AP United States History
Mr. M. Pecot
Bailey, Chapter 32: The Politics of Boom and Bust, 1920-1932
I. Harding and the Quest for Normalcy
a) Warren G. Harding
1.
Characteristics
kindly, gracious, mediocre mind
sometimes a bit overwhelmed by the responsibilities of the Presidency: "God, what a job!"
poor judge of character (Washington could never tell a lie; Harding could never tell a liar)
most corrupt administration since US Grant
2.
The Ohio Gang
cadre of poker-playing, cigar-smoking cronies & political leaders that surrounds Harding
3.
Key Players
A combination of the best minds…
−
Charles Evans Hughes (Sec State)
−
Andrew W. Mellon (Sec Treas)
−
Herbert Hoover (Sec Commerce)
And the worst…\
−
Sen. Albert B. Fall (Sec Interior)
−
Harry M. Daugherty (Attorney General)
4.
Return to Conservatism
Return to McKinley-style politics
−
laissez-fair (unless offering a helping hand to business)
Conservative appointments
−
Supreme Court
−
4 of the 9 justices are Harding appointments, including William
Howard Taft
−
strikes down Progressive legislation, e.g. Keating-Owens Act;
Muller v. Oregon struck down by Adkins v. Children's Hospital in
1923)
−
ICC
−
pro-biz appointees relax anti-trust enforcement
−
trade-associations flourish under Hoover (for sake of efficiency and
standardization, but presses the limits of anti-trust legislation)
II. Political Turmoil in the Wake of WWI
a) Economic demobilization
1.
Government dismantles economic controls
WIB
Esch-Cummings Transportation Act
−
gov't control of RR's during WWI ended; private management returns
−
RR's allowed to consolidate in order to guarantee their profitability
b) Labor
1.
End of government support
2.
Post-War strikes
bloody steel strike in 1919
−
broken by branding strikes as Reds & exploiting ethnic/racial differences among
workers
1922 RR Strike
−
brought on by a wage cut
−
2 month strike broken by crackdown led by Attorney General Harry M.
Daugherty
3.
Declining Union membership
crackdowns, "welfare capitalism," pro-biz government policy, association with communism
and radicalism
membership down 30% from 1920-1930
c) Race
1.
Great Migration
2.
Race Riots
Chicago, July 1919
−
58 killed (23 black/15 whites), 587 injured, 1000s homeless
other cities
d) Veterans
1.
benefit from post-war policy
1921 Veterans Bureau established
1924 Adjusted Compensation Act (aka Bonus Bill)
−
promoted by the American Legion, a vet. organization founded in 1919
−
known for its zealous anti-radicalism, conservatism, militant
patriotism, and promotion of vets rights
−
calls for "adjusted compensation" = a bonus to make up for wages lost while vets
served in war
−
bill passes, is vetoed by Harding; passed again in 1924 under Coolidge,
promises adjusted benefits in 20 years (1945)
e) International Relations
1.
Ending the war with Germany
after failure to pass the Treaty of Versailles, the US remains in a technical "state of war" with
Germany
war ends by Joint Resolution of Congress in 1921
2.
League of Nations
US remains suspicious of the League
−
refuses to support its provisions
−
a "watched dog" -- sends observers to Geneva
3.
Oil in the Middle East
US in a rivalry for oil rights with Britain
Sec. State Charles Evans Hughes secures right to drill for oil in the Middle East
recognition that oil was a key ingredient in the winning of WWI
4.
Disarmament crises
Naval buildup before and during WWI makes the US a growing threat to other nations
−
Anglo-Japanese Treaty (1902)
−
a response to this; pledges that GB will support Japan in any
conflict
Washington (Disarmament) Conference 1921-22
−
all powers (except Russia) invited to discuss disarmament plans & the mid-East
crisis
−
Sec. Hughes calls for a "10-year Holiday" in battleship construction and a 5-5-3
ratio between US/England/Japan on battleships and carriers
5.
