U.S. History II HIS-112

1. U.S. History IIHIS-112 Unit 8 The 1920s

2. The New Era • The 1920s were characterized by economic change and social controversy • It was a period when businesses go through an economic boom • There was an increase in new technology • It was a period marked by cultural diversity and new social behaviors • This period also fully embraced isolationism • It was also a period of Republican dominance • The presidency was held by Warren Harding (1920-1923) and Calvin Coolidge (1923-1929) • Economy soared after a postwar depression in 1921 and 1922

3. New Era and Corporate Economy • During the 1920s, the GNP rose by 40% • Industrial production nearly doubled • There was new technology that came out of the war • For example, DuPont developed plastic and rayon • There was more efficient planning, management, and innovative advertising • The level of corporate mergers taking place was higher than it had been since the 1890s • In 1929 alone, over 1,200 mergers took place • Including General Motors, Sears Roebuck, and DuPont • By 1930, 200 corporations controlled almost half the corporate wealth

4. New Era and Corporate Economy • A new managerial style emerged based on Alfred P. Sloan’s reorganization of GM • He broke the company down into components • Mangers were tasked with planning new products, controlling inventory, and putting the whole production process together • Planning was key to the new corporate structure • Marketing and advertising were now important components • More money was spent on research as well • Employers also embraced welfare capitalism • This was to encourage workers to be more productive • This included incentives such as pensions, recreation facilities, cafeterias, paid vacations and profit-sharing plans

5. New Era and Corporate Economy • This period also was known as the peak of the “second Industrial Revolution” • This is mainly because of the rising use of electricity • By 1919, more than 2/3 of American homes had electricity • With this, new electronic devices were created to save time for homemakers, including washing machines, vacuum, and refrigerators • However, the actual time the average housewife spent working was not reduced even with these gadgets • For many poor urban and rural women, the only change they saw was an ever growing divide between them and the wealthy

6. New Era and Corporate Economy • The marketing was aimed mostly at women • 80% of all personal credit was given to women homemakers • A lot of this attention was spent on personal products for women, including treatments for skin problems, body odor, and other personal problems • Chain stores also erupted at this time • They offered more goods at cheaper prices because they bought in bulk and did not provide credit or delivery services • The Great Atlantic & Pacific Tea Co. (A&P) revolutionized the grocery store • J.C. Penny and Woolworth began selling a large variety of goods

7. Warren Harding Campaign Poster (1920)

8. Election of 1920 • The election of 1920 did not see a strong candidate from either party • The Republican National Convention in June led to the rise of a “dark horse” candidate • Originally, the Republican party wanted to run Theodore Roosevelt but he had died in January 1919 • The main candidates had been General Leonard Wood and Governor Frank O. Lowden of Illinois • However, after ten rounds of balloting, Warren Harding suggested another candidate and was selected • Calvin Coolidge was picked as his running mate

9. Election of 1920 • Harding ran on two platforms: “A return to normalcy” and “America First” • The former was a rallying cry for a return to calmer time prior to World War while the latter was popular with those who were against the League of Nations • He ran a campaign very similar to McKinley’s • It included a very aggressive ad campaign while he stayed at home giving speeches • The Democrat National Convention later that month also had some big issues • It took 44 ballots before their candidate was selected, Ohio Governor James Cox with Franklin D. Roosevelt as his running mate

10. Election of 1920 • Cox supported many of Wilson’s ideas including the U.S. joining the League of Nations • As his party did not have the same funds as the GOP, he did an extensive campaign around the country that reached approximately 2 million voters • Unfortunately , many of his ideas were not attractive to the populace who did not want another four years of Wilsonian-type politics • Eugene Debs also ran for president again under the Socialist Party ticket • He was still in prison at the time

11. Election of 1920 • In the end, Harding won the election by a landslide • He received over 60% of the popular vote with 404 electoral votes • Cox only received 34% of the votes with 127 electoral votes • Debs once again got over 900,000 votes (3.4%) • As the Nation magazine put it, it was an election by “disgust” • It was not so much the policies of Harding that won the voters over but a nation sick of Wilson and the Democrats • The Republicans also won control of both houses of Congress

12. Election of 1920 Results

13. Warren Harding (1921-1923)

14. Harding Presidency • When Harding came to office, he had one major goal • He wanted to reduce the size of government to move it into a peacetime one • In a speech before a joint session of Congress, he called for • The cancellation of the wartime profit excise tax • A general lowering of taxes • The creation of a merchant marine • The development of a department of public welfare • All of these ideas were aimed at stimulating the post-war economy

