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A M E R I C A N P A G E A N T C H A P T E R 3 2

1 9 2 0 - 1 9 3 2

The Politics of Boom & Bust

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Warren G. Harding

Elected 1920

Mediocre mind

Didnt recognized corruption in his Ohio Gang

Cabinet: The Good:

Charles Evan Hughes: Secretary of State

Andrew W. Mellon: Secretary of the Treasury

Herbert Hoover: Secretary of Commerce

The Bad (Corrupt):

Albert B. Fall: Secretary of the Interior (scheming anti-conservationist

Harry M. Daugherty: Attorney General (crook)

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The Supreme Court & Progressive Legislation in 1920s

Supreme Court

Harding appoints 4 of 9 justices

Chief Justice: William H. Taft

Other 3: reactionaries

Shot down progressive legislation:

Child labor laws

Labor laws

Restricted government intervention in economy

Adkins v. Childrens Hospital(1923) ReversedMuller v. Oregonwhich had allowed a minimum wage

law for women

Theory: Women now = with the vote; so dont need protectivelegislation

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Aftermath of War on Business

Republicans prefer laissez-faire & big business

Government regulation decrease; encourages consolidation

Esch-Cummins Transportation Act (1920)

Encouraged railroad consolidation & non-interference of

Interstate Commerce Commission

Merchant Marine Act (1920) Dispose of 1500 wartime fleetnot much success

Labor Unions Membership decreased by 30% in 1920s

Railway Labor Union Boardcut wages 12% in 1922

Daugherty stopped strikers with sweeping injunction

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WWI Veterans & Congress

Veterans Bureauestablished 1921 Hospitals & vocational rehabilitation for

disabled

Adjusted Compensation Act (1924)

American Legion (militant patriots)lobbied for veterans benefits (founded byTheodore Roosevelt, Jr.)

Wanted adjusted compensation to make

up for wages lost during war Coolidge vetoedCongress overrode veto

Promises bonus to veterans in 20 yearscost $3.5 billion

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International Issues & Disarmament

July 1921: Congress issues joint-declaration to (finally) end war

U.S. not involved in League of

Nations Middle East oil issue British v. U.S. claimsagree to share

Kellogg-Briand Pact (1928)

Anti-war pledge (only defensive war)

Led by Frank B. Kellogg (Sec. of State toCoolidge)

62 nations ratify

Useless; give U.S. false sense of security

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International Issues & Disarmament

Disarmament Conference (1921-1922) All major naval powers except (Bolshevik) Russia

10 year holiday on construction of battleships

Ratio of American-English-Japanese: 5:5:3

Japanese insulted The Five-Power Naval Treaty (1922)

5:5:3 ratio BUT U.S. and British will not fortifyholdings in Far East

Future problemJapanese aggression in WWII

Nine-Power Treaty (1922)Open Door Policy inChina

RESULT

No restrictions on small warshipsother countriesbuild

Penny-pinching U.S.left far behind

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More Tariff Drama

U.S. business people want high tariffto protect from foreign competition

Fordney-McCumber Tariff Law (1922)

Increase from 27-38.5%

Through Harding & Coolidge32upward changes; 5 downward

Destructive Chain Reaction:

Europe cant make profit on goods; cantpay U.S. war debt

Europeans also set high barriers; hurtboth U.S. goods & European products

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Political Scandals

Colonel Charles R. Forbes Former deserterassigned as head of Veterans Bureau

Loots $200 million through Veteran Hospital buildingprojects

Sentenced to 2 years

Teapot-Dome Scandal

Teapot Dome, WY & Elk Hills, CAland for naval oilpreserves

Albert B. Fall gets Navy to transfer property to InteriorDepartment

Leases land to Harry F. Sinclair & Edward Doheny

Give Fall a bribe of approximately $400,000

Fall convicted; Sinclair & Doheny acquitted

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Teapot Dome Scandal

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Political Scandals

Attorney General Daugherty

Senate investigation (1924) of illegal sale of pardons & liquorpermits

Forced to resign; released when jury never agreed

Harding died before worse allegations werediscoveredAugust 2, 1920 On speechmaking tourdied of pneumonia and thrombosis

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Calvin Silent Cal Coolidge

Hardings V.P.becomes President in 1923

New England virtuesthrift, honesty, industry Wanted to reduce taxes & debts

Returned morality to Hardings administration Shy, mediocre leader

Laissez-faire attitude toward business

The man who builds a factory builds a temple

Viewed bigness as efficiency

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Frustrated Farmers

Made $ during WWI

Boom bust cycle since war

Probems: Overproduction & debt

Efficient but expensive machines Surpluses

Farm blocbipartisan Congressmen fromagricultural states (1921)

Capper-Volstead Act1921 Exempted farmer cooperatives from antitrust laws

McNary-Haugen Bill (1924-1928)

Government buy up surpluses & sell abroad

Coolidge vetoes bill twice

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Presidential Election of 1924

Coolidge Keep cool with Coolidge

Republican: 15,718,211 votes (382 EV)

John W. Davis

Democrat: 8,385,283 votes (136 EV) WY Senator Fighting Bob La

Follette Progressive: nearly 5 million votes (13 EV)

Times so prosperous that peoplewanted the status quo

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More International Issues

Isolationism continued with Coolidge

Senate refused to adhere to World Court (L ofN)

