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  1. Homework • Read Ch 33 • Message Boards • Online Quizzes

  2. Ch 33Politics of Boom and Bust

  3. Ch 33 Politics of Boom and Bust • 1920’s Presidents • All Republican • Warren G. Harding • Pro-business • High tariffs • Anti-progressivism • Corrupt • Foreign affairs • Disarmament • Kellogg-Briand • Calvin Coolidge • Pro-business • Herbert Hoover • Pro-business • Farmers’ assistance • Stock market crash • Great depression • Finally accepts the idea that the Government should help the people

  4. Harding and the Quest for Normalcy • Warren G. Harding • Characteristics • kindly, gracious, mediocre mind • sometimes a bit overwhelmed by the responsibilities of the Presidency • poor judge of character • (Washington could never tell a lie; Harding could never tell a liar) • most corrupt administration since US Grant

  5. Warren G. Harding

  6. The Republican “Old Guard” Returns • The “Ohio Gang” • Harding’s poker-playing, cigar-smoking cronies who happen to also be members of his cabinet • Key Players • A combination of the best minds… • Charles Evans Hughes (Sec State) • Andrew W. Mellon (Sec Treas) • Herbert Hoover (Sec Commerce) • And the worst… • Sen. Albert B. Fall (Sec Interior) • Harry M. Daugherty (Attorney General)

  7. Return to Conservatism • Return to McKinley-style politics • laissez-fair • Unless helping businesses make a profit • Conservative appointments • Supreme Court • 4 of the 9 justices are Harding appointments, including William Howard Taft • struck down Progressive legislation • Keating-Owens Act • Prohibited sale of products made by child labor • Muller v. Oregonstruck down by Adkins v. Children's Hospital in 1923 • Which had declared women to be deserving of special protection in the workplace.

  8. Laissez-faire • Interstate Commerce Commission (ICC) • ICC is now controlled by pro-biz appointees who relax anti-trust enforcement • Trade-associations flourish under Hoover • (secretary of commerce)

  9. The Aftermath of War • Economic demobilization • Government dismantles economic controls • WIB was dissolved • Esch-Cummings Transportation Act of 1920 • gov't control of RR's during WWI ended • private management returns of RR returns • RR's allowed to consolidate in order to guarantee their profitability • Government regulation of big business is over.

  10. Post WWI Labor • Labor • End of government support • Post-War strikes • bloody steel strike in 1919 • broken by branding strikes as Reds & exploiting ethnic/racial differences among workers • 1922 RR Strike • brought on by a wage cut • 2 month strike broken by pro-business Attorney General Daugherty • Declining Union membership • crackdowns, "welfare capitalism," pro-biz government policy, association with communism and radicalism • membership down 30% from 1920-1930

  11. WWI Veterans • Veterans • Benefitted most from post-war policy • 1921 Veterans Bureau established • promoted by the American Legion, a vet. organization founded in 1919 • known for its zealous anti-radicalism, conservatism, militant patriotism, and promotion of vets rights • called for "adjusted compensation" • a bonus to make up for wages lost while vets served in war • bill passes, is vetoed by Harding; • passed again in 1924, Coolidge vetoed, but Congress overrode him • 1924 Adjusted Compensation Act (aka Bonus Bill) • promised adjusted benefits in 20 years (1945)

  12. America seeks Benefits without Burdens • International Relations • Ending the war with Germany • after failure to pass the Treaty of Versailles, the US remained in a technical "state of war" with Germany • war finally ended by Joint Resolution of Congress in 1921 • League of Nations • US remains suspicious of the League • refuses to support its provisions but we Harding refuses to completely ignore the League • sends observers to Geneva for the world health program

  13. Black Gold • Oil in the Middle East • oil was a key ingredient in winning WWI • US in a rivalry for oil rights with Britain • Sec. State Charles Evans Hughes secures right to drill for oil in the Middle East

  14. Disarmament • Disarmament crises • Naval buildup before and during WWI made the US a growing threat to other nations • Anglo-Japanese Treaty (1902) • a response to this; pledges that GB will support Japan in any conflict • Washington (Disarmament) Conference 1921-22 • all powers (except Russia) invited to discuss disarmament plans & the mid-East crisis • Sec. Hughes calls for a "10-year Holiday" in battleship construction • a 5-5-3 ratio between US/England/Japan on battleships and carriers

  15. Washington Conference • Treaties ratified by the Washington Conference • 5-Power Naval Treaty • approves the 5-5-3 plan, with the US and England agreeing not to fortify holdings in the Pacific (but Japan can) • 4-Power Treaty • England, France, Japan, and the US • agreement to preserve the status quo in the Pacific • replaces the Anglo-Japanese Treaty (1902) • 9-Power Treaty • agreement to keep the Open Door Policy in China