15. Harding Presidency • He wanted to create a nationalized budget system • The Bureau of the Budget was created with the Budget and Accounting Act of 1921 • Its purpose was to have the Office of Accountancy find measures that were “looking to greater economy or efficiency in public expenditures” • He also made very smart appointments: • Andrew Mellon (Treasury) • Herbert Hoover (Commerce) • Henry C. Wallace (Agriculture) • Charles G. Dawes (Budget Director) • William Taft (Chief Justice)

16. Charles Evans Hughes • Secretary of State (1921-1923)

17. Washington Naval Conference • During the 1920s, U.S. foreign policy was focused not only on keeping the peace but isolationism as well • To meet this purpose, the Washington Naval Conference was held • Its purpose was to discuss disarmament and preserve peace • Three main agreements came out of it: the Four-Power Treaty, Five-Power Treaty, and the Nine-Power Treaty • All of the treaties were negotiated by Secretary of State Hughes • In the long term, it helped to enable Japan to become a dominant naval power

18. Washington Naval Conference • Four-Power Treaty (1921) • This was signed by the U.S., Britain, France, and Japan • It was designed to protect U.S. interests in the Pacific by maintaining the status quo and thus preventing war • Five Power Treaty (1922) • Like the previous treaty, it was designed to protect U.S. overseas investments and to prevent the U.S. from getting dragged into another war • This treaty put a limit on the total naval tonnage and a ratio of armaments for each of signatories • For every 5 tons of American and British warships, Japan was allowed 3 tons and France and Italy 1.75 tons

19. Washington Naval Conference • Nine-Power Treaty • Signatories included the previous members as well as China, Belgium, the Netherlands, and Portugal • This was designed to protect international interests in China • Specifically it wanted a guarantee of the U.S.’s Open Door policy and the equality of China and Manchuria • This would be violated by Japan in 1931 when they invaded Manchuria • The effect of the conference was a redesigned navy • Many ships were scrapped and new ones were built smaller • Those already under construction were modified into aircraft carriers

20. Disarming After the War

21. Harding’s Scandals • While there is some good to Harding’s presidency, there was also a lot of bad • Most of it did not come out until after the president’s death • A lot of it had to do with him appointing friends (known as the Ohio Gang) to high positions • Harding himself was plagued with scandals • He openly violated the Eighteenth Amendment by serving alcohol in the White House while he pushed for a dry country • He was known for his numerous affairs • Nan Britton wrote an exposé about her affair in the 1927 The President’s Daughter in which she tells about Harding’s love child

22. Harding’s Scandals • Teapot Dome Scandal • Harding issued an Executive Order to transfer control of all naval oil reserves from the Naval Department to the Department of the Interior • This included reserve lands in Teapot Dome, WY • In 1922, Secretary of the Interior, Albert Fall gave a contract to Harry Sinclair of Monmouth Oil to drill the lands • There was no competitive bidding done for this contract • After an investigation by the Wall Street Journal, it was discovered that Fall received a $100,000 interest-free loan from Sinclair as well as over $400,000 in bribes • Fall was convicted of bribery in 1929 and served a year in jail

23. Harding’s Scandals • In 1927, Thomas W. Miller was convicting of defrauding the government • He had been the Alien Property Custodian under Harding • His job was to handle property of enemy citizens in the U.S. as part of the Trading With the Enemies Act • He received a $274,000 bribe to transfer the American Metal Co. to Richard Merton • The Attorney General, Henry Daugherty, also received $50,000 in bribes as well

24. Harding’s Scandals • Daugherty was the target of a number of accusations • The biggest was of profiting from sales of government alcohol supplies during Prohibition • He was also accused of selling pardons • Charles Forbes, head of the Veteran’s Bureau was also guilty of corruption • Specifically, it involved giving contracts for government buildings for kickbacks • After investigation, it was discovered that he defrauded the government for millions of dollars

25. Harding’s Death • In June 1923, Harding began a cross-country trip to promote the U.S. joining the League of Nation’s World Court • Part of this including being the first president to visit the state of Alaska • In July, he supposedly came down with a bad case of food poisoning • He traveled south to San Francisco • There he developed pneumonia and died of a heart attack on August 2, 1923 • He was succeeded by V.P. Calvin Coolidge • He was sworn in by his father, a justice of the peace, while in Vermont

