Chapter 32 Notes—Part 1 – The Politics of Boom and Bust, 1920 -1932
To-- “Foreign-Policy Flounderings”
Questions:
1.
What was the economic philosophy of the Republican presidents of the 1920s? Did this environment help create the
Great Depression?
2.
What were the first tasks of the Harding administration?
3.
What was the foreign policy philosophy of Coolidge and was he consistent?
4.
Describe the political environment of the election of 1928? How did Hoover win the election?
5.
What were the causes of the Great Depression?
6.
What were the major foreign policy issues faced by the Hoover administration?
7.
In what ways were the 1920s a reaction against the progressive era?
8.
Was the American isolationism of the 1920s linked to the rise of movements such as the Ku Klux Klan? In what
ways did movements such as fundamentalism reflect similar anti-modern outlooks, and in what ways did they reflect
more basic religious disagreements?
9.
To what extent did the policies of the booming 1920s contribute to the depression? Was the depression inevitable, or
could it have been avoided. Why or why not?
10. How did the depression challenge the traditional belief of Hoover and other Americans in rugged individualism?
Main Ideas:
The Republican administrations of the prosperous 1920s pursued conservative, pro-business policies at
home and economic unilateralism abroad.
The great crash of 1929 led to a severe, prolonged depression that devastated the American economy and
spirit and resisted Hoover’s limited efforts to correct it.
Summary:
The Republican governments of the 1920s carried out active, pro-business policies, while undermining much of the
progressive legacy by neglect. The Washington Naval Conference indicated America’s desire to withdraw from
international involvements. Sky-high tariffs protected America’s booming industry but caused severe economic troubles
elsewhere in the world.
As the Harding scandals broke, the puritanical Calvin Coolidge replaced his morally easygoing predecessor. Feuding
Democrats and La Follette progressives fell easy victims to Republican prosperity.
American demands for strict repayment of war debts created international economic difficulties. The Dawes plan provided
temporary relief, but the Hawley-Smoot Tariff proved devastating to international trade.
The stock-market crash of 1929 brought a sudden end to prosperity and plunged America into a horrible depression.
Herbert Hoover’s reputation collapsed as he failed to relieve national suffering, although he did make unprecedented but
limited efforts to revive the economy through federal assistance.
Quotes:
“My God, this is a hell of a job. I have no troubles with my enemies… but my G-D Friends!”
–Warren G. Harding (1923)
“The chief business of the American people is business… The man who builds a factory builds a temple, that the
man who works there worships there.”
-Calvin Coolidge (1916)
************“We in America today are nearer to the final triumph over poverty than ever before in the history of
any land…We have not yet reached that goal, but given a chance to go forward with the policies of the last eight
years, we shall soon with the help of God be in sight of the day when poverty will be banished from this nation.”
- Herbert Hoover, President-Elect (1928) just under a year before the greatest economic crisis in our history begins
during his Presidency 
Intro Chapter 32 (text) 33 (digital edition)
Opening quote is from Hoover above---Interesting that he makes this statement just before the worst
economic crisis in our nations history--- ironic, for sure 
The 1920’s saw three Republican Presidents—Warren G. Harding, 1921-1923 (died), Calvin Coolidge, 1923 1929, and Herbert Hoover, 1929-1933.
These Presidents guided America an the Great Roller-Coaster ride---The Boom of the majority of the 20’s and
the Deepest BUST ever beginning in 1929.
These conservative Republicans turn away from Progressive Reform and return to the Gilded Age principle of
Laissez-Faire---a Government controlled and in support of Big Business--Under Harding’s short term as President, he dies of an apparent heart attack, CORRUPTION, appears again--like US Grant’s before that began the Gilded Age…
The USA retreats into a so-called isolation from the world with high tariffs and a small-unprepared military—
not joining the League of Nations—but beginning a unique period of foreign policy---peace is the goal for sure.
Native Americans continue to struggle under the “Forced Assimilation” of the Dawes Severalty Act BUT—ARE
FINALLY GIVEN CITIZENSHIP IN 1924.