  16. Weaknesses of disarmament plans • no restrictions on small warships • cruisers, destroyers, subs • no commitments to using armed forces to keep treaty provisions

  17. World Peace • Desire to stay out of future wars • Kellogg-Briand Pact of 1928 (aka Pact of Paris) • Outlawed war • Defensive wars are ok • ratified by 62 nations • Frank Kellogg, Sec. State under Coolidge

  18. Countries that signed the Kellogg Briand Pact

  19. Hiking the Tariff Higher • Fordney-McCumber Tariff (1922) • raised Underwood Tariff (1916) rates from 27% to 38.5% • allows president to raise/lower rates based on advice of a specially appointed Tariff Commission • Harding/Coolidge raised rates more than they lowered them • 32 upward revisions in 6 years; 5 downward during same time • EFFECT • prolonged the postwar chaos in Europe • Europe couldn’t sell goods to US in order to aid its recovery • Europeans raised tariffs

  20. The Stench of Scandal • The most corrupt administration since Grant • Veterans Bureau Scandal • Col. Charles R. Forbes, head of the VB, & accomplices skim $200 million dollars from the VB • Teapot Dome Scandal • In 1921, naval oil reserves at Teapot Dome, WY & Elk Hills, CA were transferred to the control of the Department of the Interior • Sec. Interior Albert B. Fall accepted a bribe of $100,000 from oilman Edward Doheny & $300,000 from Henry Sinclair in exchange for leases to the land • scandal breaks in 1923 • Sinclair & Doheny acquitted (hurts respect for the law) • Fall was sent to jail for 1 year

  21. Scandals continue • Attorney General Harry M. Daugherty • investigated by the Senate in 1924 for illegal sale of pardons and liquor permits • Resigned and blamed Harding in 1927 trial • Harding died in 1923, • never sees the full extent of the corruption in his administration • “Silent Cal” Coolidge becomes Prez.

  22. Calvin Coolidge

  23. “Silent Cal” Coolidge • Coolidge's Administration • Characteristics • A Vermont Yankee • exudes NE virtues of thrift, industry, and honesty • Silent Cal • practiced economy in words • Cautious Cal • an apostle of the status quo • Leave things the way they are • Pro-business Republican • staunch supporter of business • "the man who builds a factory builds a temple; the man who works there worships there."

  24. Period 4 • Harding • Pro-business • Laissez-faire • Interfere to help business • High Tariffs • 1922 Fordney-McCumber tariff • Anti-progressive • Hurts child labor and women • Corrupt cabinet • Veterans Bureau scandal • Teapot Dome Scandal • Disarmament • Died in office 1923 (unhealthy) • Coolidge • Quiet • Pro-business

  25. Frustrated Farmers • Dealings with Farmers • The 1920s marked a decline in agricultural profits • Overproduction • What caused overproduction? • Agricultural revolution • Gas-engine tractor • results in more crops on bigger farms

  26. Congress tries to help • McNary-Haugen Bill (proposed 1924 & 1928) • called for gov't to keep farm prices high by purchasing farmers' surplus • gov't then sells surplus abroad • make up for the loss in price through a special tax. • Vetoed 2x (twice) by Calvin Coolidge

  27. A three way Race for the White House in 1924 • Election of 1924 • Candidates • GOP: Coolidge • Dem Party is split • wets/drys, urban/rural, fundamentalists/modernists, northern/southern, immigrants/old stock Americans • select John W. Davis as a compromise • Progressive Party: Sen. Robert La Follette • runs on a campaign that lashes out at… • monopolies, anti-labor legislation, calls for ownership of RRs & limits on the power of the Supreme Court to invalidate laws

  28. Electoral Results • Results • Coolidge 15,718,211 (382) • Davis 8,385,285 (136) • LaFollette 5,000,000 (13 = the state of Wisconsin)

  29. Foreign Policy Flounderings • Isolationism in Foreign Policy • Caribbean and Latin America • a limited rejection of Big Stickism and Wilsonian interventionism • troops pulled out of the DR in 1924; • troops withdrawn from Nicaragua in 1925, but redeployed in 1926 and stay until 1933. • Troops in Haiti remain (1924-34)

  30. Post WWI Debt • International Debts • $10 billion owed to US by the Allies • Allies want loans forgiven • Debt had been paid in blood • US had made millions from sales to Allies during the war. • US doesn’t care, they want what’s owed • Allies push for German reparations • French troops sent into the Ruhr industrial valley in 1923 to extort payments • Berlin inflates its currency, leading to massive inflation by late 1923

