Chapter 32 The Politics of Boom and Bust, 1920–1932

I. The Republican “Old Guard” Returns

• Warren G. Harding, inaugurated in 1921, looked presidential: – Found himself beyond his depth in the presidency • He was unable to detect moral halitosis in his evil associates • He could not say no and designing politicians leeched on to this weakness • Washington could not tell a lie, Harding could not tell a liar • He promised to gather around him the “best minds” of the party

I. The Republican “Old Guard” Returns (cont.)

• Harding’s “best minds”: – Charles Evans Hughes: • Masterful, imperious, incisive, brilliant • Brought to the position of secretary of state a dominating conservative leadership – Andrew W. Mellon: • New secretary of the Treasury – Herbert Hoover: • Famed feeder of the Belgians and wartime food administrator • Became secretary of commerce

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I. The Republican “Old Guard” Returns (cont.)

• • Raised his second-rate cabinet to first-rate importance Especially in drumming up foreign trade for US. manufactures. Harding’s “worst minds”: – Senator Albert B. Fall: • A scheming anticonservationist • Appointed secretary of the interior • As guardian of the nation’s natural resources, he resembled the wolf hired to protect the sheep

I. The Republican “Old Guard Returns (cont.)

– Harry M. Daugherty: • • A big-time crook in the “Ohio Gang” Was supposed to prosecute wrongdoers as attorney general.

II. GOP Reaction at the Throttle

• Harding was a perfect “front” for enterprising industrialists: – New Old Guards: • Hoped to crush the reforms of the progressive era • Hoped to improve on the old business doctrine of laissez-faire • They simply wanted the government to keep its hands off business, • But for the government to guide business along the path to profits – They achieved their purpose by putting the courts and administrative bureaus in safekeeping of fellow stand patters

II. GOP Reaction at the Throttle (cont.)

– Harding lived less than three years as president: • • But appointed four of the nine justices: His fortunate choice for chief justice was ex-president Taft, who performed his duties ably but was more liberal than some of his cautious associates – The Supreme Court axed progressive legislation: • It killed a federal child-labor law • Stripped away many of labor’s hard-won gains • Rigidly restricted government intervention in the economy

II. GOP Reaction at the Throttle (cont.)

• Landmark case Adkins v. Children’s Hospital (1923): – It reversed its own reasoning in Muller v. Oregon (see p. 645): » Which declared women to be deserving of special protection in the workplace » » And invalidated a minimum-wage law for women Reasoning: because women now had the vote (19 th Amendment), they were the legal equal of men and could no longer be protected by special legislation.

– These two cases framed a debate over gender differences: » Were women sufficiently different from men that they merited special legal and social treatment?

» Or were they effectively equal in the eyes of the law and undeserving of special protections and preferences?

II. GOP Reaction at the Throttle (cont.)

– Corporations could once more relax and expand: • Antitrust laws were often ignored, circumvented, or feebly enforced by friendly prosecutors • The Interstate Commerce Commission came to be dominated by men who were personally sympathetic to the managers of the railroads • Big industrialists strived to reduce the rigors of competition • Associations that ran counter to the spirit of existing antitrust legislation, their formation was encouraged by Hoover

II. GOP Reaction at the Throttle (cont.)

• Hoover’s efficiency: – Led him to condemn the waste resulting from cutthroat competition – His commitment to voluntary cooperation led him to urge businesses to regulate themselves rather than be regulated by big government.

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III. The Aftermath of War

• Wartime government controls on the economy were swiftly dismantled: – The War Industries Board disappeared • With its passing, progressive hopes for more government regulation of big business evaporated – Returned railroads to private management in 1920 • Some hope for permanent nationalization • Congress passed the Esch-Cummins Transportation Act: – Encouraged private consolidation of the railroads

III. The Aftermath of War (cont.)

– Pledged the Interstate Commerce Commission to guarantee their profitability – New philosophy was to save the railroads from the country.

– Government tried to get out of the shipping business: – The Merchant Marine Act (1920) authorized the Shipping Board to dispose of much of the hastily built wartime fleet – The Board operated the remaining vessels without conspicuous success – Under the La Follette Act (1915) , American shipping could not thrive in competition with foreigners.

