Ch. 14: Politics and Ch. 14: Politics and Prosperity (1920-1929)Prosperity (1920-1929)

Section 1: A Republican Section 1: A Republican DecadeDecade

The Republican Party dominated all three branches of The Republican Party dominated all three branches of government throughout the entire 1920s, including the government throughout the entire 1920s, including the Presidency. Presidents were Warren Harding, Calvin Presidency. Presidents were Warren Harding, Calvin Coolidge, and Herbert Hoover.Coolidge, and Herbert Hoover.

Russian RevolutionRussian Revolution

1917 Bolshevik 1917 Bolshevik Revolution Revolution

Vladimir Lenin: Red Vladimir Lenin: Red Army Army

Resistors: White ArmyResistors: White Army The U.S. backed the The U.S. backed the

Whites because the Whites because the Bolsheviks threatened Bolsheviks threatened their business their business investments in Russia.investments in Russia.

Russian Russian Revolution/CommunismRevolution/Communism

The Reds retained control and in 1922, the new nation became The Reds retained control and in 1922, the new nation became known as the Union of Soviet Socialist Republics (USSR) or Soviet known as the Union of Soviet Socialist Republics (USSR) or Soviet Union.Union.

Communism became the official ideology of the USSR, which Communism became the official ideology of the USSR, which meant…meant…– Government ownership of all land and propertyGovernment ownership of all land and property– Single political party controlled governmentSingle political party controlled government

Red ScareRed Scare

Americans feared Americans feared Communism would Communism would spread throughout the spread throughout the world.world.

The intense fear of the The intense fear of the spreading of spreading of communism is referred communism is referred to as a Red Scare.to as a Red Scare.

Schenck v. U.S.Schenck v. U.S. During WWI, Charles During WWI, Charles

Schenck urged draftees not Schenck urged draftees not to report for duty and was to report for duty and was convicted for breaking the convicted for breaking the espionage and sedition acts. espionage and sedition acts.

He appealed on the premise He appealed on the premise of free speech.of free speech.

Supreme Court ruled that Supreme Court ruled that the government is justified the government is justified in silencing free speech in in silencing free speech in the face of “clear and the face of “clear and present danger”.present danger”.

The Palmer RaidsThe Palmer Raids

U.S. Attorney General, A. Mitchell Palmer, set up a special force to conduct U.S. Attorney General, A. Mitchell Palmer, set up a special force to conduct raids and arrest suspected “subversives”.raids and arrest suspected “subversives”.

Targets included suspected Communists, Socialists, and anarchists. Targets included suspected Communists, Socialists, and anarchists. Federal agents arrested thousands of suspected radicals without evidence.Federal agents arrested thousands of suspected radicals without evidence. Most of the suspects were born overseas.Most of the suspects were born overseas. 500+ were deported.500+ were deported.

Sacco and VanzettiSacco and Vanzetti Nicola Sacco and Nicola Sacco and

Bartolomeo Vanzetti, two Bartolomeo Vanzetti, two Italian, anarchist Italian, anarchist immigrants, were arrested, immigrants, were arrested, convicted, and sentenced convicted, and sentenced to death for a murder case to death for a murder case in Massachusetts.in Massachusetts.

Many Americans believed Many Americans believed the men to be innocent, the men to be innocent, that the men were that the men were targeted and sentenced targeted and sentenced due to their immigrant due to their immigrant status and radical political status and radical political beliefs. beliefs.

Labor StrikesLabor Strikes

A wave of labor strikes preceded the Red A wave of labor strikes preceded the Red Scare of the 1920s.Scare of the 1920s.

Many believed that Communist Many believed that Communist “agitators” were behind the labor unrest.“agitators” were behind the labor unrest.

Hindsight shows differently: inflation Hindsight shows differently: inflation caused the cost of living to double after caused the cost of living to double after WWI, while wages had stayed the same.WWI, while wages had stayed the same.

