THE POLITICS OF BOOM AND BUST Chapter 33

Republican “Old Guard” Returns ■ ■ Warren Harding was one of the best-liked men of his generation. Elected President by promising to return the nation to "normalcy, ” and opposing the idealism of his predecessor Woodrow Wilson. He captured 60% of American's votes and won by a landslide. But, weak, inept and only a mediocre mind. Harding surrounded by scoundrels. ➢ Warren Harding’s campaign manager and Attorney General, Harry Daugherty preferred dispensing patronage to practicing law. Daugherty's "Ohio Gang, " the circle of hard-drinking old friends he rewarded with federal jobs, ➢ History channel video on Harding

GOP Reaction At The Throttle ■ ■ ■ Harding = Laissez Faire Progressivism was floundering Goal was Laissez-faire plus; help guide business toward profits. Harding put many like-minded people into administration and the courts. In Harding’s three years as President, he appoints four Supreme Court justices ➢ ➢ Including Taft as Chief Justice Impacts FDR later

Rolling Back Progressivism ■ In 1920 s the Supreme Court supported business. ➢ ➢ ➢ ■ minimum wage law. federal Child Labor law, Adkins v. Children’s Hospital overturned federal minimum wage legislation for women was an unconstitution Progressive legislation regulating business was ignored and unenforced.

The Aftermath Of War ■ After war, Government got out of the governmental control of business Merchant Marine Act of 1920 United States federal statute that regulates maritime commerce in U. S. waters and between U. S. ports. ➢ Section 27, known as the Jones Act, requires that all goods transported by water between U. S. ports be carried in U. S. -flag ships ➢ ■ Labor saw major setbacks. A violent steel strike crushed in 1919 Membership in unions declined by nearly 30% between 1920 and 1930. ➢ Strikes were ruthlessly crushed. ➢ ➢ p 755

Veterans ■ ■ Veterans were one of the few groups to achieve lasting gains through the war. 1921 Veterans Bureau American Legion. ➢ Principal proponent of the legislation on behalf of World War I veterans Adjusted Compensation Act ➢ Bonus bill in 1922. created a benefit plan for World War I veterans as additional compensation for their military service. It credited servicemembers with "adjusted service certificates" equal to $1. 00 per day served in the United States and $1. 25 per day served overseas, up to specified limits. Harding vetoes. ➢ 1924, Congress repasses the bill. . ■ Cost 3. 5 billion. ➢ Coolidge vetoes, but Congress over-rides.

Benefits Without Burdens ■ ■ Harding was intent on isolationism, but U. S. couldn’t be completely isolationist. US still technically at war with Axis ➢ ■ Republicans continued to despise the League of Nations ➢ ■ ■ ■ 1921 Congress passed a joint resolution that declared the war officially ended. Eventually forced to send unofficial observers Mid-East: UK and America were competing for oil-drilling rights of oil-rich Arab nations Business wants disarmament. Draw down of the navy resisted

Five-Power Naval Treaty ■ ■ ■ Washington “Disarmament” Conference in 1921 -22. Two main issues: Naval disarmament and the situation in the Far East. Becomes the Five-Power naval Treaty of 1922: US England Japan agree to ratio of 5: 5: 3 Brits and Americans agreed not to fortify their Far East possessions, including the Philippines. Japan has no such restrictions. ➢ Anglo-Japanese alliance replaced by the Four-Power Treaty. Brit, Japan, France and US agree to preserve the status quo in Pacific. ➢ China boosted by Nine-Power Treaty of 1922 which guarantees a full open-door policy in China. ➢ It is studied by political scientists as a model for a successful disarmament movement. ➢ ➢

Limits Imposed by Washington Conference, 1921– 1922

Kellogg-Briand Pact (1928) ■ ■ ■ Idealistic Americans urged nations to foreswear war as an instrument of national policy. US Sec. of State Kellogg reluctantly supports after nearly 2 Million US signatures Signed by 62 nations pledging not to use war as an instrument of national policy. Americans believed that this would prevent war. Treaty must not infringe upon America's right of self defense and that the United States was not obliged to enforce the treaty by taking action against those who violated it. Dark green - original signatories Light grees - later adherents Light Blue territories of parties Dark blue - League of Nations mandates of parties

