The Last Days of the Gilded Age

A Darwinian spirit which pervaded European and America society (who should be the fittest people and thus the ones entitled to dominate?) created a wide domestic social gap between the ‘successful’ few who benefited royally from the new industrial age and the masses of ‘survivors’ who barely got by – but whose labors nonetheless were essential to the success of this new age.  Creating a somewhat artificial sense of solidarity between these classes by stirring up nationalist and imperialist passions helped keep domestic tensions down, but increased those tensions abroad.  It energized the European-American (‘Western’) dominance of the rest of the world – but eventually, with no more foreign fields available on which to vent such aggressive instincts, these passions turned back onto the Europeans themselves.

The "Great War" (World War One)

There was no good reason for the "Great War" which erupted in 1914 except that such nationalist passions finally flared out of control – pitting European against European in a virtually suicidal deadlock.  When the first major political system, Russia, collapsed under the strain of such martial folly it set loose an absurd and destructive idealism that supposedly now validated all the carnage:  1) supposedly (as the explanation now went) the remnants of the feudal "autocracies" had caused the war (which was not even close to being true) but now thankfully were falling (which was true) and 2) thus opening the possibility of new mass-based ‘democracies’ to arise (roughly true) which 3) guaranteed that this would be the last war which mankind would ever have to fight because ‘democracies’ are naturally peace-loving, unlike the autocracies (grossly untrue).


Thus American President Wilson "conned’ America into getting involved in this gruesome war on the basis of this new utopian rationale that the Russian Revolution in 1917 supposedly set forth.  As events would soon prove (though not prove sufficiently for a number of utopian intellectuals who would continue to hold religiously to this belief – despite all the obvious proof to the contrary) Wilson's democratic idealism did not lead to a world of perpetual peace – but merely speeded up the undoing of the old international political status quo and set loose a number of new political forces that promised to keep things stirred up internationally.  But the American involvement did at least break the murderous stalemate and tip the balance of power to one side of the battle sufficiently to bring the war to an uneasy ending in 1918.

The Roaring Twenties

The war broke the mystique of the West's civilized ‘superiority’ and depleted its political energies sufficiently so that it invited all sorts of challenges to whatever anemic political order was able to establish itself after the war.  Mostly people in the West were tired of the whole political thing – and preferred to quest after the new material offerings that abounded after the war: radios, cars, home appliances – and lots of leisure activities.  For many, the ‘Roaring 20s’ offered a rather sublime mindless existence.  For others however, especially the rural population, life was quite Spartan – producing a deep resentment over the social and economic changes taking place mostly in the urban world.

The Great Depression (1930s)

But the bright lights of the urban West suddenly went dim when at the beginning of the 1930s the economic system that stood behind all this material existence simply collapsed – putting the urban West in the same economic plight that the rural West had been experiencing.  This had the horrible effect of presenting the opportunity for political demagogues to unite national societies around a new (again Darwinism) Fascist appeal for national unity, at first simply to get that society up and running again, but then to turn that energy into a restored national pride, even again a national haughtiness (the understanding of the causes of the Great War being deflected away from their acknowledgment that it had been just such nationalist prides that had marched their fathers into war, instead pointing to various alien conspirators who had ‘caused’ that great tragedy or at least caused the economic tragedy they were presently going through ... or both:  Jews, war-industry Capitalists, foreign bankers, Communists).  As German aggressions and Spanish civil struggles darkened the skies of Europe and Japanese aggressions did the same in China a number of other national players froze in fear over the thoughts of another war possibly arising out of these developments.  That included America which was absolutely determined not to be brought into another crusading war – whether to make the world safe for democracy ... or not.

World War Two

The weak resistance of the ‘democracies’ (as Britain, France and America – and even China – were now calling themselves) to the increasingly arrogant German and Japanese spirit finally in the late 1930s (1937 in China and 1939 in Europe) plunged the world into another horrible World War.  But the ‘democracies’ tightened ranks under the onslaught, Russia changed sides to join them – and Germany and Japan, who had grossly overextended themselves in their imperialist quests, were crushed (1945).

The onset of the Cold War

Europe in trouble.  But the devastation of World War Two was extensive.  Germany and Japan lay in utter ruin materially and spiritually.  France, though it had come through the war materially intact, had not done so emotionally or spiritually.  England had come through the war mostly emotionally intact, but not materially so.  Russia had suffered extensively materially but was able to rebuild fairly quickly under Stalin's dictatorship; emotionally the Russians were strong.  And America had come through the war not only materially intact, but industrially booming; and emotionally it was in excellent shape.

The initial expectation in America was that with the war over things would quickly get back to normal (Americans have a great difficulty in understanding how difficult it is for a society to pick itself back up after having just suffered a major social trauma.).  By 1947 it was becoming apparent that Europe was not reviving, but instead seemed to be sinking deeper into economic hardship.  European soldiers returned to civilian life, only to find that there were no jobs for them.  Their countries needed rebuilding.  But there was no capital, no financing available to rebuild.  Frustration mounted in Europe.