The Republican “Old Guard” Returns –AND SO DOES CORRUPTION UNDER HARDING 
Warren G. Harding—they say had a “weak, inept interior” a man not suited to be President. Warren had a
difficult time detecting Corruption in his friends. The “Ohio Gang” (Harding was from Ohio) – was what they
called his “unofficial” cabinet, late night poker games and corrupt, Fall, Daugherty, Forbes, Miller, and Smith
all were his buddies—Harding had promised to find “the best minds in the party,” to appoint to federal offices
and to his cabinet. Some were brilliant—Charles Evans Hughes became a brilliant and conservative Secretary of
State, Andrew Mellon was made Secretary of the Treasury, one of the “Pittsburgh Millionaires” that had
worked closely with Andrew Carnegie, and Herbert Hoover, the self-made orphan millionaire mining engineer
that had saved Belgium as the director of the Food Administration during WWI and used Propaganda smartly
with his food saving slogans was appointed Secretary of Commerce. HOWEVER---Two of his appointments
were THIEVES—ALBERT B. FALL, from New Mexico, was appointed Secretary of the Interior---and as
guardian of the nation’s natural resources, he created the TEAPOT DOME SCANDAL—selling the nation’s
precious oil reserve lands to private corporations for bribes---and HARRY M. DAUGHERTY- Harding’s
campaign manager-and appointed Attorney General---a big time crook—twice subject of corruption
investigations and forced to resign…Smith ( asst. attorney general commits suicide to avoid a trial) Miller (
Property custodian) is put on trial for taking bribes in the same scandal that causes Daugherty to resign.
GOP Reaction (conservatism is some times called “reactionary”) at the Throttle
Harding crushed Progressivism---he became a tool of the large industrialists--- most big businessmen thought
he a was an “amiable boob.” The industrialist’s goal was to use the government to make big profits… and
Harding, Coolidge, and Hoover appointed industrialists to the Supreme Court and many Government agencies
to help this along—as promised. Harding, despite being President just over three years appointed 4 Supreme
Court Justices—all conservative and that will have a big impact once FDR comes in office during the Great
Depression ruling some of the early “new deal” unconstitutional—and leading to a FDR’s “Court Packing”
idea—Former President Taft becomes Chief Justice.
This new very conservative Supreme Court rules unconstitutional much progressive legislation passed earlier—
The case Hammer v. Dagenhart overturns the Keating-Owen Child Labor protection act—They overturn Muller
V. Oregon – invalidating Women’s special protection in the work place and invalidating a minimum-wage law
for women---in the Case Adkins v. Children’ Hospital (1923) --stating now that Women could vote that they
were legal equals of men and could no longer be afforded special protection.
Both the Clayton-Anti-trust and Sherman Anti-trust Acts as well as the Interstate Commerce Commission were
ignored—or controlled by conservative big business supported appointments…Hoover encourages
“consolidation-monopolization” of industry as “efficient” and saw competition as “cutthroat” ---His belief in
“voluntary regulation/enforcement” led to the expectation that the big businesses should “regulate themselves”
rather than the federal government doing so.  hmm….
The Aftermath of War
The Federal Government after the conclusion of WWI had to dismantle its limited economic controls:
The Railroads were returned to private company control—Congress passes the Esch-Cummings Transportation
Act of 1920 ---which encouraged “consolidation” and pledged the Government would “Guarantee” their
profitability--- certainly an effort to save the less significant RR’s due to the rise of the Automobile-TrucksAirplanes--- interesting---in that you can’t help people…but you can give $$$ to business owners—hmm--Unions were strangled by the Red Scare and Government deportation of leaders to the Soviet Union—“The
American Plan” – was a plan by businesses to rid themselves of Union’s by guaranteeing an “open shop,” no
mandatory union representation--- publishing and sharing “black lists” of union organizers to either fire or not
hire—When the Government Railway Labor Board cut wages on RR Workers by 12% in 1922—the workers
went on strike for two months until the Atty Gen. got a court injunction forbidding them to strike---or go to
prison--- Union Membership between 1920 and 1930 fell by 30%
Veterans benefitted--- congress created the Veterans Bureau which in turn built Veterans hospitals and provided
rehabilitation for those injured soldiers.---Veterans soon created their own “lobbying organization”—THE
AMERICAN LEGION—in 1919 by Teddy Roosevelt Jr.---the American Legion was so successful that they
persuade congress to pass the ADJUSTED COMPENSATION ACT (BONUS BILL) IN 1924 (it was vetoed by
Harding in 1922) –this “BONUS” GAVE EVERY FORMER SOLDIER A PAID-UP LIFE INSURANCE
POLICY DUE IN 20YEARS (1944) ---AT A COST OF 3.5 BILLION $$$--- COOLIDGE VETOES THE
BILL BUT CONGRESS WITH A 2/3 MAJORITY VOTE OVERRODE HIS VETO--America Seeks Benefits Without Burdens
Since we never sign the Treaty of Versailles---we were technically still at war---so Congress in July of 1921
passed a simple joint-resolution of Congress that declared WWI officially over.