Boston Police StrikeBoston Police Strike Boston police officers Boston police officers

hadn’t received a raise hadn’t received a raise since the start of WWI.since the start of WWI.

Tried to unionize- 19 Tried to unionize- 19 officers were fired.officers were fired.

The entire police force The entire police force went on strike.went on strike.

Rioting broke out Rioting broke out immediately and there immediately and there were not police to were not police to intervene. intervene.

Steel and Coal StrikesSteel and Coal Strikes In 1919, steelworkers In 1919, steelworkers

launched a strike against the launched a strike against the U.S. Steel Corp.U.S. Steel Corp.

350,000 workers walked off 350,000 workers walked off the job.the job.

Calling it the work of Calling it the work of communists, U.S. Steel communists, U.S. Steel fought hard against the fought hard against the strike.strike.

Thousands of African Thousands of African Americans were brought up Americans were brought up from the South to fill the from the South to fill the place of the strikers, the place of the strikers, the strike failed and the workers strike failed and the workers went back.went back.

Strikes DeclineStrikes Decline

After 1920, the spike in union After 1920, the spike in union membership and strikes began to membership and strikes began to decline with the booming economy of decline with the booming economy of the 20s.the 20s.

Public and governmental opposition Public and governmental opposition played a role in reducing strikes, as played a role in reducing strikes, as well as the upturn of the economy.well as the upturn of the economy.

Harding PresidencyHarding Presidency

Warren G. Harding Warren G. Harding became president in became president in 1921, succeeding 1921, succeeding Woodrow Wilson.Woodrow Wilson.

““return to normalcy”return to normalcy” Americans were weary Americans were weary

from WWI and the labor from WWI and the labor strikes that immediately strikes that immediately followed, wanted followed, wanted “normalcy”.“normalcy”.

Foreign PolicyForeign Policy

Harding was an isolationist, he Harding was an isolationist, he avoided political or economic avoided political or economic alliances with foreign countries.alliances with foreign countries.

He had opposed the League of He had opposed the League of Nations.Nations.

Also called for disarmament, nations Also called for disarmament, nations of the world to voluntarily give up of the world to voluntarily give up weapons to “disarm” the world.weapons to “disarm” the world.

Domestic IssuesDomestic Issues

Increased nativism (anti-immigrant Increased nativism (anti-immigrant sentiment)sentiment)– Religion: opposed to Catholics, Orthodox Religion: opposed to Catholics, Orthodox

Christians or Jews.Christians or Jews.– Jobs: feared immigrants would take their jobs.Jobs: feared immigrants would take their jobs.– Urban conditions: blamed slums and corruption Urban conditions: blamed slums and corruption

on immigrants. on immigrants. Harding placed a quota on immigration, Harding placed a quota on immigration,

greatly reduced the number of immigrants greatly reduced the number of immigrants after 1922.after 1922.

Teapot Dome ScandalTeapot Dome Scandal

Harding’s Secretary of the Interior, Albert B. Fall, Harding’s Secretary of the Interior, Albert B. Fall, secretly gave oil-drilling rights on government oil secretly gave oil-drilling rights on government oil fields in Elk Hills, California and Teapot Dome, fields in Elk Hills, California and Teapot Dome, Wyoming to private oil companies. Wyoming to private oil companies.

Fall received more than $300,000 in illegal Fall received more than $300,000 in illegal payments.payments.

Teapot Dome is considered one of the greatest Teapot Dome is considered one of the greatest scandals in American politics.scandals in American politics.

Coolidge Becomes PresidentCoolidge Becomes President

Harding died in Harding died in 1923, possibly from 1923, possibly from heart problems and heart problems and stress related to stress related to Teapot Dome and Teapot Dome and other scandals.other scandals.

Vice President, Vice President, Calvin Coolidge, Calvin Coolidge, became President.became President.

Coolidge and Laissez FaireCoolidge and Laissez Faire ““The chief business of The chief business of

the American people the American people is business.”is business.”

