Chapter 32
The Politics of Boom
and Bust, 1920–1932
I. The Republican “Old Guard”
Returns
• Warren G. Harding, inaugurated in 1921,
looked presidential:
– Found himself beyond his depth in the
presidency
• He was unable to detect moral halitosis in his evil
associates
• He could not say no and designing politicians leeched
on to this weakness
• Washington could not tell a lie, Harding could not tell
a liar
• He promised to gather around him the “best minds”
of the party
I. The Republican “Old Guard”
Returns (cont.)
• Harding’s “best minds”:
– Charles Evans Hughes:
• Masterful, imperious, incisive, brilliant
• Brought to the position of secretary of state a
dominating conservative leadership
– Andrew W. Mellon:
• New secretary of the Treasury
– Herbert Hoover:
• Famed feeder of the Belgians and wartime food
administrator
• Became secretary of commerce
I. The Republican “Old Guard”
Returns (cont.)
• Raised his second-rate cabinet to first-rate
importance
• Especially in drumming up foreign trade for US.
manufactures.
• Harding’s “worst minds”:
– Senator Albert B. Fall:
• A scheming anticonservationist
• Appointed secretary of the interior
• As guardian of the nation’s natural resources, he
resembled the wolf hired to protect the sheep
I. The Republican “Old Guard
Returns (cont.)
– Harry M. Daugherty:
• A big-time crook in the “Ohio Gang”
• Was supposed to prosecute wrongdoers as attorney
general.
II. GOP Reaction at the Throttle
• Harding was a perfect “front” for
enterprising industrialists:
– New Old Guards:
• Hoped to crush the reforms of the progressive era
• Hoped to improve on the old business doctrine of
laissez-faire
• They simply wanted the government to keep its hands
off business,
• But for the government to guide business along the
path to profits
– They achieved their purpose by putting the courts and
administrative bureaus in safekeeping of fellow standpatters
II. GOP Reaction at the Throttle
(cont.)
– Harding lived less than three years as president:
• But appointed four of the nine justices:
• His fortunate choice for chief justice was ex-president
Taft, who performed his duties ably but was more
liberal than some of his cautious associates
– The Supreme Court axed progressive legislation:
• It killed a federal child-labor law
• Stripped away many of labor’s hard-won gains
• Rigidly restricted government intervention in the
economy
II. GOP Reaction at the Throttle
(cont.)
• Landmark case Adkins v. Children’s Hospital (1923):
– It reversed its own reasoning in Muller v. Oregon (see p.
645):
» Which declared women to be deserving of special
protection in the workplace
» And invalidated a minimum-wage law for women
» Reasoning: because women now had the vote (19th
Amendment), they were the legal equal of men and
could no longer be protected by special legislation.
– These two cases framed a debate over gender differences:
» Were women sufficiently different from men that they
merited special legal and social treatment?
» Or were they effectively equal in the eyes of the law
and undeserving of special protections and
preferences?
II. GOP Reaction at the Throttle
(cont.)
– Corporations could once more relax and expand:
• Antitrust laws were often ignored, circumvented, or
feebly enforced by friendly prosecutors
• The Interstate Commerce Commission came to be
dominated by men who were personally sympathetic
to the managers of the railroads
• Big industrialists strived to reduce the rigors of
competition
• Associations that ran counter to the spirit of existing
antitrust legislation, their formation was encouraged
by Hoover
II. GOP Reaction at the Throttle
(cont.)
• Hoover’s efficiency:
– Led him to condemn the waste resulting from
cutthroat competition
– His commitment to voluntary cooperation led
him to urge businesses to regulate themselves
rather than be regulated by big government.
p729
III. The Aftermath of War
• Wartime government controls on the
economy were swiftly dismantled:
– The War Industries Board disappeared
• With its passing, progressive hopes for more
government regulation of big business evaporated
– Returned railroads to private management in
1920
• Some hope for permanent nationalization
• Congress passed the Esch-Cummins Transportation
Act:
– Encouraged private consolidation of the railroads
III. The Aftermath of War
(cont.)
