In the early 1920s, as Europe lay in tatters following the devastation of World War I, the United States found itself at a pivotal juncture. Under the leadership of newly-elected President Warren G. Harding, America chose to retreat into isolation, leaving a war-ravaged continent to fend for itself. This decision would have profound consequences for Europe’s struggle to rebuild and recover.
The Harding Doctrine: America First
Harding, elected in a landslide in 1920, campaigned on a platform of “return to normalcy” – a rejection of Woodrow Wilson’s internationalist approach and a promise to focus on domestic concerns. This inward turn manifested in a series of isolationist policies that would come to define America’s stance towards Europe for much of the decade.
At the heart of Harding’s approach was a deep skepticism about America’s ability to positively shape events overseas. As a New York correspondent reported in June 1922:
There is no doubt that the administration would like to take a larger part in European affairs… But the mass of American sentiment is steadfastly against it. The huge majority by which Mr Harding defeated the Democratic candidate in the autumn of 1920 was in large part a reaction against Mr Wilson’s entanglement in transatlantic politics.
This popular sentiment, rooted in disillusionment with the outcome of the war and America’s brief foray onto the global stage, would prove a powerful constraint on Harding’s foreign policy.
Fordney-McCumber Tariff: Walling Off Europe
Perhaps the most consequential manifestation of Harding’s isolationism was the Fordney-McCumber Tariff, signed into law in September 1922. The bill imposed staggeringly high tariffs on a wide range of imported goods, making European products prohibitively expensive in the American market.
The impact on Europe, still reeling from the war and desperate for export revenue, was devastating. As one analysis in the New York World noted:
Importations would be placed under a virtual embargo, thereby blocking Europe’s only means of paying off her war debt of more than eleven thousand million dollars to the United States.
The tariffs not only deprived Europe of a critical market but also exacerbated the continent’s debt crisis. European nations, already struggling to repay war loans, now found themselves cut off from their primary means of earning the necessary foreign exchange.
The Gold Conundrum
Compounding Europe’s woes was the massive accumulation of gold in the United States. By 1922, over 40% of the world’s gold supply sat idle in American vaults, a byproduct of wartime trade imbalances and postwar loans. This left European currencies critically short of the precious metal needed to back their money supplies.
Under the Fordney-McCumber Tariff, this “economically unhealthy gold surplus” would remain trapped in America, “instead of flowing back to normal channels and stabilising exchanges,” as the New York World put it. The result was ongoing currency instability and undervaluation that further hobbled European recovery.
The Price of Isolation
The impacts of American isolationism on Europe were stark. Denied both export markets and financial relief, European nations stagnated economically throughout the 1920s. Unemployment remained high, social unrest simmered, and the seeds of future conflict slowly took root.
Even in America, voices called for a reconsideration of Harding’s approach. As a Guardian editorial argued in September 1922, isolationism, while understandable, was ultimately “impracticable”:
If it were morally defensible to say that the Continent’s troubles are no concern of ours… It is manifest to everybody that in point of fact that Europe’s troubles are very much our affair and that isolation would be the most dangerous and costly policy of all.
Yet such calls went unheeded. Harding, constrained by popular opinion and vested interests, maintained his inward focus until his death in 1923. His successor, Calvin Coolidge, largely stayed the course, leaving Europe to navigate the post-war landscape alone.
A Continent Left Adrift
In the end, America’s retreat into isolationism in the 1920s left an indelible mark on European history. Deprived of the world’s largest export market and cut off from desperately needed financial flows, Europe’s recovery from the Great War was stunted and incomplete.
The economic stagnation and social upheaval of the 1920s would, in turn, sow the seeds for the calamities to come in the 1930s and beyond. While it is impossible to know how history might have unfolded had America chosen a different path, there is little doubt that the Harding doctrine of isolationism imposed a steep price on a continent already pushed to the brink.
As Europe struggled to find its footing in a new postwar reality, it did so largely without the support of the nation that had, just years earlier, played such a pivotal role in shaping its fate. The consequences of that absence would echo through the decades to come.
