Chapter #32: The Politics of Boom and Bust – Big Picture Themes
1. President Harding had several scandals underneath him, notably the Teapot Dome Scandal
over oil.
2. America entered into policies of “isolationism” whereby the US just wanted to look after
herself and leave Europe alone.
3. Coolidge was very pro-business, following a “hands-off” approach by government.
4. Hoover held the same ideas with his “rugged individualism” phrase. When the Stock Crash hit
and Great Depression started, Hoover was very reluctant and slow to take government action.
Chapter #32: IDENTIFICATIONS
Andrew Mellon
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Herbert Hoover
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Albert B. Fall
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Robert LaFollette
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Alfred E. Smith
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Ohio Gang
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Washington Conference
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Kellogg-Briand Pact
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Fordney-McCumber Tariff Law
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Teapot Dome Scandal
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Dawes Plan
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Hawley-Smoot Tariff
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Reconstruction Finance Corporation (RFC)
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Bonus Army
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Hoover-Stimson doctrine
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Chapter #32 Identifications
The Republican "Old Guard" Returns
Know: Warren Harding, Ohio Gang
1.
What flaws did Warren Harding possess?
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Harding one of best liked men in America
o Charming, back-slapping, etc
Weaknesses:
o Mediocre mind – overwhelmed by job
o Surrounded himself with corrupt friends – The Ohio Gang
 Had difficulty saying no to his friends
Harding promised to gather “The Best Minds” around him in his cabinet
o Charles Evans Hughes – State
o Andrew Mellon – Treasury
o Herbert Hoover – Commerce
Offset by 2 of the worst:
o Albert Fall – Interior
o Harry Daugherty – Attorney General
GOP Reaction at the Throttle
2.
What pro-business policies were taken by the government during the Harding
administration.

McKinley style Old Guard settled back into power under Harding
o Laissez-faire rekindled – government to keep hands off, but also to guide business to profits
 Accomplished by putting regulatory agencies and courts in the hands of standpatters
o Supreme Court an example:
 Harding appointed 4 of 9 justices – very conservative
 One good choice was Taft (surprisingly more liberal than thought)
 Killed child labor law, stripped labor of previous gains, restricted government
intervention in economy
 Adkins vs. Children’s Hospital – women now had vote and were equals to men –
didn’t deserve special privileges in workplace
o Corporations could relax and expand
 Antitrust laws ignored & circumvented
 Ex: ICC dominated by men sympathetic to RR owners
The Aftermath of War
Know: Railway Labor Board, American Legion, Adjusted Compensation Act
3.
What effects did the war have on the post-war economy?

Wartime regulation ended quickly
o WIB dismantled
o RR’s given back to private hands in 1920
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Esch-Cummins Transportation Act – encouraged RR consolidation and pledged ICC
to help increase profits of them
o Merchant Marine Act of 1920 – government to get rid of most of their controlled ships.
 Put back in private hands
Labor struggled badly post-war
o Steel strike broken up in 1919 – strikers are “Reds”
o RR Labor Board ordered wage cut – led to strike
 Ended when Daugherty issued injunction to force workers back
o Union membership shrunk by 30% between 1920-1930
Congress created Veterans Bureau in 1921
o Help veterans with medical treatment and teach them vocational skills
 American Legion – founded in 1919
 Lobbied the government for many things to benefit veterans
 Most crucial was their “bonus”
o Harding vetoed Bonus bill in 1922
o 1924 – Congress passed Adjusted Compensation Act
 Insurance policy due to every soldier in 1944
 Coolidge vetoed; Congress override
America Seeks Benefits Without Burdens
Know: Unofficial Observers, Charles Evans Hughes, Five-Power Naval Treaty, Four-Power Treaty,
Nine-Power Treaty, Kellogg-Briand Pact
4.
How did the U.S. take the lead in disarmament in the 20's?