– Pledged the Interstate Commerce Commission to guarantee
their profitability
– New philosophy was to save the railroads from the country.
– Government tried to get out of the shipping
business:
– The Merchant Marine Act (1920) authorized the Shipping
Board to dispose of much of the hastily built wartime fleet
– The Board operated the remaining vessels without
conspicuous success
– Under the La Follette Act (1915) , American shipping could
not thrive in competition with foreigners.
III. The Aftermath of War
(cont.)
• Labor limped along badly in the postwar
decade, lack of government support:
– Bloody strike in the steel industry in 1919
– The Railway Labor Board ordered a wage cut of
12% in 1922
– General Daugherty claimed on the strikers an
injunction
– Needy veterans reaped lasting gains from the
war:
• Congress (1912) created the Veterans Bureau to
operate hospitals and provide vocational rehab.
III. The Aftermath of War
(cont.)
• Veterans organized into pressure groups
• The American Legion was distinguished for its militant
patriotism, rock-ribbed conservatism, and zealous
antiradicalism.
• Aggressive for veterans’ benefit
• Critics denounced a holdup “bonus” for the millions
of veterans
• Won in 1924 the passage of the Adjusted
Compensation Act:
– Gave former soldiers a paid-up insurance policy due in 20
years
– Adding $3.5 billion to the cost of the war
IV. America Seeks Benefits Without
Burdens
• Making peace with the fallen foe:
– The United States, having rejected the Treaty of
Versailles, was technically at war with Germany,
Austria, and Hungary:
• In July Congress passed a simple joint resolution that
declared the war officially over
• Isolation was enthroned in Washington
• Continued to regard the League as an unclean thing
• Harding at first even refused to support the League’s
world health program
IV. America Seeks Benefits
Without Burdens (cont.)
– Secretary Hughes secured for American oil
companies the right to share in oil exploitations
– Disarmament was an issue for Harding:
• Had businessmen to finance the ambitious naval
building program during the war
• Washington “Disarmament Conference” 1921-1922:
–
–
–
–
Invitations went out to all but Bolshevik Russia
The double agenda included naval disarmament;
The situation in the Far East
Hughes declared a ten-year “holiday” on the construction of
battleships
– He proposed scaled-down navies of America and Britain:
ratio 5:5:3. The third was for Japan.
IV. America Seeks Benefits
Without Burdens (cont.)
– A Four-Power Treaty –the pact bound Britain, Japan, France
and the United States to preserve the status quo in the
Pacific.
– Gave China—“the Sick Man of the Far East”—the NinePower Treaty (1922), whose signatories agreed to nail wideopen the Open Door in China
– No restrictions:
» Placed on small warships
» Congress made no commitment to the use of armed
force.
• Kellogg-Briand Pact:
– Secretary of state Frank B. Kellogg won the Nobel Peace
Prize for his role; Kellogg signed the Pact with the French
foreign minister.
IV. America Seeks Benefits
Without Burdens (cont.)
• The new parchment peace was delusory:
– Defensive wars were still permitted
– The pact was a diplomatic derelict and virtually
useless
– It reflected the American mind (1920s):
• Willing to be lulled into a false sense of security
• This same attitude showed up in the neutralism of the
1930s.
p731
Figure 32-1 p731
V. Hiking the Tariff Higher
• Businesspeople sought to keep the market to
themselves by throwing up tariff walls:
– Fordney-McCumber Tariff Law:
• Lobbyists wanted to bust the average from 27% to
38.5%, almost as high as Taft’s Payne Aldrich Tariff of
1909 (see Appendix.)
• Duties on farm produce were increased
• Flexibility: the president could increase or decrease
duties as much as 50%
• Harding was more friendly to increases than
reductions.
V. Hiking the Tariff Higher
(cont.)
• In six years they authorized 32 upward charges
• During this same time, the White House ordered only
5 reductions
– The high-tariff course set off a chain reaction:
• European producers felt the squeeze
• Impoverished Europe needed to sell its manufactured
goods to the United States
• America needed to give foreign countries a chance to
make a profit
• International trade, Americans were slow to learn, is a
two-way street.
