THE POLITICS OF BOOM AND BUST

By Pam Kumparatana and Nikola Koscica

 I.

the Republican “Old Guard” Returns

 President Warren Harding – a good natured president who was unable to see the moral wrongs of his associates. He was always surrounded by cronies of the “Ohio Gang .”  II.

GOP Reaction at the Throttle

   Enterprising industrialists took advantage of Harding era were crushed – reforms from the progressive The Old Guard wanted to improve the concept of laissez-faire – government was not supposed to interfere with business but it was supposed to guide them to become profitable. In the 1920s, the Supreme Court tore down laws established in the progressive era: the child labor law was repealed, the rights the laborers gained during this period were taken away, and the government was restricted to intervene in the economy.

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Adkins v. Children’s Hospital

(1923) – women do not have special protection in the workplace and the minimum wage law did not apply to women. They had gained the 19th Amendment; they were legal equals with men and did not need special protection. Antitrust laws were ignored and corporations were able to expand again. The ICC became full of men that were sympathetic to the railroad managers.

 III.

the Aftermath of War

   The Esch-Cummins Transportation Act of 1920 – encouraged private consolidation of railroads and pledged the ICC to guarantee their profits.

The Merchant Marine Act of 1920 – authorized the Shipping Board to dispose of the wartime fleet. The Shipping Board controlled about 1500 vessels. The government tried to get into the shipping business, but the La Follette Seaman’s Act of 1915 stated that American shipping could not thrive in competition with foreigners

 There were many labor strikes due to lack of government support. The Railway Labor Board ordered a 12 percent wage cut in 1922, which prompted a two month strike. Attorney General Daugherty ended this strike, causing a hostile political environment.  Thousands of African Americans believed that they would get paid greatly after the war, so they left the south and ventured to northern cities. There was racial terror in the north – the summer of 1919 in Chicago left 23 blacks and 15 whites dead.  In 1921, Congress created the Veterans’ Bureau, and it was authorized to operate hospitals and create rehabilitation centers for the disabled.  The American Legion was founded in 1919, in Paris by Colonel Theodore Roosevelt Jr. – it became notorious for aggressively lobbying for the benefits of veterans, demanding monetary compensation from their jobs when they went to war.  Congress passed the Adjusted Compensation Act of 1924, and it gave every soldier a paid insurance due policy that was due in twenty years costs. – it added $3.5 billion dollars to the war

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IV.

Ship-Scrapping at the Washington Conference

The major powers, except Bolshevik Russia, attended the Washington “Disarmament” Conference in 1921 – 1922. Secretary Hughes proposed that the American and British navies would be scaled down, having a 5 – 5 – 3 ratio with Japan. The Five Power Naval Treaty of 1922 basically represented Hughes’ proposal and the United States and Britain agreed not to fortify their Eastern territories.

   The Four Power treaty replaced the Anglo-Japanese alliance and stated that the United States, Britain, France, and Japan had to keep the peace in the Pacific. The Nine Power Treaty of 1922 stated that all nine nations that attended this conference had to respect the Open Door Policy by respecting China’s territorial integrity. In 1928, the Kellogg-Briand Pact was signed, it was also known as the Pact of Paris. It renounced nations for using aggressive force to achieve national goals. It permitted defensive wars and it did not provide to take action against those that violated this agreement; it showed that Americans were in a false sense of security .

 V.

Hiking the Tariff Higher

  The Fordney-McCumber Tariff Law was passed by Congress in 1922. This increased the duties on farm products and it was supposed to stabilize the rates of American and foreign production. There were many tariff increases during President Harding and Coolidge’s presidency, which caused the European powers to raise their own tariffs.

 VI.

the Stench of Scandal

  1923 – Colonel Charles R. Forbes looted the government of approximately $200 million, which was connected to building veterans’ hospitals. Teapot Dome – in 1921, Albert B. Fall convinced the Secretary of Navy Denby to transfer oil reserves of Teapot Dome [Wyoming] and Elk Hills [California] to the Interior Department. He then leased these lands to Harry F. Sinclair and Edward L. Doheny, who were oilmen. He received $100,000 from Doheny and approximately three times more than that from Sinclair.   President Harding died on August 2, 1923, after embarking on a speechmaking tour across the country. He died of pneumonia and thrombosis. Calvin Coolidge took office after he died.

 VII.

Frustrated Farmers

    After the war, there were new technologies that helped farmers farm more acres of land a day, which allowed them to grow bigger crops on larger areas. But this contributed to the agricultural surpluses, causing prices to deflate. In the Congress, a “farm bloc” was formed in 1921, which helped pass helpful laws to aid the farmers. 1921 – the Capper-Volstead Act was passed, and it exempted farmers’ marketing cooperatives from antitrust persecution. From 1924 to 1928, the farm bloc proposed the McNary-Haugen Bill. This bill wanted to keep agricultural prices high by authorizing the government to buy any agricultural surpluses. Any governmental losses were to be made up by placing a special tax on farmers. President Coolidge vetoed it twice . Charles L. McNary 

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VIII.

