Chapter 7: The Roaring 20s and the Great Crash
Section1: Return to Normalcy
Journal – Section 1 Question: Answer what you think was meant by “normalcy” in the eyes of the
American public in 1920. Then, section 1 2nd question answer if you think presidents should be hurt by
scandals even if they weren’t involved.
Daily Lesson Guide:
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Election of 1920 – who would you vote for? Candidate A: Supports the League of Nations; wants
a tax increase to help pay for the war debt; opposes Prohibition; supports Progressivism of
Wilson or Candidate B: Opposes the League of Nations; wants to decrease government spending
and taxes; supports Prohibition; opposes Progressivism of Wilson. Candidate A was James Cox
(D) and B was Warren Harding (R). Harding won. Republicans took control of the House and
Senate showing the public opinion was against Wilson’s Progressivism and League…the nation
wanted to “return to normalcy.”
Video clip – these computers with Windows ’75 won’t play the video, so you’ll have to read the
following to answer the questions. Overview of the Harding Administration. Americans were tired
of Progressivism and wars abroad. Harding campaigned on a return to normalcy. What he
meant was that Americans wanted out of postwar turmoil and move toward prosperity. The
Budget and Accounting Act was important since the president must present a budget to Congress
for approval (still done today). The Washington Conference was held by world leaders to go
through leftover problems from WWI. It dealt with limiting the amount of military arms that nations
could have. Specifically, the Five Power Treaty dealt with naval arms limitation and focused on
nations limiting their battleships. The unintended consequences were that nations began to focus
on more modern naval technology, which were submarines and the new aircraft carriers, both
becoming more important than battleships. Harding’s presidency would be hurt by scandals with
the biggest being committed by Secretary of the Interior Albert Fall with the Teapot Dome
Scandal in which he improperly leased oil reserves and in return he got illegal kickbacks.
Depression of 1920-1 – Did you know the U.S. went through a major depression in 1920 going
into 1921 that was going to be the worst depression in our nation’s history. So why isn’t it
studied? The reasons were millions of soldiers returned home; jobs were scarce; taxes were high
therefore little incentive for business to grow; high unemployment. What would you do? When
an economy is down (little business, high unemployment), which is better: Government go into
debt to give money to businesses to expand or give tax breaks to businesses to expand? It
wasn’t a popular topic in history as a depression because it didn’t last long – decisions of Harding
avoided this depression. Secretary of the Treasury Andrew Mellon proposed tax cuts, which
increased revenue (contrary to a belief by some today who wrongly think that tax cuts will
decrease how much the government brings in). Mellon looked into why the wealthy paid less in
taxes as rates went up (as rates went up, government was getting less revenue in taxes from the
wealth). He found as the rate went up, the rich invested more overseas rather than build mills
and factories in the U.S. The wealthiest paid over 70% of their income in taxes when Wilson left
office. Mellon’s tax cut proposals went from 73% on the wealthiest to 25% and on the lowest
bracket from 4% to 1.5% (went even lower through the 1920s); as a result revenue greatly
increased. Harding’s decision was to cut taxes and cut government spending. Harding said no to
a stimulus package (government spending means either a debt or increase in taxes to pay for the
stimulus) and instead cut taxes…this led to entrepreneurship, new goods and inventions…in
other words incentive to be successful. Consumer buying increased, unemployment went to 2%.
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The results were incentives for entrepreneurship – led to new goods and inventions – increased
consumer buying and employment. There’s an important lesson to be learned in that when
businesses have incentive to grow, they produce new goods and affordable prices and provide
more jobs. There were scandals under Harding. Corruption of members of the “Ohio Gang” –
not Harding himself although it hurt his administration since they were his friends/appointees.
Charles Forbes in the Veterans Bureau sold hospital supplies meant for veterans. Charles
Sawyer, a doctor who was Harding's personal physician, told President Harding that Forbes was
selling valuable hospital supplies to an insider contractor. After two issued orders for the sales to
stop, President Harding finally summoned Forbes to the White House and demanded Forbes'
resignation, since Forbes had been insubordinate in stopping the shipments. Harding, however,
was not yet ready to announce Forbes' resignation and allowed him to flee to Europe on the
"flimsy pretext" to help disabled U.S. Veterans in Europe. While in Europe, Forbes submitted his
resignation to President Harding on February 15, 1923. Harding placed a reformer, Brig. Gen.
Frank T. Hines, in charge of the Veterans Bureau who immediately cleared up the mess left by
Forbes. When Forbes returned to U.S., he visited President Harding at the White House in the
Red Room. During the meeting, President Harding angrily grabbed Forbes by the throat, shook
him vigorously, and exclaimed "You double-crossing bastard!“ A guest who had an appointment
with President Harding interrupted this physical encounter and Forbes was allowed to leave.
President Harding was bitter over Forbes' "betrayal" and the two never saw one another again. In
1926, Forbes was brought to trial and convicted of conspiracy to defraud the U.S. government.
Forbes drew a two-year prison sentence and was released in November 1927. Harry Daugherty
the Attorney General took bribes for German assets seized in the war. Albert Fall, the Interior
Secretary, with the Teapot Dome Scandal hurt Harding like Credit Mobilier hurt Grant, even
though Harding wasn’t involved; Fall would be sent to prison in 1931. Harding said I can take
care of my enemies; I have no problem with my enemies; its my friends that keep me walking the
floors at night.
Evaluation Harding
o Roaring 20s rather than worsening depression
o Washington Conference – arms limitation
o Budget and Accounting Act – federal budget
o Favored civil rights for African-Americans (first president in the 20th century to speak in
favor of equal rights)
o Scandals (in his administration…not him)
o Personal life issues (extramarital affair)
Name an individual or action that you would consider patriotic in terms of bring America into the
Roaring 20s and why. Name an individual or action that you would consider pinheaded in terms
of bring America into the Roaring 20s and why.
Answer the did you meet the objective question.
When you’re complete, study your notes. You could also work further on the Internet guide.