Uploaded by Shane Tracy

20sEconomy

advertisement
chapter 26
448
Republican Resurgence and Decline
able costs, prices, and markets, as well as
more stable employment and wages. Some­
times abuses crept in as trade associations
engaged in price-fixing and other monopo­
listic practices, but the Supreme Court in
1925 held the practice of sharing informa­
tion as such to be within the law.
The Business of Farming
Stabilizing the
Economy
During the 1920s, the ef­
ficiency craze, which had
been a prominent feature of the progressive
impulse, powered the wheels of mass pro­
duction and consumption and became a
cardinal belief of Republican leaders. Her­
bert Hoover, who served as secretary of
commerce through the Harding-Coolidge
years, promoted economic expansion and
efficiency. He sought out new markets
for business and sponsored more than a
thousand conferences on product design,
production, and distribution. He also con­
tinued the wartime emphasis on standard­
ization of everything from automobile tires
and paving bricks to bedsprings and toilet
paper.
Most of all Hoover endorsed the burgeon­
ing trade-association movement. Through
such associations, competing executives in
a given field would gather and disseminate
information on sales, purchases, shipments,
production, and prices. This information al­
lowed them to plan with more confidence.
the advantages of which included predict­
During the Harding and Coolidge adminis­
trations, agriculture remained the weakest
sector in the economy. For a brief time after
the war, the farmers' hopes had soared on
wings of prosperity. The wartime boom
lasted into 1920, but then commodity prices
collapsed as European farmers began to re­
sume high levels of production.
In some ways farmers shared the business
outlook of the so-called New Era. Many
farms, like corporations, were getting larger,
more efficient, and more mechanized. By
1930 about 13 percent of all farmers had
tractors, and the proportion rose even
higher on the western plains. Better plows
and other new machines were part of the
mechanization process that accompanied
improved crop yields, fertilizers, and ani­
mal breeding.
Farm organizations of the 1920s moved
away from the proposed alliance with urban
labor that had marked the Populist Era
and toward a new view of farmers as profit­
conscious business owners. During the
postwar farm depression, the idea of mar­
keting cooperatives emerged as the farm­
er's equivalent to the businessman's trade­
association movement. Farm interest groups
formed regional commodity-marketing asso­
ciations that enabled them to negotiate iron­
clad contracts with producers for the deliv­
ery of their crops over a period of years.
These associations also brought order to the
marketing of farm products, requiring uni­
form standards and grades, efficient han­
dling and advertising, and a businesslike or­
ganization with professional technicians
and executives.
President Hoover. the Engineer
The most effective political response to
the collapse offarm prices of the early 1920s
was the formation of the farm bloc, a con­
gressional coalition of western Republicans
and southern Democrats that put through an
impressive legislative program from 1921 to
1923. The farm bloc passed bills exempting
farm cooperatives from antitrust laws and
creating new credit banks that could lend to
cooperative producing and marketing asso­
ciations.
In the spring of 1924 Senator Charles L.
:McNary of Oregon and Representative
Gilbert N. Haugen of Iowa introduced a bill
to secure "equality for agriculture in the
benefits of the protective tariff." Their plan
sought to dump American farm surpluses
on the world market in order to raise com­
modity prices in the home market. The goal
was to achieve "parity"-that is, to raise do­
mestic farm prices to a point where farmers
would have the same purchasing power rel­
ative to other consumer prices that they had
enjoyed between 1909 and 1914, a time
viewed in retrospect as a golden age of
American agriculture. A McNary-Haugen
bill finally passed both houses of Congress
in 1927 and again a year later, only to be
vetoed both times by President Coolidge. He
criticized the measure as an unsound effort
at price fixing, and as un-American and un­
constitutional to boot. Nonetheless, the bill
catapulted the farm problem into the arena
of national debate and revived the political
alliance between the South and West.
Setbacks for Unions
Urban workers shared more than farmers in
the affluence of the times. Non-farm work­
ers gained about 20 percent in real wages
between 1921 and 1928, while farm income
rose only 10 percent. The benefits of this
rise, however, were distributed lmevenly.
Miners and textile workers suffered a de­
cline in real wages. In these and other
trades, technological unemployment fol­
lowed the introduction of new methods and
machines, as technology eliminated as well
as created jobs.
Organized labor, however, did no better
than organized agriculture in the 1920s. In
fact, unions suffered a setback after the
growth years of the war as the Red Scare and
strikes of 1919 left the uneasy impression
that unions practiced political subversion.
To suppress unions, employers used intimi­
dation and repression. They often required
"yellow-dog" contracts that forced workers
to agree to stay out of unions. They also
used labor spies, exchanged blacklists, and
resorted to other forms of coercion. Some
employers tried to kill the unions with
kindness. They introduced programs of "in­
dustrial democracy" guided by company
unions or various schemes of "welfare capi­
talism" such a profit-sharing, bonuses, pen­
sions, health programs, recreational activi­
ties, and the likfi!. Prosperity, propaganda.
welfare capitalism, and active hostility com­
bined to cause union membership to drop
from about 5 million in 1920 to 3.5 million
in 1929.
President Hoover,
the Engineer