Hiking The Tariff Higher ■ ■ ■ Isolationism reflected in economic policy. Business wanted to keep American markets for American business. Fordney-Mc. Cumber Tariff Law. 1922 Hiked tariff from 27 percent to 35%. President given the power to raise or lower tariffs by 50%. Mostly used to adjust rates higher. (32 up, 5 down) Tariffs hurt European countries trying to recover from the war and pay war debts. Leads to international tariff war and to feeling of economic oppression in countries such as Germany.

The Stench Of Scandal ■ ■ Harding Administration was beset with scandals. Charles Forbes, Attorney General Daugherty Teapot Dome

Harding Dies ■ ■ ■ Harding dies in August, 1923, before the full scope of these scandals has come to light. His administration is the most scandalridden since Grant. Coolidge President.

Calvin Coolidge ■ ■ ■ Coolidge embodies Yankee Puritanism. Is not a dynamic leader. His policies compared to Harding? His five years are relatively uneventful and isn’t forced to grapple with any serious crisis. Coolidge helps to save the Republican Party. How?

Frustrated Farmers ■ ■ ■ Farmers hit hard after the war. Prices plummet. - no government demand In 1920 s one-in-four farms goes bankrupt. Great depression starts in farm economy long before it hits the rest of the economy. Capper-Volstead Act. Authorized agricultural producers to form voluntary co-operative associations for purposes of producing, handling and marketing farm products - that is, it exempted from antitrust laws. Mc. Nary-Haugen Bill. controversial plan in the 1920 s to subsidize American agriculture by raising the domestic prices of farm products Charles L. Mc. Nary and Rep. w: Gilbert N. Haugen, half➢ Coolidge twice vetoes this measure. Political ire of length portrait, standing at the farmers stays high as a result. ➢ w: White House, shaking hands

Election of 1924 ■ ■ Rep. nominate Coolidge to be elected in his own right, and he campaigns on the basis of the status quo. Democrats are hopelessly divided ➢ Nominate John W. Davis, a wealthy corporation lawyer who didn’t excite anyone. 102 ballots ■ ■ La Follette runs as third-party Progressive candidate. Coolidge wins nearly 2 -1 over Davis.

The Debt Problem ■ ■ ■ Biggest foreign policy issue in second Coolidge term was foreign debt owed US. America had gone from a debtor nation before the war to a creditor nation after the war. The dollar was beginning to supplant the Pound Sterling. America had loaned $10 Bill. to Allies during and after the War, and American investors had loaned an equal amount to Europe in the 1920 s. US wants this money back, but Allies are having a hard time repaying.

Europe asks for a Break ■ ■ Allies argue that US should write off as war expense. Their argument? ➢ Allies had sacrificed millions of lives while sat on the sidelines. Allies can’t get repaid for lost lives and manpower. ➢ US tariffs making it very hard to earn the money necessary to repay the debt. ➢ Money Allies had borrowed had been spent in US, helping to refuel the US economy.

Unraveling The Debt Knot ■ ■ ■ American government intransigent on debt. Ruhr occupation and the hyperinflation crisis Many urged that debts and reparations be drastically scaled down or canceled. Coolidge response, “they hired the money didn’t they? ” Contribution to isolationism. 1924. Dawes plan. ➢ Why is it fatally flawed.

Election of 1928 ■ ■ ■ Coolidge decides not to run. Herbert Hoover platform. Democrats, still quite divided, nominate liberal New York Governor Al Smith. Seemingly and odd choice. Why? Many dry, rural, fundamentalist democrats choked on his candidacy.

Hoover ■ ■ ■ Hoover is American success story. Against foreign entanglements. Believed in isolationism. Had never run for or held office before. He was used to the business model. ➢ ■ President Herbert Hoover poses with his dog, King Tut. ■ Uncomfortable asking for votes. Shy and standoffish personally. Integrity and personal honor; great humanitarian administering US foreign aid. Very efficient and very bright.