Coolidge believed in Coolidge believed in Laissez Faire business Laissez Faire business philosophy, no philosophy, no government government involvement.involvement.

Cut business taxes Cut business taxes and deregulated and deregulated industry.industry.

Kellogg-Briand PactKellogg-Briand Pact

Frank B. Kellogg, Coolidge’s Secretary of State, Frank B. Kellogg, Coolidge’s Secretary of State, made an agreement with French Foreign Minister made an agreement with French Foreign Minister Aristide Briand that the U.S. and France would not Aristide Briand that the U.S. and France would not go to war.go to war.

Over 60 countries eventually joined the pact, which Over 60 countries eventually joined the pact, which proved to mean very little due to a lack of proved to mean very little due to a lack of enforcement.enforcement.

1928 Election1928 Election

Coolidge decided Coolidge decided not to run for not to run for reelection in reelection in 1928, despite 1928, despite eligibility.eligibility.

Republicans Republicans nominated nominated Herbert Hoover, Herbert Hoover, who won the who won the election.election.

Section 2: A Business BoomSection 2: A Business Boom

The 1920s was marked by an economic The 1920s was marked by an economic boom, deregulation, and prosperity, until boom, deregulation, and prosperity, until the stock market crash in 1929.the stock market crash in 1929.

A Consumer EconomyA Consumer Economy

Average wages rose 28 percent between 1914-1926.Average wages rose 28 percent between 1914-1926. During the same time period, the number of During the same time period, the number of

millionaires in the U.S. doubled.millionaires in the U.S. doubled. With more income, Americans purchased more With more income, Americans purchased more

goods and services, which in turn strengthened the goods and services, which in turn strengthened the economy and their own wages.economy and their own wages.

Buying on CreditBuying on Credit

Prior to the 20s, Americans paid cash for most items.Prior to the 20s, Americans paid cash for most items. Manufacturers began offering installment plans.Manufacturers began offering installment plans. Customers paid some money up front, and the rest at Customers paid some money up front, and the rest at

intervals over a period of time.intervals over a period of time.

Electric PowerElectric Power

New home appliances New home appliances demanded demanded unprecedented unprecedented amounts of electricity.amounts of electricity.

From 1913-1917, the From 1913-1917, the number of electric number of electric customers more than customers more than quadrupled. quadrupled.

Increased the demand Increased the demand for new goods in the for new goods in the home.home.

AdvertisingAdvertising New forms of advertising New forms of advertising

sought to popularize new sought to popularize new goods.goods.

Earlier advertising had Earlier advertising had listed information about listed information about the product; fabric, design, the product; fabric, design, price, etc.price, etc.

New advertising spoke less New advertising spoke less about the product and about the product and more about the consumer, more about the consumer, how the product would how the product would improve the consumer’s improve the consumer’s image.image.

Rise in ProductivityRise in Productivity

Electric power, new advertising, and Electric power, new advertising, and installment plans all launched a buying installment plans all launched a buying spree in the 1920s.spree in the 1920s.

To meet demands, productivity increased.To meet demands, productivity increased. Gross National Product (GNP), the total Gross National Product (GNP), the total

measure of goods and services produced measure of goods and services produced annually, grew by 6% each year during the annually, grew by 6% each year during the 1920s.1920s.

GNP had grown by less than 1% a year GNP had grown by less than 1% a year from 1910-1920.from 1910-1920.

Henry Ford and the Henry Ford and the AutomobileAutomobile

The first automobiles The first automobiles were invented in Germany were invented in Germany in the 1880s, but were in the 1880s, but were inaccessible to the public.inaccessible to the public.

From 1892-1920, 8 million From 1892-1920, 8 million cars were produced and cars were produced and sold.sold.

During the 20s alone, 15 During the 20s alone, 15 million cars were sold, million cars were sold, many from the innovative many from the innovative business model of Henry business model of Henry Ford.Ford.

