1. Chapter 25, Section 1: Politics and Prosperity
Main Idea: As the Republican party returned to power in the 1920s, the economy boomed.

2. A. Republicans in Office
Warren Harding won the 1920 election using the campaign slogan “Back to Normalcy,” which meant a return to a simpler time (pre-WWI).
Harding Takes Office
For his top cabinet posts, Harding chose capable men
Andrew Mellon – Secretary of the Treasury
Herbert Hoover – Secretary of Commerce
Corruption & Scandals
For other posts, he chose his friends from home, known as the “Ohio Gang.” While Harding was honest, many of them were not, resulting in many scandals.
Charles Forbes, head of the Veterans Bureau, was convicted of stealing millions from it. After, many other scandals came to the surface, leading to Harding’s death from a heart attack.
Tea Pot Dome Scandal- Secretary of Interior Albert Fall secretly leased government land in California & Wyoming to private oil companies in exchange for bribes; he was tried and found guilty (1st cabinet member sent to prison)
Coolidge Takes Office
“Silent Cal” – response to woman’s bet … “You lose.”
Wins Election of 1924: “Keep Cool With Coolidge.”

3. The 1920 Election

4. President William H. Taft
The oil reserves of Teapot Dome, Wyoming, and Elk Hills, California shall be for US Naval use only.
Elk Hills,
California
1912
U.S. NAVY
O I L
Teapot Dome,
Wyoming
Property of
U.S. NAVY
1912
President William H. Taft

5. A hundred thousand dollars!
Why thank you very much Harry Sinclair of the Mammoth Oil Corp and Edward Doheny of Pan American Petroleum.
I appoint Albert Fall to be the Secretary of the Interior.
Ooh la la!
A hundred thousand dollars!
Psssssst. Albert,
Take this.
1921
President Warren G. Harding

6. Pan American Petroleum
Sssssweet Ed!
Hey, the bribe worked, Harry. Our buddy Albert let us lease Naval reserves and drill for oil.
Mammoth
Oil Corp
Elk Hills,
California
Pan American Petroleum
1921
U.S. NAVY
O I L
Teapot Dome,
Oil reserved
for
U.S. NAVY

7. Except I’m in jail!
1927

8. Secretary of the Interior Albert Fall
But that’s Naval property! You can’t drill there!
Why didn’t you say so, Ed? You’ve got a deal!
Secretary of the Interior Albert Fall
Yo, Albert buddy! How about letting Edward and I drill for oil in Elk Hills and Teapot Dome!
Maybe $100,000 would help you change your mind!
Harry Sinclair (Mammoth Oil Corp.)
Edward L. Doheny (Pan-American Petroleum)

9. B. Coolidge Prosperity Industry Booms
Like Harding, Coolidge was very pro-business.
Industry Booms
“Coolidge Prosperity” refers to the economic boom of the mid- to late- 1920s, while Coolidge was President.
Factory production increased, which meant more jobs were created, which meant incomes rose, which meant spending increased, which meant more economic growth, which meant ……
Advertising boosted sales by convincing people they’d be happier if they bought certain products
Buy now, pay later- installment buying (buying on credit) encouraged people to buy things they really couldn’t afford. This increased both the demand for goods, as well as consumer debt (people owed more than they had).
“The business of America is business.”
“Perhaps one of the more important accomplishments of my administration has been minding my own business.”

10. A Booming Economy: The 1920’s
Income increases
People purchase more goods
Companies expand and hire more people
Companies earn higher profits

12. A Soaring Stock Market
As the economy boomed, the stock market soared. Stock values skyrocketed & many investors got rich (called a bull market).
People getting rich from the stock market encouraged others to invest.
Buying on margin is like buying stocks on credit. This can be dangerous because stock values don’t always rise.
By 1928, stock values rose faster than company values. Some experts warned that the “Great Bull Market” would not last forever, but most investors ignored the warnings.

13. How does the stock market work?
You buy 100 shares of stock of
x $5.00 per share
How much money have you invested?
$500.00
Scenario #1
stock increases to $20 per share
How much are your 100 shares of stock now worth?
How much profit have you made?
100 shares of stock
$2, stock value
x $20.00 per share
- $ initial investment
$2,000.00
$1, net profit

14. How does the stock market work?
You buy 100 shares of stock of
x $5.00 per share
How much money have you invested?
$500.00
Scenario #2
stock decreases to $1 per share
How much are your 100 shares of stock now worth?
How much money have you lost?
100 shares of stock
$ stock value
x $1 per share
- $ initial investment
$100.00
$ net loss

15. C. A Limited Role in World Affairs
After WWI , the U.S. was now the world’s leading power, but most Americans wanted to stay out of European affairs & keep to ourselves (isolationism).
The U.S. signed a separate peace treaty with the losers of the war and would not join the League of Nations.
Latin America
Trade between US & Latin America increased. At times, we intervened to protect our interests there.
Nicaragua – US Marines were sent to protect American plantations & RRS during a revolution there
Mexico – A US diplomat worked out a compromise
The Soviet Union
Russia became the Soviet Union after V.I. Lenin (Bolshevik Revolution) installed a communist gov’t.
U.S. refused to recognize the new government due to anti-communist feelings (no private property or religion).
We still sent $20 million in aid to starving Russians in 1921.

16. Pursuing Peace
Because militarism was one of the main causes of WWI, many people in the 1920s favored disarmament.
Disarmament- reducing armed forces and weapons
By the end of the decade, the US & 61 other nations signed the Kellogg-Briand Pact, which “outlawed” war
It’s one fatal flaw, however, was that it didn’t say how it would keep the peace.
What would happen to aggressive nations?