Transcript Slide 1

THE POLITICS OF
BOOM AND BUST
Chapter 33
Republican “Old Guard” Returns
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Warren Harding was one of the best-liked
men of his generation.
Elected President by promising to return the
nation to "normalcy,” and opposing the
idealism of his predecessor Woodrow
Wilson. He captured 60% of American's
votes and won by a landslide.
But, weak, inept and only a mediocre mind.
Harding surrounded by scoundrels.
 Warren Harding’s campaign manager
and Attorney General, Harry Daugherty
preferred dispensing patronage to
practicing law. Daugherty's "Ohio Gang,"
the circle of hard-drinking old friends he
rewarded with federal jobs,
 History channel video on Harding
GOP Reaction At The Throttle
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Harding = Laissez Faire
Progressivism was floundering
Goal was Laissez-faire plus; help
guide business toward profits.
Harding put many like-minded
people into administration and the
courts.
In Harding’s three years as
President, he appoints four
Supreme Court justices
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Including Taft as Chief Justice
 Impacts FDR later
Rolling Back Progressivism
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In 1920s the Supreme
Court supported business.
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minimum wage law.
federal Child Labor law,
Adkins v. Children’s Hospital
overturned federal minimum
wage legislation for women
was an unconstitution
Progressive legislation
regulating business was
ignored and unenforced.
The Aftermath Of War
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After war, Government got out of the
governmental control of business
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Merchant Marine Act of 1920 United
States federal statute that regulates
maritime commerce in U.S. waters and
between U.S. ports.
Section 27, known as the Jones Act,
requires that all goods transported by water
between U.S. ports be carried in U.S.-flag
ships
Labor saw major setbacks.
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A violent steel strike crushed in 1919
Membership in unions declined by nearly
30% between 1920 and 1930.
Strikes were ruthlessly crushed.
p755
Veterans
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Veterans were one of the few groups to achieve lasting
gains through the war.
1921 Veterans Bureau
American Legion.
 Principal proponent of the legislation on behalf of
World War I veterans
Adjusted Compensation Act
 Bonus bill in 1922. created a benefit plan for World
War I veterans as additional compensation for their
military service. It credited servicemembers with
"adjusted service certificates" equal to $1.00 per
day served in the United States and $1.25 per day
served overseas, up to specified limits.
Harding vetoes.
 1924, Congress repasses the bill..
 Cost 3.5 billion.
 Coolidge vetoes, but Congress over-rides.
Benefits Without Burdens
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Harding was intent on isolationism, but U.S.
couldn’t be completely isolationist.
US still technically at war with Axis
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Republicans continued to despise the League
of Nations
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1921 Congress passed a joint resolution that
declared the war officially ended.
Eventually forced to send unofficial observers
Mid-East: UK and America were competing
for oil-drilling rights of oil-rich Arab nations
Business wants disarmament.
Draw down of the navy resisted
Five-Power Naval Treaty
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Washington “Disarmament” Conference in 1921-22.
Two main issues: Naval disarmament and the situation
in the Far East.
Becomes the Five-Power naval Treaty of 1922:
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US England and Japan agree to ratio of 5:5:3
Brits and Americans agreed not to fortify their Far East
possessions, including the Philippines. Japan has no such
restrictions.
Anglo-Japanese alliance replaced by the Four-Power Treaty.
Brit, Japan, France and US agree to preserve the status quo in
Pacific.
China boosted by Nine-Power Treaty of 1922 which guarantees
a full open-door policy in China.
It is studied by political scientists as a model for a successful
disarmament movement.
Limits Imposed by Washington
Conference, 1921–1922
Kellogg-Briand Pact (1928)
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Idealistic Americans urged nations to
foreswear war as an instrument of
national policy.
US Sec. of State Kellogg reluctantly
supports after nearly 2 Million US
signatures
Signed by 62 nations pledging not to use
war as an instrument of national policy.
Americans believed that this would
prevent war.
Treaty must not infringe upon America's
right of self defense and that the United
States was not obliged to enforce the
treaty by taking action against those who
violated it.