Hoover Landslide ■ ■ ■ Hoover runs as a business candidate. Did have some progressive instinct. Hoover and Smith try to keep the campaign clean, but minions take it into the sewer. “Rum, Romanism and Ruin. ” Hoover wins in a landslide, and Smith can’t even hold all of the solid democratic South. Also a very solid Republican majority in Congress.

Presidential Election of 1928

President Hoover’s First Moves ■ ■ ■ Why? Economy was roaring, but Farmers and non-union wage earners were not getting their share of the prosperity: . Hoover did not believe in direct aid. Wanted private sector response. Agricultural Marketing Act. Sets up Federal Farm Board. Farmers then turn to the tariff to cure their ills. Leads to the Hawley-Smoot Tariff of 1930. Probably one of the worst pieces of legislation in US history. ➢ Biggest tariff in US peacetime history. ➢ Raised tariff from 38. 5 to nearly 60%. ➢ Foreign nations outraged. ➢ Seemed to be a declaration of economic warfare. ➢ Helped push the world toward depression. Played into the hands of rising Nazism in Germany.

Stock Market Crash ■ Economy was near the bursting point. ➢ Prices on the stock market were vastly over-valued. ➢ Many had bought on the margin. Problem with this. ■ Black Tuesday. October 29, 1929. ➢ Causes ➢ In two months, investors lost 40 Bill, in paper value. More than total cost of WWI.

Great Depression ■ ■ ■ Opening bell of the worst and longest depression in US and World history. By the end of 1930, more than 4 Million unemployed. By 1932, 12 Mill. Wages and hours slashed. People weren’t buying, so factories weren’t producing, so there were no jobs. Many lost their life’s savings in the Market. Was a huge hit to the America Psyche. ➢ ➢ Where was Manifest Destiny? Where was the American Dream?

Causes of the Great Depression ■ ■ ■ ■ Over-production of both farm and factory. Too little being paid in wages. Over-expansion of credit through installment buying helped over-stimulate production and over-extend the buying power of consumers. Technology pushed people out of jobs. Economic anemia overseas caused by the debt burden (and Hawley-Smoot). Dried up purchasing from Europe. Terrible drought in the Mississippi Valley caused a number of farm foreclosures, putting farmers out of business. Antiquated economic theory Lack of deposit insurance

Documentary Film Video The Great Depression Part 1. flv The Crash of 1929 - American Experience PBS Video_2. flv http: //www. pbs. org/wgbh/americanexperien ce/films/crash/

Rugged Times For Rugged Individualists ■ ■ ■ Called business leaders to Washington to pressure them into keeping wages high Hoover trapped by traditional economic theory Had great sympathy for those suffering. Wedded to the idea of Laissez faire, saw governmental handout as sacrilege. Feared governmental handouts? Hoover believed that recovery was just around the corner.

Hoover Props Up Business ■ ■ ■ As the depression drags on private relief organizations run out of money. He gave much of his money to charity and encouraged Americans to do the same Hoover agrees to provide aid to RR, banks and credit corps.

Herbert Hoover: Pioneer Of The New Deal ■ ■ Hoover eventually recommends that Congress vote 2. 25 Bill. for useful public works. Reconstruction Finance Corporation – RFC (continued by FDR) which created an agency to help banks, railroads, and other key businesses to stay in business thus helping the economy. Compared to his predecessors Hoover did a great deal. Insisted on a balanced budget Republican Congress was often very hostile to Hoover’s plans.

The Bonus Army In Washington ■ ■ ■ Vets of WWI were hard hit. Bonus Expeditionary Force. Congress, riots ensue and two are killed. Hoover orders the army to force the marchers to leave. Gen. Douglas Mac. Arthur. Battle of Anacostia Flats. Brings down more abuse on Hoover.

Review

Students on Their Own ■ ■ JAPANESE MILITARISTS ATTACK CHINA HOOVER PIONEERS THE GOOD NEIGHBOR POLICY