CHAPTER 32The Politics of Boom & Bust

LECTURE 1THE PRESIDENCIES OF

HARDING AND COOLIDGE

I can list the major presidents of the 1920’s and common beliefs of each

1920’S PRESIDENTSThe 1920s was a period dominated by

Republican presidents: Herbert Hoover, Warren G. Harding, and Calvin

CoolidgeIn general, Republicans believed in less

government and less government intervention of business (opposite of

Progressive Presidents)Strong belief in “laissez-faire” economics

(leave alone or hands off)

WARREN G. HARDINGWARREN G. HARDING (Republican) was elected President in 1920

Harding was the MOST presidential looking candidateCampaign slogan was a “RETURN TO NORMALCY”

Harding was not ready for the position and was a poor reader of his friends and their motives (remind you of Grant?)

Ohio GangOhio Gang was the famous group of advisors that Harding had who

mainly were his friends )and very corrupt)

Famous members of the Ohio Gang included:• Charles Evans Hughes• Andrew Mellon• Herbert Hoover• Albert Fall (corrupt)

• Harry Daugherty (corrupt)

I can describe the conditions in the US after World War I

POST WW1 In the 1920s, the Supreme Court killed much of the Progressive legislation passed

by earlier Progressive Presidents. Under Harding, anti-trust laws were ignored or barely enforced!

Labor Unions did not fair well in the early years after WWIMembership dropped dramatically!

Returning soldiers also faced some difficulties and Congress eventually pushed through the ADJUSTED COMPENSATION ACT

Gave every former soldier a paid-up insurance policy due in 20 years

I can summarize US foreign policy in the 1920s

1920’s FOREIGN POLICYIn the early years of Harding’s administration, it was apparent that America was returning to

the foreign policy of isolationismOne of the key areas of foreign policy concern was disarmament

WASHINGTON DISARMAMENT CONFERENCEAt the Washington Disarmament Conference, the US proposed a reduction in fleets and encouraged others to follow them

KELLOGG-BRIAND PACTThere were even those who wanted to “outlaw” war and they passed an act called the Kellogg-Briand Pact that said just this (outlaw war????)

The major idea is that the US and much of the world was being put into a false sense

of security!!!!!!!

I can assess the impact of the important tariffs of the 1920s

FOREIGN TRADEIn foreign trade, the US feared being flooded with cheap European

goods from a quickly recovering Europe!

Fordney-McCumber TariffPushed tariff rates back up on goods coming into the United States

European nations responded by upping their tariffs on American goods!!!!

Hawley-Smoot TariffEventually the US responded by passing the Hawley-Smoot Tariff (under Hoover) that was the HIGHEST tariff and passed during peace time (see page 759)

I can list and explain the scandals of the Harding Presidency

SCANDALS OF HARDING ADM.

Teapot Dome

Much like U.S. Grant, Warren G. Harding’s Administration was known for scandals, fraud, and corruption

Harding was not involved but his “friends” often were including the following scandals

Involved priceless naval oil reserves in Teapot Dome, WY and in California—Albert Fall the bad guy here

Veterans Bureau Charles Forbes looted about 200 million from the govt

Att. Gen. Harry DaughertySold illegally pardons and liquor permits

To America’s surprise, Harding died on August 2nd, 1923CALVIN COOLIDGE was his VP and would assume the role of President

CALVIN COOLIDGECalvin Coolidge was a quiet, reserved individual who’s focus was on

business!!!!!Coolidge had many famous statements about business including:“The business of America is business”

“The man who builds a factory builds a templeThe man who works there worships there”To Coolidge, business people were the most important thing in our nation!!!!

I can analyze and discuss the economics of the 1920s

1920’S ECONOMICSFor the most part, the 1920’s appeared to be a boom for the economyUS came out of World War I the world’s largest creditor nation (what

about Obama???)

“TRICKLE DOWN”Secretary of Treasury Andrew Mellon advocated “tricle down” tax policies that gave tax breaks to the upper income brackets“Buying on Credit”Buying on credit became common and popularProductivity us the US rose about 70 percent and wages were at an all time highBUT…farmers found the 1920s not to be so great after all!!!!!!!!!SIGNS OF A DEPRESSION??