Treaties ratified by the Washington Conference
5-Power Naval Treaty
−
approves the 5-5-3 plan, with the US and England agreeing not to fortify
holdings in the Pacific (but Japan can)
4-Power Treaty
−
England, France, Japan, and the US
−
agreement to preserve the status quo in the Pacific
−
replaces the Anglo-Japanese Treaty (1902_
9-Power Treaty
−
agreement to keep the Open Door open in China
6.
Weaknesses of disarmament plans
no restrictions on small warships
−
cruisers, destroyers, subs
no commitments to using armed force to keep treaty provisions
III. Isolationism under Harding
a) Desire to stay out of future wars
1.
Kellog-Briand Pact of 1928 (aka Pact of Paris)
Frank Kellog, Sec. State under Coolidge
document calls for nations to foreswear war as foreign policy, but permits defensive wars
ratified by 62 nations
b) Economic Isolationism
1.
Prompted by fear of flood cheap European goods & sharp recession 1920-21
2.
Fordney-McCumber Tariff (1922)
raises Underwood Tariff (1916) rates from 27% to 38.5% (roughly the levels of the PayneAldrich Tariff)
allows president to raise/lower rates based on advice of a specially appointed Tariff
Commission
−
Harding/Coolidge were more apt to raise rates than lower them
−
32 upward revisions in 6 years; 5 downward revisions in same period
EFFECT
−
prolongs the postwar chaos in Europe
−
Europe can't sell goods to US in order to aid its recovery & needs recovery to
pay its debts
IV. The Harding Scandals
a) The most corrupt administration since US Grant; reflects the get-rich-ism of the age
1.
Veterans Bureau Scandal
Col. Charles R. Forbes, head of the VB, & accomplices skim $200 million dollars from the VB
2.
Teapot Dome Scandal
In 1921, naval oil reserves at Teapot Dome, WY & Elk Hills, CA are transferred to the control
of the Department of the Interior
Sec. Interior Albert B. Fall accepts a bribe of $100,000 from oilman Edward Doheny & $300,000
from Henry Sinclair in exchange for leases to the land
scandal breaks in 1923
−
Sinclair & Doheny acquitted (hurts respect for the law)
−
Fall sent to jail for 1 year
3.
Attorney General Harry M. Daugherty
investigated by the Senate in 1924 for illegal sale of pardons and liquor permits
resigns
b) Harding dies in 1923, never sees the full extent of the corruption in his administration
V. Silent Cal Coolidge at the Helm
a) Coolidge's Adminstration
1.
Characteristics
A Vermont Yankee
−
exudes NE virtues of thrift, industry, honesty, and frugality
Silent Cal
−
practiced economy in words
−
his sour visage led many to claim he had been
Cautious Cal
−
an apostle of the status quo
Pro-business Republican
−
staunch supporter of business
−
"the man who builds a factory builds a temple; the man who works there
worships there."
2.
Dealings with Farmers
The 1920s mark a decline in agricultural profits
−
during WWI wheat production skyrockets ("Wheat will win the war!"; "Grow
more wheat!"
−
return of foreign products and end of government purchases of wheat bring
levels back down
−
Agricultural revolution pushes production higher:
−
Gas-engine tractor (gas tractor: sowing:: McCormick reaper:
harvesting)
−
results in bigger crops on bigger farms
−
1 in 4 farms sold for debt or taxes in the 1920s.
McNary-Haugen Bill (proposed 1924-1928)
−
calls for gov't to keep farm prices high by purchasing farmers' surplus
−
gov't will sell surplus abroad, make up for the loss in price through a special tax.
−
Vetoed 2x by Calvin Coolidge
b) Election of 1924
1.
