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The Politics of Boom & Bust

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.

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The Politics of Boom & Bust

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  1. The Politics of Boom & Bust 1920 - 1932

  2. 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

  3. 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

  4. 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

  5. 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

  6. 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

  7. 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

  8. 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

  9. 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

  10. 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”

  11. 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

  12. 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

  13. 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

  14. 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

  15. 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

  16. 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

  17. 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

  18. 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

  19. 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

  20. 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

  21. 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

  22. 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

  23. 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

  24. 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

  25. 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

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