which meant its own bottom line was to cut government spending to fall “within the limits of national income.” To achieve this, he heartily endorsed a “national budget system” on the basis of “business methods so essential to the minimum of expenditure.” This would also be crucial to holding down the public debt, which was already “staggering” from the wartime economy. Dire consequences were in store if such steps were not taken. “The unrestrained tendency to heedless expenditure and the attending growth of public indebtedness, extending from federal authority to that of state and municipality and including the smallest political subdivision, constitute the dangerous phase of government today,” Harding told Congress. Admitting in his typical jumbled English that government had been “illy prepared” for the transition to a peacetime economy, he was confident that the American people “had appraised the situation, and with that tolerance and patience which go with understanding, they will give us the influence of deliberate public opinion which ultimately becomes the edict of any popular government.” What?

To that end, he called upon Congress to work urgently to achieve two critical objectives. First, it should consider a “readjustment of internal taxes,” especially the removal of those deemed “unproductive.” This is how government could help to revive business activity. At the same time, he sought to allay fears of any shift in the tax burden by emphasizing that cutting government costs would eliminate any necessity for creating new taxes that would impede the free movement of business. The other urgent matter was to protect American business from foreign competition with “an instant tariff enactment.” As Harding professed:

I believe in the protection of American industry, and it is our purpose to prosper America first. The privileges of the American market to the foreign producer are offered so cheaply today, and the effect on much of our own productivity is the destruction of our self-reliance, which is the foundation of the independence and good fortune of our people.

As a proponent of capitalist modernization, Harding emphasized the need to build up communications networks, especially radio and cable and stressed the importance of new investments in commercial aviation beyond government funding.

Some historians have captured the modernizing bent in Harding’s presidency. “His background as a businessman from a small town not only shaped his political views but also gave him the important political advantage of seeming to represent both big business and the rural past.” As a longtime businessman in Marion, Ohio, and the publisher of its daily newspaper, Harding had learned how vital it was to channel the aspirations of merchants and family farmers in small-town and rural America to the imperial visions of corporate owners and big bankers, and to do so by justifying it on moral and religious grounds. Private enterprise was the “regular order of things” and would save America from decay, he said. “American business was not a monster but the expression of a God-given power to create.”²⁶

For one of Harding’s contemporaries, Richard Franklin Pettigrew, American business was a beast and Harding was chosen by Republican elites to ride it. Pettigrew, one of the strongest and most respected anti-imperialist voices in the country and a longtime leader of middle-class, progressive radicalism in the mid-western states, and the first elected senator from South Dakota in 1899, easily recognized who wanted Harding to be the Republican nominee for president and why. They were all “men who put the United States into the European war … [and] are out for empire,” as Pettigrew put it in his 1923 book, Imperial Washington. Though the party powerbrokers and imperialists had preferred other candidates, they had finally settled on Harding because he was “the man least objectionable and most certain to stand right on their plans to exploit the rest of the world.” Citing a record of Harding’s accomplishments, Pettigrew wrote that “on every important test between capital and labor, he voted with capital.”²⁷

Indeed, Harding did the bidding of capital as a skillful politician highly conscious of the need to represent the whole spectrum of capitalist society while serving party elites who were confident he would promote their interests. His administration quickly initiated legislation aimed at advancing the interests of monopoly and finance capital, among them: lowering taxes, especially on corporations and wealthy individuals; cutting the size of federal bureaucracy; and imposing stronger tariffs to protect U.S. corporations, whose rising exports now drove the world economy. He chose some of the most qualified, wealthy, and powerful capitalist elites to fill key cabinet positions: Andrew Mellon as Treasury secretary, Charles Hughes to lead the State Department, and Herbert Hoover as Secretary of Commerce. All proved highly capable in making Washington subservient to the dictates of Wall Street.²⁸ Mellon, one of the five richest men in the world, promptly drafted legislation that Congress made into law with passage of the Revenue Act of 1921. Taxes on the wealthy were reduced significantly as lawmakers shifted the burden of making up for shortfalls with several indirect taxes, doubling the stamp tax on documents and introducing a federal license tax on cars. According to Sean Dennis Cashman, the Revenue Act amounted to nothing more than a “specious justification for the relief of the rich” so they would be freed from burdensome taxation that would prohibit them from further creative and productive investment.²⁹ Under Harding, trickle-down economics was born.