Foreign Policy

During Calvin Coolidge’s presidency, there were isolationist policies. The Senate refused to join the League of Nations. Coolidge unsuccessfully tried to pursue naval disarmament. American troops withdrew from the Dominican Republic in 1924, but remained in Haiti until 1934. President Coolidge removed troops from Nicaragua but sent them back in 1926, where they stayed until 1933. American oil companies vouched for military involvement in Mexico in 1926 when Mexico asserted its sovereignty over oil resources. The United States Treasury loaned $10 billion to the Allied nations during WWI, and demanded to be paid off. The Allies claimed that this demand was unfair, as America’s postwar tariff made it impossible for them to sell their goods and earn dollars to repay their debts.

 IX.

Unraveling the Debt Knot

  The French and the British wanted Germany to make reparation payments, totaling to about $32 billion. The Allied nations hoped to repay the American debt with the money received from Germany. The French sent troops into the industrialized Ruhr Valley in 1923, in hopes of getting reparation payments. Germany responded by allowing its currency to inflate exponentially Dawes Plan of 1924 – It was negotiated by Charles Dawes, and it rescheduled German reparations and allowed Americans to loan money to Germany. This resulted in Americans loaning money to Germany, in which Germany used that money to make reparations to France and Britain, which resulted in France and Britain repaying American war debts.

 X. The Triumph of Herbert Hoover      Hoover was liked by the masses, not by the political bosses, but he still received the rebublican nomination.

In the 1928 elections he was versing the democrat Alfred E. Smith, a 4 time New York governor. While Herbert as personally colorless, he inspired loyalty, and was at radio broadcast then his opponent. He endorsed Labor Unions, government regulation of the radio.

In the end, Hoover swept the election, receiving the southern democrats’, prohibition’ and the KKK ‘s votes.

 XI. Hoover’s First Moves     Passed the Agricultural Marketing Act of 1929, which settled up the Federal Farm Board with half a billion dollar budget to lend to farmers.

The Federal Farm Board created the Grain Stabilization Corporation and the Cotton Stabilization Corporation, whose purpose was to increase the farm prices by buying off the surplus. Their idea failed as more farm production came in.

Hawley-Smoot Tariff of 1930-Set the Tariff at 60% and lead the US into the Great Depression.

 XII. Great Crash ends the Golden Twenties.

     Industrial mass production and spiraling stock prices lead to the economy’s downfall.

Federal Reserve Board failed to curb the prices.

October 29 1929-Black Tuesday. 16 million shares were lost as a last-ditch effort, 40 billion dollars were lost, wages were cut, and many people committed suicide.

In the First year, 5000 banks collapsed along with the investor’s savings.

Soup Kitchens opened, bread lines were formed and birth rates dropped.

 XIII. Hooked on the Horn of Plenty    The Great Depression came in because of farm overproduction. The ability to consume became less than the ability to produce.

Many people paid on credit, leaving the lenders and sellers in dept.

Workers were replaced by machines, and forced out on the street. They wanted to work, but there was no work available. Those who were unable to pay for their rent were forced out on the street.

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XIV. Rugged Times for Rugged Individualist

   Hoover believed that government involvement in the economic crash would kill the American image.

He had faith in the industry, believing that it would rebuilt it self, and that prosperity would be “around the corner”.

Gave money to the top class, like the bankers, who most people blamed for the stock crash.

 XV. Herbert Hoover, Pioneer for The New Deal   Hoover encouraged Congress to spend money on public works, a total of 2.5 billion dollars was contributive. Began building the Hoover Dam (1930-1936), and vetoed the Tennessee River Dam proposed by the Muscle Shoals Bill, because he felt it was socialist.

 Established the Reconstruction Finance Cooperation (RFC) in 1932.

 It was granted half a billion dollar budget, that was meant lend money only to public work companies, even though most of the government projects somehow managed to get their own money (and the government profited from the Corp.)  Norris-La Guardia Anti-Injection Act illegalized yellow-contracts, and antiunion. It also forbade Federal Courts to forbid strikes, boycotts, and peaceful picketing.

 XVI. Rooting the Bonus Army in Washington     Hawley-Smoot Tariff gave the industry a bonus, and WWI veterans wanted their bonus now instead of waiting for it to be played off to them in small payments. “The Bonus Expeditionary Force” marched on the US capitol in 1932, and set up camps on vacant lots in D.C.

When their proposed Bill failed, Hoover offered to pay their return tickets.

Most Bonus soldiers went home, but a few stayed, and General McArthur quelled the riot, killing two people. Hoover lost popularity due to this event.

 XVII. Japanese Militarists Attack China  Japan conquers Manchuria and closes the Open Door Policy in China.

   The League of Nations was called to solve the situations, and even tried to sneak the US into the League..

The League told Japan to leave Manchuria, but Japan left the League instead.

Hoover refused to get the US involved with the League and blockaded Japan. The Stimson Doctrine stated that the US would not recognize any Japan territory conquered by force, and proceeded to boycott small Japanese goods.