In the first few decades of the 20th Century, the United States citizens were faced by several dilemmas. First, there were increased calls against immigration and anti-Semitic influence. In the 19th Century, the United States was hit by a wave of anti-Catholicism. Attacks, some which led to a significant number of deaths, were made on followers of this denomination. In the late 19th Century and early 20th Century, these Catholic immigrants, who were mainly Irish and German, had been assimilated. The focus shifted towards immigrants, who were mainly from Italy and Poland. Although these immigrants had little or no skills, they took over jobs which were primarily reserved for the United States citizens because they demanded lesser wages. This led to the emergence of anti-Semitic groups such as the Ku Klux Klan in the 1920s.
The government responded by outlawing and engaging in combats with such gangs. However, social reforms were vital in ensuring that all immigrants were assimilated. The government instituted policies that ensured that the immigrants learnt English and the American way of life. Rather than establish parallel language systems, English was used in major institutions and workplaces in order to facilitate assimilation for first and subsequent immigrant generations.
Secondly, the country experienced the Great Depression which started in 1929 and lasted up to the late 1930s. The late 18th century was characterized by rapid development which was spurred by reform policies instigated by the political leadership after the Civil War. Sound post-war economic policies served to improve the country’s economy till the early 20th Century. Major discoveries, such as oil in Pennsylvania, the typewriter and the electric light spurred the country into an industrial revolution. The United States economy was experiencing a boom.
However, in the late 1920s, the economy was faced with one of the greatest United States catastrophes: the great depression. Industries, such as the Ford Motor Company, were forced to restrict their operations and curtail expansion. In addition, the government, which favored the use of the gold standard, could not engage in monetary policy expansion. This led to high interest rates, and ultimately, the collapse of major financial institutions such as banks and the stock exchange market. Farmers defaulted on their loans since they could no longer afford to pay the high interest rates. Depositors, worried that they would loose all their savings, withdrew their money and converted it into currency. This led to low investments and a decline in the money multiplier effect. Consequently, there was a low money supply and a huge drop in aggregate investment. Therefore, workers were fired leading to high unemployment rates, wealth disparities and a general economic spiral in which production and spending levels dropped significantly.
The United States citizens no longer had confidence in their economy and political leaders. Consequently, fears escalated on a possible entire collapse of the economy. Voters, driven by this fears, overwhelmingly voted in favor of Franklin Roosevelt in 1932. Roosevelt came up with the New Deal, a well-documented plan that brought about unprecedented economic recovery. At first, the government controlled prices, wages and all other competition-based indices. In addition, it reduced farm production in order to ensure that farmers were in a position to earn a living from agriculture. However, these reforms were soon declared unconstitutional. Roosevelt’s government came up with new policies and programs that improved the workers’ welfare through social security and relief agencies. In addition, the government provided a strong stimulus for the development of labor unions. This led to lower unemployment levels in the successive years. Finally, the government increased its budgetary and military spending which helped to spur money supply and hence economic growth.