26. Calvin Coolidge (1912-1929)

27. Coolidge’s First Term • Calvin Coolidge was the opposite of Harding • While Harding was the poker-playing, heaving drinking president, Coolidge was a simple, honest, and religious man • He was best known for his no-nonsense role in putting down the Boston police strike in 1919 when he was governor of Massachusetts • When he took office on August 2, 1923, he kept much of Harding’s cabinet in tact • One of the key cabinet members was Andrew Mellon • As Coolidge’s main focus was on the economy, he wanted to keep the successful businessman on his cabinet

28. Coolidge’s First Term • Coolidge did consider the country’s economy to be his top priority • He believed that the economy either made or destroyed presidents as it was the one thing the voters always knew about • When he entered office, the country was in an economic boom • This period was known as the “Coolidge Prosperity” as the country’s income rose from $71.6 billion in 1923 to $81.7 billion in 1928 • It also was a time of corporate mergers

29. Coolidge’s First Term • Coolidge believed that businesses should be the one’s running the country • Congress should be running the federal government, not controlling businesses • This included pushing for less government regulation, higher tariffs, and lower taxes • He did admire successful business owners • This materialism clashed a bit with his Puritanical values but he believed that as long as “wealth is made the means and not the end, we need not greatly fear it”

30. Coolidge’s First Term • Coolidge took a very “hand’s off” type of leadership • He was very successful at delegating duties throughout his administration • One of the more successful parts was having Herbert Hoover restructure the Department of Commerce • Hoover believed that commerce was the center hub of the country • He expanded the role of the Department to include such things as regulation of the census, radio and air travel • He also expanded the department’s role to include getting concessions for overseas trade, especially in getting access to raw materials

31. Coolidge’s First Term • In August 1923, the anthracite coal workers were threatening to go on strike • Many Republicans were fearful about this strike threatening winter coal supplies and pushed Coolidge to deal with it • Coolidge, in turn, had Gifford Pinchot, then governor of Pennsylvania, deal with the issue instead • Pinchot was able to negotiate a settlement in favor of the workers, including eight-hour work days and a 10% wage increase • The workers were happy with the deal • However, when the price of coal was increased, the blame fell on Pinchot rather than Coolidge

32. Coolidge’s First Term • One of Coolidge’s main concerns going into the 1924 election was to separate himself from corporate interests • This was to garner the support of the progressive Republicans • He pushed through the Oil Pollution Act of 1924 • This prohibited intentional oil dumping into waters within 3 miles from the shoreline • He got U.S. Steel to end its 12-hour workday policies • He also offered the vice presidential nomination to William Borah, a progressive • However, Borah declined the nomination

33. Coolidge’s First Term • Coolidge also helped push through the Revenue Act of 1924 • It was also known as the Mellon Tax Bill, named after Secretary of Treasury Andrew Mellon • It reduced the tax rate to those making less than $4,000 (~$48,500 in 2008) from 1.5% to 1.125% • It also reduced the top income tax bracket from above $500,000 at a 63% to all income above $100,000 (~$1.2 million in 2008) at only 25% • It created the U.S. Board of Tax Appeals • It also made all non-citizen resident American Indians citizens for the purpose of apportionment

34. Election of 1924

35. Election of 1924 • During the Republican National Convention in June 1924, the clear nominee was Calvin Coolidge • Coolidge won the nomination on the first ballot • Businessman Charles Dawes was nominated for Vice President • The Democrat National Convention illustrated a large split in the party • William McAdoo was supported by the rural delegates of the south and midwest who also supported prohibition (the “drys”) and the Ku Klux Klan • Governor Al Smith of New York was supported by the ethnic minorities in the cities and more liberal delegates, especially those who were against prohibition (the “wets) and the KKK

36. Election of 1924 • One big point of contention during the Convention was whether or not the party would condemn the KKK • Even William Jennings Bryan would not condemn the KKK in fear that it would cause a permanent split of the party • After 100 ballots, neither candidate could get the required 2/3 votes to get the nomination • Because of this, it became the longest running national convention in U.S. history (June 24 to July 9) • On the 103 ballot, John W. Davis, a former Congressman from West Virginia was nominated • Charles W. Bryan was nominated as the vice president

37. Election of 1924 • Will Rogers, a comedian from the era, responded to the convention with “I'm not a member of any organized political party, I'm a Democrat!” • Senator Robert La Follette was unhappy with both sides choosing a conservative candidate • He ran as a third party candidate under the Progressive Party • His campaign pushed liberal ideas that were attractive to farmers, labor unions and socialists • He condemned the government being run by big business and called for more strict regulation of big business • He also wanted to help independent farmers by giving federal aid to them

