The Politics of Boom and Bust

1. The Politics of Boom and Bust

2. Introduction • Three republican presidents Harding, Coolidge, and Hoover steered the nation on a roller coaster ride in the 1920’s. After WWI there was amazing prosperity, and then it was followed by a terrifying crash into the Great Depression. These republicans decided that instead of direct government help that they would with cooperation through big businesses. • During this time, the United States will retreat and resume its traditional foreign policy of military unpreparedness and political isolationism.

3. Harding at this time was now the president. He looked presidential with broad shoulders, graying hair, high forehead, bushy eyebrows, and tall figure. Yet the charming and smiling exterior, it concealed a mediocre mind, and Harding was finding himself in over his head. Harding hated to hurt people’s feelings, especially those who were his friends, and then they would capitalize on his weaknesses. Washington couldn’t tell a lie; Harding couldn’t tell who was lying. The Republican Old Guard Returns

4. Harding with his weaknesses would choose a cabinet with the best minds. But the best minds of the cabinet were largely offset by two of the worst: Senator Albert Fall of New Mexico and Harry M. Daugherty who was the attorney general and the biggest crook in the Ohio Gang. The Republican Old guard Returns

5. The Aftermath of war • This legion also was aggressive in getting veterans benefits. They wanted their dough. The former service men wanted the compensation to make up for their wages that they had lost when they turned in their factory overalls for military uniforms during the Great War. • Congress quickly passed the Bonus Bill in 1922. Harding promptly vetoed. In 1924 these veterans reformed their lines, and finally Congress passed the Adjusted Compensation Act and it gave every solider a paid up insurance policy due in 20 years. Coolidge vetoed this bill and Congress overrode him leaving the veterans with their loot.

6. Hiking the Tariff Higher • In the 1920’s a lack of realism affected businesspeople who were obsessed with the dazzling prospects in the home market. They sought to keep that market to themselves by flinging up a higher tariff. They were spurred into action by their fear of cheap goods from recovering Europe, especially during the brief but sharp recession. • In 1922 congress passed the Fordney-McCumber Tariff Law. Lobbyists once more descended upon Washington and helped boost the average from 27 to 38.5 percent, which was almost as high as Taft’s Payne-Aldrich Tariff of 1909.

7. Hiking the Higher Tariff • Presidents Harding and Coolidge true to their big industry sympathies were far friendlier to tariff increases than to reductions. In the six years they had up to 32 upward changes. During the same period, the White House ordered only 5 reductions, these included mill feed and such items as quail, paintbrush handles, phenol, and cresylic acid. • Putting up these tariff walls was a game, and artificial obstacles were bad, they hurt not only American made goods but the products of European countries as well. The whole vicious circle further deepened the international economic distress.

8. The Stench of Scandal • In 1923, a gullible Harding and his accomplices looted the government to the tune of about 200 million, in connection with the building of veteran’s hospitals. He was sentenced to two years in a federal penitentiary. • The Teapot Dome Scandal was an affair that involved priceless naval oil reserves in Wyoming and California. IN 1921, the secretary of interior Albert Falls induced a careless colleague, and the secretary of navy transferred valuable properties to the Interior Department. • Harding signed the secret order and Fall leased the lands to oil men Harry Sinclair and Edward Doheny but not until he received a bribe of 100,000 from Doheny and about 3 times that amount in all from Sinclair.

9. The Stench of Scandal • In March of 1923 the scandal began to slowly come out, two years after Harding became president. Fall, Sinclair, and Doheny were indicted the next year, but the case dragged on for years in 1929. • Fall was found guilty of taking a bribe and was sentenced to one year in jail. The two bribe givers were acquitted and Sinclair served several months and for refusing to testify before a Senate committee. • The Teapot Dome Scandal polluted Washington’s government. The acquittal of Sinclair and Doheny undermined the faith in the courts. Still more scandals were coming: as Attorney General Daugherty prompted a Senate investigation in 1924 of the illegal sale of pardons and liquor permits.

10. The Stench of Scandal • Harding mercifully spared the full revelation of these inequities, and when he went on a speechmaking tour most of these scandals were beginning to break. On his way back he died in San Francisco of pneumonia and thrombosis. His death may have been hastened by a broken heart because of people being disloyal to him. • The brutal fact was that Harding was not a strong enough man to be president, which he admitted. With this fact Harding’s weakness was that he tolerated people and conditions and to its worst disgrace since the days of President Grant.

11. Silent Cal Coolidge • With Harding’s death Vice President Coolidge, was visiting his father in New England and his father administered the oath to his son. • Coolidge was unlike Harding, he believed in honesty, morality, industry, and frugality. Silent Cal which he came to be known for his brilliant flashes of silence was painfully shy, and was only blessed with mediocre powers of leadership. Many of his speeches were delivered in a New England twang and were boring. • Coolidge with his hands off temperament suited the times perfectly. His thrifty nature helped him along with Secretary of Treasury’s Mellon’s efforts to reduce taxes and debts.

12. Frustrated Farmers • Farmers were in the boom and bust cycle of the post war era, and while they were raking in money the wheat prices had shot up to 3 dollars a bushel. As a stream of world commerce came, what also came was governments end to raise the prices and to massive purchases by other nations. • Machines threatened to plow the farmers under an avalanche of their own overabundant crops. The tractor was working on American farms. The result was bigger and better crops on larger areas, using fewer horses and hired hands. A withering depression swept through agricultural districts in the 1920’s, when one farm in four was sold for debt or taxes. • The McNairy-Haugen Bill helped push to keep agricultural prices high by authorizing the government to buy up surpluses and sell them abroad. Congress twice passed the bill, but frugal Coolidge twice vetoed it. Farm prices stayed down and political leaders which raised and reached a pitch in 1924.

