1. Chapter 32 The Politics of Boom and Bust, 1920–1932

3. 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)

4. 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

6. 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

7. 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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9. Figure 32-1 p731 Limits Imposed by Washington Conference, 1921–1922

10. 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

11. 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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13. 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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15. 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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17. 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

18. Map 32-1 p736

19. 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

20. 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.

21. Figure 32-2 p737

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23. 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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25. Map 32-2 p739

26. 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

27. 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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29. Figure 32-3 p741

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31. 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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33. 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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35. 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)

37. 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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39. 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

41. 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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