I can describe the foreign policy of Calvin Coolidge

COOLIDGE FOREIGN POLICY

DAWES PLANCoolidge also had to deal with some problems in the

foreign arena as wellThe biggest problem was foreign debts including

German reparation paymentsFrench and British didn’t want to have to pay,

Germany couldn’t really pay which made France and G. Britain even more angry

Solution was the DAWES PLAN of 1924 which rescheduled debt payments from Germany

and US bankers would loan the money to Germany, who would pay GB and France, who would pay the

US (pretty much a big circle)

When the Great Depression hit,

this was all worthless anyway!!!!

LECTURE 2HOOVER & THE GREAT

DEPRESSION

ELECTION OF 1928Herbert Hoover

The two major candidates in the presidential election of 1928 were HERBERT C. HOOVER (Rep) and ALFRED E. SMITH (Dem)

Coolidge had chosen not to run again… “I choose not to run”

Hoover ran on the continued prosperity of past Republican administrations

Smith was a Roman-Catholic and supporter of alcohol (what his changes in the 1920s???)

Radio was significant in this election and helped Hoover

Hoover won in a landslide

“A chicken in every pot, a car in every garage”

“Rugged Individualism”I can summarize the election of 1928

I can assess the importance of the Hawley-Smoot Tariff

HAWLEY-SMOOT TARIFFOne of the most controversial acts of

the Hoover Administration was the passage of the Hawley-Smoot Tariff

of 1930Was the highest tariff in American

historyRate was at nearly 60%

The other nations of the world saw it as an economic declaration of war and

responded in kindProbably plunged the US further into a coming depression than we had to be!!

I can describe the beginning of the Great Depression

THE CRASH BEGINSOn October 24th, 1929 there was a big drop in the Stock

Market

October 29th, 1929 —known as “Black Tuesday” as the Stock Market crashed down!!!!

5000 banks closed their doors

Unemployment rose to 25%

Soup and breadlines occurred

Song of the period was “Brother, Can You Spare a Dime”

I can discuss Herbert Hoover’s response to the Great Depression

HOOVER’S RESPONSE?As the Depression set in, many Americans blamed Hoover for not doing enough to

helpHoover, the “Great Humanitarian” of WWI was hated

Hoovervilles/Hoover BlanketsHoover Blankets and Hoovervilles began to spring up and out

Hoover was a believer in “Trickle Down Economics” or the idea that you cut tax rates at the top and prosperity will trickle down the economic ladder and create jobs

Hoover responded with “rugged individualism” instead of government intervention…well, almost!

RFCThe Reconstruction Finance Corporation was designed to provide indirect relief by assisting insurance companies, banks, agricultural organizations, railroads, and hard pressed states and local governments (sounds New Dealish, huh?)HOOVER DAM —public money spent for jobs to build a dam on the Colorado River

I can explain the situation regarding the Bonus Army

THE BONUS ARMYThe reaction of Hoover to the Bonus Army destroyed any credibility Hoover had left

THE EVENTS?WWI vets marched to Washington demanding

their promised money earlyHoover would not meet with them and sent

the Army led by GEN. DOUGLAS MACARTHUR (later famous in WWII) to

remove themMade Hoover look very unsympathetic

I can list and discuss the causes of the Great Depression

CAUSES OF GREAT DEPRESSION1. Over-speculation2. Overproduction by the farms and

factories3. Overexpansion of credit through the

installment plan4. Technological unemployment5. Worldwide depressions6. High tariffs7. Drought—”Dust Bowl”—see next

chapter

I can explain the rise of Japan in the 1930’s and the US response

THE RISE OF JAPAN

Hoover had some foreign policy issues during his presidency to deal with tooJapan invaded Manchuria, China in 1931 and the League of Nations did nothingSome claim this is really the start of WWIICollective Security died and WWII was born in 1931 on the plains of Manchuria

Manchuria

Hoover Stimson DoctrineDeclared the US would not recognize any territorial acquisition that were

achieved by forceHerbert Hoover will treat Latin America well, but will not receive credit for it…

FDR will!!!