13. A Three-Way Race for the White House in 1924 • Republicans nominated Silent Cal for the presidency at their convention in Cleveland in 1924. Davis and La Follett were among the other candidates for president. Coolidge won with a majority electoral vote of 382 votes.

14. Unraveling the Debt Knot • America’s tightfisted insistence on getting its money back helped to harden the hearts of the Allies against conquered Germany. At the end of WWI, Britain and France demanded that Germany pay back some 32 billion dollars for war inflicted damages. • Reality finally dawned in the Dawes Plan; it rescheduled German’s reparations payments and opened the way for further American private loans to Germany. The financial cycle was that Germany would pay Germany and France, and the Allies paid war debts to the United States. In 1929, the jungle of international finance quickly turned into a desert. • President Hoover declared on year debt moratorium in 1931, and before too long all the debtors defaulted except Finland, which struggled along until the last of its debt was paid in 1976.

15. The Triumph of Herbert Hoover, 1928 • Coolidge bowed out in 1928 and chooses not to run and Hoover was his successor. He was nominated on a platform that clucked contentedly over both prosperity and prohibition. • Hoover was an American success story. He was an orphan boy who had worked his way through Stanford University. He was a successful mining engineer and a brilliant businessman who had honed in on a high degree on the doctrines of the progressive era. • In the election of 1928 Hoover was triumphed in a landslide. He had 444 electoral votes over the 87 votes of his opponent Smith.

16. President Hoover’s First Moves • In the late 1920’s there were soaring stocks and financial gravitation. Hoover’s administration was in line with a self-help promotion outcry of the wounded farmers with legislative aspirin. • The Agricultural Marketing Act was designed to help the farmers help themselves largely through producers. Money was lent generously to farm organizations seeking to buy, sell, and store agricultural surpluses. • Farmers had meanwhile clutched at the tariff as a possible straw to help keep their heads above the waters of financial ruin. Hoover had promised to call Congress into special session to consider agricultural relief and to bring limited changes in the tariff.

17. President Hoover’s First Moves • The Hawley-Smoot Tariff of 1930 followed well-worn pattern of Washington horse trading. This tariff was now on the average of 38.5 percent, as established in 1922, to nearly 60 percent. • This was economic warfare on the entire outside world. This plunged America and other nations deeper into the terrible depression that had already begun. It increased financial chaos and forced America into isolationism and home and abroad.

18. The Great Crash Ends the Golden Twenties • America’s colossus was near a bursting point. Prices on the stock exchange continued to spiral upward and create a fools’ paradise. Hoover tried to cure over-speculation through the Federal Reserve Board. • A crash came in October 1929. It was triggered by the British who raised their interest rates in an effort to bring back capital abroad by American investments. Tensions rose and built up on Black Tuesday of October 29 1929, when 16,410,030 shares of stock were sold in a save who may scramble. Wall Street became a place of doom, and by the end of two months the stockholders lost 40 billion in paper values. This was more than the total cost of WWI to the United States. • By the end of 1930, more than 4 million workers in the United States were jobless; two years later the figure had about tripled. Hungry workers were searching for jobs by pounding the pavements.

19. Hooked on the horn of Plenty • The cause of the Great Depression was one basic explanation is overproduction by both farm and factory. This means that the nation’s ability to produce goods had outrun its capacity to consume or pay for them. • By the 1930s, the depression had become a national nightmare. Through no fault of their own, citizens had lost everything. They wanted to work but there was no work. Americans uniqueness no longer seemed so unique or its Manifest Destiny so manifest, and the depression was baffling that they could not grasp.

20. Rugged Times for Rugged Individuals • As the depression nightmare worsened, relief by local government agencies broke down. Hoover was finally forced to turn from individualism and accept that this was a nationwide concern. • At last Hoover would begin to assist the railroads, banks, and credit corporations. Many people remarked that the president gave the bankers money while they were the ones that got them into this mess in the first place. Hoover proved that boot-straps would no longer work in a crisis especially when people lacked boots. • Early in 1932 congress established the Reconstruction Finance Corporation which was designed to provide indirect relief by assisting insurance companies, banks, agricultural organizations, railroads, and even state and local governments. But there would be no individual loans from the government.

21. Rugged Times for Rugged Individuals • The truth is that Hoover despite of his heartlessness, and Hoover was to abandon this 19th century, and by the end of his term he had started down the road toward government assistance for needy citizens and it’s going to be something that Roosevelt will push even further.

22. Routing the Bonus Army in Washington • War veterans were the hardest hit with the depression. Their bonus that was in the Hawley Smoot Tariff and the need was for that even more now than ever. A drive developed and thousands of veterans were now prepared to move on Washington. These veterans created 20 thousand souls converged in 1932. • After the pending bonus bill had failed in Congress by a narrow margin. Following riots, Hoover responded by ordering an army to escort the unwanted guests. Hoover charged that the Hoover Army were riffraff and reds, and were led by General Douglas MacArthur with bayonets and tear gas. Soldiers were injured, and an eleventh month old bonus baby died from exposure to the tear gas.

23. Hoover Pioneers the Good Neighbor Policy • In 1928, Hoover undertook a goodwill tour of Latin America. Hoover strove to abandon the interventionists twist given to the Monroe Doctrine by TR. Hoover engineered in politics, thus happily engineered the foundation stones of the Good Neighbor policy. Upon them rose an imposing edifice in the days of his successor, Franklin Roosevelt.