V. Hiking the Tariff Higher
(cont.)
• They could not sell to others in quantity unless they
bought from them in quantity—or lent them more
U.S. dollars
• Erecting tariff walls was a game that two could play
• The whole European-American tariff situation further
deepened the international economic distress,
providing one more rung on the ladder by which
Adolf Hitler scrambled to power.
VI. The Stench of Scandal
• Loose morality and get-rich-quickism of the
Harding era resulted in a series of scandals:
– Scandals:
• 1923 Colonel Charles R. Forbes, caught with hand in
the till, was forced to resign as head of the Veterans
Bureau
– Looted the government of $200 million, chiefly in the
building of veterans’ hospitals
– He was sentenced to two years in a federal penitentiary
• Teapot Dome scandal:
– Involved priceless naval oil reserves at Teapot Dome
(Wyoming) and Elk Hills (California)
VI. The Stench of Scandal
(cont.)
– Secretary of the interior Albert B. Fall induced his careless
colleague, the secretary of the navy, to transfer these
valuable properties to the Interior Department
– Harding indiscreetly signed the secret order
– Fall quietly leased the lands to oilmen Harry F. Sinclair and
Edward L. Doheny,
– But not until he received a bribe (“loan”) of $100,000 from
Doheny and about three times that amount in all from
Sinclair
– Teapot Dome finally came to a whistling boil
» Fall, Sinclair, and Doheny were indicated 1924
» Case dragged on until 1929
» Fall was found guilty of taking a bribe, sentenced to one
year in jail
V. The Stench of Scandal
(cont.)
» The two bribe givers were acquitted while the bribe
taker was convicted
» Sinclair served several months in jail for having
“shadowed” jurors and for refusing to testify before a
Senate committee.
– The acquittal of Sinclair and Doheny undermined faith in the
courts.
• Scandal of Attorney General Daugherty:
– A Senate investigation (1924) of illegal sale of pardons and
liquor permits
– Forced to resign, tried in 1927, but released after the jury
twice failed to agree.
V. The Stench of Scandal
(cont.)
• Harding was spared the full revelation of
these iniquities:
– He embarked on a speechmaking tour across the
country all the way to Alaska
• On return he died in San Francisco on August 2, 1923
– The brutal fact is that Harding was not a strong
enough man for the presidency—as he himself
privately admitted.
– Such was his weakness that he tolerated people
and conditions that subjected the Republic to its
worst disgrace since the days of President Grant.
p733
VII. “Silent Cal” Coolidge
• Vice President Coolidge was sworn into office
by his father:
• He embodied the New England virtues of honesty,
morality, industry, and frugality
• He seemed to be a crystallization of the
commonplace
• Had only mediocre powers of leadership
• His speeches were invariably boring
• True to Republican philosophy, he became the “high
priest of the great god Business”
VII. “Silent Cal” Coolidge
(cont.)
• His philosophy was a hands-off temperament
• His thrifty nature caused him to sympathize with
Secretary of the Treasury Mellon’s effort to reduce
taxes and debts
• Coolidge slowly gave the Harding regime a badly
needed moral fumigation
• Coolidge was not touched by the scandals.
p734
VIII. Frustrated Farmers
• Farmers in a boom-or-bust cycle in the postwar decade
– Peace brought:
• End to government –guaranteed high prices and
massive purchases by other nations
• Foreign production reentered the stream of world
commerce
– Machines:
• Threatened to plow the farmers under over their own
overabundant crops
VIII. Frustrated Farmers
(cont.)
• The gasoline-engine tractor was working a revolution
on American farms:
– They could grow bigger crops on larger areas
– Improved efficiency and expanded agricultural acreage;
helped to pile up more price-dampening surpluses
– A withering depression swept through agricultural districts
in the 1920s, when one farm in four was sold for debt or
taxes.