Henry FordHenry Ford

Originally an engineer of a lighting company, Ford spent his Originally an engineer of a lighting company, Ford spent his spare time inventing a “horseless carriage”.spare time inventing a “horseless carriage”.

By 1903 he had started his own automobile company and By 1903 he had started his own automobile company and started selling his version of the automobile, the Model T. started selling his version of the automobile, the Model T.

Ford and Assembly LineFord and Assembly Line Henry Ford perfected the Henry Ford perfected the

assembly line and mass assembly line and mass production.production.

He did not invent the He did not invent the concept of an assembly line, concept of an assembly line, but greatly enhanced its but greatly enhanced its efficiency. efficiency.

At Ford Plant in Detroit, At Ford Plant in Detroit, Michigan, they produced a Michigan, they produced a Model T every 24 seconds.Model T every 24 seconds.

Ford built half of all the Ford built half of all the automobiles in the world automobiles in the world from 1908-1927, 15 million from 1908-1927, 15 million total.total.

Business Model/FordismBusiness Model/Fordism Henry Ford offered an Henry Ford offered an

unprecedented business unprecedented business model.model.

In 1914, he announced he In 1914, he announced he would pay workers $5/day would pay workers $5/day and limit work weeks to and limit work weeks to 40 hours (5, 8 hour days)40 hours (5, 8 hour days)

This was more than This was more than double what he had been double what he had been paying ($2.34/day), or paying ($2.34/day), or what a laborer could earn what a laborer could earn anywhere else.anywhere else.

Business Model/FordismBusiness Model/Fordism Jobs at Ford became very Jobs at Ford became very

competitive so Ford was able competitive so Ford was able to demand hard work from to demand hard work from employees.employees.

Ford was also able to greatly Ford was also able to greatly reduce the cost of an reduce the cost of an automobile.automobile.

The combination of increasing The combination of increasing wages while reducing costs of wages while reducing costs of a finished car allowed the a finished car allowed the workers themselves to workers themselves to purchase Ford automobiles, purchase Ford automobiles, causing a full-circle economy. causing a full-circle economy. – This economic philosophy is This economic philosophy is

sometimes called Fordism.sometimes called Fordism.Ford was able to reduce the cost of a Model T every year. From $825 in 1908 to $360 in 1916

Industrial GrowthIndustrial Growth Automobile production Automobile production

became the largest became the largest manufacturing industry manufacturing industry during the 20s. during the 20s.

Cars became a symbol of Cars became a symbol of American identity.American identity.

Created new industries.Created new industries.– Garages, car dealerships, gas Garages, car dealerships, gas

stations, motels, restaurants, stations, motels, restaurants, road construction.road construction.

– Cars also boosted the Cars also boosted the housing market by enabling housing market by enabling an expansion of suburbia. an expansion of suburbia.

Bypassed by the BoomBypassed by the Boom The new prosperity bypassed a The new prosperity bypassed a

significant portion of the country.significant portion of the country. Unskilled laborers, immigrants, Unskilled laborers, immigrants,

and African Americans remained and African Americans remained poor.poor.

Farmers struggled during the Farmers struggled during the 1920s.1920s.– After WWI, food prices After WWI, food prices

dropped and farmers dropped and farmers struggled to remain in struggled to remain in business.business.

– Many new conveniences, Many new conveniences, such as electricity, did not such as electricity, did not extend to rural areas.extend to rural areas.

Section 3: Late 1920s Section 3: Late 1920s EconomyEconomy

Overwhelming optimism lead many Americans Overwhelming optimism lead many Americans into risky investments, leading to the collapse of into risky investments, leading to the collapse of the stock market and the Great Depression.the stock market and the Great Depression.

““Wonderful Prosperity”Wonderful Prosperity” Stock prices soared in the Stock prices soared in the

late 1920s.late 1920s.– In 1925, the value of all stocks In 1925, the value of all stocks

was $27 billion.was $27 billion.– 1929: $87 billion.1929: $87 billion.

