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Chapter 32 The Politics of Boom and Bust 1920-1932
President Harding • Harding considered worst president ever The Ohio Gang • Cabinet= conservative Old Guard • Charles Evans Hughes (State) • Andrew Mellon (Treasury) • Herbert Hoover (Commerce) • Albert B. Fall (Interior) • Harry M. Daugherty (Attorney General)
US Government in 1920s • Conservative Court Adkins vs. Children’s Hospital 1923 • War Industries Board dissolved • Esh-Cummins Act • The Merchant Marine Act of 1920 (Jones Act) • Anti-labor atmosphere The Great Railway Strike of 1922= injunction • Veterans Bureau, American Legion, Adjustment Compensation Act 1924
Disarmament and Isolationism • 1921 joint resolution to end war • Washington Conference 1922 • Five Power Treaty: ratio for naval ships • Four Power Treaty: maintain status quo in Asia • Nine Power Treaty: uphold Open Door Policy in China • Kellogg-Briand Pact 1928: war is illegal
Tariff • Fordney-McCumber Tariff 1922= 38.5% (protectionist, isolationist) • Europe needed US markets for recovery!- couldn’t pay back US debt • No money for Europe to buy US products • Europe responded with higher tariffs= spiral ↓ of international economy
Harding Scandals • Charles R. Forbes= Veterans Bureau taking kickbacks/embezzling $ • Teapot Dome Scandal: 1921 Secretary of Interior Albert B. Fall= control of navy oil fields • Took a $100,000 bribe to lease oil fields to US oil companies (Edward L. Doheny and Harry F. Sinclair) • AG Harry Daugherty took bootlegger kickbacks- no conviction • The Voyage of Understanding- died August 1923
Coolidge and Farmers • Silent Cal “The business of the American people is business” • Farmers $ dropping after war (no war effort and consumerism) • Problem of the Commons= surpluses • Capper-Volstead Act • McNary-Haugen Bill
International Debt • US=creditor nation ($16 billion from Allies) • GB and France put pressure of Germany for their $32 billion reparations • Ruhr Valley German hyperinflation • Dawes Plan in 1924 as a solution • Created a cycle of debt would collapse with Stock Market Crash
Great Britain, with a debt of over $4 billion owed to the U.S. Treasury, had a huge stake in proposals for inter-Allied debt cancellation, but France’s stake was even larger. Less prosperous than Britain in the 1920s and more battered by the war, which had been fought on its soil, France owed nearly $3.5 billion to the United States and additional billions to Britain.
1928 Election • Republicans= Herbert Hoover • Self made man, efficiency, self reliance, small government, free enterprise, individualism and business • Democrats= Al Smith • NY governor, Catholic, Wet, accent on radio • “A vote for Al Smith is a vote for the Pope” • Solid South defected Hoovercrats • Hoover landslide with 444 EV to 87 for Smith
Crash of 1929 • Hoover inauguration= prosperity, high Stock market, speculation • Black Tuesday: October 29, 1929 speculative bubble burst panic and mob mentality • Stock market crash= symptom of coming Depression- contraction of economy
Causes of Depression • Overproduction, consumerism couldn’t keep up money not invested in salaries to pay for new products • Use of easy credit • Foreign economic problems tied to US • Hawley Smoot Tariff exacerbated issue
Hoover’s Response • Was a humanitarian but believed in rugged individualism • Depression too widespread for relief organizations to handle • Wanted public works (Hoover Dam) and trickle down prosperity- Reconstruction Finance Corporation (RFC) in 1932 • “prime the pump” but received criticism
Bonus Army • Summer of 1932= Bonus Army of thousands marched on DC • Wanted bonus early set up Hoovervilles in Anacostia Flats • Rioting and army called in (Patton and McArthur) • Nail in Hoover’s coffin