Chapter 33Chapter 33

The Politics of Boom and BustThe Politics of Boom and Bust

1920 – 19321920 – 1932

Analyze the factors that led to the Great Analyze the factors that led to the Great Depression and the response of President Depression and the response of President

Herbert Hoover.Herbert Hoover.

Election of 1920Election of 1920““Back to Normalcy” ==> Back to Normalcy” ==> Harding [Rep.] & Cox Harding [Rep.] & Cox [Dem.][Dem.]– Normalcy meant: Normalcy meant: – lower taxes, lower taxes, – Laissez-Faire Laissez-Faire

(Oligopolies and (Oligopolies and Welfare Capitalism)Welfare Capitalism)

– Higher tariffHigher tariff– IsolationismIsolationism

““Ohio Gang”: poker buddies, Ohio Gang”: poker buddies, appointed:appointed:– Charles Evans HughesCharles Evans Hughes– H. HooverH. Hoover– A. MellonA. Mellon– Taft : Chief JusticeTaft : Chief Justice

Harding is consistently ranked as one of the least effective presidents. He led a very weak administration.

Scandals!Scandals! “I am not worried about my enemies. It is my friends that are “I am not worried about my enemies. It is my friends that are

keeping me awake nights.”keeping me awake nights.”

Teapot Dome: Teapot Dome: 19211921 - WY & Elk Hills, CAL; Interior Dept. Secretary Albert - WY & Elk Hills, CAL; Interior Dept. Secretary Albert Fall (Exposed 1923-24, after Harding’s death)Fall (Exposed 1923-24, after Harding’s death)– naval oil leases to oil magnates Harry Sinclair & Edward Dohenynaval oil leases to oil magnates Harry Sinclair & Edward Doheny– took bribestook bribes– Fall got $405,000 & an unsecured loanFall got $405,000 & an unsecured loan– Sinclair & Doheny exoneratedSinclair & Doheny exonerated– Fall indicted & sent to prisonFall indicted & sent to prison

Veteran’s BureauVeteran’s Bureau: : Charles ForbesCharles Forbes stole or squandered $250 mil in 2 yrs. stole or squandered $250 mil in 2 yrs. – GRAFT!!! Sent to federal penGRAFT!!! Sent to federal pen

Harry DaughertyHarry Daugherty, Atty. General – Selling pardons and liquor permits. , Atty. General – Selling pardons and liquor permits.

OtherOtherSocialist Leader PardonedSocialist Leader Pardoned (Debs) (Debs)American Legion: American Legion: 1919 (T.R.,Jr. – WWI vets wanted $$)1919 (T.R.,Jr. – WWI vets wanted $$)Fordney-McCumber Tariff:Fordney-McCumber Tariff: 1922 – high tariffs on farm products 1922 – high tariffs on farm products and new industries. President could raise or lower tariffand new industries. President could raise or lower tariff– Results: 38.5% (raised)Results: 38.5% (raised)

Kellogg-Briand Pact:Kellogg-Briand Pact: 19281928 - condemns war as “an instrument of - condemns war as “an instrument of nat’l policy”nat’l policy”– Signed by 62 nationsSigned by 62 nations– permitted defensive wars; not to use war for aggressive endspermitted defensive wars; not to use war for aggressive ends

Despite isolationism, the U.S. became involved in the Middle Despite isolationism, the U.S. became involved in the Middle East b/c of oil drillingEast b/c of oil drillingRepublican economic policies – pro-business, laissez-faireRepublican economic policies – pro-business, laissez-faireSupreme Court often ruled against progressive legislation in the Supreme Court often ruled against progressive legislation in the 20s20s– MullerMuller and and Adkins cases were about whether or not women merited Adkins cases were about whether or not women merited

special legal and social treatmentspecial legal and social treatment

President Coolidge signs the Kellogg-Briand Pact

Election of 1924Election of 1924Results: Coolidge (“Silent Results: Coolidge (“Silent Cal”/Rep. from VT) over John Cal”/Rep. from VT) over John Davis (Dem. from NY) & Davis (Dem. from NY) & LaFollette (Progressive Party)LaFollette (Progressive Party)– Dems split: wets vs. drys, Dems split: wets vs. drys,

immigrants vs. old-Americans, immigrants vs. old-Americans, Fundamentalists vs. Modernists, Fundamentalists vs. Modernists, northern liberals vs. Southern northern liberals vs. Southern conservativesconservatives

– Progressives: gov’t ownership of Progressives: gov’t ownership of rrs, relief for farmers, opposed to rrs, relief for farmers, opposed to anti-labor injunctions, opposed to anti-labor injunctions, opposed to monopoliesmonopolies

Too many people were sharing in the Too many people were sharing in the prosperity of the 20s to worry about prosperity of the 20s to worry about reform – hurt progressivesreform – hurt progressives

****CoolidgeCoolidge: Summarized his : Summarized his presidency & era: presidency & era: “The chief “The chief business of America is business of America is business.”business.”

Election of 1928Election of 1928

Results: Hoover [Rep. from Iowa] over Al E. Results: Hoover [Rep. from Iowa] over Al E. Smith [Dem. from NY & Catholic]Smith [Dem. from NY & Catholic]– ““A vote for Smith is a vote for the Pope.” Rep. A vote for Smith is a vote for the Pope.” Rep.

slogan: “A chicken in every pot & 2 cars in every slogan: “A chicken in every pot & 2 cars in every garage.”garage.”

