The Politics of Boom and Bust
(1920-1932)
Chapter 32
Concept:
The 1920’s marked an era of unbridled, unregulated capitalism. The
government encouraged business activity through “laissezfaire”economics as well as Mellon’s tax cuts. This hands-off policy
bespoke an isolationist policy in foreign affairs. Let the “good times roll”
was the moniker until the “wheels came off” in 1929 with the onset of the
depression.
The 20’s was a period of “Republican Reactionism” that took place between the
Progressive era at the turn of the century and FDR’s New Deal of the 1930’s. The
Republicans wished to return to the 19th century doctrine of laissez-faire capitalism.
Examples of Republican Reactionism
1.
Define the following terms and make the association to Reactionism:
Harding’s “Ohio Gang” – advisors that were corrupt (that used their position to grab
political plumbs and embezzle, cheat, steal.
Adkins vs. Children’s Hospital (1923) S.C. overturns Muller case of 1908 which had
est. the precedent that discriminatory laws that protected women were const. and
invalidated a min. wage law for women
trade associations – companies in one industry would group together for standardization
of product, united front in dealing with other industries and labor. Counter to the antitrust legislation, but Hoover supported because it would be self-regulatory of them and
create efficiency, not gov’t regulation of business.
Esch-Cummins Transportation Act – guaranteed profitability of RxRs once they were
returned to the private sector. (Thus undoing RxR legislation)
Harry Daughtery and injunctions – Used injunctions to put down strikes
The American Legion – ultra-patriotic group that was against radicalism,.
2.
*
Define the following terms related to the WWI veterans –
Veterans Bureau – est. to provide vocational training and rehab for war disabled
American Legion – organization that had only veterans
Adjusted Compensation Act – doughboys received insurance policies that
would be payable in 20 years.
How was the American Legion similar to the GAR? – politically powerful,
patriotic, conservative, voted Republican
Foreign Policy in the 1920’s:
American Isolationism – Paper Treaties
(Exception: Continuation of Big Brother in Latin Am.)
* 3.
-
4.
Characterize the U.S. attitude toward Europe during this decade and how did this
reflect through the treaties?
Let Europe stew in her own juices. They were paper treaties that were
unenforceable. Never ratified the Treaty of Versailles.
East Asia - Define the the treaties below and explain what their shortcomings
were. The Washington Disarmament Conferences of 1922-23 created three
multi-power treaties (Nine, Four and Five Power naval Treaties)
Five Power Naval Treaty –
Bri/US/Japan – 5-5-3 ratio of battleships and aircraft carriers/ AM and Bri. agreed
not to fortify their Far Eastern possessions, inc. Philippines. (Japan wasn’t
restricted)/ This fit perfectly with the Republican thinking of downsizing the
armed forces to save money and prevent the US from getting stuck in another
world cataclysm. – By not fortifying the Phil. the US left it open
Four Power Naval Treaty – Bri., Fr. + US, Japan agree to preserve the status quo in
China.
Nine Power Treaty – Signators agree to keep Open Door in China open (Since we are
not willing to back this up with any force it will be a deadletter in 1931 when Japan
moves into Manchuria
Kellogg-Briand Pact - Pledge to foreswear war (outlaw war) – Defensive War still an
option – thus it’s a paper treaty not worth its weight
5.
-
-
6.
-
-
Caribbean – (Use pp. 755-756 to answer.) This area is the exception to
isolationism for the US continues its “Big Brother Policy”.
Describe US actions in Haiti and Nicaragua – kept Marines there
What was the issue in Mexico and how was it resolved? – Mexico began to assert
its sovereignty over its oil reserves, but Coolidge used heavy-handed diplomacy
to thwart in order to protect American oil interests.
What was the reaction of Latin Americans? – They loudly proclaimed “yanqui
imperialism”
European Debt and Reparations Payments Cycle (Use p. 756-757)
Explain what the European debt was from and what the reparations were for
Debt: Europe had borrowed 16 billion during the war/ Germany was being forced
to pay the cost of the war for everyone.
Define the Dawes Act of 1924 – Rescheduled German payments and allowed US
bankers to loan to Germany.
What was the European reasoning as to why they shouldn’t have to pay
-
-
back the debt? – They had paid already in flesh, they had used the money to buy
American goods which stimulated the American economy. They couldn’t sell
their goods in Am. markets now because tariff walls were too high.
What Was the Hoover Debt Moratorium of 1931? And how did the episode end?
Bri. and France and others wouldn’t need to pay back for one year. All borrowers
defaulted during the Depression era
How did the whole sordid episode influence the course of events in the 1930’s?
Europeans did not trust the US, US – left a bad taste in their mouth for Europe
who we had helped out left their debt unpaid. Led to isolationist tendencies in the
1930’s – not to help them out any longer.
7.
Tariffs – How high was the Fordney-McCumber Tariff of 1922? What
was the effect of this tariff on international markets?
-
Fordney tariff – increased rates from 27% under the Underwood to 38.5 %
Int’l markets increased their tariff walls which decreased trade and hurt them
further for they were not attracting gold from Am. which they could use to pay off
war debt.
Harding Scandals – The Second Era of Good Stealings
8.
Define the scandals listed below that destroyed Harding’s Administration:
Forbes’ Veteran Bureau Scandal – looted over $200 million from the
government in the construction of veterans’ hospitals.
Teapot Dome Scandal – (1921) – Albert Fall (Sect. of Interior) transferred
naval oil reserve lands in Wyoming and Calif. to Dept. of Interior. He then leased
these to Sinclair and Doheny in exchange for $400,000.
Investigation of Attorney General Daugherty – Att. Gen. took bribes for
pardons and liquor permits. Never convicted though much evidence supported.