Workers wages rose more Workers wages rose more than 40 percent during the than 40 percent during the decade.decade.

In 1928, the In 1928, the New York TimesNew York Times described the year as one described the year as one “of unprecedented advance, “of unprecedented advance, of wonderful prosperity.”of wonderful prosperity.”

““Everybody Ought to Be Everybody Ought to Be Rich”Rich”

Americans believed wealth Americans believed wealth was available even to was available even to ordinary people.ordinary people.

John J. Raskob: stated an John J. Raskob: stated an income of $15/week over income of $15/week over 20 years could bring a 20 years could bring a $400/month income from $400/month income from investments.investments.– ““Anyone not only can be rich, but Anyone not only can be rich, but

ought to be rich.”ought to be rich.”

Welfare CapitalismWelfare Capitalism

To combat unsatisfied labor unions, many To combat unsatisfied labor unions, many larger companies became proactive in larger companies became proactive in meeting their employees’ demands. meeting their employees’ demands.

By raising wages, offering new benefits By raising wages, offering new benefits like paid vacation, health plans, and like paid vacation, health plans, and recreation programs, employers were able recreation programs, employers were able to strengthen company loyalty and to strengthen company loyalty and morale.morale.

Became known as welfare capitalism.Became known as welfare capitalism.

Uneven ProsperityUneven Prosperity

It was mainly the rich who benefited from this It was mainly the rich who benefited from this success.success.

In 1929, 0.1% of the families had incomes of over In 1929, 0.1% of the families had incomes of over $100,000 and 34% of all national savings.$100,000 and 34% of all national savings.

71% of families earned less than $2,500 a year 71% of families earned less than $2,500 a year and had little or no savings.and had little or no savings.

Personal DebtPersonal Debt Credit spending led to Credit spending led to

increased levels of increased levels of personal debt.personal debt.

The new credit option gave The new credit option gave Americans the illusion that Americans the illusion that they could have it all.they could have it all.

Traditionally, Americans Traditionally, Americans feared debt, but with talk feared debt, but with talk of abundant prosperity, of abundant prosperity, they counted on future they counted on future income to pay for their income to pay for their purchases.purchases.

Playing the Stock MarketPlaying the Stock Market

““get-rich-quick” success stories prompted small investors to get-rich-quick” success stories prompted small investors to enter the stock market.enter the stock market.

Prior to WWI, only the wealthiest Americans were invested in Prior to WWI, only the wealthiest Americans were invested in the stock market.the stock market.

The new wealth of the 20s beckoned ordinary people to play The new wealth of the 20s beckoned ordinary people to play the market, sometimes investing their life savings.the market, sometimes investing their life savings.

Buying on MarginBuying on Margin

Stockbrokers encouraged buying on the margin.Stockbrokers encouraged buying on the margin. Investors paid a fraction of the stocks price and Investors paid a fraction of the stocks price and

borrowed the rest.borrowed the rest. Brokers charged high interest rates on the Brokers charged high interest rates on the

amount borrowed.amount borrowed.

OversupplyOversupply

Rising productivity brought prosperity, Rising productivity brought prosperity, but eventually created a problem: but eventually created a problem: oversupply.oversupply.

Goods became produced more rapidly Goods became produced more rapidly than consumers demanded them.than consumers demanded them.

Although the stock market continued Although the stock market continued to rise, some industries, including the to rise, some industries, including the automobile industry, began to slump in automobile industry, began to slump in the late 20s.the late 20s.

Trouble for Farmers and Trouble for Farmers and WorkersWorkers

Falling crop prices after WWI.Falling crop prices after WWI. Many farmers lost their farms.Many farmers lost their farms. Many rural banks failed when loans were not Many rural banks failed when loans were not

repaid.repaid. Life also remained difficult for most factory Life also remained difficult for most factory

workers who worked long hours for low pay.workers who worked long hours for low pay.

This all leads to…This all leads to…