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Peace with Europe finally made by declaring war over in 1921
Isolationists talked Harding into rejecting the LON altogether
o Wouldn’t even support world health program
Couldn’t totally turn back on outside world
o Hughes struck deal to have US and GB jointly share in oil drilling in Middle East
Disarmament was something Harding embraced – businessmen unwilling to spend $ to build navy
o Rivalry developing between GB & Japan
Washington Naval Conference – 1921-22
o Double agenda: naval disarmament & Far East issues
o 5 Power Treaty: 5:5:3 ratio of ships + compensation to Japan for getting lower level
 Both agreed to not fortify Pacific possessions
o 4 Power Treaty: GB, France, Japan, US preserve status quo in Pacific
o 9 Power Treaty: Open Door policy for everyone in China
Accomplishments had flaws:
o No restrictions placed on small ships(cruisers, destroyers, etc)
o US made no pledge to use force to uphold 4 Power Treaty
Similar reliance on words alone illustrated with Kellogg-Briand Pact (1928)
o Defense permitted, but war outlawed as a method of foreign policy
o Signed by 62 countries
Hiking the Tariff Higher
Know: Fordney-McCumber Tariff Law
5.
What effects were produced by high American tariffs?


1922 Fordney-McCumber Tariff – Boosted rates by 27% to about 39%
o Rates on farm products increased
o President can also take advice of Tariff Commission by reducing or raising individual rates
by up to 50%
o Harding and Coolidge ordered many more raises than reductions
Effects:
o European producers couldn’t trade in US – prolonged their financial issues
o Europe needed recovery to pay war debts back to the US
o Europe raised their tariffs to counter
 Hurt US goods but also European goods
The Stench of Scandal
Know: Charles R. Forbes, Albert B. Fall, Teapot Dome, Harry M. Daugherty
6.
"Such was his [Harding's] weakness that he tolerated people and conditions that subjected
the Republic to its worst disgrace since the days of President Grant." Explain
o
Scandals:
o 1923 – Charles Forbes – caught stealing money from Veterans Bureau ($200 million)
 2 years in federal prison
o Teapot Dome
 1921 – Albert Fall convinced Sec. of Navy to transfer properties containing oil to
Interior Dept.
 Harding signed order
 Fall then leased lands to oil men for $400K in total bribes
 Started to leak out in 1923
 Fall finally found guilty in 1929 – bribers were acquitted
 Put stain on government reputation
o Daugherty’s deeds led to a Senate investigation in 1924 – illegal sale of pardons and liquor
permits
 Forced to resign and put on trial in 1927
o Harding spared most of the brunt
 Died on August 2, 1923 of pneumonia and thrombosis
“Silent Cal” Coolidge
Know: Calvin Coolidge
7.
Do the nicknames, "Silent Cal" and "Cautious Cal" accurately describe the Coolidge
presidency?
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Coolidge visiting parents when word comes of Harding’s death.
o Sworn in by his father via lantern-light
Coolidge:
o Embodied honesty, frugality, morality, and industry
o Shy & mediocre leader
o “Business of America is Business”
o “Man who builds a factory builds a temple”
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Coolidge was thrifty
o Sided with Mellon’s policies of hands-off and reducing national debt
Coolidge’s nature rid the White House of the stink left by Harding’s scandals
Frustrated Farmers
Know: McNary-Haugen Bill
8.
What had changed for the farmer since 1890? What had remained the same?
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Farmers made TONS of money during WWI (Spring 1920 – wheat = $3/bushel)
o Peace ended government high price guarantees and foreign need for food
Machines threatened to ruin farmers.
o Gas plows now can harvest crops a lot quicker
o Leads to increase in supply and lowers prices
Also, WWI led farmers to expand fields to new areas (“Wheat Belt”)
Overproduction lead to depression in Midwest
o Farmers mostly survived on credit – couldn’t pay debts – lost farms
Schemes to help farmers:
o Farm Bloc
o Capper-Volstead Act – exempted cooperatives from antitrust prosecution
o McNary-Haugen Bill (1924 & 1928) – prices stay high because govt buys up surplus
products
 Pay for this by taxing farmers
 Coolidge vetoed twice
A Three-Way Race for the White House in 1924
Know: Robert La Follette
9.
Why did Calvin Coolidge easily win the 1924 election?
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Republicans – Keep Cool with Coolidge
Democrats split – choose John W. Davis – just as conservative as Coolidge
LaFollette ran as Progressive 3rd party candidate
o AF of L supported him & farmers
o Progressive Party ran LaFollette only – no local offices
 Govt ownership of RR’s
 Farm Relief
 Anti-monopoly & injunction
 Amendment to limit Supreme Court’s power against laws passed by Congress
EV: 382 – 136 – 13
Times were too good for people to care about LaFollette’s reforming message.
Foreign-Policy Flounderings
10.
What are the arguments for America canceling the WWI debt of European countries?
