MR. WALTERSCHAPTER 32 The Politics of Boom and Bust.

MR. WALTERS CHAPTER 32

The Politics of Boom and Bust

Big Idea . . .

• How did Republican policies create the “false” Boom and what factors led to the BUST?

The Election of 1920

“I am not fit for this office and should never have been here.” … WGH

Who was Warren G. Harding?

• Senator from Ohio• Less than

“Presidential” leadership skills

• Unclear and vague• Promised a “return to

normalcy”

Harding – Personal Conduct?

• Gambled • Drank in White House during

Prohibition• 1905 – 1920 Carrie Philips…• 1919 Nan Britton… Illegitimate child?

Harding’s Cabinet

• Charles Evans Hughes – Sec. of State• Herbert Hoover – Sec. of Commerce• Andrew Mellon – Sec. of Treasury• Ohio Gang…

– Albert Fall – Sec. of Interior– Charles Forbes – Veterans Bureau– Harry M. Daugherty – Attorney General

Old Guard in the Court

• Harding appointed four members to the court that were pro-business

• In the case of Adkins v. Children’s Hospital, the court reversed its ruling in the Muller v. Oregon invalidating a minimum wage law for women.

• Under Harding, corporations could expand again, and anti-trust laws were not as enforced or downright ignored.

The Aftermath of the War Labor

Labor lost much of its power

A Steel Strike strike was ruthlessly broken in1919

Boston Police Strike of 1919.

Railway Labor Board ordered a wage cut of 12% in 1922..two month strike broken by injunction

Labor membership shrank by 30% from 1920 to 1930.

The Aftermath of the War Veterans

What WWI veterans wanted, they got.

American Legion founded.-Lobbyist group?

p731

“I Sympathize Deeply with You, Madam, but I CannotAssociate with You,” 1923

Foreign Policy in the 1920sSent only observers to

League of Nations

The lack of real participation though from the U.S. provedto doom the League…

In the Middle East, battle for oil erupts

p738

Five-Power Treaty (1922)-A battleship ratio was achieved through this ratio: US Britain Japan France Italy 5 5 3 1.67 1.67

-Japan got a guarantee that the US and Britain would stop fortifying their Far East territories [including the Philippines].

-But Japan could continue fortifying theirs. World War Two consequences…. Green Book, pg 292

World War I Debt Issues

Europe needed to sell goods to the U.S. in order to get the money to pay back its debts, and when it could not sell, it could not repay.

Germany also could not pay their World War reparations

Allies

USGermany

Teapot Dome Scandal• Albert B. Fall leased land

in Teapot Dome, Wyoming, and Elk Hills, California, to oilmen Harry F. Sinclair and Edward L. Doheny.

• Fall had received a “loan” (actually a bribe) of$100,000 from Doheny and about three times that amount from Sinclair.

A Mysterious Death • Within minutes of Warren G. Harding's

death at either 7:10, 7:20, or 7:30 p.m. on August 2, 1923, rumors began to circulate. No one present at his demise could give the correct time of death. No one seemed to be sure who was on hand in the San Francisco hotel room when he breathed his last. Most of all, the four physicians who had been caring for Harding for the previous week could not agree on the cause of death. It had something to do with his heart. On the other hand, perhaps it was a stroke. Alternatively, it could have been both, exacerbated by the ptomaine poisoning that he may or may not have experienced a few days earlier in Vancouver. Despite the confusion over the time of death, surely an autopsy would resolve the uncertainty about what killed Warren G. Harding. Except --- there was no autopsy. Mrs. Harding --- the "Duchess," as her husband called her --- would not permit it. Within an hour of his death, he was embalmed, rouged, powdered, dressed, and in his casket. By morning, he was on a train, headed back to Washington, D.C

Florence Harding

“Silent Cal” Coolidge

• New president Calvin Coolidge was serious, calm, and never spoke more than he needed to.

Coolidge’s Daily “Workout”

Silent Cal’s advice

• “Four – fifths of all our troubles in this life would disappear if we would only sit down and keep still”

• Reflected in his policies?

“…the chief business of the American people is business…The man who builds a factory builds a temple – the man who works there worships there.”

--Calvin Coolidge

Cal’s economic philosophy

• Pro-business• Keep taxes down and profits up• Give businesses more credit to expand

Kellogg Briand Pact• Frank B. Kellogg, Calvin

Coolidge’s Secretary of State, won the Nobel Peace Prize for his role in the Kellog-Briand Pact which said that all nations that signed would no longer use war as offensive means.

Frustrated Farmers

World War I had given the farmers much prosperity, as they had produced much food for the soldiers.

New technology in farming, such as the gasoline-engine tractor, had increased farm production dramatically.

Overproduction and debt a big problem for farmers.

Farmers

Farmers looked for reliefCapper-Volstead Act

• Protected co-ops from antitrust prosecution

McNary-Haugen Bill sought to keep agricultural

prices high by authorizing the government to buy upsurpluses and sell them abroad

1928 Presidential ElectionAfter five years of

“Coolidge Luck”…Silent Cal said he was done as President

Republican Herbert Hoover v. Democrat Alfred E. Smith

Hoover believed in “Rugged Individualism”

Al Smith was first Roman Catholic to Run for President and was ‘wet”

Election of 1928

• Hoover was a millionaire who was a great administrator and known for his humanitarianism and inspired great loyalty from those close to him.