The 1920’s Republican President’s are called isolationists {A MAJOR QUESTION? IS WHAT
FOLLOWS REALLY ISOLATIONISM OR “UNILATERAL ACTIONS IN THE WORLD”
NOT NECESSARILY ISOLATIONIST BUT A FOREIGN POLICY WITH “BLINDERS”
FOCUSED ON ONLY US INTERESTS?}—The USA ignored the League of Nations-even their World
Health program---we do send unofficial observers to Geneva, Switzerland--But true isolationism is not what happened ---we still were involved in world affairs—just not in the League
and always in our best interests –for example: The Middle East—was being recognized for its huge Oil
Supply—and a rivalry was developing between Britain and the USA for control of the development of this
resource—Sec. of State Charles Evans Hughes signs an agreement that allows both GB and USA to control the
development of this resource in the Middle East—
The “Inter-War Years” were dominated by Republican Presidents who wanted to advance American Business
Interests overseas—a pseudo “dollar diplomacy” and continuation of the RC of the MD---until 1928.
The Inter-War Years Western Hemisphere Foreign Policy 1919-1941
The inter-war years were dominated by Republican presidents whose domestic and foreign policies
were designed to advance American business interests- a new form of Taft’s “Dollar Diplomacy.” To
this end the Coolidge administration saw to it that a new constitution passed by Mexico in 1917, which
called for nationalizing Mexico’s important industries, would not jeopardize American investments in
those businesses. Throughout the 1920s U.S. troops were sent to South America and the Caribbean to
reinforce U.S.-backed regimes and to protect U.S. financial interests.
Throughout the 1920s and well into the 1930s, the United States continued to influence the affairs of its
own hemisphere as well. Time after time it intervened in Central and Latin America in order to protect
U.S. economic and political interests while simultaneously attempting to draw those nations closer to
the United States, especially in light of the rise of antagonistic governments in Japan, Germany, and
Italy. At the Pan-American Conferences of 1923 and 1928, the United States agreed to treat all nations
on an “equal footing.” The Clark Memorandum of 1928 took this rapprochement (repairing
relationships) one step further by repudiating (saying it was not our policy any more) the Roosevelt
Corollary to the Monroe Doctrine. Later, in the 1930s, President Franklin Roosevelt would replace
Dollar Diplomacy with the Good Neighbor policy, which stated that no nation would interfere in
another’s internal affairs. For the time being, this new, less hegemonic policy satisfied most South
Americans. Even in the far reaches of the American empire, the Philippines, the United States, partially
recognizing the costs of maintaining an international empire, promised Filipino independence by 1946
(Tydings-McDuffie Act). Post–World War II international affairs, however, would convince U.S.
administrations to pull back from these prewar agreements and statements.
The Inter-War Years in World Foreign Policy
Dawes and Young Plans –1920’s FP
Of equal concern to U.S. policymakers and financial institutions were the billions of dollars in loans
extended to the Allies during the war. President Coolidge wanted the debts repaid, but the Europeans
balked, claiming that they were unable to collect the billions in war reparations owed to them by a
bankrupt Germany and adding that U.S. losses paled in comparison to their losses. Equally troubling
was the U.S. passage of the Fordney-McCumber Tariff. The tariff made it exceedingly difficult for
Europeans to sell their products in the United States and make the money that could be used to pay
back the war loans. In response to this problem, the United States offered the following solutions:
• The Dawes Plan This plan significantly reduced Germany’s reparations and provided loans to
Germany in a roundabout way: the United States loaned money to Germany, Germany used this
to pay its reparations to the Allies, who in turn used these funds to pay off the interest on its war
debts to the United States.
• The Young Plan This plan further reduced Germany’s payments and established the Bank for
International Settlements to assist in the process of reparations payments.
