THE POLITICS OF BOOM AND BUST

POSTWAR TRENDS

Exhausted◦ Debate over League of Nations

Divided America

Unemployment◦ Returning Soldiers

Women / Minorities

Cost of living had doubled

Nativism◦ Prejudice against foreign-born people

Isolationism◦ Policy of pulling away from involvement in world affairs

GOP REACTION

Supreme Court Harding appointed 4 of 9 justices Chief Justice Taft

Axed progressive legislation Child labor laws

Adkins v. Children’s Hospital Reversed decision on Muller v. Oregon Women deserving special protection

Debate over gender differences

AFTERMATH OF WAR

During the war government would not allow strikes◦ Interfere with the war

1919◦ 3,000 strikes◦ 4 million workers walked out

Employers did not want to give raises or join unions◦ Labeled strikers as communists

CONT.

• Boston Police strike▫Governor – Calvin Coolidge

Raise/Right to join union Called in National Guard --- “No right to strike

against public safety” Fired --- hired new policemen

• Steel Mill strike = 1919▫ 300,000 men walked off the job▫ Strike breakers hired▫ Strikers beaten▫Wilson sent plea to end deadlock

STRUGGLES FOR PEACEWarren G. Harding ----- 1921

◦ Inherited problems Arms control, war debts, and reconstruction

Did not understand many of the issues

Ohio Gang◦ President poker-playing cronies

Corrupt friends used offices to become wealthy◦ Graft

NAVAL CONFERENCE

◦ Invited major powers to D.C. Washington Naval Conference = 1921-22 No more war ships be built - 10 yrs

5 major powers scrap largest warships U.S, Japan, G.B, France, Italy

Agreed to Disarm

CONT.

Nine-Power Treaty = 1922 Agreed to nail wide-open the Open Door in China

Kellogg-Briand Pact Forswear war as an instrument of national policy Pact of Paris Ratified by 62 nations Useless? Defensive Wars

HIKING THE TARIFF HIGHERBritain – France

◦ Pay back money they borrowed – $10 billion◦ Could be done in 2 ways

Sell goods to the U.S. Collect reparations

Fordney-McCumber Tariff = 1922◦ Raised taxes on some U.S. imports to 60%◦ Protected U.S. businesses◦ Made it impossible for G.B. and France to

sell enough goods to pay debt

WAR DEBT CONT. Germany defaulted - inflation

French troops marched in

To avoid war◦ American banker sent to negotiate a loan◦ Dawes Plan = 1924 = rescheduled Germany’s reparations◦ American investors loaned Germany the money

$2.5 billion

G.B. – France then paid the U.S.

U.S. repaid with its own money

Caused resentment

TEAPOT DOME SCANDAL• Government set aside oil-rich lands• Teapot Dome, WY and Elk Hills, CA▫ Use by Navy

• Albert B. Fall▫ Land transferred from Navy to Interior Department▫ Secretly leased to private oil companies

▫ Sinclair, Doheny

▫Received more than $400,000 in loans, bonds, and cash

▫ Found guilty of bribery

“I have no trouble with my enemies … But my … friends, they’re the ones that keep me walking the floor at night!”

SCANDAL

Attorney General DaughertyIllegal sale of pardons, liquor licensesResigned / Released

Harding goes on speech making tourHarding Dies in San FranciscoPneumoniaAugust 2, 1923

CALVIN COOLIDGE

V.P. Calvin CoolidgeVermont“Silent Cal”HonestThriftyHands off temperament

FRUSTRATED FARMERS

Boom or Bust Cycle

1920 = Price of wheat shot up $3 a barrel

Machines Grow bigger crops, purchase more land Price dampening surpluses

Coolidge refused to help McNary-Haugen Bill = Buy surpluses

ELECTION OF 1924 Republican = Calvin Coolidge

Democrats = John W. Davis

Progressives = Robert Lafollette

Coolidge wins 382 to 136 to 13

CREDIT

Americans buying less

Overbuying on credit Large consumer debt

Cut back on spending

Rich got Richer – Poor got Poorer Could not purchase a lot of the manufactured goods being

produced

HOOVER - 1928

1928 – Election Republicans = Herbert Hoover

Secretary of Commerce under Harding and Coolidge Self-made millionaire

Democrats = Alfred E. Smith

Radio

Whispering campaign Catholicism

Hoover wins 444 to 87

HOOVER’S 1ST MOVES

Agricultural Marketing Act = June 1929Help farmers help themselvesFederal Farm BoardMoney lent to farm organization seeking to buy, sell, and store agricultural surplusesCotton Stabilization Corp.Grain Stabilization Corp.