Dark green - original signatories Light
grees - later adherents Light Blue territories of parties
Dark blue - League of Nations mandates
of parties
Hiking The Tariff Higher
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Isolationism reflected in economic policy.
Business wanted to keep American markets for
American business.
Fordney-McCumber Tariff Law. 1922 Hiked
tariff from 27 percent to 35%.
President given the power to raise or lower
tariffs by 50%. Mostly used to adjust rates
higher. (32 up, 5 down)
Tariffs hurt European countries trying to recover
from the war and pay war debts.
Leads to international tariff war and to feeling of
economic oppression in countries such as
Germany.
The Stench Of Scandal
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Harding
Administration was
beset with scandals.
Charles Forbes,
Attorney General
Daugherty
Teapot Dome
Harding Dies
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Harding dies in
August, 1923, before
the full scope of these
scandals has come to
light.
His administration is
the most scandalridden since Grant.
Coolidge President.
Calvin Coolidge
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Coolidge embodies Yankee
Puritanism.
Is not a dynamic leader.
His policies compared to
Harding?
His five years are relatively
uneventful and isn’t forced to
grapple with any serious
crisis.
Coolidge helps to save the
Republican Party. How?
Frustrated Farmers
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Farmers hit hard after the war. Prices plummet. no government demand
In 1920s one-in-four farms goes bankrupt.
Great depression starts in farm economy long
before it hits the rest of the economy.
Capper-Volstead Act. Authorized agricultural
producers to form voluntary co-operative
associations for purposes of producing, handling
and marketing farm products - that is, it exempted
from antitrust laws.
McNary-Haugen Bill.
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controversial plan in the 1920s to subsidize American
agriculture by raising the domestic prices of farm
Charles L. McNary and Rep.
products
w:Gilbert N. Haugen, halfCoolidge twice vetoes this measure. Political ire of length portrait, standing at
the w:White House, shaking
farmers stays high as a result.
hands
Election of 1924
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Rep. nominate Coolidge to be
elected in his own right, and he
campaigns on the basis of the
status quo.
Democrats are hopelessly divided
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Nominate John W. Davis, a wealthy
corporation lawyer who didn’t excite
anyone. 102 ballots
La Follette runs as third-party
Progressive candidate.
Coolidge wins nearly 2-1 over
Davis.
The Debt Problem
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Biggest foreign policy issue in second
Coolidge term was foreign debt owed
US.
America had gone from a debtor nation
before the war to a creditor nation after
the war.
The dollar was beginning to supplant the
Pound Sterling.
America had loaned $10 Bill. to Allies
during and after the War, and American
investors had loaned an equal amount to
Europe in the 1920s.
US wants this money back, but Allies are
having a hard time repaying.
Europe asks for a Break
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Allies argue that US should write off
as war expense.
Their argument?
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Allies had sacrificed millions of lives
while sat on the sidelines. Allies can’t
get repaid for lost lives and manpower.
US tariffs making it very hard to earn
the money necessary to repay the
debt.
Money Allies had borrowed had been
spent in US, helping to refuel the US
economy.
Unraveling The Debt Knot
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American government intransigent on
debt.
Ruhr occupation and the
hyperinflation crisis
Many urged that debts and
reparations be drastically scaled down
or canceled.
Coolidge response, “they hired the
money didn’t they?”
Contribution to isolationism.
1924. Dawes plan.
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Why is it fatally flawed.
Election of 1928
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Coolidge decides not to run.
Herbert Hoover.
Hoover platform.
Democrats, still quite
divided, nominate liberal
New York Governor Al
Smith. Seemingly and odd
choice. Why?
Many dry, rural,
fundamentalist democrats
choked on his candidacy.
Hoover
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Hoover is American success
story.
Against foreign entanglements.
Believed in isolationism.
Had never run for or held office
before. He was used to the
business model.
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President Herbert Hoover
poses with his dog, King Tut.
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Uncomfortable asking for votes.
Shy and standoffish personally.
