The ‘20s: Culture, Consumption, and Crash 159start. The RFC was only supposed to loan to institutions that had sufficient
collateral [the ability to pay back the loan] so the vast majority of that fed-
eral money went to big banks and corporations, a large number of which held
on to the funds instead of loaning them out or reopening their factories or
expanding production. Many companies, in fact, used RFC money to pay
down their own debts and lay off workers. Critics called it a “bread line for
big business.” Making matters worse, RFC money could only be used on
public projects—growing crops, building dams, erecting bridges—that would
pay for themselves, through tolls, rents as in public housing, purchases as from
the post office, or through tax receipts. The RFC was ultimately unsound
because it did not help those who most needed it—consumers. Hoover con-
tinued to attack the problem of the depression as a problem of production [as
his successor initially would] so only about 10 percent of the $300 million
available was even loaned out; only about $300 million, or 20 percent, of the
$1.5 billion public works budget was released; and the Fed increased interest
rates, thereby making money scarce and collapsing the economy further. So
long as government officials and the ruling class continued to focus on the
problem of production, the problem was not going away. As Hoover and
other American leaders surveyed the world in 1932, it seemed as though there
were two alternatives to global depression—Communism as practiced in the
Soviet Union, and a new economic model, Fascism, which was emerging in
Italy and Germany. Neither were options for the United States, so new ideas,
and new deals, had to be worked out.
The “Isolationist” ‘20s?
The 1920s bracketed the two biggest wars in world history—the Great War,
eventually called World War I, and World War II—but was a period of relative
global peace, a time of “isolationism” according to most Americans. From the
days of George Washington on, the U.S. claimed it wanted to avoid becoming
tangled up in the problems of the world; it wanted to be “isolated” from the
kind of issues that drove Europe to war in 1914 and led Wilson to intervene
in 1917. So the 1920s, Americans still believe, was an era of Isolationism, a
brief period of relief in between two bloody and destructive wars. But was
the 1920s a time of isolationism? What kind of international policies did the
U.S. pursue, or avoid, in that decade? Was America truly isolationist, or was