III. The Aftermath of War (cont.)

• Labor limped along badly in the postwar decade, lack of government support: – Bloody strike in the steel industry in 1919 – The Railway Labor Board ordered a wage cut of 12% in 1922 – General Daugherty claimed on the strikers an injunction – Needy veterans reaped lasting gains from the war: • Congress (1912) created the Veterans Bureau to operate hospitals and provide vocational rehab.

III. The Aftermath of War (cont.)

• • Veterans organized into pressure groups The American Legion was distinguished for its militant patriotism, rock-ribbed conservatism, and zealous antiradicalism.

• • Aggressive for veterans’ benefit Critics denounced a holdup “bonus” for the millions of veterans • Won in 1924 the passage of the Adjusted Compensation Act: – Gave former soldiers a paid-up insurance policy due in 20 years – Adding $3.5 billion to the cost of the war

IV. America Seeks Benefits Without Burdens

• Making peace with the fallen foe: – The United States, having rejected the Treaty of Versailles, was technically at war with Germany, Austria, and Hungary: • In July Congress passed a simple joint resolution that declared the war officially over • Isolation was enthroned in Washington • Continued to regard the League as an unclean thing • Harding at first even refused to support the League’s world health program

IV. America Seeks Benefits Without Burdens (cont.)

– Secretary Hughes secured for American oil companies the right to share in oil exploitations – Disarmament was an issue for Harding: • Had businessmen to finance the ambitious naval building program during the war • Washington “Disarmament Conference” 1921-1922: – – – – Invitations went out to all but Bolshevik Russia The double agenda included naval disarmament; The situation in the Far East Hughes declared a ten-year “holiday” on the construction of battleships – He proposed scaled-down navies of America and Britain: ratio 5:5:3. The third was for Japan.

IV. America Seeks Benefits Without Burdens (cont.)

– A Four-Power Treaty –the pact bound Britain, Japan, France and the United States to preserve the status quo in the Pacific.

– Gave China—“the Sick Man of the Far East”—the Nine- Power Treaty (1922), whose signatories agreed to nail wide open the Open Door in China – No restrictions: » Placed on small warships » Congress made no commitment to the use of armed force.

• Kellogg-Briand Pact: – Secretary of state Frank B. Kellogg won the Nobel Peace Prize for his role; Kellogg signed the Pact with the French foreign minister.

IV. America Seeks Benefits Without Burdens (cont.)

• The new parchment peace was delusory: – Defensive wars were still permitted – The pact was a diplomatic derelict and virtually useless – It reflected the American mind (1920s): • Willing to be lulled into a false sense of security • This same attitude showed up in the neutralism of the 1930s.

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Figure 32-1 p731

V. Hiking the Tariff Higher

• Businesspeople sought to keep the market to themselves by throwing up tariff walls: –

Fordney-McCumber Tariff Law:

• Lobbyists wanted to bust the average from 27% to 38.5%, almost as high as Taft’s Payne Aldrich Tariff of 1909 (see Appendix.) • Duties on farm produce were increased • Flexibility: the president could increase or decrease duties as much as 50% • Harding was more friendly to increases than reductions.

V. Hiking the Tariff Higher (cont.)

• • In six years they authorized 32 upward charges During this same time, the White House ordered only 5 reductions – The high-tariff course set off a chain reaction: • European producers felt the squeeze • Impoverished Europe needed to sell its manufactured goods to the United States • America needed to give foreign countries a chance to make a profit • International trade, Americans were slow to learn, is a two-way street.

V. Hiking the Tariff Higher (cont.)

• • • They could not sell to others in quantity unless they bought from them in quantity—or lent them more U.S. dollars Erecting tariff walls was a game that two could play The whole European-American tariff situation further deepened the international economic distress, providing one more rung on the ladder by which Adolf Hitler scrambled to power.

