From reconstruction to depression

Course: The United States of America: History and Political System
Book: From reconstruction to depression
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Date: Thursday, 20 June 2024, 6:20 AM



Period of Reconstruction

The war was followed by the period of Reconstruction, which lasted for twelve years (1865-1877). The characteristic feature of this period was an enormous economic growth, which made the United States the most powerful nation in the world. The country became a leading industrial power. There were great factories, steel mills, flourishing cities and vast agricultural holdings. The first transcontinental railroad was completed in 1869, and by 1900, the United States had more railroads than all of Europe. The industries, such as petroleum, steel and textile, prospered. Americans made use of a series of inventions: the telephone, the light bulb, the phonograph. In Chicago, architect Louis Sullivan used steelframe construction to develop the first skyscraper.

In 1866 the Russian government offered to sell the territory of Alaska to the United States. Secretary of State William H. Seward, enthusiastic about American expansion, negotiated the deal. On March 30, 1867, the two parties agreed that the United States would pay Russia $7.2 million for the territory of Alaska. Opponents of the Alaska Purchase persisted in calling it Seward’s Folly or Seward’s Icebox until 1896, when the great Klondike Gold Strike convinced everybody that Alaska was a valuable addition to American territory.

During this period a real progress in the field of democracy was made as well. The Blacks were given the right to vote, and some of them were elected not only to various state legislatures in the South, but also to the U.S. Congress. While being in these posts, they introduced a lot of legislation beneficial to the common people. However, in 1866, the Southern planters founded a secret organization, the Ku Klux Klan, as an instrument of terror against the Blacks. Most of the leaders were former members of the Confederate Army. During the next years Klansmen wearing masks, tortured and killed black Americans and sympathetic whites. Immigrants, who they blamed for the election of Radical Republicans (they tried to protect civil rights of the blacks and bring them into the mainstream of an American life), became also their targets.

In 1868, the 14th Amendment to the United States Constitution was ratified. It grants citizenship to all persons born or naturalized in the United States, which included former slaves who had just been freed. Known as the Reconstruction Amendment, it forbids any state to deny any person life, liberty or property, without due process of law or to deny to any person within its jurisdiction the equal protection of its laws. Reconstruction came to an end in 1877, when new constitutions had been ratified in all Southern states and all federal troops were withdrawn from the area of these states.

14th Amendment to the U.S. Constitution:

Civil Rights (1868)



Section 1.

All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.

Section 2.

Representatives shall be apportioned among the several States according to their respective numbers, counting the whole number of persons in each State, excluding Indians not taxed. But when the right to vote at any election for the

choice of electors for President and Vice-President of the United States, Representatives in Congress, the Executive and Judicial officers of a State, or the members of the Legislature thereof, is denied to any of the male inhabitants of such State, being twenty-one years of age, and citizens of the United States, or in any way abridged, except for participation in rebellion, or other crime, the basis of representation therein shall be reduced in the proportion which the number of such male citizens shall bear to the whole number of male citizens twenty-one years of age in such State.

Section 3.

No person shall be a Senator or Representative in Congress, or elector of President and Vice-President, or hold any office, civil or military, under the United States, or under any State, who, having previously taken an oath, as a member of Congress, or as an officer of the United States, or as a member of any State legislature, or as an executive or judicial officer of any State, to support the Constitution of the United States, shall have engaged in insurrection or rebellion against the same, or given aid or comfort to the enemies thereof. But Congress may by a vote of two-thirds of each House, remove such disability.

Section 4.

The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

Section 5.

The Congress shall have the power to enforce, by appropriate legislation, the provisions of this article.


First half of the 20th century

Despite Constitutional guarantees, Southern blacks were now second-class citizens and were subordinated to the whites, though they still had limited civil rights. In 1896, the United States Supreme Court ruled that the Constitution permitted separate facilities and services for the two races, so long as these facilities and services were equal. Promptly there were set separate, but unequal facilities for the blacks.

Laws enforced strict segregation in public transportation, schools, sports, and even cemeteries. Poll taxes were enacted, in order to exclude the blacks and poor whites from voting. Often, the Blacks accused of minor crimes were sentenced to hard labor and violence was perpetrated against them. Although blacks were legally free, they were still treated very much like slaves.

