October 1929 became the moment of truth for ‘American individualism’. Political Stability was about to collapse in Asia, economic stability would crumble where it was least expected:
in the heart of the new world order: United States, New York, Wall Street.

   Throughout the 1920s, stock prices had been rising, reflecting the strength of the American economic powerhouse. The atmosphere was exuberant, fortunes seemed to be easy to make.
Betting on continuously rising stock prices, many investors had financed their port- folios with loans. In September 1929 many found themselves unable to pay; conse- quently they sold off their stocks. By October the selling was ubiquitous. On Octo- ber 24 and October 29 Wall Street ‘crashed’.  This price-tumbling was aggravated by bankruptcies of many small and medium-size banks who had lost money in ‘foul’ mortgages that farmers suffering from falling prices for their goods were not able to pay.[209]

   Hoover’s credo of ‘no-government interference in the marketplace’ further helped a vicious circle to take grip. By the end of 1929 stock prices were down 50%, unem- ployment rose from 3% in the year of the crash to 25% in 1933, the over 800 banks that went bankrupt in the single year of 1930 ruined many small savers, investment dropped from $10 billion to $1 billion, farmers lost their property and the country had to suffer from droughts, bug invasions and sand storms where once was fertile land.  Hoover insisted that „prosperity [was] just around the corner.“[210]

Most important for the role of the United States as leading world power were the psychological implications of this Great Depression. The sudden change from pros- perity to poverty, the loss of everything in a few days time shocked many Ameri- cans. Where was the stability prophesied for the world if it followed the American model when it did not even work in ‘God’s own country’ ?
Could the United States still serve as a role model for the world? Was the Constitu- tion still appropriate for an industrial, interdependent world? Had the American nation really developed the most advanced and best society, when Communist Russia did not suffer from the virtually world-wide depression but the United States’ praised democracy went down on its knees?

   Americans even doubted the sacrosanct fundaments of their nation: the indivi- dual’s capacity to pursue and find his happiness, a liberal society, market-economy, unalienable universal freedoms, and representative democracy.[211]

   Those doubts were reinforced as all around them the world shattered into pieces. The global scale of American economic involvement and the sudden break in the apparently endless chain of loans granted to Germany used to pay reparations to the Allies transferred to the U.S. to repay the debts, worked to make the depression a global phenomenon. Americans made things even worse as they raised the ave- rage tariff to  59% in an attempt to protect the domestic market.

   Now, ‘American individualism’ disintegrated for sure. In September 1931 Britain gave up the gold standard in order to manipulate its currency and raised high tariff walls around the Commonwealth discriminating against U.S. products. The French were deeply angered about the new American tariff and compared it to a declara- tion of war. In Germany the Communist and National Socialist parties gained strength as the country was hit by the depression.[212]  The Europeans met at Lau- sanne in 1932 to finally put an end to the reparations. The U.S. would have to con- sider $13 billion as lost.[213]  The world had lost its head and not every nation would find it again soon.
 
 

‘American individualism’ of the Republican Era had just like Wilson’s internationa- list moralism aimed at building a new, stable structure of international relations. Diplomacy would provide the security through disarmament while U.S. economic power was to develop virtually the entire globe. American goods (increasingly such products as Hollywood movies that reflected American values) would ‘americanize’ other nations. War would no longer be possible in a thus integrated and interrelated world. Pax Americana would be the highest state of human development.

   The flaw lay in ignoring that denying to accept America’s world power status in all its implications- not purely economic ones - did not necessarily mean that no other power would attempt to exploit and fill this vacuum. The accomplishment to renounce one’s possible superior power in its destructive force is an acknowledge- able and rare feature in politicians.

  However, the failure to base this system on a more stable basis had devastating consequences for the world and America’s power and position in it.