VI. The Stench of Scandal

• Loose morality and get-rich-quickism of the Harding era resulted in a series of scandals: –

Scandals:

• 1923 Colonel Charles R. Forbes, caught with hand in the till, was forced to resign as head of the Veterans Bureau – Looted the government of $200 million, chiefly in the building of veterans’ hospitals – He was sentenced to two years in a federal penitentiary •

Teapot Dome scandal:

– Involved priceless naval oil reserves at Teapot Dome (Wyoming) and Elk Hills (California)

VI. The Stench of Scandal (cont.)

– Secretary of the interior Albert B. Fall induced his careless colleague, the secretary of the navy, to transfer these valuable properties to the Interior Department – – Harding indiscreetly signed the secret order Fall quietly leased the lands to oilmen Harry F. Sinclair and Edward L. Doheny, – But not until he received a bribe (“loan”) of $100,000 from Doheny and about three times that amount in all from Sinclair – Teapot Dome finally came to a whistling boil » Fall, Sinclair, and Doheny were indicated 1924 » » Case dragged on until 1929 Fall was found guilty of taking a bribe, sentenced to one year in jail

V. The Stench of Scandal (cont.)

» The two bribe givers were acquitted while the bribe taker was convicted » Sinclair served several months in jail for having “shadowed” jurors and for refusing to testify before a Senate committee.

– The acquittal of Sinclair and Doheny undermined faith in the courts.

• Scandal of Attorney General Daugherty: – A Senate investigation (1924) of illegal sale of pardons and liquor permits – Forced to resign, tried in 1927, but released after the jury twice failed to agree.

V. The Stench of Scandal (cont.)

• Harding was spared the full revelation of these iniquities: – He embarked on a speechmaking tour across the country all the way to Alaska • On return he died in San Francisco on August 2, 1923 – The brutal fact is that Harding was not a strong enough man for the presidency—as he himself privately admitted.

– Such was his weakness that he tolerated people and conditions that subjected the Republic to its worst disgrace since the days of President Grant.

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VII. “Silent Cal” Coolidge

• Vice President Coolidge was sworn into office by his father: • He embodied the New England virtues of honesty, morality, industry, and frugality • He seemed to be a crystallization of the commonplace • Had only mediocre powers of leadership • His speeches were invariably boring • True to Republican philosophy, he became the “high priest of the great god Business”

VII. “Silent Cal” Coolidge (cont.)

• • His philosophy was a hands-off temperament His thrifty nature caused him to sympathize with Secretary of the Treasury Mellon’s effort to reduce taxes and debts • Coolidge slowly gave the Harding regime a badly needed moral fumigation • Coolidge was not touched by the scandals.

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VIII. Frustrated Farmers

• Farmers in a boom-or-bust cycle in the post war decade – Peace brought: • End to government –guaranteed high prices and massive purchases by other nations • Foreign production reentered the stream of world commerce – Machines: • Threatened to plow the farmers under over their own overabundant crops

VIII. Frustrated Farmers (cont.)

• The gasoline-engine tractor was working a revolution on American farms: – – They could grow bigger crops on larger areas Improved efficiency and expanded agricultural acreage; helped to pile up more price-dampening surpluses – A withering depression swept through agricultural districts in the 1920s, when one farm in four was sold for debt or taxes.

• Schemes abounded for bringing relief to the hard pressed farmers: – A bi-partisan “farm bloc” from the agricultural states coalesced in Congress in 1921 and succeeded in getting some helpful laws passed.

VIII. Frustrated Farmers (cont.)

• • The Capper-Volstead Act: – Exempted farmers’ marketing cooperatives from antitrust prosecution The McNary-Haugen Bill (1924-1928): – – – – – Sought to keep agricultural prices high by authorizing the government to buy up surpluses and see them abroad Government losses were to be made up by a special tax on the farmers Congress twice passed the bill, But frugal Coolidge twice vetoed it Farm prices stayed down, and farmers’ political temper atures stayed high, reaching a fever pitch in the election of 1924.

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IX. A Three-Way Race for the White House in 1924

• Election of 1924: – Nominated “Silent Cal” at their convention in Cleveland in the summer of 1924 – Democrats had more difficulty choosing a candidate in their convention in New York: • • The party was split between “wets” and “drys” Urbanites and farmers • Fundamentalists and Modernists • Northern liberals and southern stand-patters, immigrants and old-stock Americans.

IX. A Three-Way Race for the White House in 1924 (cont.)

• • • The Democrats failed by one vote to pass a resolution condemning the Ku Klux Klan Deadlocked for an unprecedented 102 ballots, the convention turned to John W. Davis Now wide-open for a liberal candidate: – Senator Robert (“Fighting Bob”) La Follette sprang forth to lead a new Progressive party – He gained the endorsement of the American Federation of Labor – – He enjoyed the support of the shrinking Socialist party, But his majority constituency were the price-pinched farmers

IX. A Three-Way Race for the White House in 1924 (cont.)

– La Follette’s new Progressive party: • Fielding only a presidential ticket, with no candidates for local office • Proved only a shadow of the robust Progressive coalition of prewar days • Its platform called for government ownership of railroads and relief for farmers • It lashed out at monopoly and antilabor injunctions • Urged a constitutional amendment to limit the Supreme Court’s power to invalidate laws passed by Congress.