Candidates
GOP: Coolidge
Democrats: John W. Davis (a wealthy corporation lawyer)
−
Dem Party is split between wets/drys, urban/rural,
fundamentalists/modernists, northern/southern, immigrants/old stock
Americans
−
selects Davis as a compromise
Progressive Party: Sen. Robert LaFollette
−
runs on a campaign that lashes out at monopolies, antilabor legislation, calls for
ownership of RRs & limits on the power of the Supreme Court to invalidate laws.= a
response to the conservative court appointees of Harding/Coolidge
2.
Results
Coolidge 15,718,211 (382)
Davis
8,385,285 (136)
LaFollette 5,000,000 (13 = the state of Wisconsin)
c) Isolationism in Foreign Policy
1.
Caribbean and Latin America
a limited rejection of Big Stickism and Wilsonian interventionism
−
troops pulled out of the DR in 1924;
−
troops withdrawn from Nicaragua in 1925, but redeployed in 1926 and stay until
1933.
−
Troops in Haiti remain (1924-34)
2.
International Debts
The major foreign policy issue of the Coolidge administration
−
debts are a complicated tangle of loans and payments
−
$10 billion owed to US by the Allies, who want loans forgiven
−
Allies turn the screws on Germany for reparations payments
−
French troops sent into the Ruhr industrial valley in 1923 to extort
payments
−
Berlin inflates its currency, leading to massive inflation by late 1923
(a loaf of bread = 480 million marks)
Dawes Plan 1924
−
reschedules German reparations payments
−
allows for private loans to Germany
−
creates a web in which American bankers loan money to Germany
which repays the Allies, who in turn make payments on American
loans!
America's refusal to forgive debts simply promotes more ill-will and isolationism
VI. Herbert Hoover in Office ("Mister, we could use a man like Herbert Hoover again!")
a) The Election of 1928 * * * *
1.
Candidates
GOP: Herbert Hoover
−
Coolidge doesn't run again; opens the door for Sec. Commerce Hoover
−
decries socialism with cries of "rugged individualism"
−
an orphan and self-made man who worked his way through
Stanford
−
supports isolation, individualism, and free enterprise
−
Great administrator, efficient, honest, and humanitarian
−
Recoils from anything that hints of a "planned economy" but supports unions
and regulation of radio
Dems: Alfred E. Smith
−
4 time governor of NY
−
a tremendous political personality but numerous strikes against him as a
national candidate
−
a "wet" (prohibitionists call him Al(cohol) Smith)
−
urban and northern
−
Roman Catholic (KKK campaigns against him; "a vote for Smith is
a vote for the Pope"; "Rum, Romanism, and Ruin.")
2.
Results
GOP landslide
−
"Hoovercats"
−
100% Americanism in the South helps crack the democratic hold on
Southern states as Democrats defect and vote for Hoover
b) Problems on the Horizon
1.
Dealing with the Farm surplus
Agricultural Marketing Act (1929)
−
establishes the Federal Farm Board (capitalized with $500 million) to lend to
farm organizations seeking to buy, sell, and store surpluses
−
in 1930 the FFB creates the Grain Stabilization Corporation and the Cotton
Stabilization Corporation to bolster prices
−
both, however, are buried under an avalanche of produce as prices
drop to 57¢ a bushel; 5¢ per lbs.
2.
Economic Woes
Smoot-Hawley Tariff (1930)
−
like most tariff measures, starts in the House as a reasonable protective bill
−
becomes the highest peacetime tariff in American history
−
raised Fordney-McCumber from 38.5% to almost 60%
−
Seals the US off from European goods, but also seals American goods inside.
Black Tuesday, October 29, 1929
−
burst in the "speculative bubble" in the stock market
−
16,410,030 shares dumped
−
marks the beginning (but not the cause of the Great Depression)
−
2 months after the crash, stocks had lost $40 million dollars in
paper value
−
5000 banks collapse by 1932; foreclosures on property as banks scramble to call
in loans
Unemployment
−
1930: 4 million jobless
−
1932: 12 million jobless
VII. The Great Depression
a) Causes of the Great Depression
1.