Hoover versus Smith
Calvin Coolidge's decision not to seek elec­
tion in 1928 cleared the way for Herbert
Hoover to gain the Republican nomination.
The party platform took credit for postwar
prosperity, debt and tax reduction, and the
protective tariff that had been in operation
since 1922 ("as vital to American agricul­
ture as it is to manufacturing"). It rejected
the McNary-Haugen agricultural program
but promised a farm board to manage crop
surpluses more efficiently.
The Democratic nomination went to Gov­
ernor Alfred E. Smith of New York. But
when he revealed in his acceptance speech
a desire to liberalize prohibition, Smith
alienated many Democrats in the southern
449
chapter 26
450 !
Republican Resurgence and Oecline
Bible Belt. Hoover by contrast called for im­
proved enforcement.
The two candidates projected sharply dif­
ferent images. Hoover was the Quaker son
of middle America, the successful engineer
and businessman from rural Iowa, the ar­
chitect of Republican prosperity, a simple
man who dressed plainly, spoke tersely, and
followed his strong conscience. Smith was
the prototype of those things that rural and
small-town America distrusted: the son of
Irish immigrants, Catholic, and a critic of
prohibition. Outside the large cities such
qualities were handicaps he could scarcely
surmount, for all his affability and wit.
In the election Hoover won in the third
consecutive Republican landslide, with 21
million popular votes to Smith's 15 million,
and an even more top-heavy electoral ma­
jority of 444 to 87. Hoover even cracked the
Solid South, leaving Smith only a hard core
of six Deep South states plus Massachusetts
and Rhode Island. The election was above
all a vindication of Republican prosperity,
but the shattering defeat of the Democrats
concealed a major realignment in the mak­
ing. Smith had nearly doubled the vote for
the Democratic candidate of four years be­
fore. Smith's image, though a handicap in
the hinterlands, swung big cities back into
the Democratic column. And in the farm
states of the West there were signs that some
disgruntled farmers had switched over to
the Democrats. A coalition of urban workers
and unhappy farmers was in the making.
objection of Treasury Secretary Mellon, he
announced a plan for ta-x reductions in the
low-income brackets. He shunned corrupt
patronage practices, and he refused to coun­
tenance "Red hunts" or interference with
peaceful picketing of the White House. He
also defended his wife's right to invite
prominent blacks to the White House, and
he sought more money for all-black Howard
University.
Hoover showed greater sympathy than
Coolidge for the struggling agricultural sec­
tor. In 1929 he pushed through a special ses­
sion of Congress the Agricultural Marketing
Act, which established both a Federal Farm
Board with a revolving loan fund of $500
million to help farm cooperatives market
major commodities and a program in which
the Farm Board could set up "stabilization
corporations" empowered to buy surpluses
off the market.
To open glutted markets, Taft supported
the Hawley-Smoot Tariff of 1930, which car­
ried duties on imported manufactures and
farm crops to a new high. Average rates
went from about 32 to 40 percent. More than
1,000 economists petitioned Hoover to veto
the bill because, they predicted. it would
raise prices to consumers, damage the ex­
port trade and thus hurt farmers, promote
inefficiency, and provoke foreign reprisals.
Events proved them right, but Hoover felt
that he had to go along with his party in an
election year. This proved to be a disastrous
mistake, for it only exacerbated the growing
economic depression.
Hoover in Control
The milestone year of 1929 dawned with
high hopes. The economy seemed robust,
incomes were rising, and the pro-business
Hoover was about to enter the White House.
"I have no fears for the future of our coun­
try," Hoover told his inauguration audience.
"It is bright with hope."
Forgotten in the rush of later events
would be Hoover's credentials as a progres­
sive and humanitarian president. Over the
The Economy Out of Control
Depression? Most Americans had come to
assume during the 1920s that there would
never be another depression. This mis­
guided optimism proved to be an important
factor in generating the economic free-fall
after 1929. Throughout the 1920s, the idea
grew that American business had entered
a "New Era" of permanent growth. Such
naive talk helped promote an array of
get-rich-quick schemes. Speculative mania
fueled the Florida real-estate boom, which
got under way when the combination of
Coolidge prosperity and automobiles made
Florida an accessible playground.
The Florida real-estate mania collapsed
in 1926, but the stock market took up the
slack. Until 1927 stock values had risen
with profits, but then they began to soar on
wings of fanciful speculation. Gamblers in
the market ignored warning signs. By 1927
residential construction and automobile
sales were catching up to demand, business
inventories rose, and the rate of consumer
spending slowed. By mid-1929, production,
employment, and other gauges of economic
activity were declining. Still the stock mar­
ket rose, driven by excessive confidence and
perennial greed.
By 1929 the stock market had become a
fantasy world. Conservative financiers and
brokers who counseled caution went un­
heeded. Hoover worried too, and he sought
to discourage speculation, but to no avail.
On September 4, stock prices wavered, and
the next day they dropped. The Great Bull
Market staggered on into October, trending
downward but with enough good days to
keep hope alive. On October 22 a leading
bank president told reporters that there was
"nothing fundamentally wrong with the
stock market or with the underlying busi­
ness and credit structure."
Download
Random flashcards
Arab people

15 Cards

Pastoralists

20 Cards

Marketing

46 Cards

Ethnology

14 Cards

Create flashcards