During this period, the United States was becoming the world's leading industrial power. The Panama Canal was built in 1904 - 14, and it increased the U.S. influence in Central America.

ACP Reaffirms Its Commitment to Panama Canal Expansion

Press Release

Panama City, Panama, January 2, 2014

The Panama Canal Authority (ACP) reaffirms its commitment to successfully complete the Expansion Program to fulfill its objective of offering a new era to world maritime commerce.

“For the Panama Canal it is of utmost importance that the Expansion Program is completed to better serve the international maritime community and its customers,” said Panama Canal Administration Jorge L. Quijano.

ACP categorically rejects the pressures by contractor Grupo Unidos del Canal, S.A. (GUPCSA) in recent statements, which sole purpose are to force the ACP to negotiate outside the terms established in the contract for the new locks alleging over costs and demanding anuary 2, 2014


to be provided additional funds from those agreed in the contract. GUPCSA is the contractor in charge of the new locks project, one of the components of the overall Panama Canal Expansion.

To date, the contractor has not followed the claims and conflict resolution processes established in the contract to support the claims.

“No matter what type of pressure is exercised against the ACP, we maintain our request that GUPCSA respects the contract that they accepted and signed,” said Quijano.

According to the contract, the intention to suspend the works does not imply the termination or abandonment of the project by the international consortium, formed by the companies Sacyr Vallehermoso, S.A (Spain), Impregilo, S.p.A. (Italy), Jan de Nul Group (Belgium) and Constructora Urbana S.A. (CUSA) (Panama).

The ACP reiterated that the only channels to process claims are clearly established in the contract. A third party decides two of the three methods established in the contract for the resolution of claims. These contractual clauses were accepted by GUPCSA upon signature of the contract.

The ACP also trusts that the contractor is able to comply with the terms agreed upon under contract. The contract includes guarantees that will allow completing the new locks. With 65% completion, the new locks project is at a stage that the construction may be completed with the mechanisms included in the contract, if needed.

Overall, the Expansion Program is 72% complete. GUPCSA has previously indicate that instead of finishing construction October 2014, as originally established in the contract, the new locks will be finished June 2015.

The Panama Canal Authority (ACP) is the autonomous agency of the Government of Panama in charge of managing, operating and maintaining the Panama Canal.

January 3, 2014

Source:  Panama Canal Expansion

After the First World War

After the First World War the Unites States were in an even stronger economic position. The war disturbed the economies of its European rivals and U.S. companies were able to capture markets, which had previously been supplied by countries like Britain and Germany. U.S. companies also began to make full use of mass production. However, unrestrained economic growth created many serious problems. Some businesses became too big and powerful. The United States Steel Corporation, formed in 1901, was the largest corporation in the world. Such giant enterprises could produce and sell goods cheaply, but on the other hand they could also destroy smaller competitors.

The period of 1922 to 1933 in the USA was famous for prohibition, a period during which the production and sale of alcoholic beverages were illegal. Initially, it was supposed to lower crime and corruption, reduce social problems, lower taxes needed to support prisons and poorhouses, and improve health and hygiene in America. Instead, illegal alcohol became more dangerous to consume, organized crime flourished, courts and prisons became overloaded, and corruption of police and public officials worsened. The roots of prohibition went bak to the early 1900s where there was a temperance movement originating in the public toward prohibition of alcohol. The movement was supported by rural Protestants, Anti-Saloon League, Democratic and Republican parties and Woman´s Christian Temperance Union. Many women became active in supporting prohibition believing it would protect families, women and children from the effects of abuse of alcohol. Prohibition began on January 16, 1920, when the 18th Amendment to the Constitution went into effect. Even though the sale of alcohol was illegal, alcoholic drinks were still widely available at speakeasies (a saloon or nightclub selling alcoholic beverages illegally) and other underground drinking establishments.