At the same time, Harding was also a petty-bourgeois reactionary and white supremacist whose leadership in restricting immigration was central to the doctrine of 100 percent Americanism. Defending segregation in his April 12 speech to Congress, he made a lame attempt to address the spike in racist violence and the number of African Americans lynched. He called on Congress “to wipe out the stain of barbaric lynching from the banners of a free and orderly representative democracy.” As a white supremacist, however, Harding called this a “condition which cannot be removed” but alluded to the possibility “that some of its difficulties might be ameliorated by a humane and enlightened consideration of it,” or as he also put it, “at least, a national attitude of mind calculated to bring about the most satisfactory possible adjustment of relations between the races, and of each race to the national life.”

Harding did not last a full term in the White House. A sickly man who drank and ate excessively while relying on a regimen of drugs served up by his quack physician, he died of a likely heart attack on August 2, 1923, in the presidential suite of a San Francisco hotel while on the last leg of a tour dubbed “The Voyage of Understanding.” But his relatively brief run is perhaps more significant than even his defenders have argued. His petty-bourgeois ways served as an effective cover for a political agenda that served the capitalist ruling class. As an ardent nationalist, Harding promoted the expansion of American business at home and greater imperial reach abroad with his mantra of “America First.” His politics amounted to a contradictio in terminis: rooted in a petty-capitalist faith in business, Harding quickly became his opposite once in the White House, a champion of monopoly-finance capital. His presidency indicated a new dynamic in ruling-class politics in the United States, a president posing as a true representative of democratic capitalism, which was considered peculiarly American, but whose policies fueled the centralization and concentration of Big Business itself.

ROARING INTO THE 1920s

Within a year of Harding’s entry into the White House, the Great Boom was on. From 1922 to 1929, technological innovation on a massive scale raised the productive capacity of American industry to historic levels which, in turn, made the United States the world’s first, true consumer society. Tectonic shifts altered the social and political landscape. Consumerism replaced citizenship. The desire for individual fulfillment pushed aside earlier Progressive Era concerns about collective needs. Wages for some workers rose while the middle class grew in numbers. Those with enough income and credit bought cars, appliances, radios, clothes, cosmetics, and more. The luckiest managed to buy homes, which sparked increased residential construction. A rising segment of the population, mostly white, urban, and employed in various commercial activities and professions, became obsessed with fashion, movies, cigarettes, speakeasies, and other newfound pleasures.

Cultural norms were being uprooted. Women smoked openly. Jazz clubs stretched leisure time into the wee hours. And like never before people talked openly about sex. The petting party, wrote magazine writer-editor Frederick Lewis Allen in 1931, had become “widely established as an indoor sport.”³⁰ In ways generally foreign to other peoples, Americans had proved themselves the quickest learners in the ways of self-indulgence. Those who entered the ranks of the new middle class, among them professionals and mid-level managers, attained levels of social comfort unimaginable only a few years earlier. With the rising self-indulgence came the advocates, practitioners, and propagandists of the “new psychology.” There was much talk about Sigmund Freud, though few really understood what he had claimed to have discovered about people. Most important, however, the coming of material abundance—or at least the promise of it—had raised the bar for American individualism to a much greater height.

As for business leaders, politicians, academics, and others, the whirlwind of new ideas, attitudes, and behaviors was indicative of capitalism’s long-standing promise of endless prosperity and uninterrupted progress. Some called it a “New Era” or the “New Capitalism,” others the “New Economy.” Regardless of the terminology, all indicated that a capitalist revolution was underway. How startling! After all, wasn’t it Lenin and the Bolsheviks who were claiming that their revolutionary turn to socialism had changed the course of human history? No! shouted the creators and propagandists of the New Era. The real revolution was a capitalist one, and since it was only happening in America it seemed reasonable that the next best thing to do was to sell the idea to the public. By the middle of the decade, the marketing of the New Era, or whatever it was called, made up what people understood as the “ballyhoo” of the times, all that noisy, frenzied barking about what struck them in the moment. From the allure of shiny cars and short skirts, to a new Charlie Chaplin movie, or the stories of famous people being murdered, swindled, divorced, or lionized in the daily tabloids, the clamor of those engaged in selling anything or any idea through advertising, publicity and propaganda was constant.

For all its exuberant promise of an even brighter future, the Great Boom also challenged the capitalist class in equally unprecedented ways. New cracks were opening in the political landscape, adding to longtime spatial and cultural divides. None was more significant than the sudden, widening chasm between urban workers earning higher wages and small farmers in the countryside burdened by declining prices in agricultural products. Rapid industrialization and urbanization were breaking down the old order of agrarian and small-town America. Expenditures for public education rose dramatically. College enrollments soared though millions of Americans were left behind and consigned to ignorance and backwardness. New and often jarring perspectives became part of everyday life, which increasingly divided Americans along many lines. Science challenged religion. Protestants sneered at Catholics. Both despised Jews. Protestantism itself, the dominant form of American Christianity, became a battleground between modernists and fundamentalists. Women were challenging patriarchy at home and in the workplace. African Americans migrated to the North and Midwest to escape the legacy of slavery in the South.