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Isolationism popular in Coolidge era
o Senate wouldn’t let Coolidge join World Court (judicial arm of LON)
Exception: US intervention in Latin America
o Withdrawn from DR in 1924
o Stayed in Haiti from 1914 – 1934
o Removed from Nicaragua in 1925; sent back in 1926
o Oil-men wanted Coolidge to intervene in Mexico – nationalize oil there
 Diplomacy won out – no intervention
International Debts:
o WWI made US a creditor nation (16 billion)
o US investors loaned 10 billion to foreign nations in the 1920’s
o Key was 10 billion that US government loaned Allied nations before & after war
 US wanted to be repaid, while Allies protested (paid in blood)
 US should write off loans as their war effort
 How can we repay you with your high tariffs??
Unraveling the Debt Knot
Know: Dawes Plan
11.
What were the world-wide repercussions of America’s insistence on debt repayment?
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US insistence on repayment made Allies come down harder on Germany
o 32 billion in reparations
o Hoped to then take some of that money and repay the US
o 1923 – Germany fell behind payments and France invaded Ruhr Valley
 Germany inflated its currency
 Bordered on anarchy
o Statesmen wanted to scale down payments
 “They hired the money”
o Dawes Plan (1924) – rescheduled reparations and private loans to Germany
 US bankers $ to Germany – German reparations to Allies – Allied war debts to US
 Cog was US credit
 Caused major international mess once market crashed in 1929
o US wanting all money created massive animosity between Europe & US
 Led partially to US declaring its neutrality legislation in 1930’s
The Triumph of Herbert Hoover, 1928
Know: Al Smith, "Rum, Romanism, and Ruin"
12.
Why was Herbert Hoover so much more popular with voters than Al Smith?
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Coolidge decided not to run in 1928 – Hoover likely successor
o Darling of the masses
Democrats nominated Alfred E. Smith – very colorful personality
o Fatal handicaps for time:
 Very “wet”
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 Too urban
 Roman Catholic
 Dry, rural, Fundamentalist Democrats had trouble swallowing his candidacy
Radio played role – helped Hoover more
o Smith had more personal spark than radio
o Hoover: socialism is un-American – RUGGED INDIVIDUALISM
 Example of American success story (free enterprise, small government)
Hoover was different than Harding
o Shy, standoffish, and stiff
o Never before elected to office & thin skinned
o Real power in his integrity
The self-made millionaire was a perfect candidate for businessmen that wanted a hands off
government
o Still was a little progressive while Secretary of Commerce
Campaign marred by below the belt tactics
o Catholicism of Smith
 “Rum, Romanism, and Ruin”
o Smith even had a hard time pulling together the Solid South because of his Catholicism
444-87
Huge Republican majority in House
Dry Democrats rebelled against Smith (VA, NC, TN for Hoover)
President Hoover's First Moves
Know: Farm Board, Hawley-Smoot Tariff
13.
Did Hoover’s attempts to help farmers produce positive results? Explain.
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Everyone doing well financially in late 1920’s except unorganized wage earners and farmers
June 1929 – Agricultural Marketing Act (designed to have farmers self-help)
o Federal Farm Board – fund of half billion
 Lent to farm organizations to buy, sell, and store farm products
 1930- Farm Board tried to keep prices high after crash, but failed because of large
amount of surplus crops
Farmers wanted tariff fixed – Hoover promised limited changes to it if elected
o Gave farmers hope
Hawley-Smoot Tariff of 1930
o Left HOR as a bill to help farmers
o Lobbyists in Senate added so many amendments it changed the scope
o Highest tariff in nation’s history – 60%
Angered foreigners and plunged the world into deeper Depression
The Great Crash Ends the Golden Twenties
Know: Black Tuesday, "Brother Can You Spare a Dime?"
14.
What were the immediate effects of the stock market crash?
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Times were good when Hoover was sworn in on March 4, 1929
o Mostly everyone doing well except MW farmers
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Hoover tried to curb stock speculation, but failed
October 1929 – Market crash
o Partially caused by British raising interest rates
 Led to selling, which led to more selling
o Oct. 29, 1929 – Black Tuesday – 16 million shares sold frantically
 Doom and gloom, suicides increased
By end of 1929, stockholders lost about 40 billion
Crash led to business depression at home and abroad
o By end of 1930, 4 million out of work (tripled by 1932)
o Over 5000 banks collapsed first 3 years – wiped out savings
o Foreclosures
o Bread lines, soup kitchens
o Birth rate down
Hooked on the Horn of Plenty
Know: Hoover Blankets, Hoovervilles
15.
