chapter 25, section 1: politics and prosperity main idea: as the republican party returned to power...
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Chapter 25, Section 1: Politics and Prosperity
Main Idea: As the Main Idea: As the Republican party returned Republican party returned to power in the 1920s, the to power in the 1920s, the
economy boomed.economy boomed.
A. Republicans in Office Warren Harding won the 1920 election using the campaign
slogan “Back to Normalcy,” which meant a return to a simpler time (pre-WWI).
Harding Takes OfficeHarding Takes Office For his top cabinet posts, Harding chose capable men
Andrew Mellon – Secretary of the Treasury Herbert Hoover – Secretary of Commerce
Corruption & ScandalsCorruption & Scandals For other posts, he chose his friends from home, known as
the “Ohio Gang.” While Harding was honest, many of them were not, resulting in many scandals. Charles Forbes, head of the Veterans Bureau, was convicted
of stealing millions from it. After, many other scandals came to the surface, leading to Harding’s death from a heart attack.
Tea Pot Dome Scandal- Secretary of Interior Albert Fall Secretary of Interior Albert Fall secretly leased government land in California & Wyoming secretly leased government land in California & Wyoming to private oil companies in exchange for bribes; he was to private oil companies in exchange for bribes; he was tried and found guilty (1st cabinet member sent to prison) tried and found guilty (1st cabinet member sent to prison)
Coolidge Takes OfficeCoolidge Takes Office “Silent Cal” – response to woman’s bet … “You lose.” Wins Election of 1924: “Keep Cool With Coolidge.”
Elk Hills,CaliforniaElk Hills,California
19121912
U.S. NAVYU.S. NAVY
O I LO I LTeapot Dome,Wyoming
Property of U.S. NAVY
Teapot Dome,Wyoming
Property of U.S. NAVY
President William H. TaftPresident William H. Taft
The oil reserves of Teapot Dome, Wyoming, and Elk Hills, California shall be for US Naval use only.
I appoint Albert Fall to be the Secretary of the Interior.
President Warren G. HardingPresident Warren G. Harding
Psssssst. Albert,Take this. Ooh la la!
A hundred thousand dollars!
Why thank you very much Harry
Sinclair of the Mammoth Oil
Corp and Edward Doheny of Pan
American Petroleum.
Elk Hills,CaliforniaElk Hills,California
Teapot Dome,Oil reserved
forU.S. NAVY
Teapot Dome,Oil reserved
forU.S. NAVY
Mammoth Oil Corp
19211921
U.S. NAVYU.S. NAVY
O I LO I L
Pan American
PetroleumPan American
Petroleum
Hey, the bribe worked, Harry. Our buddy Albert let us lease Naval reserves and drill for oil.
Sssssweet Ed!
Secretary of the Interior Albert Fall
Harry Sinclair
(Mammoth Oil Corp.)
Edward L. Doheny (Pan-American Petroleum)
Yo, Albert buddy! How about letting
Edward and I drill for oil in Elk Hills and
Teapot Dome!
But that’s Naval
property! You can’t drill
there!
Maybe $100,000 would help you
change your mind!
Why didn’t you say so, Ed? You’ve got a deal!
B. Coolidge Prosperity Like Harding, Coolidge was very pro-business.Like Harding, Coolidge was very pro-business.
Industry BoomsIndustry Booms “Coolidge Prosperity” refers to the economic ” refers to the economic
boom of the mid- to late- 1920s, while Coolidge boom of the mid- to late- 1920s, while Coolidge was President.was President.
Factory production increased, which meant more Factory production increased, which meant more jobs were created, which meant incomes rose, jobs were created, which meant incomes rose, which meant spending increased, which meant which meant spending increased, which meant more economic growth, which meant ……more economic growth, which meant ……
Advertising boosted sales by boosted sales by convincing people they’d be happier if they bought certain products
Buy now, pay later- installment buying (buying on credit) encouraged people to buy things they really couldn’t afford. This increased both the demand for goods, as well as consumer debt (people owed more than they had).
“Perhaps one of the more important accomplishments of my administration has been minding my own business.”
“The business of America is business.”
A Booming Economy: The 1920’s
Income increases
People purchase more goods
Companies earn higher profits
Companies expand and hire more people
People getting rich from the People getting rich from the stock market encouraged stock market encouraged others to invest.others to invest.
Buying on marginBuying on margin is like is like buying stocks on credit. This buying stocks on credit. This can be dangerous because can be dangerous because stock values don’t always rise.stock values don’t always rise.
By 1928, stock values rose By 1928, stock values rose faster than company values. faster than company values. Some experts warned that the Some experts warned that the “Great Bull Market” would not “Great Bull Market” would not last forever, but most investors last forever, but most investors ignored the warnings.ignored the warnings.
A Soaring Stock MarketA Soaring Stock MarketAs the economy boomed, the stock market soared. Stock values skyrocketed & many investors got rich (called a bull market).
How does the stock market work?
You buy 100 shares of stock ofx $5.00 per shareHow much money
have you invested? $500.00
Scenario #1
stock increases to $20 per share
100 shares of stockx $20.00 per share
How much are your 100 shares of stock now worth?
$2,000.00
How much profit have you made?
$2,000.00 stock value
- $500.00 initial investment
$1,500.00 net profit
How does the stock market work?
You buy 100 shares of stock ofx $5.00 per shareHow much money
have you invested? $500.00
Scenario #2
stock decreases to $1 per share
100 shares of stockx $1 per share
How much are your 100 shares of stock now worth?
$100.00
How much money have you lost? $100.00 stock value
- $500.00 initial investment
$400.00 net loss
C. A Limited Role in World Affairs After WWI , the U.S. was now the world’s leading After WWI , the U.S. was now the world’s leading
power, but most Americans wanted to stay out of power, but most Americans wanted to stay out of European affairs & keep to ourselves (isolationism).European affairs & keep to ourselves (isolationism). The U.S. signed a separate peace treaty with the losers The U.S. signed a separate peace treaty with the losers
of the war and would not join the League of Nations.of the war and would not join the League of Nations.
Latin AmericaLatin America Trade between US & Latin America increased. At
times, we intervened to protect our interests there. Nicaragua – US Marines were sent to protect American
plantations & RRS during a revolution there Mexico – A US diplomat worked out a compromise
The Soviet UnionThe Soviet Union Russia became the Soviet Union after V.I. Lenin Russia became the Soviet Union after V.I. Lenin
(Bolshevik Revolution) installed a communist gov’t.(Bolshevik Revolution) installed a communist gov’t. U.S. refused to recognize the new government due to U.S. refused to recognize the new government due to
anti-communist feelings anti-communist feelings (no private property or religion).(no private property or religion). We still sent $20 million in aid to starving Russians in 1921.We still sent $20 million in aid to starving Russians in 1921.
Pursuing PeacePursuing PeaceBecause militarism was one of the main causes of WWI, many people in the 1920s favored disarmament.
DisarmamentDisarmament- reducing - reducing armed forces and weaponsarmed forces and weapons
By the end of the decade, the US & 61 other nations signed the Kellogg-Briand Pact, which “outlawed” war
It’s one fatal flaw, however, was that it didn’t say how it would keep the peace.
What would happen to aggressive nations?