The Politics of Boom and Bust
Chapter 32
AP
What is meant by the
“Republican Decade”?

The Executive Branch was dominated by
three Republican presidents

Less direct govt action, more cooperation
with big business
Congress was Republican
 TR died in 1919 --- Progressive wing of
the Republican party died with him

The Election of 1920
 Rep:
Warren Harding - Ohio
 Dem: James Cox - Ohio
Harding Cox
 Electoral Vote: 404
127
 Popular Vote:
16 m 9 m
 Percentage:
60 % 34%
The Election of 1920
 The
reason Harding wins…
 Charming
character
 Political maneuvers of his
friends
“I am not fit for this office
and should never have been
here.” … WGH
The Election of 1920
 1920
is the first presidential
election in which women
participate
 Harding was popular with
women
 Handsome
 Supported
women’s suffrage
Who was Warren G. Harding?

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Senator from Ohio
Less than “Presidential”
leadership skills
Unclear and vague
Promised a “return to
normalcy”
Harding – Personal Conduct?
 Never
committed a crime
 Gambled …
 Hypocrite…
 1905 – 1920 affair with Carrie
Philips…
 1919 Nan Britton…claimed to be
Harding’s mistress
Nan Britton & Carrie Phillips
President and Mrs. Harding
Harding’s Cabinet?
Charles Evans Hughes – Sec. of State
 Herbert Hoover – Sec. of Commerce
 Andrew Mellon – Sec. of Treasury
 Ohio Gang…

 Albert
Fall – Sec. of Interior
 Charles Forbes – Veterans Bureau
 Harry M. Daugherty – Attorney General
“John, I can’t make a …thing out
of this tax problem. I listen to one
side and they seem right, and
then… I talk to the other side and
they seem just as right… I know
somewhere there is an economist
who knows the truth, but I don’t
know where to find him and
haven’t the sense to know him
and trust him when I find
him…What a job!” - WGH
Harding Scandals
“I have no problem with my
enemies…But…my Gdmn
friends…, they’re the ones that
keep me walking the floors at
night.” WGH
Harding Scandals
Charles Forbes … 1923 stole $200
million that was allocated to Vets
Hospital
 Thomas Miller…accepting bribes
 Harry Daugherty… 1924 illegal sale of
pardons and liquor permits
 Albert Fall – Teapot Dome Scandal
…1921 leased public oil lands to private
company and received bribe

Harding’s Domestic Policy
 Fordney-McCumber
Tariff (1922)…
raised tariffs
 Reduction of taxes…
 Less spending, less government,
less presidential power
 Immigration Act of 1921…quotas
Harding’s Foreign Policy?
“We seek no part in directing the destiny of the world” - Harding
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Isolationism
Signed a Congressional joint resolution ending
WWI
Opposed U.S. membership in League
Washington Naval Conference
(1921)…disarmament
Foreign Debt…scale reparations down/cancel?
Dawes Plan…rescheduled German reparations
and gave private American loans to Germany
Harding’s Death
Disillusioned and despondent over scandals
 Took trip to Alaska and California
 Died at the Palace Hotel in San Francisco in
1923
 No autopsy
 Doc Sawyer – Mrs. Harding’s doctor and
Surgeon General – diagnosed ptomaine
poisoning – probably a stroke

Calvin Coolidge
Republican President
 Pro-business
 Keep taxes down and
profits up
 Give businesses more
credit to expand
 High tariffs on imports

“…the chief business of the American
people is business…The man who
builds a factory builds a temple – the
man who works there worships there.”
--Calvin Coolidge
The Coolidge Presidency

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Honest and respectable
Immigration Act of 1924…2% quota, Asian
exclusion
Federal Income Tax and “Trickle-down
Economics”
McNary-Haugen farm bill…post WW1 farm
surplus – govt would buy surplus and sell
them abroad – Coolidge VETO
Kellogg-Briand Pact 1928…renounced war,
but had no enforcement
Herbert Hoover – The Great
Engineer

