The Politics of Boom & Bust

AMERICAN PAGEANT CHAPTER 32 1920-1932

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 anticonservationist Harry M. Daugherty: Attorney General (crook)

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) Reversed Muller v. Oregon which had allowed a minimum wage law for women Theory: Women now = with the vote; so dont need protective legislation

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

WWI Veterans & Congress

Veterans Bureauestablished 1921 Hospitals & vocational rehabilitation for disabled Adjusted Compensation Act (1924) American Legion (militant patriots) lobbied for veterans benefits (founded by Theodore Roosevelt, Jr.) Wanted adjusted compensation to make up for wages lost during war Coolidge vetoedCongress overrode veto Promises bonus to veterans in 20 years cost $3.5 billion

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 to Coolidge) 62 nations ratify Useless; give U.S. false sense of security

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 fortify holdings in Far East Future problemJapanese aggression in WWII

Nine-Power Treaty (1922)Open Door Policy in China RESULT No restrictions on small warshipsother countries build Penny-pinching U.S.left far behind

More Tariff Drama

U.S. business people want high tariff

to protect from foreign competition Fordney-McCumber Tariff Law (1922)

Increase from 27-38.5%

Through Harding & Coolidge32

upward changes; 5 downward Destructive Chain Reaction:

Europe cant make profit on goods; cant pay U.S. war debt Europeans also set high barriers; hurt both U.S. goods & European products

Political Scandals
Colonel Charles R. Forbes Former deserterassigned as head of Veterans Bureau Loots $200 million through Veteran Hospital building projects Sentenced to 2 years Teapot-Dome Scandal Teapot Dome, WY & Elk Hills, CAland for naval oil preserves Albert B. Fall gets Navy to transfer property to Interior Department Leases land to Harry F. Sinclair & Edward Doheny

Give Fall a bribe of approximately $400,000

Fall convicted; Sinclair & Doheny acquitted

Teapot Dome Scandal

Political Scandals
Attorney General Daugherty Senate investigation (1924) of illegal sale of pardons & liquor permits Forced to resign; released when jury never agreed Harding died before worse allegations were

discoveredAugust 2, 1920

On speechmaking tourdied of pneumonia and thrombosis

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

Frustrated Farmers
Made $ during WWI Boom bust cycle since war

Probems: Overproduction & debt Efficient but expensive machines Surpluses Farm blocbipartisan Congressmen from

agricultural 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

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 people

wanted the status quo

More International Issues

Isolationism continued with Coolidge Senate refused to adhere to World Court (L of N) Coolidge unsuccessfully sought some further naval disarmament Central America & Caribbean

Isolationism 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

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 boom because of war U.S. postwar tariff hurt chances of Allies being able to repay debt German war reparation payment needed to pay Allied debt ($32 billion) 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)

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 other countries

Not until 1931President Hoover declared one year

debt moratoriumtoo late International debt led to more isolationism in U.S.

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 Border states

Herbert Hoover & Election of 1928

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 Stabilization Corporation (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

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

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

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

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)

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

Bonus Army
Bonus Expeditionary Force WWI Veterans Wanted bonus payment promised in 1945 in 1932 20,000 came to Washingtonlived in a Hooverville
Public health issue; refused to decamp (Hoover arranges to pay return fare for 6,000 of them)

Bonus Army
General Douglas MacArthur ordered to evict
Battle of Anacostia Flats Used tear gas & bayonets (w/o orders) a few wounded, included possibly the death of 11 month old baby

Hoover takes full blame for MacArthurs actions

Hoover loudly booed throughout country

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 declares U.S. will not recognize any territorial acquisitions achieved by force Amounts to a verbal slap on the wrist for Japan

Collective security for the world fades with this event

Hoover & the Good Neighbor Policy

1928--Hoover embarks on goodwill tour of Latin

America (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