Stalin saw this as an opportunity to extend the reach of his 'international Communism' deep into Western Europe.  He advised the large Communist Parties of France, Italy, Belgium and elsewhere, to cease their cooperation with the post-war governments and begin to stir up worker agitation to bring about new 'socialist' (ie., 'Communist,' ie., 'Stalinist') governments.  America sensed the danger of a rising Communist threat in Europe and took action.

Building a new 'Free World' international economic order

American leaders understood that Europeans needed to get back on their feet economically as fast as possible in order to head off Communist insurrection and a Stalinist takeover of their governments.  And America was in a perfect position to help:  America itself, one single country, generated fully one half of the world's total economic productivity in the first years after the war.

Because of the solid strength of the American economy, the dollar was the most sought-after currency in the world (the British pound, French franc and German mark were suffering terribly because of the economic instability of these countries).  By simply granting some of that wealth in dollars (up to $15 billion) to the Europeans, even to our former enemy Germany, we could help the Europeans rebuild (most of that money would return anyway to the US in the form of purchases of American industrial goods!).

But America let it be known to the world willing to take America's lead (not surprisingly Russia and its Communist 'satellite' countries in East Europe turned down the offer) that there was a key condition that accompanied the 'dollarization' of the post-war world.  America would not allow dollars to be used to rebuild nationalistic economies.  Extreme nationalism had twice ruined Europe - and good parts of the rest of the world as well.  America did not want to see Europe rebuild around nationally competing economies.  American leaders remembered that our present American Constitution came about in 1787 because after independence from Britain, the 13 states fell into an economic competition with each other that nearly destroyed the economy of the young nation; America consequently created a federation and took away the powers of the states to put up economic barriers against each other's goods.  Americans felt that it was time for the Europeans to build something of a similar order.  It was time for Europe to rise above the petty nationalist jealousies that had already caused so much death and destruction.  Europeans needed to unite to create a 'New Europe.'

The dollar would be used to rebuild our European friends around the goal of international economic integration.  They would be required to open their doors to the goods of other countries, even to the flow of investments into their national economies as part of opening up of their economies.

Of course this proved to be a great boon to the American economy, with its huge reserves of hard currency (dollars) ready to go out into the world looking for investment opportunities.  Some of the countries (such as France) complained about the conditions America had tacked onto this new American-sponsored international economic order.  But eventually, as the European economies revived and European investment money began to flow as readily as American investment dollars, the advantages of this new 'Free World' / 'Capitalist' order began to be understood by all.

Indeed Europe would move on its own to take the lead in removing national economic barriers among themselves to let money, goods and labor moved freely across their national borders.  By the late 1960s Europe was well on its way toward European Union.

But as of the late 1940s, this dream was still a long way off.

Cold War Idealism accompanies this solidifying of the 'Free World.' 

And thus it was in the late 1940s that America and Russia found themselves in contention for the heart of Europe (and eventually the heart of the entire world).  This seemed totally unexpected on the part of most average Americans.  There had been, during the honeymoon years of Russian-American war-time cooperation, a number of promises made by the Russians of post-war cooperation.  Americans as usual had idealized the war as 'democracy versus fascism' – and somehow had come to believe that Russia was interested in promoting ‘democracy’ in the same way America was.

But finding the Russians increasingly to be non-cooperative, Americans felt betrayed.  But Americans felt betrayed not just by the Russians, but also by those Americans who had recently been so encouraging of American-Russian cooperation.  Looking back on those wartime promises from the vantage point by 1947 or 1948 of the growing sense of Russian-American conflict, irate Americans now wondered how could anyone ever have believed that Russia would support 'democratic' ideals.  Russia was Communist, was it not?  Communism and Democracy are natural enemies, are they not?  Who were these American leaders who had been so trusting of Russia.  Were they themselves trustworthy?

So once again an idealistic good-evil dualism entered into the American understanding of the political complexities of a world about which Americans had only the slightest knowledge.  When in 1949 Communists won the civil war in China, defeating the government of our war-time ally Chiang, Americans sensed the rising threat of Communism to 'democracy' everywhere.  The invasion in 1950 of Communist North Korea of 'democratic' South Korea, and our need to get involved militarily in order to prevent the collapse of democratic South Korea made the issue even clearer: America was involved in a life-death struggle of democracy to preserve itself against the aggressions of Communism.  It was as if we had entered a Third World War – except that we were not yet called on to fight its source (Communist Russia and China) directly militarily.  But we were involved in this struggle at least economically and spiritually.  It was a war – but primarily a 'Cold War.'s

Go on to the next section:  The Last Days of the Gilded Age

  Miles H. Hodges