OVERPRODUCTION
beyond the capacity of consumers to consume or pay
2.
INCOME DISPARITY
growing gap between the rich and poor
profits from production going back into more production, not into wages or salaries, which
creates much of the problem in #1
3.
EASY CREDIT
a false wealth that leads to more production but a consumer who is overextended
−
installment plans
−
"buying on margin" - stocks
4.
UNEMPLOYMENT & UNDEREMPLOYMENT
caused by technology and the start/stop nature of the economy
5.
WORLDWIDE DEPRESSION
European nations faltering on loans and reparations payments
further dampens trade, already smarting from…
6.
HIGH TARIFFS
7.
NATURAL DISASTERS
drought & the boll-weevil in the Mississippi Valley in 1930
b) Hoover and the Great Depression
1.
2.
3.
Hoover's response to the crisis
Philosophy of "rugged individualism"
−
fears that direct government aid would sap citizens of their independence and
would hurt the national fiber
−
results in a declining perception of Hoover; seen in the popular eye as
unsympathetic/cold
−
Hoovervilles, Hoover blankets, Hoover flags
The Trickle Down theory
−
Hoover does believe in using the power of the state to stimulate the economy
from the top via aid to corporations, farm cooperatives, public works etc.
Paving the way for the New Deal
Public Works
−
Hoover approves of $2.25 billion dollar public works program
−
most famous project = Boulder Dam (later called Hoover Dam) on
the Colorado River, 1930-1936
−
Hoover accepts the principle of public works, but rejects anything
that smacks of socialism (e.g., the Muscle Shoals Bill -- calls for
creation of hydroelectric dams in TN which would sell power in
competition with private utility companies)
Reconstruction Finance Corporation (1932)
−
A gov't lending corporation; provides money to aid business and farm
organizations
Norris-LaGuardia Anti-Injunction Act (1932)
−
a boost to organized labor
−
outlaws yellow dog contracts & forbids federal courts from issuing injunctions
to restrain strikes, boycotts, and picketing
The significance of Hoover's actions
−
an important bridge between the previous depression policies ("sweat it out")
and the New Deal….government is doing something to combat economic
slumps
Hoover and the Bonus Army
Bonus Expeditionary Force
−
group of 20,000 vets seeking early payment on the "bonuses" promised in the
Adjusted Compensation Act (1924)
−
While Congress debates a Bonus Bill calling for early payment; the marchers
take up residence in a giant Hooverville across the Potomac at Anacostia Flats;
protest outside the Capitol; give speeches; etc.
Waging War on Vets
−
After the bill fails in Congress, Hoover asks the "army" to disperse
−
HH pays for about 6,000 train fares
−
14,000 refuse to leave
−
General Douglas MacArthur called on to remove the BEF
−
excessive force, including tear gas, armored vehicles, and bayonets
are employed.
−
Hoover takes full responsibility, although he was sickened by the
spectacle.
VIII. Foreign Troubles in the Era of the Great Depression
a) Japanese aggression in Asia
1.
Japan invades Manchuria in 1931
a clear violation of the Open Door Policy and the 9-Power Treaty
2.
League of Nations put to the test
League of Nations (with US support--albeit unofficial) condemns the Japanese action as an
unjustified invasion
−
Japanese response: bolt the League
L of N calls for an embargo of Japan
−
US refuses to support the embargo, fearing it would draw the US into a war
−
Instead the US issues the Stimpson Doctrine (1932)
−
US declares that it would not recognize any territorial acquisitions
made by force…but won't back the doctrine up.
3.
Japan's bombing of Shanghai (1932)
b) "Good Neighbor" Pioneered
1.
HH strives to abandon the "Big Stickism" begun with TR
Negotiates for the withdrawal of troops from Haiti by 1934 and Nicaragua by 1933
GN policy will become a hallmark of the FDR administration