IX. A Three-Way Race for the White House in 1924 (cont.)

• Election returns: • La Follette polled nearly 5 million votes • “Cautious Cal” and the oil-smeared Republicans over whelmed Davis, 15,718,211 to 8,385,283 • The electoral count stood at 382 for Coolidge, 136 for Davis, and 13 for La Follette, all from his home state of Wisconsin (see Map 32.1)

Map 32-1 p736

X. Foreign-Policy Flounderings

• Isolation continued to reign in the Coolidge era: • The Senate would not allow America to adhere to the World Court • Coolidge only halfheartedly and unsuccessfully pursued further naval disarmament • American outward looking: – The armed interventionism in the Caribbean and Central America – American troops were withdrawn (after an eight-year stay) from the Dominican Republic in 1924 – They remained in Haiti (1914-1934).

X. Foreign-Policy Flounderings (cont.)

– America was in Nicaragua intermittently since 1909; Coolidge briefly removed them in 1925; in 1926 he sent them back where they stayed until 1933 – American oil companies clamored for a military expedition to Mexico in 1926 – Overshadowing all other foreign-policy problems in 1920s was the issue of international debts: • Complicated tangle of private loans; Allied war debts and German reparations payments (see Figure 32.2) • In 1914 America had been a debtor nation to the sum of $4 billion • By 1922, it had become a creditor nation to the sum of $16 billion.

X. Foreign-Policy Flounderings (cont.)

• • American investors loaned some $10 billion to foreigners in the 1920s The key knot in the debt tangle was the $10 billion that the U.S. Treasury had loaned to the Allies – – – – Uncle Sam held their IOUs—and he wanted to be paid The Allies protested that the demand for repayment was grossly unfair The French and the British pointed out, with much justice, that they had held up a wall of flesh and bone against the common foe, until the Americans were ready to enter America, they argued, they should write off its loans as war costs

X. Foreign-Policy Flounderings (cont.)

– The real effect of their borrowed dollars had been to fuel the boom in the already roaring wartime economy in America, where nearly all the purchases had been made – Final straw, protested the Europeans, was that America’s postwar tariff walls made it almost impossible for them to sell their goods to earn the dollars to pay their debts.

Figure 32-2 p737

XI. Unraveling the Debt Knot

• Germany’s war debts: – America insisted on getting its money back – The French and British demanded $32 billion in reparations payments – The Allies hoped to settle their debt with the United States – Debt cancellations: • Some statesmen wanted the debts to be scaled down or even canceled • Calvin Coolidge turned aside any suggestions of debt cancellation.

XI. Unraveling the Debt Knot (cont.)

• The Dawes Plan (1924): • Was largely negotiated by Charles Dawes, about to be Coolidge’s running mate • It rescheduled German reparations payments • And opened the way for further American private loans to Germany • The whole financial cycle now became still more complicated: – As U.S. bankers loaned money to Germany, – Germany paid reparations to France and Britain, – And the former Allies paid war debts to the United States.

XI. Unraveling the Debt Knot (cont.)

• When that well dried up after the great crash of 1929, the jungle of international finance quickly turned into a desert • President Herbert Hoover declared a one-year moratorium in 1931— – except “honest little Finland,” which struggled along making payments until the last of its debt was discharged in 1976 • The United States never did get its money, but it harvested a bumper crop of ill will.