What causes contributed to the Great Depression?
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Basic explanation: overproduction of farm products and factory goods
o Production ability had outrun ability to consume or pay for them
 Too much money in hands of few wealthy
 Invested in factories or production, not salaries
o Other issues:
 Overexpansion of credit over-stimulated production
 Technological advances also cost people jobs
o Further darkened by economic conditions abroad
 England and France never fully recovered
 1931 – Vienna bank failed & caused European chain reaction
 International trade dried up by 1930 Hawley-Smoot Tariff
 Uncertainties over reparations, war debts caused tensions on U.S.
o Drought on MS Valley in 1930 made things worse
 People lost farms through auctions & farm tenancy developed
o Citizens lost everything in Depression
 Wanted to work, but there was none
 US people had beat the frontier, but couldn’t grasp depression
 “Charity Soup”
 “Hoover blankets”
 “Hoovervilles”
Rugged Times for Rugged Individualists
Know: Rugged Individualism, The Great Humanitarian
16.
How did President Hoover’s beliefs affect the way he handled the Depression?
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Hoover torn between being a humanitarian and a rugged individualist
o Convinced that industry, thrift and self-reliance would save the day – kept away from
government handouts
 Handouts would weaken national fiber
o Local relief dried up quickly and Hoover was forced to reevaluate thoughts on relief
Compromise – assist RR’s, banks and credit corporations
o Relief would trickle itself down
 Critics:
 Help feed Belgians but not Americans
 Help Big business only
Hoover Battles the Great Depression
Know: Muscle Shoals Bill, Reconstruction Finance Corporation, Pump-Priming, Yellow Dog
Contracts
17.
Is Hoover’s reputation as ultra-conservative well deserved? Explain.
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Hoover secured $2.25 billion in appropriations to help fix economy
o 1930 – Hoover Dam began on Colorado River
 Completed in 1936 – created large manmade lake
 Jobs
o Fought all “Socialistic” schemes
 Ex: Muscle Shoals Bill – Dam TN River
 Vetoed
o 1932 – Reconstruction Finance Corporation created
 ½ billion dollar budget
 Provide indirect relief by helping insurance, banks, RR’s, state and local
governments
 No loans to individuals
 All projects were self-liquidating
 Too late to really have major effect
 New Dealish
o 1932 – Norris-La Guardia Anti-injunction Act
 Outlawed yellow dog contracts and forbade federal courts to issue injunctions
o Hoover did inaugurate a new policy
 Abandoned 19th century sweat it out tactics
Not helped by hostile Congress
o Republican majority did not help
o 1930 – Democrats controlled HOR and almost controlled Senate
Routing the Bonus Army in Washington
Know: Bonus Expeditionary Force, Douglas MacArthur
18.
What happened to the Bonus Army? Why?
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WWI veterans pushed for an early payment of their 1945 bonus voted on in 1924.
o B.E.F. (20,000 people) marched on DC in summer of 1932
o Set up public camps and erected Hoovervilles
 Premature failed in Congress
 Hoover arranged to pay for home travel for about 6000 – refused to leave
o Hoover ordered the army to remove “guests”
o MacArthur took things too far and removed marchers from Anacostia Flats
o Further tarnished his reputation
Japanese Militarists Attack China
Know: Manchuria, Stimson Doctrine
19.
How did the Japanese attack on Manchuria demonstrate the weakness of the League of
Nations?
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September 1931 – Japan invades Manchuria
o Overran province and shut Open Door
Violation of LON charter and other agreements signed by Japan
o LON tied because of US non-membership
o 1932 – Stimson Doctrine
 US would not recognize any territorial changes achieved by force
 Did nothing to stop Japan
 Bombed Shanghai in 1932
o Americans launched informal boycotts
In reality collective security died and WWI started in 1931
o Major reason was because other world powers couldn’t count on the US for support
Hoover Pioneers the Good Neighbor Policy
20.
What was President Hoover’s policy toward Latin America?
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After his election in 1928, Hoover goes on goodwill tour of Latin America
o Economic crash caused investments in Latin America to decline
 As money ran low, “economic imperialism” dried up
Hoover tried to abandon interventionist sentiment of TR and his corollary
o 1932 – treaty with Haiti calling for withdrawal of US troops by 1934
o 1933 – last US marines pulled out of Nicaragua