Hoover was already known for his administrative capabilities

Dawes PlanDawes Plan

1924:1924: Lent $10 billion Lent $10 billion

to Allies; Harding & to Allies; Harding &

Coolidge wanted it all Coolidge wanted it all

paid backpaid back– would facilitate trade w/Europe in order to protect would facilitate trade w/Europe in order to protect

US economyUS economy– Europeans thought we should forgive the loansEuropeans thought we should forgive the loans– America insisted debts be paid, so FR and BR America insisted debts be paid, so FR and BR

demanded enormous reparations from GERdemanded enormous reparations from GER

Causes and Effects of the Great Causes and Effects of the Great DepressionDepression

Prosperity of the 20s was real: Prosperity of the 20s was real:

wages, profits, manufacturing were wages, profits, manufacturing were

up but farmers, coal industry, small up but farmers, coal industry, small

businesses were weak; lots of stock businesses were weak; lots of stock

speculations; stock market was not speculations; stock market was not

regulated at the timeregulated at the time

Wall Street Crash: Oct. 24 ==> “Black Thursday,” Oct. Wall Street Crash: Oct. 24 ==> “Black Thursday,” Oct. 29, 1929 ==> “Black Tuesday”29, 1929 ==> “Black Tuesday”

**Bull Market **Bull Market ==> strong market==> strong market

**Bear Market**Bear Market ==> weak market ==> weak market

Sold Out (1929), cartoon by Rollin Kirby depicting the

repercussions of the Stock Market Crash of 1929.

Causes and Effects of the Great Causes and Effects of the Great DepressionDepression

speculationspeculationbuying on marginbuying on marginUneven distribution of incomeUneven distribution of incomeexcessive use of creditexcessive use of creditoverproduction of consumer goodsoverproduction of consumer goodsweak farm economy and overproductionweak farm economy and overproductionHigh tariffsHigh tariffsDawes PlanDawes PlanCoolidge twice had vetoed farm subsidy billsCoolidge twice had vetoed farm subsidy bills

Causes and Effects of the Great Causes and Effects of the Great DepressionDepression

““Hoovervilles” and “Hoover Blankets”Hoovervilles” and “Hoover Blankets”

Hooverville outside of Seattle

President Hoover believed that the gov’t

could not help ease the Depression; he believed

it could be ended by:•Directly assisting banks Directly assisting banks

& businesses& businesses•Keeping faith in the Keeping faith in the

efficiency of the industrial efficiency of the industrial systemsystem

•Relying on American Relying on American rugged individualismrugged individualism

•Lending funds to feed Lending funds to feed farm livestockfarm livestock

The Great Depression The Great Depression caused a decade-long caused a decade-long decline in the birthratedecline in the birthrate

Hoover’s PoliciesHoover’s PoliciesHoover adopted unprecedented federal initiatives to combat the Hoover adopted unprecedented federal initiatives to combat the DepressionDepressionHawley-Smoot Tariff: Hawley-Smoot Tariff: 19301930 - Increased duties on farm & - Increased duties on farm & manufacturing productsmanufacturing products– both sides enacted higher tariffsboth sides enacted higher tariffs– In the 1920s, tariff rates were substantially raisedIn the 1920s, tariff rates were substantially raised

Europe nations raised theirs as a resultEurope nations raised theirs as a resultPostwar chaos in Europe was prolongedPostwar chaos in Europe was prolongedInternational economic problems deepened; Depression worsened worldwideInternational economic problems deepened; Depression worsened worldwideAmerican foreign trade declinedAmerican foreign trade declined

Reconstruction Finance Corporation (1932)Reconstruction Finance Corporation (1932): Provides loans to banks, : Provides loans to banks, insurance comps., rr’s, & state & local gov’ts ==> “trickle down” to insurance comps., rr’s, & state & local gov’ts ==> “trickle down” to smaller businessessmaller businesses

RFC loaned $2 bil to businesses, banks, & state gov’tsRFC loaned $2 bil to businesses, banks, & state gov’tspump-priming loanspump-priming loans

Norris-LaGuardia Act (Norris-LaGuardia Act (19321932): pro-labor unions): pro-labor unions– Outlawed “yellow dog contracts”, court injunctionsOutlawed “yellow dog contracts”, court injunctions

Despair and ProtestDespair and ProtestBonus Army: 1932 - Unemployed WWI vets; Bonus Army: 1932 - Unemployed WWI vets; came to Washington -- not due to be paid until came to Washington -- not due to be paid until 19451945– Congress had promised to pay in 1924 but Congress had promised to pay in 1924 but

scheduled to be paid in 1945scheduled to be paid in 1945– Hoover called them “Red Agitators”Hoover called them “Red Agitators”– more than 100 casualtiesmore than 100 casualties– ““Battle of Anacostia Flats” – July 1932Battle of Anacostia Flats” – July 1932– Results: driven from shanties by MacArthur Results: driven from shanties by MacArthur

[Eisenhower & Patton][Eisenhower & Patton]– Severely damaged Hoover’s public imageSeverely damaged Hoover’s public image

Burning the veterans’ shanty townThe Bonus Army

Stimson DoctrineStimson Doctrine

19321932: Sec. of State: Sec. of State– Declares US will not recognize impairment of Declares US will not recognize impairment of

Chinese sovereignty or “Open Door” policyChinese sovereignty or “Open Door” policyWill not recognize any territorial acquisition achieved by Will not recognize any territorial acquisition achieved by forceforce

– Refuses to recognize legitimacy of any regime Refuses to recognize legitimacy of any regime established by force [Japan & China]established by force [Japan & China]