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XII. The Triumph of Herbert Hoover, 1928

• 1928 presidential race: – Coolidge decided not to run again – Herbert Hoover became the candidate: • Nominated on a platform of both prosperity and prohibition – Democrats nominated Alfred C. Smith • “Al(cohol) Smith,” soakingly and drippingly “wet” when the country was devoted to the “noble experiment” of prohibition • • He seemed to be abrasively urban He was Roman Catholic

XII. The Triumph of Herbert Hoover (cont.)

– Radio played prominently in this campaign for the first time: • It helped Hoover more than Smith • Hoover decried un-American “socialism” • And preached “rugged individualism” • Never having been elected to public office , he was thin-skinned in the face of criticism • He did not adapt readily to necessary give-and-take of political accommodation • His real power lay in his integrity – – His humanitarianism His passion for assembling the facts

XII. The Triumph of Herbert Hoover (cont.)

– His efficiency – – – His talent for administration His ability to inspire loyalty in close associates They called him “the Chief.” • He was the best businessperson’s candidate: – Self-made millionaire, he recoiled from anything suggesting socialism, paternalism, or “planned economy,” – Yet as secretary of commerce, he had exhibited some progressive instincts: » He endorsed labor unions » He supported federal regulation of the new radio broadcasting industry » He flirted with the idea of government-owned radio.

XII. The Triumph of Herbert Hoover (cont.)

– Indications of low-level campaigners: • • Religious bigotry against Smith’s Catholicism The White House would become a branch of the Vatican—complete with “Rum, Romanism, and Ruin” • The South shied away from “city slicker” Al Smith – Election returns: • Hoover triumphed in a landslide: • He bagged 21,391,993 popular votes, to 15,016,169 for Smith • Hoover electoral count of 444 to Smith’s 87.

– Big Republican victory; Hoover swept five former Confederacy states and all Border States(see Map 32.2).

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Map 32-2 p739

XIII. President Hoover’s First Moves

– Hoover’s administration’s responses to the unorganized wage earners and the disorganized farmers – The Agricultural Marketing Act (June 1929): • Designed to help the farmers help themselves, largely through producers’ cooperatives • It set up the Federal Farm Bureau with a revolving fund of ½ billion dollars at its disposal • Money was lent generously to farm organizations seeking to buy, sell, and store agricultural surpluses.

XIII. President Hoover’s First Moves (cont.)

– In 1930 the Farm Board created: • The Grain Stabilization Corporation and the Cotton Stabilization Corporation • Primary goal to bolster sagging prices by buying up surpluses • They were suffocated by an avalanche of farm produce – Hoover during the campaign promised to call Congress into session to bring about “limited” change in the tariff.

XIII. President Hoover’s First Moves (cont.)

• The Hawley-Smoot Tariff (1930): – By the time it was through both houses of Congress: • Turned out to be the highest protective tariff in the nation’s peacetime history • The average duty on nonfree goods was raised from 38.5% to nearly 60 % • To angered foreigners, it was a blow below the trade belt – It seemed like a declaration of economic warfare on the entire outside world – It reversed a promising worldwide trend toward reasonable tariffs

XIII. President Hoover’s First Moves (cont.)

– It plunged both America and other nations deeper into the terrible depression that had already begun – It increased international financial chaos and forced the United States further into the bog of economic isolationism – And economic isolationism, both at home and abroad, was playing directly into the hands of a hate-filled German demagogue, Adolf Hitler.

XIV. The Great Crash Ends the Golden Twenties

– The speculative bubble: • Few people sensed that the permanent plateau of prosperity would soon break • Prices on the stock exchange continued to spiral upward • And created a fool’s paradise of paper profits • There were a few prophets who tried to sound warnings – The catastrophic crash came in October 1929: • Partially caused by the British who raised interest rates

XIV. The Great Crash Ends the Golden Twenties (cont.)

• • Foreign investors and wary domestic speculators began to dump their “insecurities” Tensions built up to the panicky Black Tuesday of October 29, 1929: – – – – – 16,410,030 shares of stocks were sold in a save-who-may scramble Wall Street became a wailing wall as gloom and doom replaced boom Suicides increased alarmingly Losses in blue chips securities were unbelievable By the end of 1929 stockholders lost $40 billion in paper values (see Figure 32.3).

XIV. The Great Crash Ends the Golden Twenties (cont.)

• The stock-market collapse heralded a business depression: – – At home and abroad The most prolonged and prostrating in American or world experience – No other industrialized nation suffered so severely – – – End of 1929: 4 million workers were jobless Two years later the figure had about doubled Hungry and despairing workers pounded the pavements in search of work – – The misery and gloom was incalculable Over 5000 banks collapsed in the first three years – Carrying down with them the savings of tens of thousands of ordinary citizens.

