The Politics of Boom and Bust: 1920-1932 pp. 751-757. Hiking the Tariff Higher.
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American businessmen did not want Europe flooding American markets with cheap goods after the war, so Congress passed the Fordney-McCumber Tariff Law, which raised the tariff from 27% to 35% to protect American businesses.
Presidents Harding and Coolidge, granted with the authority to reduce or increase duties, were always sympathetic towards big industry and were much more
prone to increasing tariffs than decreasing them.
However, this protectionary device did present a serious problem: Europe needed to sell goods to the U.S. in order to get the money to pay back its debts and begin its economic recovery from WWI, but when it could not sell, it could not repay, thus ensuring continued economic depression of the European states, thus encouraging a panicky citizenry from those countries, thus encouraging…….uh, I hope you see where this is heading……..
In a nutshell, the U.S. policy of raising tariffs sky-high in the 1920s:
Led the European nations to raise their own protectionary tariffs.
Meant that the postwar chaos in Europe was prolonged.
Meant that international economic distress deepened.
The Teapot Dome Scandal was the most shocking of all and involved the corrupt mishandling of naval oil reserves.
Secretary of the Interior Albert B. Fall leased land in Teapot Dome, Wyoming, and Elk Hills, California, to private oilmen Harry F. Sinclair and Edward L. Doheny, but not until Fall had received a “loan” (actually a bribe) of $100,000 from Doheny and about three times that amount from Sinclair to keep quiet about this clearly illegal transaction.
This greedy deal put the American people at risk during any potential upcoming war. Traitor!
World War I had given the farmers a rare time of prosperity, as they’d produced much needed food for the soldiers.
New technology in farming, such as the gasoline-engine tractor, had increased farm production even more dramatically than usual.
However, after the war, these products weren’t needed as much, and the farmers fell back into their traditional poverty due to the classic problem of overproduction of farm goods (ie. Too much food without enough mouths to sell it to).
Farmers looked for relief, and the Capper-Volstead Act, which exempted farmers’ marketing cooperatives from antitrust prosecution, and the McNary-Haugen Bill, which sought to keep agricultural prices high by authorizing the government to buy up surpluses and sell them abroad, helped a little.
Uh, however, Coolidge vetoed the bill - twice.
In addition, the Norris-LaGuardia Act, intended to benefit labor unions was also shot down by Coolidge.
Because America demanded that Britain and France pay their debts, those two nations placed huge reparation payments on Germany, which, in order to pay them, printed out loads of worthless paper money…..causing inflation to soar!
At one point in October of 1923, a loaf of bread cost 480 million German marks!
Finally, in 1924, Charles Dawes engineered the Dawes Plan, which provided a solution to the tangle of war-debt and war-reparations payments. In essence, the plan called for a rescheduling of German reparations payments and paved the way for American private loans to Germany.
Essentially, the payments were a huge circle from the U.S. to Germany to Britain/France and back to the U.S. All told, America never really gained any money or was properly repaid .
Also, the U.S. gained bitter feelings from France and Britain who were angry over America’s apparent greed and careless nature for their plight.
In 1928, Calvin Coolidge said, “I do not choose to run,” and his logical successor immediately became economics genius Herbert Hoover.
Hoover spoke of “Rugged Individualism” which was his view that America was made great by strong, self-sufficient individuals, like the pioneers of old days trekking across the prairies, relying on no one else for help. This was the kind of folk America still needed, he said.
Hoover was opposed by New York governor Alfred E. Smith, a man who was blanketed by scandal (he drank during a Prohibitionist era and was hindered politically by his NY accent and Roman Catholicism).