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Sec. of Commerce
Assist business
community
Rugged
individualism
Small government
What was the nature of the “Bull
Market”?
 Stock
prices increased…
 Speculation…
 Market value…
 Dow Jones Industrial Average …
What weakness was developing in
the market?
4
million Americans invested (3%)
 Margin accounts…
 Investment trusts…
 Corporations and banks ...
 Dow increased from 191 to 381 in
5 months in 1929
What was the nature of the Crash
of 1929?
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Oct. 23 – Dow lost 21 points in 1 hour
Oct. 28 – 38 points lost (13%)
Oct. 29 – Black Tuesday
 16.4 million shares sold
 Over 1 million shares – no buyers
 Brokers called in margin accounts
Nov. - $30 billion gone
The floor of the New York Stock Exchange
– Oct. 1929
Panic on Wall
Street –
October, 1929
“The fundamental
business of the
country…is on a
sound and
prosperous
basis.” - Hoover
What were the underlying causes
of the Depression?
Overproduction – underconsumption…
 Farming…
 Unequal distribution of income…
 Stock market crash…
 Bank failures…
 Tariff and foreign debt policies…
 Overuse of credit

Family incomes 1929?
2.3% over $10,000
 8% over $5,000
 71% less than $2,500
 60% less than $2,000
 Over 42% less than $1,500
 21% less than $1,000
 Ave. farm income $962

What was the effect of the market
crash?
 Undermined
confidence
 Production decreased
 Workers laid off
 Lay offs led to further decline in
spending
 More cut-backs
 More lay-offs
Unemployed in Chicago
Why did banks close?
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Banks had loaned money to speculators
People defaulted on their loans
Depositors began to withdraw funds
1930-1933 – 9,000 banks closed
Millions in deposits lost
Nation’s money supply fell by 1/3
Decline in purchasing power
“Run” on the bank
How does the Depression become
world wide?

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Europe – war debts…
Germany – reparations…
1930 Hawley Smoot Tariff – highest
protective tariff
 Europe could not sell to the U.S.
 Set up tariffs against U.S. products
 We could not sell to Europe
 International trade dropped by 40%
What is the human toll of the
Depression?
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Farm families lost farms
Bank closing denied people savings to fall
back on when they were unemployed
Unemployment in 1932:
 Cleveland 50%
 Akron 60%
 Toledo 80%
Psychological…
What was the impact of the
Depression on people’s lives?
Poor diet
 Poor medical and health care
 Delayed lives
 Families split up
 Schools closed (no taxes)
 Suicide rate up 30%
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Who helped the unemployed?
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Existing relief systems inadequate
Private charities….
State governments…
Government officials…
Soup kitchens …
Hoovervilles…
Riding the rails…
Hoovervilles
Bread Lines
What was the condition of rural
American?

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Farm incomes down 60%
1/3 of all farmers lost their land
Dust Bowl ….
What was Hoover’s response to the
depression?

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Sec. of Treasury Mellon – “wait it out”
Hoover
 commitment to localism and private
initiative
 Solutions outside of government
 Summoned business leaders to
Washington…
 Called for state and local governments to
create public works
 1930 President’s Committee for
Unemployment and President’s Organization
for Unemployment Relief…
Hoover’s response?
 National
Credit Corporation…
 Crisis worsened
 Election of 1930…
 Unemployment…
Hoover Dam – Public Works
What was the Reconstruction
Finance corporation?
$2 billion in loans to banks, insurance
companies, and railroads
 Public upset…
 Later: $2 billion to state and local
governments for job creating public works
– only $30 million allocated
 Hoover: against this – said it would open
the door to socialism and collectivism

Nature of Protests?
 1932
– mood desperate
 Hunger March
– communist organizers led
march against Ford
– 4 killed and 50 wounded
How did farmers respond to falling
prices?
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Farms were foreclosed
Burned crops – corn and wheat
Spilled milk
“Farmers Holiday”
Blocked roads – prevent food from getting
to market
Used force to try to prevent foreclosures
What was the Bonus Army?
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10,000-20,000 unemployed WWI veterans
Patman Bill – government should pay a
bonus to WWI veterans that was due in
1945
House of Rep. approved/Senate voted
down
Hoover ordered Gen. Douglas McArthur to
disperse the Bonus Army
Bonus Army Camp
Bonus Army at “Anacostia Flats”