Large quantities of alcohol were smuggled in from Canada, overland and via the Great Lakes. In addition, the Prohibition era encouraged the rise of criminal activity, especially organized crime (gangsterism) often associated with bootlegging. The most notorious example was the Chicago gangster Al Capone, who earned a staggering $60 million annually from bootleg operations and speakeasies. Support for prohibition was waning by the end of the 1920s and with the country caught in the Great Depression, creating jobs and revenue by legalizing the liquor industry had an undeniable appeal. Franklin D. Roosevelt ran for president in the 1932 election and his victory meant the end for prohibition. In February 1933 Congress adopted a resolution proposing a 21st Amendment to the Constitution that would repeal the 18th Amendement.

Solving Scarface

How the Law Finally Caught Up With Al Capone

In the “roaring twenties,” he ruled an empire of crime in the Windy City: gambling, prostitution, bootlegging, bribery, narcotics trafficking, robbery, “protection” rackets, and murder. And it seemed that law enforcement couldn’t touch him.

The early Bureau would have been happy to join the fight to take Capone down. But we needed a federal crime to hang our case on—and the evidence to back it up.

In those days, racketeering laws weren’t what they are today. We didn’t have jurisdiction over prohibition violations; that fell to the Bureau of Prohibition. Even when it was widely rumored that Capone had ordered the brutal murders of seven gangland rivals in the infamous “St. Valentine’s Day Massacre,” we couldn’t get involved. Why? The killings weren’t a federal offense.

Then, in 1929, we got a break.

On February 27, Capone was subpoenaed at his winter home near Miami, Florida, to appear as a witness before a federal grand jury in Chicago on March 12 for a case involving a violation of prohibition laws.

Capone said he couldn’t make it. His excuse? He claimed he’d been laid up with broncho-pneumonia for six weeks and was in no shape to travel.

That’s when we got involved. We were asked by U.S. Attorneys to find out whether Capone was on the level. Our agents went to Florida and quickly found that Capone’s story didn’t hold water. When he was supposedly bedridden,

Capone was out and about going to the race tracks, taking trips to the Bahamas, even being questioned by local prosecutors. And by all accounts, his health was just fine.

On March 27, 1929, Capone was cited for contempt of court in Chicago and arrested in Florida. He was released on bond, but from there on, it was downhill for the notorious gangster:

  • Less than two months later, Capone was arrested in Philadelphia by local police for carrying concealed weapons and was sent to jail for a year.
  • When he was released in 1931, Capone was tried and convicted for the original contempt of court charge. A federal judge sentenced him to six months in prison.
  • In the meantime, federal Treasury agents had been gathering evidence that Capone had failed to pay his income taxes. Capone was convicted, and on October 24, 1931, was sentenced to 11 years in prison. When he finally got out of Alcatraz, Capone was too sick to carry on his life of crime. He died in 1947.

In the end, it took a team of federal, state, and local authorities to end Capone’s reign as underworld boss.

Source: stories/2005/march/capone_032805

Great Depression and New Deal

Americans developed a tendency to invest savings and earnings in speculative ventures. One way of making money during the 1920s was to buy stocks and shares. Prices of these stocks and shares constantly went up, so investors kept them for a short-term period and then sold them at a good profit. On October 29, 1929 (the Black Tuesday) the Stock Market crashed. It had lost 47 percent of its value in twenty-six days. Although less than one percent of the American people actually possessed stocks and shares, the Wall Street Crash was to have an enormous impact on the whole population. Business houses closed their doors, factories shut down and banks failed. By 1932 approximately one out of every four Americans was unemployed. The big disparity between the country's productive capacity and the ability of people to consume was the core of the problem. The Great Crash was the beginning of a deep, worldwide economic crisis - the Great Depression.

Soon after he was elected as a president, Franklin Delano Roosevelt introduced a series of measures, called the New Deal. The main ideas of the New Deal were recovery from the economic depression and stabilization of the national economy to prevent severe economic crises in the future. Under the New Deal industrial enterprises and farmers were given subsidies to be able to restrict their production, farm surpluses were purchased by the Government and banks received government support too. Within three months, the historic Hundred Days, Roosevelt enacted a number of laws to help the economy to recover. New jobs were created by the construction of roads, airports, bridges, and public buildings. The program reduced unemployment from 17 million to 8 million. In addition, the New Deal also included social and labor legislation.

