Ch. 32: Politics of Boom and Bust

1. Ch. 32: Politics of Boom and Bust Mr. Long AP US History

2. Presidents of the 1920s • Warren Harding (1920-1923, died of pneumonia) • Calvin Coolidge (1923-1929) • Herbert Hoover (1929-1933)

3. Warren Harding • Looked the part but not a great leader. • Sought to surround himself with “the best minds” as his administrators. • Charles Hughes (Sec of State) • Andrew Mellon (Sec of Treasury) • Herbert Hoover (Sec of Commerce) • There were some duds in his Administration. • Albert Fall (Teapot Dome Scandal)

4. The Aftermath of War • With the War over, the government stepped back and away from business intervention. • EX: RR went back to private ownership • Gov got out of shipping (Merchant Marine Act 1920) • Who will suffer from the governments pro-business policies? • Labor = strikes • Group that benefited from the Harding’s Administration were the VETERNS • Sought lost wages from war • Adjusted Compensation Act (Congress passed during Coolidge)

5. America Seeks Benefits W/O Burdens • “Unofficial observers” were sent to League of Nations to keep an eye on things. • Lack of US participation doomed L of N. • Harding saw need for oil • Harding secured oil rights in Middle East • Disarmament Conference 1921-22 • Japan and Britain were in a ship-building race • Charles Hughes suggests ratio of ships at 5:5:3 (US: Britain: Japan) • RESULSTS IN SEVERAL TREATIES

6. America Seeks Benefits W/O Burdens • Disarmament Treaties: • Five-Power Treaty: set up 5:5:3:1.7:1.7 ratio and gave Japan a bonus to save face • US, Britain, Japan, France, and Italy • Four-Power Treaty: required Britain, Japan, France and the US to keep status quo in Pacific • Nine-Power Treaty: Kept open the Open Door Policy with China (Free trade for all) • Problems: 1. no limit on small ships 2. US agreed to Four-Power treaty but not bound to it.

7. America Seeks Benefits W/O Burdens • “War to End All Wars” = international trend to end all warfare • 1928 Kellogg-Briand Pact: • Outlawed War • 62 Nations signed this treaty • Under Administration of Calvin Coolidge (Frank Kellogg) • While a “beautiful idea” it was very unrealistic! • No provision for enforcement, nor provision for defensive war

8. Tariff Issues • Businesses wanted a higher tariff to protect themselves from foreign trade • Fordney-McCumber Tariff: increased tariff from 27% to 38.5% • Harding/Coolidge had the okay to raise it up to 50% • PROBLEM: Europe needed to export to pay war debts back to US. High tariff = no payments

9. The Stench of Scandal • Harding’s gullibility and trust led to many scandals amongst his administration. (Not himself) • Teapot Dome Scandal 1923: • Sec. of Interior Albert Fall managed natural resources. • Oil was discovered in “Teapot Dome” Wyoming • Fall accepted bribes for oil drilling rights from Edward Doheny and Harry Sinclair (total $400,000) • Harry Daugherty: • -possibly sold pardons and liquor permits (during prohibition) • Scandal led the public to not trust the courts or government • Scandals cost a lot and sentences were weak!

10. Teapot Dome Scandal

11. “Silent Cal” Coolidge • President Harding died on Aug 3, 1923 and Calvin Coolidge replaces him as president • Very traditional • Serious, calm, moral, boring and didn’t speak much. • Pro-business (more) • “the man who builds a factory builds a temple, the man who works there, worships there”

12. Frustrated Farmers • During WWI farmers enjoyed a BOOM! • A lot of food is needed and prices were high! • After WWI new technologies (tractor) made work easier and Increased production. • Increased production with same demand = decrease prices • FAMRERS FALL ONTO HARD TIMES!

13. Frustrated Farmers • Farmers turn to Congress for help… • Capper-Vostead Act: exempted farmers cooperatives from antitrust laws. • McNary-Haugen Bill: tried to keep the price of agricultural goods high. NEVER PASSED: Coolidge to conservative/thrifty • Government would buy excess surplus and selling to other nations.

14. Foreign Policy Flounderings • Isolationalism is the rule of thumb during the 1920s • US still would not join the League of Nations (World Court) • US was involved in Latin America • European debt was a touchy issue but they couldn’t pay anyway.

16. Unraveling the Debt Knot • Britain and France owe large amounts of war debt to the US after WWI • Can’t pay it back • Germany printed more money to pay debts which caused enormous inflation. • Coolidge wouldn’t forgive the debt even though France and Britain demanded it. • Dawes Plan: • America would loan money to Germany • Germany would make payments to Britain and France • Britain and France would repay loans • This is a big circle but at least on paper the debts are being paid

17. Triumph of Herbert Hoover • Herbert Hoover won in a landslide in the election of 1928. • “Rugged Individualism”: • View that America was made great by strong, self-sufficient individuals, like the pioneers of old days who relied on no one else but themselves. He said America still needs these types of individuals.

18. President Hoover’s First Moves • America is still prosperous at the beginning of Hoover’s election. • He promoted the strengthen of agriculture with the Agricultural Marketing Act • Federal Farm Board: • Lent money to farmers in need • Stabilized the price of grain (Surplus purchasing to keep price high)

19. President Hoover’s First Moves • Hawley-Smoot Tariff • Increased tariff to 60% • This is like economic warfare to other nations • Negative Effects: • Went against a trend toward lower tariffs in the world • It slowed trade and deepened depression when it hit • Helped move the US to full-fledged isolationism = Hitler’s rise to power

20. Great Crash Ends the Golden Twenties • US grew “drunk” on prosperity and didn’t think it would come to an end • Causes of the Great Depression: • Stock Market Crash (TRIGGER) • “Black Tuesday”: October 29, 1929 • 25% decrease in three days ($30 Billion) • $40 Billion loss by end of 1929 • Banks Failures • Over production • Economic relations with Europe • Hawley-Smoot Tariff • Drought

21. Results of Stock Market Crash • Results: • Businesses went out of business • People couldn’t/wouldn’t buy • Unemployment shot up • 5,000 banks went bankrupt • People took money out in fear of bankruptcy/to invest in commodities (gold) • Only thing growing were soup kitchens and shelters

22. Rugged Times for Rugged Individualists • Hoover took the blame like all presidents during hard times. • Problem: He’s belief in rugged individualism made him slow to take any government action (Handouts) • Solution: Just wait it out • He believed this was just part of the “business cycle”: ups and downs of an economy • Hoover did eventually go against his nature and get the government to take some action

23. Hoover Battles the Great Depression • President Hoover got Congress to dole out $2.25 Billion to jumpstart the economy. • EX: Hoover Dam: started in 1930 and finished in 1936 • Reconstruction Finance Corporation (RFC): Hoover’s most far-reaching effort to help the nation (financial) • Lent money to finance the massive government projects of FDR’s “New Deal”

24. Effect of Hoover • Despite his slogan of “rugged individualism”, belief in the business cycle and laissez-faire economics, and something of a reputation for not caring about people, Hoover did get the government involved in fighting the Great Depression. Just later rather then sooner.

25. Routing the Bonus Army in Washington • Bonus Expeditionary Force 1932 • 20,000 WWI veterans who marched on Washington D.C. • Objective: Demand their promised bonus be paid as WWI Veterans • Result: President Hoover used force to disband the army. • Gen. George MacArthur • “Battle of Anacostia Flats” • Used bayonets, tear gas and fire to move the BEF out • This hurt Hoover’s image even more