1938Edit
1938 stands as a turning point in the long arc from the Great Depression to a new global order. The year tested the resilience of liberal democracies, the efficiency of market-driven economies, and the willingness of nations to defend their sovereignty against imperial aggression. In the United States, policy makers faced a persistent question: should the federal government continue expanding relief and reform to stabilize the economy and protect workers, or should policy pivot toward more limited government and market-led growth? Around the world, expansionist regimes pushed borders, challenged treaties, and threatened the balance of power, forcing debates over deterrence, diplomacy, and moral responsibility.
The global economy was still recovering from the Great Depression when producers and workers confronted the costs of mass dislocation, monetary policy, and regulatory reform. The dominant narrative in many capitals was that government had a duty to intervene to prevent another collapse, but the prudence and scope of that intervention remained contested. In this context, 1938 also offered moments for allies and friends of free societies to test the limits of diplomacy and deterrence, even as many insisted that peace must be earned through strength and clear commitments rather than surrendering ground to aggression.
Major events and developments
Europe: border changes, appeasement, and growing threat
In March 1938, the Anschluss—the incorporation of Austria into Nazi Germany—made a bold, irreversible assertion that neighboring states could no longer assume their borders would be respected by their neighbors. This move underscored the fragility of the post‑First World War order and tested the resolve of those who believed sovereignty should be defended rather than traded away in the name of convenience.
The crisis surrounding the Czechoslovak state intensified as Germany pressed claims on the Sudetenland, a region with substantial ethnic and strategic importance. The subsequent Munich Agreement—reached by Britain and France with the objective of preserving peace by conceding territory to Germany—became the most controversial moment of the year. From a perspective that prizes national self-government and deterrence, the agreement was seen by some contemporaries as a regrettable concession that bought time but did not meaningfully deter expansion. Critics argued it betrayed an ally and compromised the credibility of international commitments; supporters claimed it temporarily reduced the risk of a broader war and allowed resources to be redirected toward rebuilding defense. The debate over appeasement would dominate conservative and liberal alike for decades, with proponents insisting it a safer path during a fraught moment and opponents warning that it signaled weakness to would-be aggressors. The outcome, however, was clear: the border changes in Central Europe did not halt expansionist ambition, and they reshaped the calculations of every major power thereafter.
In November 1938, the wave of anti‑jewish violence that would come to be known as Kristallnacht swept German cities, marking a turning point in the regime’s treatment of dissent and minority groups. The events underscored the moral and strategic peril of totalitarian rule and intensified international scrutiny of the Nazi state. They also hardened resolve in some capitals to confront aggression more directly, even as debates continued about how to balance ethical obligations with the practical risks of confrontation.
The First Vienna Award and related diplomatic maneuvers further unsettled the map in Central Europe, exemplifying the unsettled nature of borders in a continent where treaties could be revised by force or arbitration. The broader implication was that, while diplomacy could delay conflict, it did not erase the threat posed by a revisionist power intent on reordering the continent.
For a contemporary reader, the European drama of 1938 illustrates two enduring truths: first, that modern sovereign states defend themselves with both deterrence and diplomacy; second, that attempts to appease aggression without credible commitments often produces a false sense of security and invites further demands.
Asia and the Pacific: expansion, diplomacy, and restraint
In Asia, the Imperial Japanese regime pressed deeper into the Chinese mainland during the ongoing Second Sino-Japanese War. The conflict between Japan and China intensified in 1938, testing the patience and prudence of the leading powers in the region and raising the stakes for commercial and strategic interests in the Pacific. The balance between restraint, economic leverage, and moral condemnation became a running theme as countries weighed the costs of intervention against the consequences of unchecked aggression. Japan’s actions drew sharp international criticism while also complicating the prospects for a rapid, comprehensive settlement that could stabilize the region without triggering wider conflict.
United States domestic policy and the evolution of governance
Back home, the United States continued the process of restructuring the economy and social order that had begun during the New Deal. A landmark development of 1938 was the enactment of the Fair Labor Standards Act (FLSA), which established a federal minimum wage and a 40-hour workweek under certain conditions, along with provisions intended to curb exploitative child labor. Supporters argued the act helped restore fair competition, protected workers, and codified a social compact that had been evolving for years. Critics, especially from business circles and small employers, warned that mandated wage floors and standard hours could raise costs, reduce hiring, and stifle innovation—arguments grounded in a belief that free enterprise and flexible labor markets best promote prosperity over the long run.
In the political arena, the administration’s approach to reform and regulation continued to spark debate. Proponents argued that sensible, targeted regulation was necessary to correct market failures and protect workers, while opponents warned that excessive federal power could undermine incentives, efficiency, and the dynamism that had characterized American enterprise. The tug-of-war over the appropriate balance between relief, reform, and restraint would shape policy battles for years to come, including the controversial discussion around the scope of executive power and the future of the federal judiciary.
A related line of debate concerned the international posture of the United States, with isolationist sentiments competing against calls for a more active stance in defense of democratic values. The year did not resolve these tensions, but it did help crystallize the domestic consensus that a strong economy, credible deterrence, and a clear sense of national interest were prerequisites for both prosperity and peace.
Controversies and debates
1938 was a year of sharp disagreements about how to respond to aggression abroad and how to run a mixed economy at home. The decision to pursue diplomacy through concessions in Central Europe sparked a lasting controversy about whether accommodation with expansionist regimes can ever be prudent, and whether deterrence is credible without testing the will to defend commitments. From a conservative vantage, the critique centered on deterrence: without credible guarantees and adequate defenses, concessions invite further demands at the expense of allies and the peace itself.
At home, the expansion of federal responsibilities under the New Deal framework generated persistent opposition from those who favored smaller government, lower taxes, and simpler regulation. The controversy over the Fair Labor Standards Act reflected a broader dispute about how to reconcile social goals with economic incentives. Supporters maintained that fair wages and reasonable hours protected workers and stabilized labor markets; critics warned of unintended consequences for employment, entrepreneurship, and competitive vigor. In this view, the proper balance lies in a strong but restrained government that creates a level playing field without distorting the incentives that drive growth.
Some critics accused supporters of moralizing economic policy or of letting foreign policy debates drift into moral absolutes about national character. A pragmatic interpretation argued that the best path through 1938 required a mixture of deterrence, diplomacy, and reform—recognizing both the dangers of unchecked aggression and the dangers of overreach in governance. The discussion, then as now, was not simply about outcomes in a single year, but about the rights and responsibilities of nations to secure peace and prosperity in ways consistent with their political and economic principles.