• Schemes abounded for bringing relief to the hardpressed farmers:
– A bi-partisan “farm bloc” from the agricultural states
coalesced in Congress in 1921 and succeeded in getting
some helpful laws passed.
VIII. Frustrated Farmers
(cont.)
• The Capper-Volstead Act:
– Exempted farmers’ marketing cooperatives from antitrust
prosecution
• The McNary-Haugen Bill (1924-1928):
– Sought to keep agricultural prices high by authorizing the
government to buy up surpluses and see them abroad
– Government losses were to be made up by a special tax on
the farmers
– Congress twice passed the bill,
– But frugal Coolidge twice vetoed it
– Farm prices stayed down, and farmers’ political temperatures stayed high, reaching a fever pitch in the election of
1924.
p735
IX. A Three-Way Race for the White
House in 1924
• Election of 1924:
– Nominated “Silent Cal” at their convention in
Cleveland in the summer of 1924
– Democrats had more difficulty choosing a
candidate in their convention in New York:
•
•
•
•
The party was split between “wets” and “drys”
Urbanites and farmers
Fundamentalists and Modernists
Northern liberals and southern stand-patters,
immigrants and old-stock Americans.
IX. A Three-Way Race for the
White House in 1924 (cont.)
• The Democrats failed by one vote to pass a resolution
condemning the Ku Klux Klan
• Deadlocked for an unprecedented 102 ballots, the
convention turned to John W. Davis
• Now wide-open for a liberal candidate:
– Senator Robert (“Fighting Bob”) La Follette sprang forth to
lead a new Progressive party
– He gained the endorsement of the American Federation of
Labor
– He enjoyed the support of the shrinking Socialist party,
– But his majority constituency were the price-pinched
farmers
IX. A Three-Way Race for the
White House in 1924 (cont.)
– La Follette’s new Progressive party:
• Fielding only a presidential ticket, with no candidates
for local office
• Proved only a shadow of the robust Progressive
coalition of prewar days
• Its platform called for government ownership of
railroads and relief for farmers
• It lashed out at monopoly and antilabor injunctions
• Urged a constitutional amendment to limit the
Supreme Court’s power to invalidate laws passed by
Congress.
IX. A Three-Way Race for the
White House in 1924 (cont.)
• Election returns:
• La Follette polled nearly 5 million votes
• “Cautious Cal” and the oil-smeared Republicans overwhelmed Davis, 15,718,211 to 8,385,283
• The electoral count stood at 382 for Coolidge, 136 for
Davis, and 13 for La Follette, all from his home state
of Wisconsin (see Map 32.1)
Map 32-1 p736
X. Foreign-Policy Flounderings
• Isolation continued to reign in the Coolidge
era:
• The Senate would not allow America to adhere to the
World Court
• Coolidge only halfheartedly and unsuccessfully
pursued further naval disarmament
• American outward looking:
– The armed interventionism in the Caribbean and Central
America
– American troops were withdrawn (after an eight-year stay)
from the Dominican Republic in 1924
– They remained in Haiti (1914-1934).
X. Foreign-Policy Flounderings
(cont.)
– America was in Nicaragua intermittently since 1909;
Coolidge briefly removed them in 1925; in 1926 he sent
them back where they stayed until 1933
– American oil companies clamored for a military expedition
to Mexico in 1926
– Overshadowing all other foreign-policy problems
in 1920s was the issue of international debts:
• Complicated tangle of private loans; Allied war debts
and German reparations payments (see Figure 32.2)
• In 1914 America had been a debtor nation to the sum
of $4 billion
• By 1922, it had become a creditor nation to the sum
of $16 billion.
X. Foreign-Policy Flounderings
(cont.)
• American investors loaned some $10 billion to
foreigners in the 1920s
• The key knot in the debt tangle was the $10 billion
that the U.S. Treasury had loaned to the Allies
– Uncle Sam held their IOUs—and he wanted to be paid
– The Allies protested that the demand for repayment was
grossly unfair
– The French and the British pointed out, with much justice,
that they had held up a wall of flesh and bone against the
common foe, until the Americans were ready to enter
– America, they argued, they should write off its loans as war
costs
X. Foreign-Policy Flounderings
(cont.)