The rapid pace of change also compelled the captains of industry and their partners in finance to create new methods in capitalist production aimed at keeping the American economy moving. To that end, the Great Boom they engineered and the effort to sell it as a capitalist revolution only reaffirmed what Marx and Engels had written seventy years earlier about the revolutionary powers of the bourgeoisie. The U.S. ruling class was now the principal and driving force of global capitalism. While revolutionary communists were attempting to build a socialist road in the newly created Soviet Union, America’s capitalist oligarchy was fulfilling its own historic mission, according to criteria formulated by Marx and Engels:

The bourgeoisie cannot exist without constantly revolutionising the instruments of production, and thereby the relations of production, and with them the whole relations of society.… Constant revolutionising of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones. All fixed, fast-frozen relations … are swept away … All that is solid melts into air.³¹

Such was the whirlwind the Great Boom brought to America during much of the 1920s. As the ruling class of a growing empire and epicenter of the world capitalist system, America’s leading capitalists and their allies in politics and the media transformed the United States by further revolutionizing the means of production and bringing the consciousness of monopoly-finance capitalism into its most advanced state. The core and the outer limits of a coming Pax Americana were developing quickly. With the exception of two minor downturns in 1924 and 1927, Big Business amassed historic profits by investing in new technology, molding a disciplined workforce through efficient, “scientific” management, paying higher wages to some workers, and extending credit to any eligible borrower who sought it. Corporations, big banks, and Wall Street brokers raked in profits as never before. The boom fueled the growth of a new middle class of doctors, lawyers, scientists, engineers, bureaucrats, educators, and all the medium-level and higher-ups in the world of business. The result was a wondrous spectacle of new things for sale and people with cash or credit clamoring for them in the department stores that lined the crowded streets of big cities and thriving towns. Here was a historic marker for all subsequent trumpeting about the endless promise of the good life that was becoming possible for anyone living under American capitalism.

For Big Business, the continued growth of the U.S. economy meant that it would rely increasingly on its ability to influence the course and content of public life. Businessmen endeavored to create a set of interlocking structures and networks aimed at determining what was required in policies and their implementation. In a short period of time, all of this coalesced into a singular force that made business a system of power in its own right. Assisted by their chief executives and managers, salesmen and ad men, trade associations, and the sorcery of public relations experts and social psychologists, the architects of capitalist prosperity made it possible for rank-and-file Americans to consume as never before while going deeper into debt and being made to think that it was normal to do so. If monopoly-finance capitalism thrived on its capacity to create a more acquisitive society, America’s capitalists broke new ground to facilitate it.

Unprecedented prosperity brought equally daunting challenges. Even more than their immediate predecessors who had elevated America to the status of a world power, the captains of industry and finance could not rest on their laurels. Simply put, the tremendous leap in production during the 1920s raised the bar on its mandate to sustain profitability. To that end, capitalists needed to find new outlets for productive investment by making more of the same goods for expanding markets, or newer goods to replace older ones in existing markets—or both, ideally. Every goal reached in the production and sale of goods became a new starting point, and failure to reach beyond it would bring overproduction, declining wages, underconsumption, and, consequently, declining profits. This was the sine qua non of monopoly-finance capitalist enterprise: do whatever is necessary to drive further capital accumulation or face the onset of a crisis.

Consequently, all the nation’s leading industrialists agreed that the public had to keep buying. But not all recognized the new market imperatives that accompanied the success of expansive and profitable production. Though the Ford Motor Company had mastered production methods and processes from start to finish, Henry Ford was adamant that most of it go into the making of a single car, the Model T, so he could sell it for the lowest possible price. In 1908, its first year in production, the car sold for $845. When Ford himself drove home the last of the line in May 1927, more than 15 million had been made and the selling price had dropped to less than $300.³² Ford had built the world’s greatest integrated production plant, on the Rouge River in Dearborn, Michigan. To make cars, he had bought up whole forests for wood and coal fields for the power he needed. He also built a steel plant as part of the Rouge River complex. Ford’s success was astounding. The company produced 1,250,000 cars in 1920, one every 60 seconds. Five years later on a single day, one Model T rolled off the assembly line every 10 seconds.³³ To ensure continued success, Ford did everything possible to increase production and lower costs. He hired experts in scientific management to determine how much movement to allow workers on the assembly lines and rammed cars down the throats of dealers regardless of their inventories. Ford even paid his workers higher wages in the belief that they would buy products like his for the cheapest possible price. By 1927, there were more Model T’s on the roads than all other cars combined.