Nevertheless, the collapse of national economies brought on by the Great Depression caused most
nations to default on their debt payments to the United States. Most nations do not pay back loans made
during WWI until the 2000’s.
The Washington “Disarmament” Conference 1921-22******* [SEE CHART ON P. 757 IN DIGITAL
EDITION}****
Shocked by the enormous loss of life in WWI, world leaders grasped at ways to prevent such a thing from
happening again. The LEAGUE OF NATIONS was seen as one method, but WITHOUT US AND
SOVIET (RUSSIA) INVOLVEMENT, its potential for solving international disputes was limited.
Nevertheless, various international agreements were made in the inter-war years to limit the size of
militaries and resolve potential political disputes. Some were practical; others rested on naïve optimism.
This conference is brought on by concerns of the “Great Powers” about continuing unrest in the Far East
(Asia) there are correct to be concerned—this is where WWII begins before Europe. Charles Evans
Hughes –Secretary of State shocks the “Great Powers” who attend this conference with the following
plan:
Washington Naval Disarmament Conference (1921 -1923)
• The Five-Power Naval Treaty At the Washington “Disarmament” Conference (1921–1922),
convened by President Harding, the United States, Britain, Japan, France, and Italy agreed to
limit their capital ships to the following ratio respectively: 5:5:3: 1.75:1.75. The participants also
agreed to ban the use of certain insidious weaponry, such as poison gas, and restricted
submarine warfare. (Japan feels insulted with the ratio which places them below the USA and
GB in the order and amount of ships---they sign this but never forget this insult !!!)
NOTE: The USA & GB would have an equal # of Battleships and Aircraft Carriers 5:5 and
Japan would have 3 (5:5:3) – France and Italy would have less –1.75 each.
• The Four-Power Treaty At the same conference, the United States, Britain, Japan, and France
agreed to respect one another’s Pacific territorial possessions by, in part, THE USA AND GB
AGREED TO not create forward military bases in the Pacific. (However this part of the treaty
is not agreed to by Japan and they are begin to FORTIFY THEIR PACIFIC POSESSIONS while
the USA and GB do not---and will cost American Soldiers thousands of lives as they attempt to
take these islands during WWII)
OUTLAWING WAR
•
Kellogg-Briand Pact (1928) This international agreement outlawed war. However, it
made no provision for enforcement, nor did it provide for defensive wars.
•
In the two decades following WWI (Inter-War Years), as the horrors of World War I battlefields
faded from public consciousness, the United States experienced an economic boom, highlighted
by the “Roaring Twenties.” But the harshness of the Versailles Treaty, the onset of the Great
Depression, and the rise of militarism and imperialism in Europe and Asia would guarantee
that the peace would not be maintained for long. By 1939, in Europe, 1937 in Asia, the world
was again at war. Two-4 years years later, the United States, which had emerged from World
War I as a major economic and military power, would for the second time in less than
twenty-five years send its young men to fight and die on foreign battlefields. But this time, the
stakes seemed so much higher.
Hiking the Tariff Higher
The Fordney-McCumber Tariff-1922
Raised the tariff to an average tax of 38.5 % (from 27) –also permitted the President to reduce or
increase rates by as much as 50%.
Presidents Harding and Coolidge—authorized 32 raises of the tariff and only 5 reductions further
raising the barrier in US-Global trade—
This High Tariff course led to serious problems---chain reaction—Europeans trying to recover
economically from WWI struggled to sell any goods in the USA (the largest global market) and
without being able to do so ---THIS LED TO A GLOBAL ECONOMIC DEPRESSION --MAYBE THE WORST IN WORLD HISTORY--- and led to POST-WAR CHAOS!
This short-sighted raising of economic barriers made it difficult for European countries being
able to re-pay their WWI debt to the USA and ESPECIALLY GERMANY being able to pay the
HUGE REPARATIONS DEMANDED FROM THE VERSAILLES TREATY---this some say led
to the collapse of the German Economy—and Democratically elected Government and THE
RISE OF ADOLF HITLER TO POWER!!!**** Especially when you include the even higher
HAWLEY-SMOOT TARIFF OF THE HOOVER ADMINISTRATION (EARLY 1930’S)
Some historians also claim that these trade barriers led to our own Great Depression occurring and
worsening (Hawley-Smoot) due to the reciprocal trade barriers placed on American Products by
European Countries which lowers the amount of American Goods purchased overseas… IT WAS A
VICIOUS CYCLE, WHICH DEEPENED INTERNATIONAL ECONOMIC DISTRESS****
The Stench of Scandal
“The loose morality (Harding is supposed to have had many mistresses and children born outside his
marriage) and “get-rich quickism” of the Harding era manifested themselves spectacularly in a series of
scandals (mentioned previously).”