– The real effect of their borrowed dollars had been to fuel
the boom in the already roaring wartime economy in
America, where nearly all the purchases had been made
– Final straw, protested the Europeans, was that America’s
postwar tariff walls made it almost impossible for them to
sell their goods to earn the dollars to pay their debts.
Figure 32-2 p737
XI. Unraveling the Debt Knot
• Germany’s war debts:
– America insisted on getting its money back
– The French and British demanded $32 billion in
reparations payments
– The Allies hoped to settle their debt with the
United States
– Debt cancellations:
• Some statesmen wanted the debts to be scaled down
or even canceled
• Calvin Coolidge turned aside any suggestions of debt
cancellation.
XI. Unraveling the Debt Knot
(cont.)
• The Dawes Plan (1924):
• Was largely negotiated by Charles Dawes, about to be
Coolidge’s running mate
• It rescheduled German reparations payments
• And opened the way for further American private
loans to Germany
• The whole financial cycle now became still more
complicated:
– As U.S. bankers loaned money to Germany,
– Germany paid reparations to France and Britain,
– And the former Allies paid war debts to the United States.
XI. Unraveling the Debt Knot
(cont.)
• When that well dried up after the great crash of 1929,
the jungle of international finance quickly turned into
a desert
• President Herbert Hoover declared a one-year
moratorium in 1931—
– except “honest little Finland,” which struggled along making
payments until the last of its debt was discharged in 1976
• The United States never did get its money, but it
harvested a bumper crop of ill will.
p738
XII. The Triumph of Herbert Hoover,
1928
• 1928 presidential race:
– Coolidge decided not to run again
– Herbert Hoover became the candidate:
• Nominated on a platform of both prosperity and
prohibition
– Democrats nominated Alfred C. Smith
• “Al(cohol) Smith,” soakingly and drippingly “wet”
when the country was devoted to the “noble
experiment” of prohibition
• He seemed to be abrasively urban
• He was Roman Catholic
XII. The Triumph of Herbert
Hoover (cont.)
– Radio played prominently in this campaign for
the first time:
•
•
•
•
It helped Hoover more than Smith
Hoover decried un-American “socialism”
And preached “rugged individualism”
Never having been elected to public office , he was
thin-skinned in the face of criticism
• He did not adapt readily to necessary give-and-take of
political accommodation
• His real power lay in his integrity
– His humanitarianism
– His passion for assembling the facts
XII. The Triumph of Herbert
Hoover (cont.)
–
–
–
–
His efficiency
His talent for administration
His ability to inspire loyalty in close associates
They called him “the Chief.”
• He was the best businessperson’s candidate:
– Self-made millionaire, he recoiled from anything suggesting
socialism, paternalism, or “planned economy,”
– Yet as secretary of commerce, he had exhibited some
progressive instincts:
» He endorsed labor unions
» He supported federal regulation of the new radio
broadcasting industry
» He flirted with the idea of government-owned radio.
XII. The Triumph of Herbert
Hoover (cont.)
– Indications of low-level campaigners:
• Religious bigotry against Smith’s Catholicism
• The White House would become a branch of the
Vatican—complete with “Rum, Romanism, and Ruin”
• The South shied away from “city slicker” Al Smith
– Election returns:
• Hoover triumphed in a landslide:
• He bagged 21,391,993 popular votes, to 15,016,169
for Smith
• Hoover electoral count of 444 to Smith’s 87.
– Big Republican victory; Hoover swept five former
Confederacy states and all Border States(see Map 32.2).
p739
Map 32-2 p739
XIII. President Hoover’s First
Moves
– Hoover’s administration’s responses to the
unorganized wage earners and the disorganized
farmers
– The Agricultural Marketing Act (June 1929):
• Designed to help the farmers help themselves, largely
through producers’ cooperatives
• It set up the Federal Farm Bureau with a revolving
fund of ½ billion dollars at its disposal
• Money was lent generously to farm organizations
seeking to buy, sell, and store agricultural surpluses.
