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."