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The State, The Economy, and Business

The State, The Economy, and Business. Chapter 23 Pages 688-692. Objective. Summarize the continuities of the administrations of Warren Harding, Calvin Coolidge and Herbert Hoover in domestic and foreign affairs. Essential Questions: What types of Presidents were Harding and Coolidge ?

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The State, The Economy, and Business

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  1. The State, The Economy, and Business Chapter 23 Pages 688-692

  2. Objective • Summarize the continuities of the administrations of Warren Harding, Calvin Coolidge and Herbert Hoover in domestic and foreign affairs. • Essential Questions: • What types of Presidents were Harding and Coolidge? • What were the scandals of the Harding Administration? • What role did the US have in the world? • Why did big business flourish in the 1920’s?

  3. New Era New and closer relationship between the federal government and American business becomes the hallmark of Republican policy in both domestic and foreign affairs. It is this business-government partnership that Republicans claim is responsible for the nation’s economic prosperity.

  4. Warren Harding 1921-1923 • “I knew that this job would be too much for me.” • The Ohio Gang • Cards, tobacco, and whiskey • “I have no trouble with my enemies…. But my damned friends,… keep me walking the floor nights.” • Scandals • Attorney General Harry Daugherty received bribes from bootleggers and fails to convict fellow crony, Forbes. • Charles Forbes steals $250 million from veterans’ hospitals. • Sec. of Interior Albert Fall receives payoffs for leasing government oil reserves to two private oil companies. First cabinet member to go to jail.

  5. Warren Harding 1921-1923 Mr. & Mrs. Harding

  6. Warren Harding 1921-1923 • Mr. Harding & Nan Britton • Affair 1917-23…30 yrs younger • 1919 daughter Elizabeth Ann • Child support delivered by Secret Service • Sued the Harding estate • Book: The President’s Daughter (1927)

  7. Warren Harding 1921-1923 • Mr. Harding & Carrie Philips • Affair 1905-20…10 yrs younger • Wife of a friend • 1917 blackmailed Harding on WWI war vote • 1920 RNC bribes Philips with $20K & a slow trip to Japan • Lives until the 1960s

  8. Warren Harding 1921-1923 • Sec. of Treasury Andrew Mellon • Pittsburgh banker • Serves three Republican presidents • One of the richest men in America • Leading investor in Aluminum Corp. & Gulf Oil • Cut the federal deficit • Cut taxes on income, corporations, and inheritance • Free capital for new investment

  9. Calvin Coolidge 1923-29 VP to Harding Gov. of Massachusetts and fame thru 1919 Boston police strike “Silent Cal” Least amount of government possible “The business of America is business.”

  10. Herbert Hoover 1929-1933 • Sec. of Commerce under Harding & Coolidge • Continuation of government-business partnership • Business that is enlightened by government will serve the public interest • “Rugged-individualism” =self-reliance & personal responsibility • “Associative State” • Government encourages voluntary cooperation among corporations, consumers, workers, farmers, and small businessmen. • Commitment to efficiency & rationality • Standardization

  11. Herbert Hoover 1929-1933 • “Associative State” • Creation of national trade associations • Improve efficiency by reducing competition • Expands monopolies by ignoring anti-trust laws • Supreme Court allows • Regulatory boards are run by industry leaders • Ideal system for the concentration of corporate wealth & power • 200 corporations own ½ the corporate wealth & 1/5 of national wealth • Vertical monopolies that control the raw materials, manufacturing processes, and distribution networks increase

  12. War Debts, Reparations, Keeping the Peace • WWI transforms America • From debtor to creditor and the world’s strongest economic power • NY replaces London as center of international finance and investment markets • Allies no more? • US is a loan shark • Europeans are ungrateful debtors • Leads to anti-American feelings in Europe and isolationism in the US

  13. War Debts, Reparations, Keeping the Peace • German war reparations • $33 billion by ToV • No means to repay • 1924 President Hoover & banker Charles Dawes aid German recovery • Dawes Plan • Reduced German debt • Stretched out the payments • Lent Germany money • Stabilized Germany’s currency to pay GB & France • GB & France repay US

  14. War Debts, Reparations, Keeping the Peace • 1921 Sec. of State Charles Evans Hughes • Washington Naval Conference 1st disarmament conference • GB, France, Italy, Japan, & China • Reduction of navies and no new warships • Agreement eventually abandoned • The US never joins the League of Nations • However, maintains an active, yet selective hand in world affairs • 1926 US joins World Court (est. by League in 1920) • 1928 Kellogg-Briand Pact • Renounces war with 62 other nations • No power of enforcement • US Congress spends $250 million on new battleships

  15. Commerce & Foreign Policy • Sec. of State Charles Evans Hughes • The creation of a “Pax Americana” • Economic wealth, not military or political power, could create a new and prosperous international system free of conflict. • Capitalist economies must expand its markets to thrive • Investments must help others to buy American products • Close cooperation between US bankers and government dictates US foreign policy

  16. Commerce & Foreign Policy • 1926 Sec. of Commerce Herbert Hoover • GB drive up the price of rubber, a key component of America’s growing auto industry • Hoover retaliates by threatening British loans and war debt payments • Encourages US investors to grow their holdings in SE Asia and Liberia • In 3 months, Hoover drives the price from $1.21 per pound to $.40 • Simple “rugged individualism” on a global scale

  17. Commerce & Foreign Policy Oil, automobiles, farm equipment, and electrical equipment supplies the growing world market. US foreign investment grows from $3.8 billion in 1919 to $7.5 billion in 1929. US companies challenge British dominance over Middle Eastern & Latin American oil fields to form powerful cartels.

  18. Commerce & Foreign Policy The US policy of maximum freedom for businesses, backed with limited government advice and assistance, greatly boosted the power and profits of American investors. US investment in Latin America doubles and stifles the ability of locals to grow their own food, diversify their economies, or establish democratic governments. US establishes “Banana Republics” or autocratic, military regimes that can protect US investments.

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