How did earlier events in the period 1920 through the war contribute to the conditions described in Postwar America?

World War I changed the United States' standing as a world economic power. By 1919, it was a net creditor instead of a debtor to other countries. It had loaned $10 billion to foreign governments; nearly half that amount went to Britain. However, unlike Britain, which had been the nineteenth-century center of world finance, the United States did not pump enough money into the world economy to significantly stimulate global economic growth. By res erving most funds for domestic investment and by insisting that the cash- strapped Allies repay their debts, American fiscal policies and practices contributed to the economic instability and eventual worldwide depression of the interwar period. After World War I, Germany, Italy, and Japan — all anxious to regain or increase their power — adopted forms of dictatorship. The League of Nations was unable to promote disarmament. When Adolf Hitler came into power, he promised to end the humiliating conditions caused by German defeat in World War I.Economic problems were among the fundamental causes of World War II.

One legacy of World War II, therefore, was the return of abundance, and with it the relegitimation of capitalism (p 18). Another was a rising popular expectation of economic security and material comfort—of what was already becoming known as 'the American dream.” a dream that rested on visions of increasing consumption. But abundance also helped strengthen other hopes for change. As Hersey's statement suggests, to some the “American dream” meant more than apple pie alone. Democracy, he said, was part of the mix— not as an alternative to visions of material comfort, but as both a precondition for and a result of them. Defining what democracy meant, mediating among the very different ...