The cornerstone of the New Deal was the Social Security Act of 1935. It created a system of insurance for the aged, disabled and unemployed. The system was based on employer and employee contributions. Roosevelt also banned unfair employer practices and protected the workers´ right to collective bargaining. These measures made Roosevelt extremely popular. He was the only American president who served three terms and was elected to a fourth. Although the economy improved, the Roosevelt's New Deal programs did not end the Depression.

Franklin D. Roosevelt´s 9th Press Conference

(shortened version)

THE PRESIDENT: It is very good to see you all. My hope is that these conferences are going to be merely enlarged editions of the kind of very delightful family conferences I have been holding in Albany for the last four years. And so I think we shall discontinue the practice of compelling the submitting of questions in writing before the conference in order to get an answer. There will be a great many questions, of course, that I won't answer, either because they are "if" questions—and I never answer them—and Brother Stephenson will tell you what an "if" question is—

MR. STEPHENSON (Reporter): I ask forty of them a day.

THE PRESIDENT: And the others, of course, are the questions which for various reasons I do not want to discuss, or I am not ready to discuss, or I do not know anything about. There will be a great many questions you will ask that I do not know enough about to answer.

Then, in regard to news announcements, Steve (Early, Assistant Secretary to the President) and I thought that it would be best that straight news for use from this office should always be without direct quotations. In other words, I do not want to be directly quoted, unless direct quotations are given out by Steve in writing. That makes that perfectly clear.

Then there are two other matters we will talk about: The first is "background information," which means material which can be used by all of you on your own authority and responsibility, not to be attributed to the White House, because I do not want to have to revive the Ananias Club. (Laughter)

Then the second thing is the "off the record" information which means, of course, confidential information which is given only to those who attend the conference. Now there is one thing I want to say right now about which I think you will go along with me. I want to ask you not to repeat this "off the record" confidential information either to your own editors or to your associates who are not here; because there is always the danger that, while you people may not violate the rule, somebody may forget to say, "This is off the record and confidential," and the other party may use it in a story. That is to say, it is not to be used and not to be told to those fellows who happen not to come around to the conference. In other words, it is only for those present.

Now, as to news, I don't think there is any. (Laughter)

Steve reminds me that I have just signed the application for Associate Membership in the Press Club, which I am very happy to do.

Q. You mentioned in your greetings to the Governors on Monday that you favored a unified banking system. Is that in your emergency plan?

THE PRESIDENT: That wasn't quite the way I put it to them. What I said to them was that it was necessary to treat the State and national banks the same way in this emergency, so there would not be two different classes of banks in this country; and the other thing I said was to try to avoid forty-eight different plans of putting this into effect.

Q. Do I understand you are going to keep hold of this banking situation until permanent legislation is enacted?

THE PRESIDENT: Off the record answer, yes.

Q. May I ask if the long-time settlement of the banking situation is intermeshed with the World Economic Conference?

THE PRESIDENT: I should say on that—background information—so far as banks go within the United States, no; so far as international exchange goes, yes. I think that is the easiest way of putting it. In other words, the opening of banks and the maintaining of banks once they are opened are not connected with the World Economic Conference.

Q. In your Inaugural Address, in which you only touched upon things, you said you are for sound and adequate . . .

THE PRESIDENT: I put it the other way around. I said "adequate but sound."

Q. Now that you have more time, can you define what that is?

THE PRESIDENT: No. (Laughter.) In other words—and I should call this "off the record" information—you cannot define the thing too closely one way or the other. On Friday afternoon last we undoubtedly did not have adequate currency. No question about that. There wasn't enough circulating money to go around.

Q. I believe that. (Laughter.)

THE PRESIDENT: We hope that when the banks reopen a great deal of the currency that was withdrawn for one purpose or another will find its way back. We have got to provide an adequate currency. Last Friday we would have had to provide it in the form of scrip, and probably some additional issues of Federal Bank notes. If things go along as we hope they will, the use of scrip can be very greatly curtailed, and the amounts of new Federal Bank issues, we hope, can be also limited to a very great extent. In other words, what you are coming to now really is a managed currency, the adequateness of which will depend on the conditions of the moment. It may expand one week and it may contract another week. That part is all off the record.