  31. Solution to Allied Debt • Dawes Plan 1924 • Reschedules German reparations payments • allows for private loans to Germany • creates a cycle in which American bankers loan money to Germany, which repays the Allies, who in turn make payments on American loans! • America's refusal to forgive debts simply promotes more ill-will and isolationism

  32. The Triumph of Herbert Hoover, 1928 • The Election of 1928 • Candidates • Coolidge doesn't run again • GOP: Herbert Hoover • an orphan and self-made man who worked his way through Stanford • supports isolation, individualism, and free enterprise • Great administrator, efficient, honest, and humanitarian • Recoils from anything that hints of a "planned economy" but supports unions and regulation of radio

  33. Democrats • Dems: Alfred E. Smith • 4 time governor of NY • a tremendous political personality but numerous strikes against him as a national candidate • a "wet" (prohibitionists call him Al(cohol) Smith) • urban and northern • Roman Catholic • KKK campaigns against him; "a vote for Smith is a vote for the Pope"; "Rum, Romanism, and Ruin.”

  34. Results

  35. Herbert Hoover

  36. President Hoover’s First Moves • Dealing with the Farm surplus • Agricultural Marketing Act (1929) • establishes the Federal Farm Board • $500 million to lend to farm organizations seeking to buy, sell, and store surpluses • in 1930 the Federal Farm Board created the Grain Stabilization Corporation and the Cotton Stabilization Corporation to bolster prices • Unsuccessful • Too much; overproduction • both were buried under an avalanche of farm produce as prices drop to 57¢ a bushel; 5¢ per lbs.

  37. Tariff changes • Farmers hoped that Hoover could lower tariffs • Hawley-Smoot Tariff (1930) • like most tariff measures, starts in the House as a reasonable protective bill • becomes the highest peacetime tariff in American history • raised Fordney-McCumber from 38.5% to almost 60% • Seals the US off from European goods, but also seals American goods inside.

  38. The Great Crash Ends the Golden Twenties • Black Tuesday, October 29, 1929 • burst in the "speculative bubble" in the stock market • 16,410,030 shares sold • marks the beginning (but not the cause) of the Great Depression • 2 months after the crash, stocks had lost $40 million dollars • 5000 banks collapse by 1932; • foreclosures on property as banks scramble to call in loans

  39. Unemployment • Unemployment • 1930: 4 million jobless • 1932: 12 million jobless

  40. Causes of the Great Depression • OVERPRODUCTION • Farm and Factory • Too ,much for consumers to consume or pay • INCOME DISPARITY • growing gap between the rich and poor • Too much money in the hands of a few wealthy people • profits from production going back into more production, not into wages or salaries, which creates much of the problem in #1 • EASY CREDIT • a false wealth that leads to more production but a consumer who is overextended • installment plans • "buying on margin" - stocks

  41. UNEMPLOYMENT & UNDEREMPLOYMENT • caused by technology and the start/stop nature of the economy • WORLDWIDE DEPRESSION • European nations faltering on loans and reparations payments • HIGH TARIFFS • Dampened trade • NATURAL DISASTERS • drought & the boll-weevil in the Mississippi Valley in 1930 • Cause farmers to sell farm

  42. Hoover and the Great Depression • Hoover's response to the crisis • Philosophy of "rugged individualism” and “volunteerism” • fears that direct government aid would make citizens lazy and dependent • People began to look at Hoover as unsympathetic/cold • Hoover-villes, Hoover-blankets, Hoover-flags

  43. Hoover finally caves in and helps… • the wealthy business owners • The Trickle Down theory • Believed that if financial health were restored at the top, unemployment would be relieved at the bottom. Doesn’t work

  44. Hoover Battles the Great Depression • Paving the way for the New Deal • Public Works • Hoover approves of $2.25 billion dollar public works program • most famous project = Boulder Dam (later called Hoover Dam) • Hoover accepts the principle of public works, but rejects anything that smacks of socialism • the Muscle Shoals Bill – • which calls for creation of hydroelectric dams in TN which would sell power in competition with private utility companies

  45. Hoover’s “Deal” • Reconstruction Finance Corporation (1932) • A gov't lending corporation that provides money to aid business and farm organizations • Norris-LaGuardia Anti-Injunction Act (1932) • a boost to organized labor • outlaws yellow dog contracts & forbids federal courts from issuing injunctions to restrain strikes, boycotts, and picketing

  46. The significance of Hoover's actions • an important bridge between the previous depression policies ("sweat it out") and the New Deal….government is doing something to combat economic slumps

  47. Routing the Bonus Army in Washington • Bonus Expeditionary Force (Bonus Army) • group of 20,000 vets seeking early payment on the "bonuses" promised in the Adjusted Compensation Act (1924) • The marchers take up residence in a giant Hooverville across the Potomac • protest outside the Capitol; speeches; etc.