But for all his success, Ford had resisted two key requirements for sustaining profit in the booming 1920s—installment credit and customer satisfaction. According to historian Geoffrey Perrett, Ford opposed the first because he hated debt of any kind, the second because the puritan in him could not see beyond simple utility. Fiercely independent and ever the mechanic he had been in his youth, Ford’s actions in the face of rising competition seemed like those of a man who believed he could solve all the challenges of capitalist production and exchange in his own head. Eventually, he would lose ground to General Motors, which had created its own financing company in 1919 and committed itself to making improvements and variations that consumers came to demand during the 1920s. Only in 1927, when sales dropped significantly, did Ford give up on the Model T by shutting down operations in the spring, laying off 40,000 workers until the new Model A was ready for marketing by the end of the year. Then, quite uncharacteristically for Henry Ford, the new car was unveiled amid great clamor in Madison Square Garden on December 1.³⁴

Ironically, the man who had pioneered mass production of the decade’s most important durable commodity came late to an understanding of the market conditions of the New Era. The imperatives of capitalist enterprise were expanding in relation to the volatility of the market. The war had created unprecedented growth and contributed to greater concentration of wealth and political power. Now, given the challenge of adjusting to peacetime, competition among leading capitalists compelled them to go beyond their predecessors and develop even greater control over the market. Their approach to this challenge took two distinct forms that marked the onset of fascist processes in the U.S. epicenter of the world capitalist system.

TERRORIST AND NON-TERRORIST FASCIST PROCESSES

In a qualitatively new way, state power defended the capitalist class from the surge of working-class upheaval in 1919 and 1920. By 1922, the Harding administration had finished the job of taming American labor. Business-friendly Republicans in government at all levels had done this by often resorting to violence, sometimes paying vigilante citizens’ groups to do their dirty work against strikers, union organizers, and radicals. The combination of brute force, use of the legal system, and the ideological push by the NAM, the Chamber of Commerce, and other trade associations crippled labor for much of the decade, though periodically powerful strikes did occur. These were among the mechanisms of repression or terrorist processes created by monopoly-finance capitalism between 1919 and 1929.

It was also during the seven-year period of the Great Boom that the U.S. bourgeoisie advanced capital’s control over society through persuasion and manipulation. These were the non-terrorist processes that were most advanced in the capitalist epicenter.³⁵ Mass production and consumption on a hitherto massive scale required more than the political coercion of labor. Capitalist rule over the market and society, which depended on the circuit of capital operating at successively higher levels of investment, distribution, profit, and reinvestment, could no longer rest on the use of force alone. Though the means of deploying the latter was always present to capitalists and their managers of state power, the need to do so once the boom got underway was minimal. More important, the drive for capital accumulation and profit expanded the properties of commodity production and exchange, in accordance with the explosive growth of the market and demands to maintain it. Mass production on a level never before attained now required mass consumption to follow.

Clearly, the spectacle of abundance created in the boom helped to make this possible. The appearance of so many new and tantalizing consumer goods, and the belief that they could be acquired and enjoyed by everyone, constituted the material basis for an ideological justification that was crucial to the success of the boom. A revolution was occurring in capitalism, its ideological proponents declared, but only in the United States where they convinced millions of Americans to believe that the great promise of universal prosperity was at hand because the boom-bust cycles were a thing of the past. This went along with the creed of 100 percent Americanism whereby everyone who worked hard to fulfill his God-ordained mission on earth could become a capitalist. The main task of the capitalist class and their able assistants was to convince enough Americans that the New Era would eventually create universal wealth. All their efforts had one thing in common: to remove all resistance to the drive for capitalist accumulation. This made their objective the total domination of capital over society and the individual.