• The democrats ran Al Smith perhaps most colorful politician off the 20’s

1928 Presidential Election

Hoover as PresidentThe Tariff

• The Hawley-Smoot Tariff of 1930 raised the tariff to an unbelievable 60%!

• Foreigners hated this tariff that reversed a promising worldwidetrend toward reasonable tariffs and widened the yawning trade gaps.

Wall Street’s Big Bull Market• It was a time that people believed in something for nothing.

• The stock market’s “Bull Market” encouraged people to gamble with their savings

• Much of the stock in the era was bought “on Margin” or purchased with a small down payment.

• Recovery had some weaknesses as 5% of the nation’s families received 1/3 of all the income.

• Agriculture, Coal and Textile industries all missed out on the prosperity of the 1920s

The Stock Market CrashBlack Tuesday

•October 29, 1929, a devastating stock market crash caused byover-speculation and overly high stock prices built only uponnon-existent credit struck the nation.

• Losses, even blue-chip securities, were unbelievable as by the endof 1929, stockholders had lost over $40 million in paper values (morethan the cost of World War I)!

– By the end of 1930, 4 million Americans were jobless, and two years later, that number shot up to 12 million.

– Over 5,000 banks collapsed in the first three years of the Great Depression.

– Lines formed at soup kitchens and at homeless shelters.

p741

Why the Great DepressionThe Great Depression might have

been caused by an overabundance of farm products and factory products. The nation’s capacity toproduce goods had clearly outrun its capacity to consume or pay forthem.

Also, an over-expansion of credit created unsound faith in money, which is never good for business.

Britain and France’s situations, which had never fully recovered from World War I, worsened.

In 1930, a terrible drought scorched the Mississippi Valley and thousands of farms were sold to pay for debts.

Figure 32-3 p741

Turning on HooverBy 1930, the depression was

a national crisis, and hard-working workers had nowhere to work, thus, people turned bitter and also turned on Hoover.

Villages of shanties and ragged shacks were called Hoovervilles andwere inhabited by the people who had lost their jobs. They popped upeverywhere.

p743

Hoover’s dilemma: humanitarian vs. rugged individualist

Hoover unfairly received the brunt of the blame for the GreatDepression, but he also did not pass measures that could have made thedepression less severe than it could have been.

Critics noted that he could feed millions in Belgium (after World War I) but not millions at home in America.

He did not believe in government tampering with the economicmachine and thus moving away from laissez faire, and he felt that depressions like this were simply parts of the natural economicprocess, known as the business cycle.

However, by the end of his term, he had started to take steps for the government to help the people.

Hoover Battles the Great Depression

Hoover at first helps banks, corporations to “trickle down”

Later starts large gov’t assistance programs for unemployed/poor

Hoover Battles the Great Depression

Finally, Hoover voted to withdraw $2.25 billion to start projects to alleviate the suffering of the depression.

The Hoover Dam of the Colorado River was one such project.

The Muscle Shoals Bill, which was designed to dam the TennesseeRiver and was ultimately embraced by the Tennessee Valley Authority,was vetoed by Hoover.

Hoover Battles the Great Depression

• In 1932, Congress passed the Norris-La Guardia Anti-Injection Act,which outlawed anti-union contracts and forbade the federal courts toissue injunctions to restrain strikes, boycotts, and peaceful picketing(this was good for unions).

• Remember, that in past depressions, the American public was oftenforced to “sweat it out,” not wait for government help. Thetrend was changing at this point, forced to do so by the Depression.

Routing the Bonus Army in Washington

Many veterans, whom had not been paid their compensation for WWI, marched to Washington, D.C. to demand their entire bonus.

The “Bonus Expeditionary Force” erected unsanitarycamps and shacks in vacant lots, creating health hazards and annoyance.

Riots followed after troops came in to intervene (after Congress tried to pass a bonus bill but failed), and many people died.

• Hoover falsely charged that the force was led by riffraff and reds(communists), and the American opinion turned even more against him.

p747

• Hoover’s already sinking popularity is severely damaged by the Bonus Army incident.

First Moves of World War IIIn September 1931, Japan,

alleging provocation, invaded Manchuria and shut the Open Door.

Peaceful peoples were stunned, as this was a flagrant violation ofthe League of Nations covenant, and a meeting in Geneva, Switzerland, was arranged.

An American actually attended, but instead of driving Japan out of China, the meeting drove Japan out of the League, thus weakening it further.

p748

First Moves of World War IIStimson Doctrine…US not

recognize Japan’s land takings in Asia

Since the U.S. took no effective action, the Japanese bombedShanghai in 1932, and even then, outraged Americans didn’t do much to change the Japanese minds.

Without US participation, league of Nations does little to stop or penalize Japan

Pioneering the Good Neighbor PolicyHoover was deeply interested in

relations south of the border, andduring his term, U.S. relations with Latin America and the Caribbeanimproved greatly.

Agreed to pull troops out of Haiti and Nicaragua

Since the U.S. had less money to spend, it was unable to dominateLatin America as much, and later, Franklin D. Roosevelt would buildupon these policies.

p745