The Politics of Boom & Bust

1920 - 1932

President Harding’s Ohio Gang Cabinet Members: - “The Ohio Gang”

Sec of State – Charles Evans Hughes Sec of Treasury – Andrew Mellon Sec of Commerce – Herbert Hoover Sec of Interior – Albert Fall Attorney General – Harry Daugherty

Harding as President “Old Guard” hoped to improve on the old

business doctrine of laissez-faire Gov’t should help guide business along the

path to profits Put a end to a lot of progressive

legislation Supreme Court - Taft as Chief Justice Adkins v. Children’s Hospital - reversed

Muller v. Oregon No different treatment for women in the workplace

Antitrust laws were ignored

The Aftermath of War War Industries Board disappeared Railroads returned to private

management in 1920 Esch-Cummins Transportation Act of 1920

Merchant Marine Act of 1920 – get rid of wartime fleet

Union membership declined by 30% American Legion founded

Lobbied for veterans’ benefits – Bonus Army Adjusted Compensation Act – 1924

Paid-up insurance policy

America Seeks Benefits Without Burdens

July 1921 – joint resolution officially ending the war Isolationism but concerned about oil in the Middle East

Sec Hughes eventually secured rights for US oil companies Washington Disarmament Conference – 1921-1922

Agenda – naval disarmament & situation in the Far East (Japan)

Five-Power Naval Treaty of 1922 Included ship ratios, US & Great Britain could not fortify

their Far Eastern possessions & replaced the Anglo-Japanese alliance

Nine-Power Treaty of 1922 Open Door in China was extended

Kellogg-Briand Pact 1927 - Aristide Briand (France)

proposed a treaty with the US to outlaw war

Frank Kellogg (US) invited other nations to join

Paris – Aug 1928 – almost all major nations signed the treaty Outlawed aggression, not self-defense, &

had no enforcement provision

Hiking the Tariff Higher

Mellon sought substantial increases in protective tariffs

Fordney–McCumber Tariff Law – 1922 Increased tariff to 38.5% Duties on farm produce were increased President could raise or lower rates to a limit of

50% on recommendation of the Tariff Commission

Harding & Coolidge favored increased tariffs Hurt not only America but also European

countries as well

Scandal 1923 – Charles Forbes – Head of the

Veterans’ Bureau Caught stealing money - $200 million//

Sentenced to 2 years 1921 - Teapot Dome Scandal

Albert Fall - Sec of Navy transferred valuable properties to the Interior Dept (with Harding’s approval)

Teapot Dome, Wyoming & Elk Hills, CA Fall leased the lands to oilmen Harry Sinclair &

Edward Dohney after receiving a bribe Fall was found guilty of accepting a bribe & sentenced

to one year

Scandal Conti. 1924 - Attorney General Daughtery

Investigated for illegal sale of pardons & liquor permits

Forced to resign & later released after 2 juries failed to agree

Harding went on a speechmaking tour across the country including Alaska Aug 2, 1923 – died in CA Coolidge takes office

Calvin Coolidge “Silent Cal”

Honest Supported the status quo “the man who builds a factory builds a

temple” “the man who works there worships there”

Frustrated Farmers Farmers were being hurt by

overproduction Coolidge twice refused to sign legislation

which proposed to subsidize farm prices Capper-Volstead Act – exempted farmers’

from antitrust legislation McNary-Haugen Bill – 1924 – 1928

Goal was to keep farm prices high by authorizing the gov’t to buy up surpluses & sell them abroad – farmers would pay a special tax

Election of 1924 Republican – Calvin Coolidge Democrat – John W. Davis Progressive – “Fighting Bob” La Follette

Platform gov’t ownership of the railroads Relief for farmers Anti-monopoly & anti-labor injunctions Limit Supreme Court’s power to invalidate laws of