For these reasons, American capitalists turned to advertising, “the sword arm of business,” as it became known in the 1920s. “Thanks to advertising,” wrote the journalist and author Silas Bent in 1927, “a penny’s worth of germicidal value in a nationally known antiseptic is marketed for $95; flimsy wood is sold as good furniture; and six-dollar shoes are sold at twelve dollars.” But the sword itself was double-edged, especially in newspapers where there were two kinds of news, one that disseminated useful information about events or circumstances on the basis of a “natural demand” for it, the other the result of sheer salesmanship.³⁶ For Bent, the gathering and packaging of 90 percent of the news by the ever-growing centralized ownership of newspapers and magazines was based on its “pecuniary advantage” in some form or another.³⁷ Thus the mission of the newspaper business was above all to advance readership on the basis of understanding how to package and sell news. Moreover, it relied on public opinion experts like Walter Lippmann, who argued that it was necessary for elites to “manufacture consent” for a public that could neither see nor understand the world clearly.³⁸ As a result, news stories increasingly came to depend on ways to hold the reader’s attention. The need to captivate, entertain, sensationalize, and titillate the reader was similar to the approach used by advertisers to promote their commodities. As Bent explained, “The merchandiser of manufactured commodities uses methods quite similar to the merchandiser of news.”³⁹ Here was one kind of ballyhoo that made capitalism functional and kept the Great Boom alive, at least for now.

Soon enough, psychologists plumbed the minds of what it considered the “irrational public” to determine ways to assemble and manage public opinion in the service of Big Business. The most notable among them, Henry C. Link, manufactured popularized versions of Freudian psychology that were delivered to order to Big Business. In 1923, Link helped to organize other academics to create and then direct the American Psychological Corporation, whose objective was to provide businessmen with the knowledge of how to use methods of behavioral psychology to the advance of marketing. The “new psychology” of the 1920s served the needs of capitalists in their efforts to sustain the Great Boom and was a crucial means in recognizing social impulses that triggered desire and want, especially if the commodity in question was not needed.⁴⁰

CAPITALIST PROGRESS AND ITS CONTRADICTIONS

Such were the efforts by America’s rulers who played a pivotal role in transforming the class struggle at home and abroad in the 1920s. Marx and Engels had grasped its dynamic throughout world-historical development: “uninterrupted” but always a “hidden” or “open fight” from one epoch or era to another depending on the material conditions of society and their ideological products.⁴¹ In 1920s America, the owners and managers of capital were playing out their revolutionary role at a pivotal moment in the transition to the hegemonic rule of American finance capital in the world capitalist system. As its epicenter, the United States was reconfiguring the international order and transforming the social relations of production toward greater abundance. Warren Harding, the compromise Republican Party candidate from Ohio who saw beyond his petty-bourgeois midwestern roots, had recognized that the United States needed a foreign policy to empower its businessmen to rebuild Europe and reap enormous profits. In the process, the United States quickly recognized that support for Benito Mussolini and his fascist regime in Italy was the basis upon which to establish American hegemony in Europe.

At the same time, the very processes that created Pax Americana carried the seeds of a future crisis. The expansion of U.S. imperial interests, secured at times by the use of military force in Central America and the Caribbean, exacerbated existing contradictions of class and race. This was also true in the Philippines where U.S. imperial rule had been brutal. At home, the ruling class and its state apparatus had crushed the alleged Bolshevik conspiracy in 1920 and quickly moved to quell other forms of opposition. Their defeat of alien forces then made it possible to claim that it was all the work of good, old-stock people who stood for the ideas, images, and proper behaviors of True Americanism. Fearing that white America would be overrun, Congress passed the Emergency Quota Act in 1921, limiting immigration from countries in Europe, the Near East, Africa, and even Australia and New Zealand, though committed white supremacists were disappointed that too many immigrants from southern and eastern Europe were entering the country to poison the ranks of Anglo Saxons. The draconian National Origins Act of 1924 cut quotas even more and was designed to keep out East Asians, especially the Japanese.⁴² The “adhesive” of white supremacy at home and abroad was the glue that held together the rising American imperium.⁴³ And all the while, the gurus of advertising, public relations, and propaganda advanced new and more sophisticated means of capitalist power to propagate a politics of accommodation in society, at times doing so in the most surreptitious and manipulative ways. The class struggle in the United States during the years of the Great Boom remained hidden, though the contradictions operating within it would intensify quickly when the crisis came in 1929.

It is within all of these developments that we find the genesis of fascist processes, terrorist and non-terrorist alike, in the expansion and euphoria of unprecedented capitalist expansion. In the United States, the objective to totalize the powers of capital over all aspects of material life and consciousness marked the onset of fascism—the terrorist and non-terrorist rule of Big Business—in its particular American form. Simply put, these processes fueled the coming of the American Behemoth, a living example of what Marx saw in Capital—“a live monster that is fruitful and multiplies.”⁴⁴