THE POLITICS OF
BOOM AND BUST
By Pam Kumparatana and Nikola Koscica
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I. the Republican “Old
Guard” Returns
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President Warren Harding – a
good natured president who was
unable to see the moral wrongs of
his associates. He was always
surrounded by cronies of the
“Ohio Gang.”
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II. GOP Reaction at the Throttle
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Enterprising industrialists took
advantage of Harding –
reforms from the progressive
era were crushed
The Old Guard wanted to
improve the concept of
laissez-faire – government
was not supposed to interfere
with business but it was
supposed to guide them to
become profitable.
In the 1920s, the Supreme
Court tore down laws
established in the progressive
era: the child labor law was
repealed, the rights the
laborers gained during this
period were taken away, and
the government was restricted
to intervene in the economy.
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Adkins v. Children’s Hospital (1923) – women do not have special
protection in the workplace and the minimum wage law did not apply to
women. They had gained the 19th Amendment; they were legal equals
with men and did not need special protection.
Antitrust laws were ignored and corporations were able to expand
again. The ICC became full of men that were sympathetic to the railroad
managers.
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III. the Aftermath of War
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The Esch-Cummins
Transportation Act of 1920 –
encouraged private
consolidation of railroads and
pledged the ICC to guarantee
their profits.
The Merchant Marine Act of
1920 – authorized the Shipping
Board to dispose of the wartime
fleet. The Shipping Board
controlled about 1500 vessels.
The government tried to get
into the shipping business, but
the La Follette Seaman’s Act of
1915 stated that American
shipping could not thrive in
competition with foreigners
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There were many labor strikes due to
lack of government support. The
Railway Labor Board ordered a 12
percent wage cut in 1922, which
prompted a two month strike.
Attorney General Daugherty ended
this strike, causing a hostile political
environment.
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Thousands of African Americans
believed that they would get paid
greatly after the war, so they left the
south and ventured to northern cities.
There was racial terror in the north –
the summer of 1919 in Chicago left
23 blacks and 15 whites dead.

In 1921, Congress created the
Veterans’ Bureau, and it was
authorized to operate hospitals
and create rehabilitation centers
for the disabled.
The American Legion was
founded in 1919, in Paris by
Colonel Theodore Roosevelt Jr. –
it became notorious for
aggressively lobbying for the
benefits of veterans, demanding
monetary compensation from
their jobs when they went to war.
Congress passed the Adjusted
Compensation Act of 1924, and it
gave every soldier a paid
insurance due policy that was
due in twenty years – it added
$3.5 billion dollars to the war
costs.
IV. Ship-Scrapping at the
Washington Conference
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The major powers, except
Bolshevik Russia, attended
the Washington
“Disarmament” Conference
in 1921 – 1922.
Secretary Hughes
proposed that the American
and British navies would be
scaled down, having a 5 –
5 – 3 ratio with Japan.
The Five Power Naval
Treaty of 1922 basically
represented Hughes’
proposal and the United
States and Britain agreed
not to fortify their Eastern
territories.
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The Four Power treaty replaced
the Anglo-Japanese alliance and
stated that the United States,
Britain, France, and Japan had
to keep the peace in the Pacific.
The Nine Power Treaty of 1922
stated that all nine nations that
attended this conference had to
respect the Open Door Policy by
respecting China’s territorial
integrity.
In 1928, the Kellogg-Briand Pact
was signed, it was also known
as the Pact of Paris. It
renounced nations for using
aggressive force to achieve
national goals. It permitted
defensive wars and it did not
provide to take action against
those that violated this
agreement; it showed that
Americans were in a false sense
of security.
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V. Hiking the Tariff Higher
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The Fordney-McCumber Tariff
Law was passed by Congress
in 1922. This increased the
duties on farm products and it
was supposed to stabilize the
rates of American and foreign
production.
There were many tariff
increases during President
Harding and Coolidge’s
presidency, which caused
the European powers to
raise their own tariffs.
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VI. the Stench of
Scandal
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1923 – Colonel Charles R.
Forbes looted the
government of
approximately $200 million,
which was connected to
building veterans’
hospitals.
Teapot Dome – in 1921,
Albert B. Fall convinced the
Secretary of Navy Denby to
transfer oil reserves of
Teapot Dome [Wyoming]
and Elk Hills [California] to
the Interior Department. He
then leased these lands to
Harry F. Sinclair and
Edward L. Doheny, who
were oilmen. He received
$100,000 from Doheny and
approximately three times
more than that from
Sinclair.
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President Harding died on
August 2, 1923, after
embarking on a
speechmaking tour across
the country. He died of
pneumonia and
thrombosis.
Calvin Coolidge took office
after he died.
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VII. Frustrated Farmers
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After the war, there were new technologies that helped farmers
farm more acres of land a day, which allowed them to grow
bigger crops on larger areas. But this contributed to the
agricultural surpluses, causing prices to deflate.
In the Congress, a “farm bloc” was formed in 1921, which helped
pass helpful laws to aid the farmers.
1921 – the Capper-Volstead Act was passed, and it exempted
farmers’ marketing cooperatives from antitrust persecution.
From 1924 to 1928, the farm bloc proposed the McNary-Haugen
Bill. This bill wanted to keep agricultural prices high by
authorizing the government to buy any agricultural surpluses.
Any governmental losses were to be made up by placing a
special tax on farmers. President Coolidge vetoed it twice .