XIII. President Hoover’s First
Moves (cont.)
– In 1930 the Farm Board created:
• The Grain Stabilization Corporation and the Cotton
Stabilization Corporation
• Primary goal to bolster sagging prices by buying up
surpluses
• They were suffocated by an avalanche of farm
produce
– Hoover during the campaign promised to call
Congress into session to bring about “limited”
change in the tariff.
XIII. President Hoover’s First
Moves (cont.)
• The Hawley-Smoot Tariff (1930):
– By the time it was through both houses of
Congress:
• Turned out to be the highest protective tariff in the
nation’s peacetime history
• The average duty on nonfree goods was raised from
38.5% to nearly 60 %
• To angered foreigners, it was a blow below the trade
belt
– It seemed like a declaration of economic warfare on the
entire outside world
– It reversed a promising worldwide trend toward reasonable
tariffs
XIII. President Hoover’s First
Moves (cont.)
– It plunged both America and other nations deeper into the
terrible depression that had already begun
– It increased international financial chaos and forced the
United States further into the bog of economic isolationism
– And economic isolationism, both at home and abroad, was
playing directly into the hands of a hate-filled German
demagogue, Adolf Hitler.
XIV. The Great Crash Ends the Golden
Twenties
– The speculative bubble:
• Few people sensed that the permanent plateau of
prosperity would soon break
• Prices on the stock exchange continued to spiral
upward
• And created a fool’s paradise of paper profits
• There were a few prophets who tried to sound
warnings
– The catastrophic crash came in October 1929:
• Partially caused by the British who raised interest
rates
XIV. The Great Crash Ends the
Golden Twenties (cont.)
• Foreign investors and wary domestic speculators
began to dump their “insecurities”
• Tensions built up to the panicky Black Tuesday of
October 29, 1929:
– 16,410,030 shares of stocks were sold in a save-who-may
scramble
– Wall Street became a wailing wall as gloom and doom
replaced boom
– Suicides increased alarmingly
– Losses in blue chips securities were unbelievable
– By the end of 1929 stockholders lost $40 billion in paper
values (see Figure 32.3).
XIV. The Great Crash Ends the
Golden Twenties (cont.)
• The stock-market collapse heralded a business
depression:
– At home and abroad
– The most prolonged and prostrating in American or world
experience
– No other industrialized nation suffered so severely
– End of 1929: 4 million workers were jobless
– Two years later the figure had about doubled
– Hungry and despairing workers pounded the pavements in
search of work
– The misery and gloom was incalculable
– Over 5000 banks collapsed in the first three years
– Carrying down with them the savings of tens of thousands
of ordinary citizens.
XIV. The Great Crash Ends the
Golden Twenties (cont.)
– Countless thousands lost their home and farms to
foreclosure
– Breadlines formed, soup kitchens dispensed food
– Families felt the stress, as jobless fathers nursed their guilt
and shame at not being able to provide for their families
– Breadless breadwinners blamed themselves for their plight
– Mothers nursed fewer babies.
p741
Figure 32-3 p741
p742
XV. Hooked on the Horn of Plenty
• What caused the Great Depression?
– Overproduction:
• Both farm and factory
• The depression of the 1930s was one of abundance,
not want
• It was the “great glut” or the “plague of plenty”
• The nation’s ability to produce goods had clearly
outrun its capacity to consume or pay for them
• Too much money was going into the hands of the
wealthy:
– Who in turn invested it in factories and other agencies of
production.
– Nothing going into salaries and wages revitalizing
purchasing power.
XV. Hooked on the Horn of Plenty
(cont.)
– Overexpansion:
• Of credit through installment-plan buying;
overstimulated production
• Normal technological unemployment
– Economic anemia abroad:
•
•
•
•
Britain and the Continent had never fully recovered
A chain-reaction financial collapse in Europe
A drying up of international trade
European uncertainties over reparations, war debts,
and defaults on loans owed to America.
