Decision Making Outcomes

Government and Business The government chose both B and C

Established War Industries Board○ Increased efficiency ○ Conserved resources through standardization○ Heavily influenced by business

Unintended ConsequencesBusiness controlled WIB and used it for own

benefitSeveral thousand businesses made over

50% profit

Government and Business Unintended Consequences Continued

WIB made decisions that benefitted big business

Government offered contracts that guaranteed a profit○ “Cost-plus-fee contracts” reimbursed company for

expenses plus gave an added feeGovernment gave subsidies, relaxed antitrust

laws, restricted market entry○ This was done to foster cooperation, but undid

many progressive reformsBig business set up a well-organized lobbying

group in Washington

Government and Business Unintended Consequences Continued

The size of government grew relative to the economy○ 1915 war spending 1% GDP○ 1918 war spending 28% GDP○ Large bureaucracy

Standardization led to industrial efficiency ○ Standard of living increased

Businesses incorporate more planning in producing goods

Government and Business Unintended Consequences Continued

Black Market developed○ Resulted from shortages of non-essential

goods○ Other countries in the war also experienced

this

Government and Business Choice A- Free-market approach

Might be more efficient in long-runProduction would probably not meet needs

of war effort○ U.S. could lose the war before the market

meet the demandAlthough B and C had weaknesses, they

worked

Government and Business Choice D- Socialism

Might have worked during wartimeWhat happens when the war is over?Government-run businesses have history of

failure in 20th century○ Soviet Union○ Cuba○ Eastern Europe

Government and Financing The government did both A and B.

Doubled income tax from 1% to 2%○ Surcharge on income over $20,000 to 13%

Increased taxes on alcohol and tobaccoIncreasing corporate taxesInheritance tax of 10% on amounts over

$50,000Government needed to borrow to pay most

costsPeople purchased war bonds

○ Appealed to patriotism○ Government pay the amount plus interest

Government and Financing Unintended consequences

Deficit rose to $1 billion per month○ Greater than yearly federal budget before the war

Federal debt 20 times greater after war○ Future taxes and spending cuts needed

Prices doubled (inflation) during the warBond drives help the rich

○ Tax exemption on bond interest, rather than being taxed at a higher rate

Burden of tax shifts to wealthier people

Government and Financing Choice C

Would have prevented the U.S. from fighting the war effectively

War was expensive-need new strategies to raise money

Government and Labor The government chose D

Created agency called National War Labor Board (NWLB)○ Included 5 business and 5 labor leaders○ Gave workers the right to unionize and bargain

collectively○ Workers pledged not to strike

There were thousands of strikes anywayIf unions refused to work after talking to NWLB

○ Government took strong actionArresting workersThreatening to send them into army

Government and Labor

Unintended ConsequencesStrikes increased during war

○ 1914- 979○ 1917-4233

Union membership increased almost 50%Wages almost doubledModeration, rather than radicalism, became

the norm in unions

Government Control of Information During World War I- Problem 1 The Government chose C

Committee on Public Information (CPI)○ Also called Creel Committee after its leader

George Creel○ Emphasized positive news in the war

Used patriotic posters, pamphlets and movies

○ “Four-minute men”75,000 volunteer army of respected community

leadersDelivered pro-war speeches at local gatherings

○ Felt positive information would make censorship unnecessary

Government Control of Information During World War I- Problem 1 Successes of CPI

Americans mostly supportive of war effortMorale remained high

Negative impacts of CPISome considered releasing carefully

selected information as censorshipMovies depicted Germans as evilCreel caught lying about info at least once

Government Control of Information During World War I- Problem 1 Unintended Consequences

CPI’s emphasis on danger of German spies created atmosphere of fear○ Life became difficult for German Americans

Committee stressed “100% Americanism”○ People should be entirely committed to the

war effort○ Led to discrimination against dissenters and

nonconformists○ Distrust of immigrants lasted beyond the war

Led to deportations and anti-immigration laws

Government Control of Information During World War I- Problem 1 Unintended Consequences

Some Americans became more skeptical of government

Historians worked for the CPI and focused on the idea of Germany starting the war

Government Control of Information During World War I- Problem 2 Government passed Espionage Act in

1917 and Sedition Act in 1918 Wilson feared dissent would undermine

war effortHe fought for censorship of the press

Espionage ActCrime to spy against the U.S., sabotage the

U.S., refuse military service if drafted, or obstruct military recruitment

Prohibited mailing of subversive papers

Government Control of Information During World War I- Problem 2 Sedition Act

Prohibited any communication intended to cause contempt to government

Many considered the acts a violation of the First AmendmentPeople feared that these acts would be used

beyond the war effort

Both acts were enforced

Government Control of Information During World War I- Problem 2 Schenck v. United States

Socialist with anti-war views published pamphlet opposing draft

Supreme Court upheld conviction for violating Espionage Act

Pamphlet posed clear and present danger during wartime

Government Control of Information During World War I- Problem 2 Unintended Consequences

The laws remained in force after the warAttorney General A. Mitchell Palmer used these

in the Palmer Raids against radicals○ They were deported○ They were not German spies; They were

socialists, communists, and suspected anarchistsThe Sedition Act was repealed in 1921 but the

Espionage Act remained in effect decades after the war○ Parts of it are still in effect in the 21st century.