Charles L.
McNary 
VIII. Foreign Policy
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During Calvin Coolidge’s
presidency, there were
isolationist policies. The Senate
refused to join the League of
Nations. Coolidge
unsuccessfully tried to pursue
naval disarmament.
American troops withdrew from
the Dominican Republic in 1924,
but remained in Haiti until 1934.
President Coolidge removed
troops from Nicaragua but sent
them back in 1926, where they
stayed until 1933. American oil
companies vouched for military
involvement in Mexico in 1926
when Mexico asserted its
sovereignty over oil resources.
The United States Treasury
loaned $10 billion to the Allied
nations during WWI, and
demanded to be paid off. The
Allies claimed that this demand
was unfair, as America’s
postwar tariff made it
impossible for them to sell their
goods and earn dollars to repay
their debts.
IX. Unraveling the Debt Knot
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The French and the British
wanted Germany to make
reparation payments,
totaling to about $32 billion.
The Allied nations hoped to
repay the American debt
with the money received
from Germany.
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The French sent troops into
the industrialized Ruhr
Valley in 1923, in hopes of
getting reparation
payments. Germany
responded by allowing its
currency to inflate
exponentially
Dawes Plan of 1924 – It was
negotiated by Charles Dawes,
and it rescheduled German
reparations and allowed
Americans to loan money to
Germany. This resulted in
Americans loaning money to
Germany, in which Germany
used that money to make
reparations to France and
Britain, which resulted in
France and Britain repaying
American war debts.
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X. The Triumph of Herbert
Hoover
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Hoover was liked by the masses,
not by the political bosses, but he
still received the rebublican
nomination.
In the 1928 elections he was
versing the democrat Alfred E.
Smith, a 4 time New York governor.
While Herbert as personally
colorless, he inspired loyalty, and
was at radio broadcast then his
opponent.
He endorsed Labor Unions,
government regulation of the radio.
In the end, Hoover swept the
election, receiving the southern
democrats’, prohibition’ and the
KKK ‘s votes.
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XI. Hoover’s First Moves
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Passed the Agricultural Marketing Act of 1929, which
settled up the Federal Farm Board with half a billion
dollar budget to lend to farmers.
The Federal Farm Board created the Grain
Stabilization Corporation and the Cotton Stabilization
Corporation, whose purpose was to increase the farm
prices by buying off the surplus.
Their idea failed as more farm production came in.
Hawley-Smoot Tariff of 1930-Set the Tariff at 60% and
lead the US into the Great Depression.
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XII. Great Crash ends the
Golden Twenties.
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Industrial mass production
and spiraling stock prices
lead to the economy’s
downfall.
Federal Reserve Board
failed to curb the prices.
October 29 1929-Black
Tuesday. 16 million shares
were lost as a last-ditch
effort, 40 billion dollars
were lost, wages were cut,
and many people
committed suicide.
In the First year, 5000
banks collapsed along with
the investor’s savings.
Soup Kitchens opened,
bread lines were formed
and birth rates dropped.
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XIII. Hooked on the Horn of Plenty
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The Great Depression came in because of farm overproduction.
The ability to consume became less than the ability to produce.
Many people paid on credit, leaving the lenders and sellers in
dept.
Workers were replaced by machines, and forced out on the
street. They wanted to work, but there was no work available.
Those who were unable to pay for their rent were forced out on
the street.
 XIV.
Rugged Times for Rugged
Individualist
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Hoover believed that government involvement
in the economic crash would kill the American
image.
He had faith in the industry, believing that it
would rebuilt it self, and that prosperity would
be “around the corner”.
Gave money to the top class, like the bankers,
who most people blamed for the stock crash.
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XV. Herbert Hoover, Pioneer for The New Deal
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Hoover encouraged Congress to spend money on
public works, a total of 2.5 billion dollars was
contributive.
Began building the Hoover Dam (1930-1936), and
vetoed the Tennessee River Dam proposed by the
Muscle Shoals Bill, because he felt it was socialist.
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Established the Reconstruction Finance Cooperation
(RFC) in 1932.
It was granted half a billion dollar budget, that was
meant lend money only to public work companies,
even though most of the government projects
somehow managed to get their own money (and the
government profited from the Corp.)
Norris-La Guardia Anti-Injection Act illegalized
yellow-contracts, and antiunion. It also forbade
Federal Courts to forbid strikes, boycotts, and
peaceful picketing.
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XVI. Rooting the Bonus Army in
Washington
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Hawley-Smoot Tariff gave the
industry a bonus, and WWI
veterans wanted their bonus now
instead of waiting for it to be played
off to them in small payments.
“The Bonus Expeditionary Force”
marched on the US capitol in 1932,
and set up camps on vacant lots in
D.C.
When their proposed Bill failed,
Hoover offered to pay their return
tickets.
Most Bonus soldiers went home,
but a few stayed, and General
McArthur quelled the riot, killing two
people. Hoover lost popularity due
to this event.
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XVII. Japanese Militarists Attack
China
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Japan conquers Manchuria and
closes the Open Door Policy in
China.
The League of Nations was called
to solve the situations, and even
tried to sneak the US into the
League..
The League told Japan to leave
Manchuria, but Japan left the
League instead.
Hoover refused to get the US
involved with the League and
blockaded Japan. The Stimson
Doctrine stated that the US would
not recognize any Japan territory
conquered by force, and proceeded
to boycott small Japanese goods.