The Politics of Boom and Bust 1920-1932

1. The Politics of Boom and Bust 1920-1932 Students will understand the how the Republicans during 1920’s began shifting towards being the conservative party and the causes of the Great Depression.

2. Warren G. Harding took office in 1921 • He was over his head, wrong man for the job, far too trusting • “Ohio Gang” took advantage of him and corruption ran wild • Men like Mellon, Charles Evans Hughes, Herbert Hoover were the good side to his administration • The bad were Albert B. Fall New Mexico—Secretary of Interior, Harry W. Daugherty Ohio—Attorney General The Republican “Old Guard” Returns

3. Very conservative order replaced the progressive changes • Change from Republican laissez-faire to government helping big business • Done through putting the courts and administrative bureaus in the hands of Republicans (Harding put in 4 of 9 justices on SC) • Supreme Court killed many progressive bills • Adkins v. Children’s Hospital • Women no longer have protective status • Overturned Muller v. Oregon • Business relaxed again • Antitrust laws were ignored • Interstate Commerce Commission was dominated by business lovers • Big business set up trade associations to fix prices and reduce competition • Encourage by Hoover, wanted business to regulate itself GOP Reaction at the Throttle

4. US had to sign their own treaty with the Central Powers (technically still at war) • July 1921 Congress declared the war over • Harding’s administration was very isolationist but he sent representatives to the League to observe but not participate • Secretary Hughes got American oil companies the right to exploit the Middle East’s oil reserves America Seeks Benefits Without Burdens

5. Naval disarmaments and the problems in the Far East • Ten year holiday on ship building and a 5:5:3 ratio between US, Britain, and Japan • US and Britain had to agree not to fortify their possessions in the East to get Japan to agree • Four Power Treaty • Britain, US, France, and Japan agreed to maintain the status quo in the Pacific • Nine Power Treaty • Agreed to the Open Door Policy in China • Why it failed • No restrictions on small warships which the other powers made in large numbers • Congress put a reservation on the Four Power Treaty that declared US would not automatically declare war • Defensive war was still allowed • Pushed America into an even farther sense of Ostrichism Disarmament Conference 1921-22

6. Raised the tariff to protect American manufacturing from a flood of cheap European goods and to keep America’s success to herself • Fordney-McCumber Tariff Law • Raised the rates from 27% to 38.5% • Increased the tariffs on farm produce • Gave the president powers to raise or lower by 50% • Europe was hit by America’s tariffs and it took longer for them to rebound after the war • Europe needed to sell its goods to the US in order to pay for its debt to the US, were caught in a Catch 22 • Europe also couldn’t buy from US unless the US bought theirs • Europe in turn raised its tariffs and hurt American goods and European • Helped push Hitler to power and pushed towards depression Hiking the Tariff Higher

7. Veterans Bureau was robbed by Colonel Charles R. Forbes—the head of the Veterans Bureau • Forbes and his accomplices took over 200$ million • Teapot Dome scandal • Teapot Dome and Elk Hills were oil reserves for the navy • Albert Fall secretary of interior leased the reserves to oilmen Sinclair and Doheny after receiving a bribe of 100,000$ • Fall served one year in jail • Attorney General Daugherty sold pardons and liquor permits • Hung jury twice • Harding died on a speechmaking tour trying to cool the heat of the scandals with the public The Stench of Scandal

8. Coolidge represented the New England virtues, honesty, morality, industry, etc • He was a true believer in big business and all the benefits America reaps from it • Coolidge fit the times perfectly • Big business thrived under him and the country healed after the scandals “Silent Cal” Coolidge

9. Farmers had done very well during the war but after the prices dropped • Farmers caught in the same cycle of overproduction • Gasoline engine tractor helped push the way • Prices went up farmers put more money into land, more $ made, pushed prices down as soon as war ended • One out of four farms were sold for debt or taxes in the 1920’s • Capper-Volstead Act 1921 • Exempted farmers’ cooperatives from antitrust legislation Frustrated Farmers

10. Coolidge—Republican, John W. Davis—Democrat, La Follette—Progressive • Coolidge won with 15.7 to 8.3 to 5 million, electoral was 382 to 136 to 13 A Three-Way Race for the White House in 1924

11. Hoover vs. Alfred E. Smith • Smith was a wet Catholic • 1st presidential election in which radio played a big role • Hoover was a former orphan that worked his way up, this was his first elected office, had been in the cabinet before during WWI • He was the perfect businessmen’s candidate (self-made millionaire) • A vote for Smith is a vote for the Pope; Rum, Romanism, and Ruin • Hoover won in a landslide 21 to 15 million, 444 to 87 electoral votes • A Republican finally won a southern state’s votes that seceded, first time in 52 years, The Triumph of Herbert Hoover 1928

12. 2 groups were left out of the roaring twenties • Unorganized wage earners and disorganized farmers • Agricultural Marketing Act 1929 • Designed to help farmers help themselves by setting up producers coops • Federal Farm Board with ½ a billion dollars to spend • 1930 Farm Board created Grain and Cotton Stabilization Corporations • Boost up prices by buying the surpluses • Hawley-Smoot Tariff 1930 • Raised tariff to highest peace time ever, hurt farmers didn’t help them, rates went up from 38 to 60% • Led to international financial chaos President Hoover’s First Moves

13. Hoover took office on March 3, 1929 and tried to use the federal reserve board to curb speculation but it didn’t work • Crash on October 29, 1929 Black Tuesday • Loss of 40$ billion in paper value • Brought on a business depression • Unemployment hit 4 million by 1930 and by 1932 it was 12 million • 5,000 banks closed in 3 years ruining millions of family’s savings The Great Crash Ends the Golden Twenties

14. What caused the Depression? • Overproduction by farm and factory • US produced more than it could consume • Buying on credit over stimulated production • Wages were too low to keep up with production • Made worse by European collapses • Drought hit the Mississippi Valley in 1930 • One out of four farms were sold at auction many for one penny • Completely new monster for Americans to fight, unseen and very complicated • Hoover blankets, Hoovervilles, etc Hooked on the Horn of Plenty

15. Hoover was the wrong man for the job • Thought gov’t hand outs went against the moral fiber of US • Local gov’t couldn’t handle all the problems • Hoover helped the businesses (trickle down theory) • Hated by the people, would feed the Belgians but not Americans, loaned money to the businesses that caused the depression but not the people • He did open the door for FDR’s New Deal Rugged Times for rugged Individuals

16. $2.25 billion for public works, the biggest of which was the Hoover Dam 1930-36 • Reconstruction Finance Corporation (RFC) • Lent money to banks, insurance co, RR, etc in total ½ billion$ • “Pump priming” loans • Too little too late, gov’t actually made money off the loans • Norris-La Guardia Anti Injunction Act 1932 • Outlawed yellow dog contracts and forbade the courts to use injunctions • Hoover began gov’t spending to end depressions, 1st time in American History Hoover Battles the Depression

17. Bonus Army (BEF) Bonus expeditionary Force • The veterans were hit hard and wanted their bonus in 1932 instead of 1945 • 20,000 showed up in DC and built a small town • Hoover ordered the army to force them to decamp • Douglas MacArthur led the army that forced the BEF to leave • Made Hoover even more unpopular Routing the Bonus Army in Washington

18. September 1931 invaded Manchuria (who was going to stop them) and shut the Open Door on the West • Broke almost every treaty Japan signed in the last 30 years • US refused to send in troops only paper bullets • Japan then bombed Shanghai in 1932 • Basically the start of WWII Japanese Militarists Attack China