XIV. The Great Crash Ends the Golden Twenties (cont.)

– Countless thousands lost their home and farms to foreclosure – – Breadlines formed, soup kitchens dispensed food Families felt the stress, as jobless fathers nursed their guilt and shame at not being able to provide for their families – – Breadless breadwinners blamed themselves for their plight Mothers nursed fewer babies.

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Figure 32-3 p741

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XV. Hooked on the Horn of Plenty

What caused the Great Depression?

– Overproduction: • Both farm and factory • The depression of the 1930s was one of abundance, not want • It was the “great glut” or the “plague of plenty” • The nation’s ability to produce goods had clearly outrun its capacity to consume or pay for them • Too much money was going into the hands of the wealthy: – Who in turn invested it in factories and other agencies of production.

– Nothing going into salaries and wages revitalizing purchasing power.

XV. Hooked on the Horn of Plenty (cont.)

– Overexpansion: • Of credit through installment-plan buying; overstimulated production • Normal technological unemployment – Economic anemia abroad: • Britain and the Continent had never fully recovered • A chain-reaction financial collapse in Europe • A drying up of international trade • European uncertainties over reparations, war debts, and defaults on loans owed to America.

• Many of these conditions had been caused by Uncle Sam’s own narrow-visioned policies.

XV. Hooked on the Horn of Plenty (cont.)

– Nature: a terrible drought scorched the Mississippi valley in 1930 • Thousands of homes and farms were sold at auction for taxes • Farm tenancy or rental—a species of peonage—was spreading among both whites and blacks – By the 1930s the depression had become a national calamity • A host of citizens had lost everything • They wanted to work—but there was no work.

•

XV. Hooked on the Horn of Plenty (cont.)

America’s “uniqueness” no longer seemed so unique, nor its Manifest Destiny so manifest: – The depression was a baffling wraith that Americans could not grasp – Initiative and self-respect were stifled – Many slept in tin-and-paper shantytowns cynically named Hoovervilles – The very foundations of America’s social and political structure trembled.

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XVI. Rugged Times for Rugged Individualists

• Hoover’s exalted reputation as a wonder worker and efficiency engineer crashed – He would have shined in the prosperity drenched Coolidge years – Now the Great Depression proved to be a task beyond his engineering talents • He was distressed by the widespread misery • As a “rugged individualist” he shrank from the heresy of government handouts.

XVI. Rugged Times for Rugged Individualists (cont.)

– He was convinced that industry, thrift, and self reliance were the virtues that made America great • He feared that a government doling out doles would weaken, perhaps destroy, the national fiber • Relief by local government agencies broke down • Hoover finally had to reluctantly turn from his doctrine of log-cabin individualism • And accept the proposition that the welfare of the people in a national catastrophe is a direct concern of the national government.

XVI. Rugged Times for Rugged Individualists (cont.)

• He worked out a compromise between – – The old hand-off philosophy And the “soul-destroying” direct dole then being used in England.

– He would assist the hard-pressed railroads, banks, and rural credit corporation » That if financial health were restored at the top of the economic pyramid: » Unemployment would be relieved at the bottom on a trickle-down basis.

– Partisan critics sneered at the “Great Humanitarian”:

XVI. Rugged Times for Rugged Individualism (cont.)

– Most of the criticism of Hoover was unfair: • His efforts probably prevented a more serious collapse • His expenditures for relief, revolutionary for the day, paved the path for the enormous federal outlays of his New Deal successor, Franklin Roosevelt.

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XVII. Hoover Battles the Great Depression

• Hoover’s “trickle-down” philosophy: – He recommended that Congress vote immense sums for useful public works • He secured from Congress appropriations totaling $2.25 billion for such projects • Most imposing of the public enterprises was the gigantic Hoover Dam on the Colorado River – It was a huge man-made lake for the purposes of irrigation, flood control, and electric power – He sternly fought all schemes that he thought were “socialistic.”

XVII. Hoover Battles the Great Depression (cont.)

• Conspicuous was the Muscle Shoals Bill: – – Designed to dam the Tennessee River He vetoed this measure primarily because he opposed the government’s selling electricity in competition with its own citizens in private companies.

– In 1932 Congress responded to Hoover’s appeal: • Established the Reconstruction Finance Corporation (RFC): – – It was designed to provide indirect relief By assisting insurance companies, banks, agricultural organ izations, railroads, and even hard-pressed state and local governments

XVI. Hoover Battles the Great Depression (cont.)

– But to preserve individualism and character, – – There would be no loans to individuals.

