Theological liberalism first arose in Germany partly in response to findings in various fields, such as archeology and geology, that seemed to disprove the accuracy of Scripture. It also sought to answer the philosophical arguments against orthodox Christian teachings that arose during the Enlightenment of the 18th Century. Its origins are in the German Enlightenment, notably in the philosophy of Immanuel Kant and the religious views of Friedrich Schleiermacher. Major tenets of theological liberalism are the beliefs that personal opinion and experience outweigh dogma, that the Christian church is a community of persons united by common experience rather than creeds, and the absence of fixed, immutable truths. Liberal Christians generally reject the historicity and accuracy of many books of the Bible and deny or treat as mythology such core Christian doctrines as the Virgin Birth, the Trinity, and the resurrection of Jesus Christ.
As for what nurtured the rise of theological liberalism in the mainline churches, the prestige and scholarship of the German and European universities where these doctrines were taught and the relative lack of evangelical apologists to counter the claims of ascendant liberalism were major factors. Only one seminary, Princeton, was a stronghold of orthodox Christian scholarship, and even that institution succumbed to liberalism before 1930. The evangelical community was by and large more interested in soul winning. The "superstars" among evangelicals between the Civil War and World War II were popular orators like Dwight Moody and Billy Sunday, not scholars like Benjamin Warfield or J. Gresham Machen.
As Marxist theory thrived in the absence of strong defenders of free market economics in the late 19th and early 20th Centuries, so liberal Christianity gained ascendancy as evangelicals failed to challenge their positions effectively. The popular revivalists may have "won souls" in the rural areas and working class neighborhoods of the cities, but they were largely the subject of disdain, if not ridicule, among the upper classes. The results of this emphasis, combined with the effects of dispensational theology, separationism, and sinless perfection theology, provided a clear path for liberal Christians in their long march to dominate the mainline Protestant denominations and the prestigious private universities.
Lotta good points there. Helps explain why unions didn't take off in the South too. (IMHO)