• Many of these conditions had been caused by Uncle
Sam’s own narrow-visioned policies.
XV. Hooked on the Horn of Plenty
(cont.)
– Nature: a terrible drought scorched the
Mississippi valley in 1930
• Thousands of homes and farms were sold at auction
for taxes
• Farm tenancy or rental—a species of peonage—was
spreading among both whites and blacks
– By the 1930s the depression had become a
national calamity
• A host of citizens had lost everything
• They wanted to work—but there was no work.
XV. Hooked on the Horn of Plenty
(cont.)
• America’s “uniqueness” no longer seemed so
unique, nor its Manifest Destiny so manifest:
– The depression was a baffling wraith that
Americans could not grasp
– Initiative and self-respect were stifled
– Many slept in tin-and-paper shantytowns
cynically named Hoovervilles
– The very foundations of America’s social and
political structure trembled.
p743
XVI. Rugged Times for Rugged
Individualists
• Hoover’s exalted reputation as a wonderworker and efficiency engineer crashed
– He would have shined in the prosperitydrenched Coolidge years
– Now the Great Depression proved to be a task
beyond his engineering talents
• He was distressed by the widespread misery
• As a “rugged individualist” he shrank from the heresy
of government handouts.
XVI. Rugged Times for Rugged
Individualists (cont.)
– He was convinced that industry, thrift, and selfreliance were the virtues that made America
great
• He feared that a government doling out doles would
weaken, perhaps destroy, the national fiber
• Relief by local government agencies broke down
• Hoover finally had to reluctantly turn from his
doctrine of log-cabin individualism
• And accept the proposition that the welfare of the
people in a national catastrophe is a direct concern of
the national government.
XVI. Rugged Times for Rugged
Individualists (cont.)
• He worked out a compromise between
– The old hand-off philosophy
– And the “soul-destroying” direct dole then being used in
England.
– He would assist the hard-pressed railroads, banks, and rural
credit corporation
» That if financial health were restored at the top of the
economic pyramid:
» Unemployment would be relieved at the bottom on a
trickle-down basis.
– Partisan critics sneered at the “Great
Humanitarian”:
XVI. Rugged Times for Rugged
Individualism (cont.)
– Most of the criticism of Hoover was unfair:
• His efforts probably prevented a more serious
collapse
• His expenditures for relief, revolutionary for the day,
paved the path for the enormous federal outlays of
his New Deal successor, Franklin Roosevelt.
p744
XVII. Hoover Battles the Great
Depression
• Hoover’s “trickle-down” philosophy:
– He recommended that Congress vote immense
sums for useful public works
• He secured from Congress appropriations totaling
$2.25 billion for such projects
• Most imposing of the public enterprises was the
gigantic Hoover Dam on the Colorado River
– It was a huge man-made lake for the purposes of irrigation,
flood control, and electric power
– He sternly fought all schemes that he thought
were “socialistic.”
XVII. Hoover Battles the Great
Depression (cont.)
• Conspicuous was the Muscle Shoals Bill:
– Designed to dam the Tennessee River
– He vetoed this measure primarily because he opposed the
government’s selling electricity in competition with its own
citizens in private companies.
– In 1932 Congress responded to Hoover’s appeal:
• Established the Reconstruction Finance Corporation
(RFC):
– It was designed to provide indirect relief
– By assisting insurance companies, banks, agricultural organizations, railroads, and even hard-pressed state and local
governments
XVI. Hoover Battles the Great
Depression (cont.)
– But to preserve individualism and character,
– There would be no loans to individuals.
– The “pump-priming” loans were no doubt of widespread
benefit
– Projects that it supported were largely self-liquidating
– The government profited to the tune of many millions of
dollars
– Giant corporations benefited
• The irony is that the thrifty and individualistic Hoover
actually sponsored the project
• It actually had a strong New Dealish flavor.
XVI. Hoover Battles the Great
Depression (cont.)