Coolidge Administration – 1923-1929
9.
After reading p. 753, characterize his personal attributes and his philosophy on
how to run the country. Also, what was the “mentality” of American society
during his administration.
- let business reign - don’t interfere. He was honest and did not have the
corruption in his administration that Harding did. Am. society belied the belief
that prosperity overrode moral sensibilities.
* 10.
-
11.
Interpret the meaning of Collidge’s quote – “The man who builds a factory builds
a temple.”
Illustrates that he believed that America’s greatness resided in business and it
was the basis of prosperity.
Farmers: What obstacles did farmers face in the 1920’s?
Problems – war-time agricultural demand and the high prices were greatly
diminished after the war because of resumed European production./ technology
allowed increased efficiency and production but this in turn created surpluses
which decreased prices.
Define :
Capper-Volstead Act –exempted farmer marketing cooperatives from
antitrust prosecution
McNary-Haughen Bill – authorized the gov’t to buy surpluses and sell
them abroad in order to keep prices high.
Agricultural Marketing Act (1929) – (Use p. 759) established the Federal Farm
Board with ½ billion to farmers to help themselves by giving loans to
cooperatives to buy surpluses to increase prices.
How effective were these bills in giving relief to the farmers? the McNaryHaughan Bill passed both houses but was vetoed by Coolidge. Thus prices
remained low and farmers lost their farms on a scale of 1 out of 4 in the 20’s
because of debt or back taxes. Farm Board – not enough to offset the massive
surpluses in wheat and cotton.
Hoover’s Administration (1929-1933)
12.
Election of 1932:
Al Smith “The Happy Warrior” (Democrats) – what were his handicaps?
- wet when the country was still wedded to the “noble expirament”
- urban and thus a bit abrasive to country folk
- Catholic in a country that was predominantly Protestant
Herbert Hoover – (Republican) What were his attributes and what was his
message?
- pedigree – businessman, Food commissioner for Belgium in WWI
- rugged individualism - businessman
How did radio influence the outcome?
- Smith’s accent grated on some nerves while Hoover’s voice came through
better than when it went in.
13.
Hawley-Smoot Tariff (1930) – Define its provisions and explain how it impacted
world trade and politics.
- raised rates from 38.5% to 60% and virtually prohibited European goods from
entering. The result – they put up further tariff walls and all countries further
isolated economically which deepened the depression and led to the rise of Hitler.
The Great Depression – The Start : (1929-1932)
14.
15.
Stock Market Crash:
What happened on “Black Tuesday”? – October 29,1929 – mad flurry of selling
What triggered the crash initially?
- Britain raised their rates to keep cash within the country. Wary investors started
to sell securities and then an onslaught took place
Characterize the depth of the depression by 1932 –
-Unemployment – 4 million (’30); 12 million (’32)
- over 5,000 banks failed.
- farm foreclosures abounded – couldn’t pay taxes
16.
What were the causes of the Great Depression?
- overproduction in farm and factory/ nation’s ability to produce goods had
greatly exceeded its capacity to consume or pay for them.
- Overexpansion in credit – installment buying
- new labor saving devices put more out of work
- International trade obstacles – dried up because of tariff walls and credit drying
up over the reparations payments
17.
What were “Hoovervilles”?
- shantytowns around cities where people moved who did not have anyplace else
to go ; made of cardboard, wood and anything else they could get their hands on.
-
18.
Why didn’t Hoover want to use federal government money to “bail out” the
people and provide jobs (in the first 3 years)?
- “Rugged Individualism” – people must bring themselves out.
- soul-draining – like in England (would make them dependent on the gov’t)
- not the role of the gov’t to provide for the people –
19.
Though mostly unfair, what did critics say about Hoover?
- He could bail out the Belgiums by bringing relief in WWI but refused to
bail out Americans in their dire straits;
- willing to give money to the rich who brought on the depression but would
not give to the people (RFC and trickle down)
20.
Hoover belatedly switches to mild governmental intervention. Define these
programs –
Hoover Dam – started in 1930, dammed up the Colorado R.
Reconstruction Finance Corporation (1932) – ½ billion, indirect relief by
providing assistance to incurance co., banks agri. organizations RxRs and some
local and state gov’ts.
Norris-LaGuardia Anti-Injunction Act (1932)- outlawed yellow dog contracts
forbade fed. courts form issuing injunctions against strikes, boycotts, etc.
21.
Why did Hoover veto the Muscle-Shoals Bill?
- too socialistic – would compete with private electric companies in the
Tenn. Valley (will later be passed by FDR)
21.
Though not very effective what was significant about the few programs started
under Hoover?
- started the gov’t down the road of assistance to needy citizens
- RFC started too late and only gave money to businesses in a “trickle down
fashion”
23.
Bonus Army – (1932) – What did they want and how did Hoover handle the
situation?
- WWI veterans wanted their money up front, camped out on Anacostia Flats,
- MacArthur was sent in and removed those that remained (paid for return of
several thousand) with bayonets. Bonus Bill never passed.
24.
Japan invades Manchuria – What occurred?
- 1931 – Japan takes and bars the Open Door Policy
25.
Hoover-Stimson Doctrine - define and explain its effectiveness.
- US would not recognize any territorial acquisitions achieved through force
- the Naval Treaties w/Japan were dead letters
26.
Good Neighbor Policy (“foundation by Hoover, but built by Roosevelt”) what
was this policy? Give two examples.
- Treat L.A. much more friendly, stop the economic imperialism of TR’s Big
stickism and his Roosevelt Corollary
- pulled troops out of Haiti by ’34, out of Nicaragua by early ‘33