STOCK MARKET

Dow Jones IndustrialMost widely used barometer of the stock market’s health

Measure based on the stock prices of 30 representative large firms trading on the New York Stock Exchange

Bull MarketPeriod of rising stock pricesAmericans rushed to buy stocks and bonds

GREAT CRASH ENDS GOLDEN 20’S 3% of nation's population owned stocks

Speculation Bought stocks and bonds on the chance of a quick profit

Buying on Margin Paying a small % of a stock’s price as a down payment and

borrowing the rest

Government did little to discourage buying or regulate the market

STOCK MARKET CRASHES

September 1929 Stock prices peaked – then fell Many sold their stocks

October 24 Market took a plunge Panicked – investors unloaded shares

October 29 ---- Black Tuesday Bottom fell out Shareholders frantically tried to sell ----- 16.4 million

Many could not find buyers

Mid – November Investors lost $40 Billion

BANKS / BUSINESS FAILURES Great Depression --- 1929 – 1940 Economy plummeted Unemployment skyrocketed

People panicked Withdrew money from banks

Couldn’t get money Banks invested in stock market

1929600 Banks Closed

193311,000 of the nations 25,000 banks failed

Banks not insured

CONT.

90,000 businesses went bankruptAutomobile / Railroads

Unemployment3% = 192925% = 19331 out of 4 workers out of a job

1929- 1932400,000 farms lost through foreclosure

TARIFF’S

Hawley-Smoot Tariff – 1930Highest protective tariff in peace time history

Foreigners = declaration of economic warfare

Plunged nations deeper into the depression

IsolationismPlayed into the hands of Hitler

CAUSES OF DEPRESSION1. Tariffs and war debt policies

2. Crisis in farm sector

3. The availability of easy credit

4. Unequal distribution of income

Falling demand for consumer goods

Interest rates low – Borrow easily Large debts

THE DEPRESSION Job lost

Evicted from homes Ended up in the streets

Slept in parks, sewer pipes Wrapped themselves in

newspapers to keep warm

Shantytowns Little towns consisting of shacks Scrap materials Orange crates, piano box

“ H O O V E R V I L L E ” I N S E A T T L E , 1 9 3 4

DEPRESSION

Soup Kitchens Free food or low cost food

Bread Lines Lines of people waiting to receive food provided by charitable organizations

CHILDREN Lack of money for health care Milk consumption declined Malnutrition Diet-related diseases

Rickets

Shortened school year Many schools closed

1933 = 2,600 300,000 students

Students went to work

“Hoover Tourists”

HOOVER BATTLES G.D.

HooverTook a cautious approachFelt the government should play a limited roleOpposed any form of federal welfare or Direct reliefCash payments or food provided by the government

Should be done through organized charities

UPSET AMERICANS

Farmers burned their crops Dumped milk Blocked roads

Shantytowns --- “Hoovervilles”

People wrapped in newspapers --- “Hoover Blankets”

Empty pockets turned inside out --- “Hoover Flags”

SOCIAL EFFECTS

Demoralized

Lost will to survive 1928 – 1932

Suicide rate rose more than 30%

Achieving financial security “Never be poor again”

Thriftiness

Families helped families Bonds within communities

BOULDER DAM (HOOVER DAM) Colorado River

Finance dam = Sale of the electric power dam would generate

Water Rights Arizona, California, Colorado,

Nevada, New Mexico, Utah and Wyoming

Helped growth of California’s Agricultural economy

HOOVER FINALLY TAKES ACTION

Federal Home Loan Bank Act = 1932 Lowered mortgage rates Allowed farmers to refinance their farm loans

Reconstruction Finance Corporation = 1932 $2 Billion for financing for banks, life insurance companies, railroads and large businesses

First 5 months - $805 million to corporations Business failures continues

Too little too late

BILLS PASSED CONT.

Norris-La Guardia Anti-Injunction Act 1932Outlaws “Yellow-dog” contractsForbade federal courts to issue injunctions to restrain strikes, boycotts, and peaceful picketing

BONUS ARMY - 1932

Bonus paid to veterans Not until 1945

Wanted bonus now $500 per soldier

Veterans went to capital to support bill

“Hoover thought Marchers were communists and persons with criminal records”

Bill did not pass

Hoover asked protestors to leave

Used army to get rid of protestors

1,000 – gassed

2 people shot

Hoover’s image shot

DUST BOWL

1930’s = Great Plains Farmers exhausted landLittle grass / trees left to hold the soil down

Wind scattered topsoil = exposing sand / gritDust traveled hundreds of miles

Region hit the hardestKansas, Oklahoma, Texas, New Mexico, and Colorado

Thousands left their landMigrated to California and the Pacific Coast

JAPAN

1931Launched a surprise attack

Took Province of Manchuria = China

League of Nations warned to stay outBoycotts