The “pump-priming” loans were no doubt of widespread benefit – – Projects that it supported were largely self-liquidating The government profited to the tune of many millions of dollars – Giant corporations benefited • The irony is that the thrifty and individualistic Hoover actually sponsored the project • It actually had a strong New Dealish flavor.

•

XVI. Hoover Battles the Great Depression (cont.)

• Norris-La Guardia Anti-Injunction Act (1932): – – It outlawed “yellow-dog” (antiunion) contracts And forbade the federal courts to issue injunctions to restrain strikes, boycotts, and peaceful picketing.

Hoover did inaugurate a significant new policy: • By the end of his term he had started down the road toward government assistance for the needy citizens—a road that Franklin Roosevelt would travel much farther.

XVI. Hoover Battles the Great Depression (cont.)

• Hoover’s woes: – Increased by a hostile Congress – The Republican majority proved highly uncooperative – In 1930 the Democrats controlled the House – Insurgent Republicans could—and did—combine with opposition Democrats to harass Hoover – Some of the president’s troubles were deliber ately manufactured by Congress.

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XVIII. Routing the Bonus Army in Washington

• Veterans of World War I were also hard-hit victims of the depression: • “Bonus” through the Hawley-Smoot Tariff • What did the government owe them for their services in 1917-1918?

• Many veterans were prepared to go to Washington – To demand the immediate payment of their entire bonus – The “Bonus Expeditionary Force” (BEF), some 20,000, went to the capital summer of 1932 – – They erected shacks on vacant lots—a gigantic “Hooverville” After two were killed, Hoover ordered the army to evacuate the unwanted guests.

XVIII. Routing the Bonus Army in Washington (cont.)

– The Bonus Army: • • Led by General Douglas MacArthur With bayonets and tear gas • And with far more severity than Hoover had planned • The brutal episode brought down additional abuse on the once-popular Hoover.

– The time was ripening for the Democratic Party—and Franklin D. Roosevelt—to cash in on Hoover’s calamities.

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XIX. Japanese Militarists Attack China

• Militaristic Japan stole the Far Eastern spotlight: • In September, 1931 the Japanese imperialists lunged into Manchuria • America had strong sentimental stake in China, but few significant economic interests – – – Americans stunned by this act of naked aggression It was a flagrant violation of the League of Nations covenant And other international agreements solemnly signed by Tokyo – Not to mention the American sense of fair play.

XIX. Japanese Militarists Attack China (cont.)

– Washington rebuffed initial attempts in 1931 to secure American cooperation in applying eco nomic pressure on Japan – Washington and Secretary of State Henry L. Stimson decided to fire only paper bullets • The so-called Stimson doctrine: – Proclaimed in 1932 – Declared that the United States would not recognize any territorial acquisitions achieved by force – Righteous indignation—or a preach-and-run policy—would substitute for solid initiatives.

XIX. Japanese Militarists Attach China (cont.)

– The verbal slap did not deter the march of the Japanese militarists: • They bombed Shanghai in 1932 • With shocking losses to civilians • There was no real sentiment for armed intervention among depression-ridden Americans, who remained strongly isolationists during the 1930s – Collective security died and World War II was born in 1931 on the Manchuria plains.

– The Republic came closer to stepping into waters of internationalism than American prophets would dare to predict in the early 1920s.

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XX. Hoover Pioneers the Good Neighbor Policy

• Hoover and relations with America’s southern neighbors: – Hoover was interested in the often-troubled nations below the Rio Grande – After the stock market crash of 1929: • Yankee economic imperialism became less popular • Hoover became an advocate of international goodwill • Strove to abandon the interventionist twist given by the Monroe Doctrine of Theodore Roosevelt

XX. Hoover Pioneers the Good Neighbor Policy (cont.)

– He negotiated a treaty with Haiti, later supplanted by an executive agreement, that provided withdrawal of American platoons by 1934 – In 1933 the last marine “leathernecks” sailed away from Nicaragua after an almost continuous stay of some twenty years – Hoover, the engineer in politics, • Happily engineered the foundation stone of the Good Neighbor policy; • Upon them rose an imposing edifice in the days of his successor, Franklin Roosevelt.

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