• Norris-La Guardia Anti-Injunction Act (1932):
– It outlawed “yellow-dog” (antiunion) contracts
– And forbade the federal courts to issue injunctions to
restrain strikes, boycotts, and peaceful picketing.
• Hoover did inaugurate a significant new
policy:
• By the end of his term he had started down the road
toward government assistance for the needy
citizens—a road that Franklin Roosevelt would travel
much farther.
XVI. Hoover Battles the Great
Depression (cont.)
• Hoover’s woes:
– Increased by a hostile Congress
– The Republican majority proved highly
uncooperative
– In 1930 the Democrats controlled the House
– Insurgent Republicans could—and did—combine
with opposition Democrats to harass Hoover
– Some of the president’s troubles were deliberately manufactured by Congress.
p745
XVIII. Routing the Bonus Army in
Washington
• Veterans of World War I were also hard-hit
victims of the depression:
• “Bonus” through the Hawley-Smoot Tariff
• What did the government owe them for their services
in 1917-1918?
• Many veterans were prepared to go to Washington
– To demand the immediate payment of their entire bonus
– The “Bonus Expeditionary Force” (BEF), some 20,000, went
to the capital summer of 1932
– They erected shacks on vacant lots—a gigantic “Hooverville”
– After two were killed, Hoover ordered the army to evacuate
the unwanted guests.
XVIII. Routing the Bonus Army in
Washington (cont.)
– The Bonus Army:
•
•
•
•
Led by General Douglas MacArthur
With bayonets and tear gas
And with far more severity than Hoover had planned
The brutal episode brought down additional abuse on
the once-popular Hoover.
– The time was ripening for the Democratic
Party—and Franklin D. Roosevelt—to cash in on
Hoover’s calamities.
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XIX. Japanese Militarists Attack China
• Militaristic Japan stole the Far Eastern
spotlight:
• In September, 1931 the Japanese imperialists lunged
into Manchuria
• America had strong sentimental stake in China, but
few significant economic interests
– Americans stunned by this act of naked aggression
– It was a flagrant violation of the League of Nations covenant
– And other international agreements solemnly signed by
Tokyo
– Not to mention the American sense of fair play.
XIX. Japanese Militarists Attack
China (cont.)
– Washington rebuffed initial attempts in 1931 to
secure American cooperation in applying economic pressure on Japan
– Washington and Secretary of State Henry L.
Stimson decided to fire only paper bullets
• The so-called Stimson doctrine:
– Proclaimed in 1932
– Declared that the United States would not recognize any
territorial acquisitions achieved by force
– Righteous indignation—or a preach-and-run policy—would
substitute for solid initiatives.
XIX. Japanese Militarists Attach
China (cont.)
– The verbal slap did not deter the march of the
Japanese militarists:
• They bombed Shanghai in 1932
• With shocking losses to civilians
• There was no real sentiment for armed intervention
among depression-ridden Americans, who remained
strongly isolationists during the 1930s
– Collective security died and World War II was
born in 1931 on the Manchuria plains.
– The Republic came closer to stepping into waters
of internationalism than American prophets
would dare to predict in the early 1920s.
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XX. Hoover Pioneers the Good
Neighbor Policy
• Hoover and relations with America’s
southern neighbors:
– Hoover was interested in the often-troubled
nations below the Rio Grande
– After the stock market crash of 1929:
• Yankee economic imperialism became less popular
• Hoover became an advocate of international goodwill
• Strove to abandon the interventionist twist given by
the Monroe Doctrine of Theodore Roosevelt
XX. Hoover Pioneers the Good
Neighbor Policy (cont.)
– He negotiated a treaty with Haiti, later
supplanted by an executive agreement, that
provided withdrawal of American platoons by
1934
– In 1933 the last marine “leathernecks” sailed
away from Nicaragua after an almost continuous
stay of some twenty years
– Hoover, the engineer in politics,
• Happily engineered the foundation stone of the Good
Neighbor policy;
• Upon them rose an imposing edifice in the days of his
successor, Franklin Roosevelt.
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