Integrity and personal honor;
great humanitarian
administering US foreign aid.
Very efficient and very bright.
Hoover Landslide
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Hoover runs as a business candidate.
Did have some progressive instinct.
Hoover and Smith try to keep the campaign
clean, but minions take it into the sewer.
“Rum, Romanism and Ruin.”
Hoover wins in a landslide, and Smith can’t even
hold all of the solid democratic South.
Also a very solid Republican majority in
Congress.
Presidential Election of 1928
President Hoover’s First Moves
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Why? Economy was roaring, but Farmers and non-union wage
earners were not getting their share of the prosperity:.
Hoover did not believe in direct aid. Wanted private sector
response.
Agricultural Marketing Act. Sets up Federal Farm Board.
Farmers then turn to the tariff to cure their ills.
Leads to the Hawley-Smoot Tariff of 1930. Probably one of the
worst pieces of legislation in US history.
 Biggest tariff in US peacetime history.
 Raised tariff from 38.5 to nearly 60%.
 Foreign nations outraged.
 Seemed to be a declaration of economic warfare.
 Helped push the world toward depression. Played into the
hands of rising Nazism in Germany.
Stock Market Crash
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Economy was near the
bursting point.
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Prices on the stock market
were vastly over-valued.
Many had bought on the
margin. Problem with this.
Black Tuesday. October
29, 1929.
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Causes
 In two months, investors
lost 40 Bill, in paper value.
More than total cost of
WWI.
Great Depression
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Opening bell of the worst and
longest depression in US and World
history.
By the end of 1930, more than 4
Million unemployed. By 1932, 12
Mill.
Wages and hours slashed. People
weren’t buying, so factories weren’t
producing, so there were no jobs.
Many lost their life’s savings in the
Market.
Was a huge hit to the America
Psyche.
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Where was Manifest Destiny?
 Where was the American Dream?
Causes of the Great Depression
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Over-production of both farm and factory.
Too little being paid in wages.
Over-expansion of credit through installment
buying helped over-stimulate production and
over-extend the buying power of consumers.
Technology pushed people out of jobs.
Economic anemia overseas caused by the debt
burden (and Hawley-Smoot). Dried up
purchasing from Europe.
Terrible drought in the Mississippi Valley
caused a number of farm foreclosures, putting
farmers out of business.
Antiquated economic theory
Lack of deposit insurance
Documentary Film Video The Great
Depression Part 1.flv
The Crash of 1929 - American Experience PBS Video_2.flv
http://www.pbs.org/wgbh/americanexperien
ce/films/crash/
Rugged Times For Rugged
Individualists
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Called business leaders to
Washington to pressure them
into keeping wages high
Hoover trapped by traditional
economic theory
Had great sympathy for those
suffering.
Wedded to the idea of Laissez
faire, saw governmental
handout as sacrilege.
Feared governmental
handouts?
Hoover believed that recovery
was just around the corner.
Hoover Props Up Business
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As the depression drags on
private relief organizations run
out of money.
He gave much of his money to
charity and encouraged
Americans to do the same
Hoover agrees to provide aid
to RR, banks and credit corps.
Herbert Hoover: Pioneer Of The
New Deal
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Hoover eventually recommends that
Congress vote 2.25 Bill. for useful
public works.
Reconstruction Finance Corporation
– RFC (continued by FDR) which
created an agency to help banks,
railroads, and other key businesses to
stay in business thus helping the
economy. Compared to his
predecessors Hoover did a great deal.
Insisted on a balanced budget
Republican Congress was often very
hostile to Hoover’s plans.
The Bonus Army In Washington
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Vets of WWI were hard
hit.
Bonus Expeditionary
Force. Congress, riots
ensue and two are killed.
Hoover orders the army
to force the marchers to
leave.
Gen. Douglas
MacArthur. Battle of
Anacostia Flats.
Brings down more abuse
on Hoover.
Review
Students on Their Own
JAPANESE MILITARISTS ATTACK
CHINA
 HOOVER PIONEERS THE GOOD
NEIGHBOR POLICY
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