Q. Can we use that part-managed?

THE PRESIDENT: No, I think not. . . .

Q. Now you came down to adequacy; but you haven't defined what you think is sound. Don't you want to define that now?

THE PRESIDENT: I don't want to define "sound" now. In other words, in its essence—this is entirely off the record—in its essence we must not put the Government any further in debt because of failed banks. Now, the real mark of delineation between sound and unsound is when the Government starts to pay its bills by starting printing presses. That is about the size of it.

Q. When you speak of a managed currency, do you speak of a temporary proposition or a permanent system?

THE PRESIDENT: It ought to be part of the permanent system that is off the record—it ought to be part of the permanent system, so we don't run into this thing again. . . .

Q. Can you tell us anything about guaranteeing of bank deposits?

THE PRESIDENT: I can tell you as to guaranteeing bank deposits my own views, and I think those of the old Administration. The general underlying thought behind the use of the word "guarantee" with respect to bank deposits is that you guarantee bad banks as well as good banks. The minute the Government starts to do that the Government runs into a probable loss. I will give you an example. Suppose there are three banks in town; one is 100 percent capable of working out, one 50 percent and another 10 percent. Now, if the Government assumes a 100 percent guarantee, it will lose 50 percent on one and 90 percent on the other. If it takes on a 50 percent guarantee, it will lose nothing on the first and second, but will lose a lot on the 10 percent solvent bank. Any form of general guarantee means a definite loss to the Government. The objective in the plan that we are working on can be best stated this way: There are undoubtedly some banks that are not going to pay one hundred cents on the dollar. We all know it is better to have that loss taken than to jeopardize the credit of the United States Government or to put the United States Government further in debt. Therefore, the one objective is going to be to keep the loss in the individual banks down to a minimum, endeavoring to get 100 percent on them. We do not wish to make the United States Government liable for the mistakes and errors of individual banks, and put a premium on unsound banking in the future.

Q. That is off the record?


Q. Couldn't you make it background? There is a demand for the guarantee proposition.

THE PRESIDENT: As long as you don't write stories to give the average depositor the thought that his own particular bank isn't going to pay. That is what I want to avoid, because, when you come down to it, the great majority of banks are going to pay up. There will be many other banks which won't pay out the whole thing immediately, but will pay out 100 percent in time. There will be a very small number of banks that will probably have to go to the Examiner; but I don't want anybody to get the idea in reading the stories that the average bank isn't going to pay one hundred cents on the dollar, because the average bank is going to pay it. . . .


Source: Franklin D. Roosevelt: "Press Conference," March 8, 1933.


Americans in the World War II

In September 1939, war erupted in Europe. The policy of the United States was to be neutral but not indifferent. The United States gave the British 50 overage destroyers in return for naval bases in the Western Atlantic in the time when Great Britain was threatened by German invasion. During the war, USA lent $ 13.5 thousand million in war supplies to Britain and another $9 thousand million to the Soviet Union.

The United States entered the war on 7 December 1941, after the Japanese attack on Pearl Harbor. The States played a leading part in the war in the Far East, North Africa, Sicily, Italy and Normandy. The famous Supreme Commander of the allied forces was General Dwight David Eisenhower. Under his command all Africa was cleared of the enemy within a short time. In 1943 the Allies landed in Italy and after two years of hard fighting German armies were forced to surrender. With the help of United States, France and Belgium were liberated in 1944.

In February 1945 Roosevelt, Churchill, and Stalin met in Yalta in the Crimea where they discussed the problem of arranging zones of occupation in Germany. They continued the work of the Yalta Conference in May 1945 in Potsdam. The USA was represented there by Harry Truman, who became the President after Roosevelt's death. Roosevelt died in April 1945, shortly before the end of the war in Europe. Truman represented the right wing of the Democratic Party. In hopes of inducing Japanese to surrender and thus avoiding heavy casualties in an invasion of Japan, he made a controversial decision. On 6 August 1945 he ordered the use of an atomic bomb (Project Manhattan) against Hiroshima and on 9 August against Nagasaki. After these attacks Japan agreed to surrender (14 August). Nearly 200,000 civilians died in the nuclear attacks. The war came to an end and it strengthened the position of the USA.