Charles Forbes- Head of the new VETERANS BUREAU - along with accomplices, stole over 200$
MILLION in bribes and kickbacks from the building of Veteran’s Hospitals—2 YEARS IN JAIL.
Albert B. Fall – Head of the Bureau of the Interior – TEAPOT DOME SCANDAL*****
At Teapot Dome, Wyoming and Elk Hills, California both sites of our Naval Oil Reserves—Fall leases
these lands to oilmen Sinclair and Doheny—for a bribes close to ½ of a million dollars—two years
later this “secret deal” signed by Harding (unknowingly???) is leaked to the press and all three men
were indicted—both Sinclair and Doheny were acquitted but Fall was convicted---The American
public was upset as newspapers said—“You can’t put a million dollars in jail,” and “In America
everyone is assumed guilty until proven rich.”
Harry Daugherty- Attorney General- investigated twice by the Senate, for the illegal sale of pardons
and liquor permits—tried twice but acquitted due to ‘hung juries.’
Warren G. Harding takes a cruise to Alaska (first president to visit) on his return in San Francisco, he
suffers a massive heart attack and dies (some say his wife poisoned him  ) So he does not suffer from
these scandals too much due to most of the trials coming after his death—but his reputation suffers for
sure as he is ranked either the worst or among the worst Presidents in history.
“Silent Cal” Coolidge
“Silent Cal” –the famous nickname for this quiet but honest President---comes from a story of a White
House dinner, Where a famous movie actress was in attendance—and she bet her friend that she could
get Coolidge to speak more than three words---she tells him of his reputation as being a man of few
words and of her bet with her friend—they then approach her friend together-she assumes that she has
won the bet---Coolidge then speaks, “You Lose,” then walks away --
Great Quote from Coolidge on the importance of business at the beginning of the notes—know this**
VP Coolidge hears of Harding’s death—and in his father’s New England, Vermont, farmhouse he
takes the oath of office and becomes President in August of 1923.
Coolidge is known to be very different from Harding—Honest, moral, frugal, hard-worker---but
boring.
Coolidge’s 5 and ½ years as President were economically blessed—except for farmers—he allowed
Mellon to cut taxes on the Wealthy –“TRICKLE DOWN THEORY” –and led a robust economy—
“The Boom Years” he was called the “High priest of the Great God Business” and a “hands-off”
Corporate Dominated Government- a return to the Gilded Age—dominated.
Frustrated Farmers
During WWI Farmers had done very well, BUT after WWI with the return of European Nations to
producing crops---the SUPPLY SURGED—and Prices correspondingly CRASHED—Production due
to increased MECHANIZATION AND NEW INVENTIONS coupled with more nations able to
produce agricultural products SPELLED DOOM FOR AGRICULTURE – (one reason for the Great
Migration is the invention of the Mechanical Cotton Picker and collapse of Cotton Prices)
The gasoline engine tractor and the end of massive government purchases for war—led to a CRASH—
THE RESULT—ONE FARM IN 4 IS SOLD FOR DEBT OR TAXES IN 1920’S
Congress attempts to legislate some relief—The McNary-Haugen Bill is passed twice in Congress – it
would allow the Government to purchase surplus crops and sell them abroad-overseas—Government
losses, if any, would be made up by a special tax on Farmers---BUT COOLIDGE VETOES THIS
BILL TWICE—
FARM PRICES STAY LOW—
A Three-Way Race for the White House in 1924
“Keep Cool and Keep Coolidge”
The Election of 1924
Cal Cooldige –Republican
John Davis- Democrat
“Fighting Bob” LaFollette- Progressive Party
Coolidge dominates the race—Lafollete does win Wisconsin his home state and did bring some needed
Progressivism to the race but ---the times were economically TOO GOOD –for a sitting President to
lose… BUT WOULD THEY REMAIN SO??? FOR HOW LONG???