The Politics of Boom & Bust
1920 - 1932
President Harding’s
Ohio Gang
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Cabinet Members: - “The Ohio Gang”
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Sec of State – Charles Evans Hughes
Sec of Treasury – Andrew Mellon
Sec of Commerce – Herbert Hoover
Sec of Interior – Albert Fall
Attorney General – Harry Daugherty
Harding as President
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“Old Guard” hoped to improve on the old
business doctrine of laissez-faire
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Gov’t should help guide business along the path to
profits
Put a end to a lot of progressive legislation
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Supreme Court - Taft as Chief Justice
Adkins v. Children’s Hospital - reversed Muller v.
Oregon
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No different treatment for women in the workplace
Antitrust laws were ignored
The Aftermath of War
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War Industries Board disappeared
Railroads returned to private management in
1920
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Esch-Cummins Transportation Act of 1920
Merchant Marine Act of 1920 – get rid of
wartime fleet
Union membership declined by 30%
American Legion founded
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Lobbied for veterans’ benefits – Bonus Army
Adjusted Compensation Act – 1924
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Paid-up insurance policy
America Seeks Benefits
Without Burdens
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July 1921 – joint resolution officially ending the war
Isolationism but concerned about oil in the Middle East
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Sec Hughes eventually secured rights for US oil companies
Washington Disarmament Conference – 1921-1922
 Agenda – naval disarmament & situation in the Far
East (Japan)
 Five-Power Naval Treaty of 1922
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Included ship ratios, US & Great Britain could not fortify their
Far Eastern possessions & replaced the Anglo-Japanese
alliance
Nine-Power Treaty of 1922
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Open Door in China was extended
Kellogg-Briand Pact
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1927 - Aristide Briand (France) proposed a
treaty with the US to outlaw war
Frank Kellogg (US) invited other nations to
join
Paris – Aug 1928 – almost all major nations
signed the treaty
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Outlawed aggression, not self-defense, & had no
enforcement provision
Hiking the
Tariff Higher
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Mellon sought substantial increases in
protective tariffs
Fordney–McCumber Tariff Law – 1922
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Increased tariff to 38.5%
Duties on farm produce were increased
President could raise or lower rates to a limit of
50% on recommendation of the Tariff Commission
Harding & Coolidge favored increased tariffs
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Hurt not only America but also European countries
as well
Scandal
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1923 – Charles Forbes – Head of the
Veterans’ Bureau
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Caught stealing money - $200 million// Sentenced
to 2 years
1921 - Teapot Dome Scandal
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Albert Fall - Sec of Navy transferred valuable
properties to the Interior Dept (with Harding’s
approval)
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Teapot Dome, Wyoming & Elk Hills, CA
Fall leased the lands to oilmen Harry Sinclair &
Edward Dohney after receiving a bribe
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Fall was found guilty of accepting a bribe & sentenced to
one year
Scandal Conti.
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1924 - Attorney General Daughtery
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Investigated for illegal sale of pardons &
liquor permits
Forced to resign & later released after 2
juries failed to agree
Harding went on a speechmaking tour
across the country including Alaska
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Aug 2, 1923 – died in CA
Coolidge takes office
Calvin Coolidge
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“Silent Cal”
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Honest
Supported the status quo
“the man who builds a factory builds a temple”
“the man who works there worships there”
Frustrated Farmers
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Farmers were being hurt by overproduction
Coolidge twice refused to sign legislation
which proposed to subsidize farm prices
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Capper-Volstead Act – exempted farmers’ from
antitrust legislation
McNary-Haugen Bill – 1924 – 1928
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Goal was to keep farm prices high by authorizing the
gov’t to buy up surpluses & sell them abroad – farmers
would pay a special tax
Election of 1924
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Republican – Calvin Coolidge
Democrat – John W. Davis
Progressive – “Fighting Bob” La Follette
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Platform
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gov’t ownership of the railroads
Relief for farmers
Anti-monopoly & anti-labor injunctions
Limit Supreme Court’s power to invalidate laws of
Congress
**** Coolidge Wins
Coolidge’s Foreign Policy
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Isolationism
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Pursued further disarmament
Armed intervention in the Caribbean
& Central America
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US troops removed from Dominican Republic (1924)
US troops remained in Haiti 1914 – 1934
Removed troops from Nicaragua (1909) but sent them
back in 1926 – 1933
Mexico (1926) – oil dispute
International Debt
