Ch. 32 Notes:
The Politics of Boom and Bust
1. In the presidential
election of 1920, the
Republicans ran Warren
G. Harding as the “antiWilson” – he was
personable and
approachable.
2. He was also a poor choice
for president – he wasn’t
a good administrator, he
didn’t see the corruption
in those around him, he
hated to say no to people
and he wasn’t
exceptionally bright.
3. These problems are going
to lead to an
administration filled with
corruption.
Warren G. Harding
The Semi Return of Laissez Faire
1.
2.
3.
4.
5.
The Republican Party (under Harding, Coolidge and Hoover) hoped to
use government activity to assist the development of businesses
during the 1920’s – “Less government in business and more business
in government”.
They are going to cut government spending and also lower personal
income taxes on the upper classes – to encourage more business
investment.
To protect U.S. industries Congress passed the Fordney-McCumber
and Hawley-Smoot Tariffs – both will lead to a decline in foreign trade
and make it difficult for European nations to pay off their war loans.
They will also relax the enforcement of prior legislation, such as the
Interstate Commerce Act and the Sherman and Clayton Anti-Trust
Acts – this will of course have negative effects on the lower classes of
society, especially farmers and laborers.
The U.S. Supreme Court will also aid in the support of business by
ruling against progressive legislation – in the case of Adkins v.
Children’s Hospital they will declare that women were no longer
entitled to special protection in the workplace because of the now
had the right to vote.
Harding and Foreign Affairs
1. The Republican Party had opposed the Treaty of
Versailles and after his election Congress will
pass a resolution declaring the war over – the
U.S. was set on isolating itself from foreign
affairs.
2. However, Harding did work towards
disarmament in regard to navies – mainly
because the Republicans and business leaders
didn’t want to spend more money on the U.S.
navy.
The Washington Conference
1. The U.S., Great Britain and Japan were becoming
rivals on the seas in regard to the size of their navies.
2. In the Four Power Pact (U.S., G.B., France and Japan)
the parties agreed to respect each others holdings in
the Pacific.
3. In the Five Power Pact (U.S., G.B., France, Japan and
Italy) the parties agreed to limit the sizes of their
navies.
4. In the Nine Power Pact the parties agreed to keep the
Open Door Policy going in China.
5. None of these pacts have any real enforcement
provisions though, so they don’t do much good.
Scandal
1. Because of his lack of oversight over those
around him, Harding’s presidency will deal with
numerous scandals.
2. The head of the new Veteran’s Bureau, Charles
Forbes, will skim around $200 million from the
bureau (gets two years in jail).
3. Attorney General Harry Daugherty was arrested
for selling pardon’s and liquor permits – and for
not prosecuting cases – but his two trials ended
with hung juries.
Teapot Dome
1. The worst scandal was
the Teapot Dome
Scandal.
2. Secretary of the Interior
Albert Fall took control
of two oil fields in
Teapot Dome,
Wyoming, and Elk Hills,
California.
3. He then leased the land
to two oil companies for
bribes.
4. He was convicted and
sentenced to one year
in jail.
1. Harding died of
pneumonia on August 2,
1923 and Calvin Coolidge
assumed the presidency.
2. Once again the
government’s policy was
to protect the business
community of America – at
the expense of other
sectors of the American
economy – especially
farmers.
3. He will be reelected in
1924 – mainly because of
the prosperity the country
is enjoying (Progressive
Party dying out).
Calvin Coolidge
The Plight of Farmers
1. Farmers had been struggling since after WWI.
2. Even as the number of farmers decreased, production
increased – largely to support the war effort – but
after the war overproduction becomes a huge
problem.
3. Farm workers were also “tractored out” – replaced by
new machinery.
4. To try to help farmers, Congress passed the McNaryHaugen Bill, which provided for the purchase of
surplus crops to sell them abroad – but there was still
no market for them.
5. Farmers end up suffering the effects of the Great
Depression well before the rest of the country.
Coolidge and Foreign Affairs
1. The main issue facing Coolidge in regard to foreign
affairs is trade – our high tariffs are shrinking
international trade.
2. This is especially a problem for our Allies, who are
struggling to pay off their war loans – and Germany
who is struggling to pay off reparations.
3. The Allies want us to cancel the debt – they paid in
blood, we can pay in money – we refuse.
4. In 1924 Congress passes the Dawes Act to help
Germany – we loan money to Germany to help them
stimulate their economy and the money the make can
be used to pay off reparations, which can then be
used to pay off us.
The Dawes Act
Herbert Hoover
1. In 1928, Herbert
Hoover (Rep.) will be
elected president –
largely on the
prosperity the
Republicans have
gained for the U.S.
2. However, that
prosperity is about to
come to a screeching
halt – and Hoover will
take the blame.
Hoover’s Foreign Policy
1. In 1932, Japan invaded Manchuria – the U.S.
is in an isolationist phase and doesn’t want to
get involved even though this is a violation of
the Four Power Pact.
2. Instead, Secretary of State Henry Stimson
issues the Stimson Doctrine – we refuse to
recognize Japan’s control over any Chinese
territory.
Black Tuesday
1. During the 1920’s, the wealthiest 1% of the U.S.
saw their income rise 75% - the rest of the
population only saw about a 9% increase, so
they made their purchases on credit (70% of
families made around $2500 a year).
2. People were also heavily invested in the stock
market – often speculating and buying on
margin in order to reap larger profits.
3. On October 29, 1929, the stock market crashed
and the Great Depression has arrived.
The Great Depression
1. From 1929 – 1940, the Great Depression will be the
worst financial crisis the U.S. has ever faced – by
1933, around 11,000 banks have failed, GDP falls
nearly 50%, around 90,000 businesses go bankrupts
and unemployment will skyrocket to 25%.
2. Even the birthrate drops because people can’t afford
to have children.
3. Causes:
1.
2.
3.
4.
Our tariffs and war debt policies.
U.S. overproduction and buying on credit.
The economic problems of farmers.
The unequal distribution of wealth.
Hoovervilles
Hoover and the Depression
1. Hoover has no real response – he doesn’t
believe it’s the governments job to provide
direct aid to individuals.
2. His approach is to appeal to the country to
voluntarily aid people – wealthy individuals
and charitable organizations will step in to
create soup kitchens and bread lines to aid
those out out work.
Too Little to Late
1. As the Depression worsens, Hoover finally tried to do
some things – but he never gives direct aid to the
American people!
2. The Hawley-Smoot Tariff is passed to protect U.S.
industries – it makes things worse by basically
stopping foreign trade.
3. The Agricultural Marketing Act tries to help farmers
market their crops better – not what they need.
4. The Reconstruction Finance Corporation gives money
to businesses and industries and to states to use as
they see fit – not going to help much but does keep
the depression from getting even worse.
The Bonus Army
1.
2.
3.
4.
5.
6.
During Harding’s administration, WWI veterans were promised a
bonus by Congress to make up for wages they lost while at war.
The payment is due in 1945, but in 1932 a group of vets (around
20,000) march on Washington to demand an early payment.
Congress refuses and Hoover orders the Bonus Army to leave
Washington, D.C. – most comply.
When a group stays (and begins having conflict with Washington
police), Hoover orders Douglas McArthur (with help from Dwight
Eisenhower) to get them out of Washington
McArthur uses 1000 troops, tanks and tear gas to drive them out
of their Hooverville – in the process the Hoovervile will catch on
fire – two vets were shot, many more suffered injuries and an 11
month old baby died in the process.
This ended any chance Hoover might have had at being reelected
– he will be defeated easily by FDR in the next election.
The Bonus Army