Congress **** Coolidge Wins

Coolidge’s Foreign Policy Isolationism

Pursued further disarmament Armed intervention in the Caribbean

& Central America US troops removed from Dominican Republic

(1924) US troops remained in Haiti 1914 – 1934 Removed troops from Nicaragua (1909) but

sent them back in 1926 – 1933 Mexico (1926) – oil dispute

International Debt US Treasury had loaned the Allies $10

billion US demanded repayment

Allies planned to pay off debt by reparations received from Germany Germany could not pay Allies wanted the debt to be forgiven US refused

Dawes Plan of 1924 Rescheduled German reparations

payments & opened the way for further American private loans to Germany US bankers loaned Germany money Germany paid Great Britain & France

reparations Great Britain & France paid US Treasury for

war debts

The Triumph of Hoover1928

Coolidge decided not to seek reelection Republican – Herbert Hoover

Never held an office before Democrat – Alfred E. Smith

“wet” Roman Catholic

Radio – helped Hoover more than Smith Hoover was the 1st Republican to win any

Southern states

President Hoover

Stocks continued to soar Left out of the boom:

Unorganized wage earners & disorganized farmers Agricultural Marketing Act – 1929

Designed to help farmers help themselves through cooperatives

Set up a Federal Farm Board Lent money to farm organizations seeking

to buy, sell, or store surpluses Created the Grain Stabilization Corporation

& the Cotton Stabilization Corporation Goal was to buy up surpluses to increase prices

Hawley – Smoot Tariff of 1930

Increased the tariff from 38.5% to 60% Highest protective tariff in peacetime

history Infuriated European countries Plunged US & other nations deeper into

depression

The Great Crash

Hoover tried to curb speculation through the Federal Reserve Board Unsuccessful

October 1929 – Stock Market Crash Partially triggered by British who raised their

interest rates to bring back capital lured by American investments

“Black Tuesday” Oct 29, 1929 Millions of shares of stock were sold By the end of 1929, stockholders had lost $40

billion

Beginning of the Great Depression

Depression hit at home & abroad Bread lines formed, soup kitchens dispensed

food, & apple peddlers tried to make ends meet 1930 – more than 4 million US workers were

unemployed 2 years later, the number had tripled Workers who did not lose their jobs took

dramatic pay cuts Over 5000 banks collapsed in the 1st 3 years

Life savings of tens of thousands went with them Birth rate declined

Causes of the Great Depression

Overproduction by farm & factory Unbalanced Economy

Too much money was going into the hands of a few people

Credit Crisis Installment buying overstimulated production

International Depression Hastened by Hawley-Smoot Tariff of 1930

Hoover & the Depression “Hoovervilles” & “Hoover blankets” Tried to encouraged the public Encouraged local gov’ts to help their

citizens Assisted railroads, banks, & rural credit

corporations “Trickle Down Theory” Opposed direct help to the people

Pioneer of the New Deal

Public works – Congress approved $2.25 billion Hoover Dam

Opposed all schemes he deemed “socialistic” Muscle Shoals Bill – opposed by Hoover 1932 – Reconstruction Finance Corporation (RFC)

Became a gov’t lending bank to business & gov’t

1932 – Norris-La Guardia Act Outlawed antiunion contracts & legalized peaceful

strikes, boycotts, & picketing

The Bonus Army Veterans were demanding their pay now The “Bonus Expeditionary Force” went to

Washington in the Summer of 1932 Set up “Hoovervilles”

Federal troops were used to put down the protest Under Gen. Douglas MacArthur Authorized brutal force

Caused severe damage to Hoover’s public image

Japan Attacks China Sept 1931 – Japan invaded Manchuria. Why?

Stopped foreign trade with conquered area Violation of the League of Nations covenant

Geneva Meeting – League of Nations US sat unofficially on the council Nothing was accomplished Japan left the League

1932 – Stimson Doctrine US would not recognize any territorial acquisitions that

were achieved by force Japan also bombed Shanghai

Informal boycotts were launched in the US