Coolidge unsuccessfully sought some further

naval disarmament

Central America & CaribbeanIsolationism exceptions Dominican Republic: 1924--troops withdrawn

after 8 years

Haiti: troop remained

Nicaragua: troops temporally left but returned(1909-1933)

Mexico: U.S. oil interests, but Coolidge

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International Debt Cycle

U.S. largest creditor nation after WWI ($16 billion +$10 billion more loaned throughout the 1920s)

U.S. insisted Allies pay back its $10 billion loan

Allies thought U.S. should write it off as war costs since they had

really paid the price of war in human lives + US had war boombecause of war

U.S. postwar tariff hurt chances of Allies being able to repay debt

German war reparation payment needed to pay Allied debt ($32billion)

Germany paid war reparation with U.S. borrowed funds

Germany currencymassive inflation

($120 million pre-inflation in German Marks to pay for loaf of bread)

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International Debt Cycles

Some U.S. statesmenscale-down or cancel debts

Americans view it as being cheated

Coolidge: They hired the money, didnt they?

Dawes Plan (1924) Rescheduled German reparations

Further American private loans to Germany

Debt cycle

Financial crisis opens door for Hitler & fosters ill will with othercountries

Not until 1931President Hoover declared one yeardebt moratoriumtoo late

International debt led to more isolationism in U.S.

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Herbert Hoover & Election of 1928

Herbert HooverRepublican (21+ million votes)

Hero of WWIHead of Food Administration

Self-made man, efficient, brilliant businessman

Rugged individualism and isolationism

Had some Progressive leanings (labor unions & fed.Regulations)

Alfred E SmithDemocrat (15+ million votes)

Popular NY GovernorCatholic & anti-Prohibition)

Rum, Romanism, & Ruinfear of Southern Democrats

HoovercratsSouthern Democrats who voted for Hoover

Carried 5 former Confederate states and all the Borderstates

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Herbert Hoover & Election of 1928

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President Hoovers First Moves

Prosperity soared late 1920s

Minor aid to farmers: Agricultural Marketing Act (1929)

Established Federal Farm Board

Revolving fund to buy, sell, and store surplus

Grain Stabilizing Corporation & Cotton StabilizationCorporation (1930)established by board to deal buy surplus

Agencies overwhelmed by farm produces

Hawley-Smoot Tariff(1930) Highest protective tariff in peacetime (60%)

Supposed to help U.S. farmers

Angered the world

Made depression worse for U.S. & other nations

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Stock Market Crash

Stock Marketgrowing to new heights

October 29, 1929 Black Tuesday Market had been dramatically fluctuating in

October

16,410,030 shares sold that day

By end of 1929stockholders lost $40 billion

Start of business depression at home and abroad

The Great Depression By end of 19304 million workers jobless; triples in

2 years

5000 banks collapsed in first 3 years

Life savings gone for tens of thousands

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Causes of the Great Depression

Overproduction of farm & factory

Outgrew capacity to consume goods produced

Overexpansion of credit

Installment payment plans Technological unemployment New labor saving machines

Economic chaos abroad Debts & Reparation

Chain reaction following Vienna banking house collapse (1931)

Smoot-Hawley Bill

DroughtMississippi Valley & Dust Bowl

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American Individualism v. The Depression

Great Depressionbaffling to Americans Breadwinner blamed themselves

Government unprepared

Private relief organizationsoverwhelmed

Local government relief effortsalso overwhelmed

Hooverindustry, thrift, & self-reliance Worked out compromise between the dole and giving aid

Give aid to needy railroads, banks, and rural credit corporations

Money would trickle down to individuals

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Hoover Battles the Great Depression

$2.25 billion for public works projects Hoover Dam on Colorado River

Fought against socialistic projects I.E. Muscle Shoals BillDam Tennessee River

Reconstruction Finance Corporation (RFC) $.5 billion-- Pump-priming loans to businessnot to individuals

(too little, too late)

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Hoover Battles the Great Depression

Norris-La Guardia Anti-Injunction Act (1932) Outlawed yellow-dog (antiunion) contracts & forbade federal

courts to issue injunctions for strikes, boycotts, & pickets

Hoover criticized:

Hoovervilles &Hoover Blankets

BUTopened the way for FDRs more radical methods

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Bonus Army

Bonus Expeditionary Force WWI Veterans

Wanted bonus payment promised in1945 in 1932

20,000 came to Washingtonlived in aHooverville

Public health issue; refused to decamp

(Hoover arranges to pay return fare for

6,000 of them)

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Bonus Army

General Douglas MacArthur ordered to evict Battle of Anacostia Flats

Used tear gas & bayonets (w/o orders) a few wounded, includedpossibly the death of 11 month old baby

Hoover takes full blame for MacArthurs actions Hoover loudly booed throughout country

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Japan attacks China

Militarist Japan overruns Manchuria(Sept. 1931)

Violates League of Nations Covenant

Has no real power to do anything about it

U.S. also upset at aggression

Stimson Doctrine (1932)

Secretary of State Henry Stimson declaresU.S. will not recognize any territorial

acquisitions achieved by forceAmounts to a verbal slap on the wrist for

Japan

Collective security for the world fades withthis event

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Hoover & the Good Neighbor Policy

1928--Hoover embarks on goodwill tour of LatinAmerica (on a U.S. battleship)

Disagrees interventionism of Roosevelt Corollary

to Monroe Doctrine 1932New treaty with Haiti Withdrawal of U.S. troops by 1934

1933withdrawal of U.S. troops from Nicaragua