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US Treasury had loaned the Allies $10 billion
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US demanded repayment
Allies planned to pay off debt by reparations
received from Germany
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Germany could not pay
Allies wanted the debt to be forgiven
US refused
Dawes Plan of 1924
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Rescheduled German reparations payments &
opened the way for further American private
loans to Germany
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US bankers loaned Germany money
Germany paid Great Britain & France reparations
Great Britain & France paid US Treasury for war
debts
The Triumph of Hoover
1928
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Coolidge decided not to seek reelection
Republican – Herbert Hoover
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Democrat – Alfred E. Smith
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Never held an office before
“wet”
Roman Catholic
Radio – helped Hoover more than Smith
Hoover was the 1st Republican to win any
Southern states
President
Hoover
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Stocks continued to soar
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Left out of the boom:
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Unorganized wage earners & disorganized farmers
Agricultural Marketing Act – 1929
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Designed to help farmers help themselves through
cooperatives
Set up a Federal Farm Board
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Lent money to farm organizations seeking
to buy, sell, or store surpluses
Created the Grain Stabilization Corporation
& the Cotton Stabilization Corporation
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Goal was to buy up surpluses to increase prices
Hawley – Smoot Tariff of 1930
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Increased the tariff from 38.5% to 60%
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Highest protective tariff in peacetime history
Infuriated European countries
Plunged US & other nations deeper into
depression
The Great
Crash
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Hoover tried to curb speculation through the
Federal Reserve Board
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October 1929 – Stock Market Crash
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Unsuccessful
Partially triggered by British who raised their interest
rates to bring back capital lured by American
investments
“Black Tuesday” Oct 29, 1929
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Millions of shares of stock were sold
By the end of 1929, stockholders had lost $40 billion
Beginning of the
Great Depression
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Depression hit at home & abroad
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1930 – more than 4 million US workers were
unemployed
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2 years later, the number had tripled
Workers who did not lose their jobs took dramatic
pay cuts
Over 5000 banks collapsed in the 1st 3 years
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Bread lines formed, soup kitchens dispensed food, &
apple peddlers tried to make ends meet
Life savings of tens of thousands went with them
Birth rate declined
Causes of the
Great Depression
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Overproduction by farm & factory
Unbalanced Economy
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Credit Crisis
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Too much money was going into
the hands of a few people
Installment buying overstimulated production
International Depression
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Hastened by Hawley-Smoot Tariff of 1930
Hoover & the Depression
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“Hoovervilles” & “Hoover blankets”
Tried to encouraged the public
Encouraged local gov’ts to help their citizens
Assisted railroads, banks, & rural credit
corporations
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“Trickle Down Theory”
Opposed direct help to the people
Pioneer of the
New Deal
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Public works – Congress approved $2.25 billion
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Hoover Dam
Opposed all schemes he deemed “socialistic”
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Muscle Shoals Bill – opposed by Hoover
1932 – Reconstruction Finance Corporation (RFC)
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Became a gov’t lending bank to business & gov’t
1932 – Norris-La Guardia Act
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Outlawed antiunion contracts & legalized peaceful
strikes, boycotts, & picketing
The Bonus Army
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Veterans were demanding their pay now
The “Bonus Expeditionary Force” went to
Washington in the Summer of 1932
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Federal troops were used to put
down the protest
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Set up “Hoovervilles”
Under Gen. Douglas MacArthur
Authorized brutal force
Caused severe damage to Hoover’s public image
Japan Attacks China
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Sept 1931 – Japan invaded Manchuria. Why?
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Geneva Meeting – League of Nations
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US sat unofficially on the council
Nothing was accomplished
Japan left the League
1932 – Stimson Doctrine
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Stopped foreign trade with conquered area
Violation of the League of Nations covenant
US would not recognize any territorial acquisitions that were
achieved by force
Japan also bombed Shanghai
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Informal boycotts were launched in the US
Hoover Pioneers the Good
Neighbor Policy