Chapter_26_New_Era_1920-1932

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• Harding
 Genial
 Lack of strong convictions
 Put strong men in important
offices
 Gave lesser offices to the “Ohio
Gang”
Harding’s Wife and Girlfriend
• Secretary of Treasury, Andrew Mellon, dominated
domestic policy under Harding
Lowered taxes – BUT opposed lower rates for lower classes
Raised tariffs to protect US industries
Returned to laissez-faire policies
Reduced national debt
BUT farm bloc opposed rich industrialists – farmers lost income
following WWI
• Charles Forbes – embezzled
millions appropriated for veterans’
hospitals
• Attorney general Daugherty
implicated in fraud
• Teapot Dome Scandal
 Secretary of Interior Albert Fall
 Leased government oil reserves
to private oil companies
• Calvin Coolidge
 Elected after three-party split
election (LaFollette ran on
Progressive ticket)
 After elected cleaned house
 Kept on Secretary of Treasury
Mellon
 “Silent Cal”
• Both Harding and Coolidge deferred to the Senate on
foreign affairs
• US overwhelmingly isolationist
• Economic interests forced US to seek American influence
abroad
• Continued Open Door Policy in China – required
increasing checks on Japanese expansionism
• The Washington Conference
Five-Power Treaty
 US-GB-Fr-Jp-It agreed to stop building battleships and reduce fleets to
a fixed ratio
Four-Power Treaty
 US-GB-Fr-Jp agreed to respect each other’s interests in Pacific and
confer if any attack launched
Nine-Power Treaty
 All powers agreed to respect Chinese independence and maintain
Open Door
• Treaties signified US interest in world affairs but treaties toothless
• Ratio under treaty actually gave Japanese naval dominance in
Pacific
• Treaty made Philippines indefensible and endangered Hawaii
• Japan offended by National Origins Act 1924 that omitted Japan
from quota
• Most Japanese military officers considered war with US inevitable
• Peace organizations flourished in 1920’s
• Isolationism strengthened
• Kellogg-Briand Pact 1928
French foreign minister Aristide Briand and US Secretary of
State Frank Kellogg
Both saw treaty as meaningless but were pushed by peace
movement
Diplomats from 15 countries signed treaty that renounced war
as implement of policy
• Hoover first to treat Latin Americans as equals
• Re-interpreted Roosevelt Corollary to Monroe Doctrine to mean
US to intervene only in self-defense
• Marines in Haiti, Nicaragua, and Dominican Republic recalled in
1934
• Platt amendment abrogated
• Latin Americans still resentful of “rich Americans”
• 1931 Japanese occupied Manchuria made into puppet state
Manchukuo
• Violation of Kellogg-Briand Pact and Nine-Powers Treaty
• US and League of Nations asked by Chiang Kai-shek to intervene
– US refused – not a world policeman
• 1932 Japan attacked Shanghai
• Condemnation by League of Nations resulted in Japanese
withdrawal from League
•
•
•
•
•
US lent Allies $10 billion for WWI – wanted money repaid
Allies demanded billions from Germany to pay for war
1924 Dawes Plan scaled down German reparations
1929 Young Plan further scaled down German reparations
When Great Depression struck both Germans and Allies defaulted
on payments
• Democrats nominated Governor Al
Smith




Catholic
Wet
Born in slums
Tammany Hall product
• Republicans nominated Herbert
Hoover
 Quaker
 Dry
 Modern approach to business and
labor
• Economic prosperity and Hoover’s
wide appeal gave Hoover a
landslide
• Economy of 1920’s had defects – lagging industries
• Movement towards consolidation meant more business in fewer
hands
• Large manufacturers afraid of upsetting the public about
monopolies, kept prices down
• Agriculture weakest sector – prices fell and costs rose
along with European tariffs and quotas
• Government did little to help the farmer
• US economy built on sand
Large wealth gap
Money held by rich used in stock market speculation and rise in
“bull market”
• Stock prices increased – some
brokers expressed alarm at
overvalued stocks – few cared
• Stock speculation became national
mania – pulling in thousands of
small investors
• October 24 – a wave of selling sent
prices spinning downward
• October 29 – 16 million shares sold
– prices plummeted
• Stock market collapse did not start Depression
• Great Depression was a global event caused by economic chaos
as result of WWI
• In US too much wealth in too few hands – not enough consumers
to buy products
• Wealth gap caused by easy credit extended by federal reserve
(friendly to rich)
• Under-consumption caused factories to close and fire workers
causing demand to further shrink
• Automobile output fell from 4.5
million in 1929 to 1.1 million in 1932
• Financial system cracked under
strain – more than 1300 banks
closed doors in 1930, 3700 more in
next 2 years
• Each bank failure deprived people
of funds to buy goods
• Agriculture worsened as demand
for farm products dropped
• Unemployment rose from 1 million
at height of economic boom to 13
million
• Hoover tried to end depression –
lowered taxes, lowered interest
rates, made loans available to
businesses
• Hoover failed to help local and state
agencies and failed to allow federal
funds to be given to individuals – he
also relied too much on private
charities
• Charities were drying up and
state/local governments
overwhelmed
• When drought impacted farmers
Hoover allowed federal funds to be
used for seed and food for livestock
but not for farmers themselves
• Hoover put more stress on the
economy by balancing the budget
instead of spending
• 1930 Hawley-Smoot Tariff Act – dramatically raised tariffs
on imports
• Tariff made it hard for Europe to earn money to repay US
and helped bring financial collapse to Europe
• Spring of 1932 – many families
unable to find public aid
• Many evicted and forced to live in
communities of shacks near dumps
or swamps called “Hoovervilles”
• Food prices so low farmers burned
corn for fuel – farmers dumped milk
– and blocked transport of crops to
market
• Mexicans were rounded up and
deported so they would not
compete for jobs and food
• Summer 1932 – Veterans marched
on Washington DC demanding their
WWI bonuses
• “Bonus Army” shacks in
Washington were attacked and
burned by US troops
• US in revolutionary situation
• Communists gained support in
intellectual circles
• Unemployment led to apathy
• Unemployment brought shame – many never applied for
public assistance
• High food costs resulted in diets low in protein creating
listlessness
• Depression resulted in dramatically lower birth rate
• Some families were strengthened while others were
destroyed
• The influence of wives increased
• Attitudes of husbands and wives magnified
• Some children caused strain while others helped the
family
• The Depression caused Hoover to turn defensive and petulant
• Franklin D. Roosevelt
 Governor of New York
 Roosevelt’s sunny attitude contrasted with Hoover’s glum demeanor
 Roosevelt crippled by polio
 Had no real plan and contradicted himself but was the face of hope
 After election, FDR developed economic plan called the New Deal
• The Twentieth Amendment
 1933
 Provided for convening new
Congresses in January instead
of the following December
(eliminated the lame-duck
Congress)
 Advanced the date of the
presidential inauguration from
March 4th to January 20th
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