38. Election of 1924 • The Republicans were able to raise over $4.4 million for their advertising campaign • Coolidge remained at his job in the White House while Dawes traveled the country • They rode along with the slogan “Keep Cool with Coolidge” while reminding Americans how well the country has done economically under the Republicans • Coolidge won the election with 54% of the popular vote (382 electoral votes) • Davis got 28.8% of the votes and 136 electoral votes • La Follette got 16.6% of the votes and 13 electoral votes

39. 1924 Presidential Election Results

40. Andrew Mellon Treasury Secretary (1921-1932)

41. Coolidge’s Domestic Policies • Coolidge’s main domestic policies was to increase the economic well-being of American businesses • He supported Andrew Mellon’s plan to reduce the national debt left over from World War I • He believed that if the tax rates were too high, people would avoid paying them • Therefore, tax rates should be lowered and therefore people would be willing to pay their taxes and thus increase government income • This included reducing income taxes for both the wealthy and poor, lowering the Federal Estate Tax, and promoting more government efficiency

42. Coolidge’s Domestic Policies • Mellon helped push through the Revenue Act of 1926 • This eliminated the gift tax and reduced estate taxes by 50% • It also cancelled many excise taxes • In 1928, the Revenue Act reduced tax rates for corporations to 12% • This allowed the government to give large tax refunds to businesses • Mellon’s plan was successful • It reduced government spending and reduced the national debt from close to $26 billion in 1921 to about $16 billion in 1930

43. Coolidge’s Domestic Policies • In 1925, Coolidge appointed William E. Humphrey as the chair of the Federal Trade Commission • Humphrey was a corporate attorney and lobbyist for the lumber industry • With this appointment, the FTC only investigated “unfair business practices” when the corporations clearly violated what was good for the public interests • Even then, the FTC did not take legal action, instead relying on private hearings and informal “stipulations”

44. Coolidge’s Domestic Policies • While Coolidge’s administration was very pro-business, it did place some limits on big business • In 1926, the U.S. Railway Labor Act was passed • Also known as the Watson-Parker Act of 1926 • The purpose of the Act was to end what were called “wildcat strikes” that would bring the railroad industry to a standstill • Workers received the right to organize unions and negotiate with owners through a bargaining and grievance system • Owners did not have to worry about major strikes • A National Mediation Board was set up to negotiate between the two sides

45. Great Mississippi Flood of 1927

46. Coolidge’s Domestic Policies • In 1927, the Mississippi River flooded • It was the worst river flooding in U.S. history • Roughly 16.5 million acres in seven states were flooded with waters up to 30 feet deep • It caused over $400 million in damages • 246 people were killed due to the flooding • Hoover organized emergency aid to flood victims • The next year, the Flood Control (Jones-Reid) Act of 1928 was passed • It created a system of levees over 1,000 miles long and a series of locks and dams were built along with the construction of runoff channels

47. Vice President Charles Dawes (1925-1929)

48. Coolidge’s Foreign Policies • Coolidge’s foreign policy was tied into the economics • His main goals were to reduce the risk of international conflict, resist revolution and make the world safe for trade and investment • A big concern for the U.S. in Europe was he amount of debt owed by Allied countries • More than $10 billion was owed to the U.S., with ¾ of that belonging to France and Britain • Many called for a cancellation of debts as they had already “paid the price” through the destruction and loss of lives they endured • Coolidge refused to cancel the debt but instead lowered the interest rates on it

49. Coolidge’s Foreign Policies • Another big issue for the Europeans was that they could not export goods to the U.S. • The Fordney-McCumber Tariff of 1922 set the average import duty to 38.5% • Because Europe was unable to export goods to the U.S., they had great difficulty paying back their loans • In 1923, Germany was on the verge of defaulting on its huge reparation payments to the Allies • Germany had only made one payment back in September 1921 and placed a moratorium on loan payments • In response, in January 1923, France invaded the Ruhr Valley which was a key industrial area for Germany

50. Coolidge’s Foreign Policies • An international committee was set up by the Allies to bring about order in Europe • The head of the committee was Charles Dawes • It believed that a “healthy” Germany could pay back its loans to Britain and France • The Dawes Plan of 1924 • The reparations payments were reduced from $2 billion a year to $50 million • Financial reforms were to take place in Germany • This included backing up the paper currency with gold reserves and having American loans made available to Germany • France would leave the Ruhr Valley