Chapter 32
The Politics of Boom
and Bust, 1920–1932
I. The Republican “Old Guard” Returns
• In 1921 Warren G. Harding, looked presidential
– But depended on cabinet
• Harding’s “best minds”
– Charles Evans Hughes (Sec of State)
– Andrew W. Mellon (Sec of Treasury)
– Herbert Hoover (Sec of Commerce)
• Harding’s “worst minds”
– Senator Albert B. Fall (Sec of Interior)
– Harry M. Daugherty (Attorney General)
II. GOP Reaction at the Throttle
• Harding a “front” for enterprising industrialists
– Crushed the reforms of the progressive era
– Corporations expand power / influence
• Antitrust laws were feebly enforced (less competition)
– Condemned the waste from cutthroat competition
– “Voluntary cooperation”
• Businesses should regulate themselves, not big gov’t
III. The Aftermath of War
• Wartime economy was swiftly dismantled
– Federal Government control was surrendered
• Labor loss power in postwar decade
– Railway wages cut 12% (1922), unsuccessful strike
– Union membership declined dramatically
• Veterans reaped lasting gains from the war
– Veterans Bureau created (hospitals & job rehab)
– Veterans’ “bonus”-Adjusted Compensation Act-1924
IV. America Seeks Benefits Without Burdens
• U.S. rejected the Treaty of Versailles
• Mid-East oil secured for American companies
• Disarmament was an issue for Harding
– Washington “Disarmament Conference” 1921-1922
• 10 year naval holiday
– A Four-Power Treaty –Pacific status quo
– The Nine-Power Treaty kept ‘Open Door’ in China
– Kellogg-Briand Pact
• Outlawed war as policy
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Limits Imposed by Washington
Conference, 1921–1922
Figure 32-1 p731
V. Hiking the Tariff Higher
• Fordney-McCumber Tariff Law (1922)
– Average tariff increased to 38.5%
• The U.S. high-tariffs set off a chain reaction
– International trade is a two-way street
– European producers felt the squeeze
– Europe began erecting tariff walls
• Economies / Governments Destabilized
VI. The Stench of Scandal
• Harding scandals
– Forbes (Veterans Bureau) = $200 million fraud
– Teapot Dome scandal
• Naval oil reserves land and bribes
– Scandal of Attorney General Daugherty
• Illegal sale of pardons and liquor permits
• Harding was spared theses events
– Died on August 2, 1923
– Not involved in scandals (probably)
– Worse scandals/disgrace since President Grant
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VII. “Silent Cal” Coolidge
• VP Coolidge was sworn into office by his father
• Coolidge was not touched by the scandals
• True to Republican philosophy, (Pro-business)
• Supported efforts to reduce taxes and debts
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VIII. Frustrated Farmers
• Farmers in a post-war bust cycle
– Peace brought lower demand & prices
– Machines increased productivity, unemployment
– The McNary-Haugen Bill (1924-1928)
• Authorizing the government to buy up surpluses
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IX. A Three-Way Race for the White House in 1924
• Republicans nominated “Silent Cal”
• Democrats split had between “wets” and “drys”
– 102 ballots, John W. Davis was nominated
• Robert La Follette’s new Progressive party
– Most liberal candidate/party
• Election returns
– “Cautious Cal” 15,718,211 to Davis 8,385,283
– The electoral college
– 382=Coolidge, 136=Davis, and 13=La Follette
Map 32-1 p736
X. Foreign-Policy Flounderings
• Isolation continued to reign in the Coolidge era
– U.S. didn’t adhere to the World Court
– American occupies Latin America
• Dominican Republic, Haiti, Nicaragua
• International debts a major concern
– Private loans, allied war debts & German reparations
• In 1914 - debtor nation to the sum of $4 billion
• In 1922, a creditor nation to the sum of $16 billion
XI. Unraveling the Debt Knot
• America insisted on getting its money back
• Germany owed reparations to France & Britain
– Coolidge said no debt cancellations
• The Dawes Plan (1924)
– It rescheduled German reparations payments
– Further American private loans to Germany
– The United States never did get its money
• But it harvested a bumper crop of ill will.
Figure 32-2 p737
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XII. The Triumph of Herbert Hoover, 1928
• Coolidge decided not to run again
• Herbert Hoover became the Republican candidate
– “Prosperity and prohibition” platform
• Democrats nominated Alfred C. Smith
– “Abrasively urban” and Roman Catholic
• Election returns: Hoover in a landslide
– Hoover 21,391,993 votes, Smith 15,016,169
– Hoover wins electoral count of 444 to 87
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Map 32-2 p739
XIII. President Hoover’s First Moves
• The Agricultural Marketing Act (June 1929)
– Created Federal Farm Bureau fund ($½ billion)
• The Hawley-Smoot Tariff (1930)
– Highest peacetime protective tariff history (60%)
– Seemed like ‘economic warfare’ to other nations
• It plunged America/Europe deeper into terrible depression
XIV. The Great Crash Ends the Golden Twenties
• Catastrophic crash came in October 1929
• The British raised interest rates
• Investors/speculators began to sell their “insecurities”
• Black Tuesday (October 29, 1929)
– $40 billion in paper values losses
– The stock-market collapse heralded a depression
• Unemployment doubled in 2 years
• 5000+ banks collapsed in three years
• Countless lost their home and farms to foreclosure
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Figure 32-3 p741
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XV. Hooked on the Horn of Plenty
• What caused the Great Depression?
– Farm & Factory 0verproduction
– Wealth concentration
– Stock Overexpansion (Buying on ‘margin’)
– Defaults on loans owed to America (from WWI)
– Drought in the Mississippi valley
• America’s social and political structure trembled
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XVI. Rugged Times for Rugged Individualists
• “Hoovervilles” became common
• Hoover was against government handouts
– Believed in “rugged individualism”
– Didn’t want “soul-destroying” government dole
• Decided to help railroads, banks, & rural credit
– Goal to restore the top of the economic pyramid
• Most of the criticism of Hoover was unfair
– Hoover was concerned about unemployed, homeless
– His efforts prevented a more serious collapse
– His plan paved the path for the New Deal
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XVII. Hoover Battles the Great Depression
• Immense sums for useful public works
– EG: Hoover Dam on the Colorado River
• Fought all “socialistic” schemes
– Vetoed the Muscle Shoals Bill
• Reconstruction Finance Corporation (1932)
– $ to major industries, companies, state/local gov’ts
• Norris-La Guardia Anti-Injunction Act (1932)
– No anti-union (yellow dog) contracts
– No feds used to restrain strikes, boycotts, picketing
• Hoover’s political woes
– Hostile Republican Congress, then Democratic (1930)
XVIII. Routing the Bonus Army in Washington
• World War I vets hard-hit by the depression
• 200,000 vets go to Washington in protest
• The “Bonus Army” demands early payments
• Hoover orders army to evacuate vets
• Makes Hoover even more unpopular
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XIX. Japanese Militarists Attack China
• Japan invades Manchuria (Sept, 1931)
• The U.S. fires “paper bullets”
– Stimson doctrine (1932)
• Japan bombs Shanghai, China (1932)
– With shocking losses to civilians
• Collective security dies
• World War II strategies are born
XX. Hoover Pioneers the Good Neighbor Policy
• U.S. relations with America’s southern neighbors
– After the stock market crash of 1929
• Hoover became an advocate of international goodwill
– Treaty with Haiti troops out in 1934
– In Nicaragua troops leave in 1933 (after 20 years)
– Hoover engineered the foundation
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