Chapter 32 - The Politics of Boom and Bust

I. The Republican “Old Guard” Returns

1. President Warren G. Harding was popular, but he was a pushover and didn’t know how to lead.
2. His cabinet helped: Secretary of State Charles Evans Hughes, smart and tactical and Secretary of Commerce Herbert Hoover, and Secretary of
   the Treasury Andrew W. Mellon.
3. However, they had some bad apples, such as, Senator Albert B. Fall of New Mexico, secretary of the interior, who was against the movement of conservation and Harry M. Daugherty who became attorney general.

II. GOP Reaction at the Throttle

1. A good man but a pushover, Harding \was old fashioned.
2. He wanted to laissez-faire capitalism.
3. He appointed four of the nine justices, including William H. Taft.
4. In the 1920s, the Supreme Court stopped a federal child-labor law and In the case of Adkins v. Children’s Hospital, the court
   reversed its ruling in the Muller v. Oregon case by taking away a minimum wage law for women.
5. Under Harding, corporations benefitted and grew.
6. Interstate Commerce Commission.

III. The Aftermath of the War

1. Wartime government controls disappeared completely.
2. Government returned control of railroads
   to corporations with the the Esch-Cummins Transportation Act of 1920.
3. The Merchant Marine Act of 1920 got rid of ships which reduced the Navy.
4. Labor Unions lost a lot of their power.
5. In 1921, the Veterans’ Bureau was created to help disabled and struggling veterans.

IV. America Seeks Benefits Without Burdens

1. America never ratified the Treaty of Versailles, until July of 1921.
2. The U.S. did not participate in the League of Nations.
3. In the Middle East, Secretary Hughes allowed American oil
   companies the right to use the large amounts of oil there.
4. The Washington “Disarmament” Conference of 1921-22
   resulted in a plan that kept a 5:5:3 ratio of ships that could be held
   by the U.S., Britain, and Japan.
5. The Soviet Union was not invited.
6. The Nine-Power Treaty of 1922 allowed the open door in China to remain open.
7. Frank B. Kellogg, Calvin Coolidge’s Secretary of State, won
   the Nobel Peace Prize.
8.  Kellog-Briand Pact; all nations that signed would no longer use war as offensive means.

V. Hiking the Tariff Higher

1. Congress passed the Fordney-McCumber
   Tariff Law, which raised the tariff from 27% to 35%.
2. This sucked for Europe because they were not receiving money from the States that was essential in paying them back for war costs.

VI. The Stench of Scandal

1. Charles R. Forbes was caught stealing over 200 million and resigned as the leader of the Veterans’ Bureau.
2. Albert B. Fall leased land in Teapot Dome, Wyoming, and Elk Hills,
   California, to oilmen Harry F. Sinclair and Edward L. Doheny, and received a bribe of $100,000 from Doheny and about $300,000 from Sinclair.
3. President Harding died in San Francisco on August 2,
   1923, of pneumonia and thrombosis

VII. “Silent Cal” Coolidge

1. Calvin Coolidge was part of the Republican Party.
2. He was a clean start for most Americans who were just too tired of Harding’s presidency and the scandal it brought.

VIII. Frustrated Farmers

1. World War I had given the farmers the opportunity to produce much food for the soldiers.
2. But after the War, a lot of production was not needed.
3. Capper-Volstead Act exempted farmers’ marketing cooperatives from antitrust
   prosecution
4.  McNary-Haugen Bill, which kept produce prices high and allowed government to but surpluses and sell them to other countries for profit (Coolidge vetoed the second bill, twice.)

IX. A Three-Way Race for the White House in 1924

1. Coolidge was chosen by the Republicans again in 1924.
2. Klu Klux Klan was not persecuted by Democrats.
3. Senator Robert La Follette led the Progressive Party as the third party candidate.

X. Foreign-Policy Flounderings

1. Senate did not allow the U.S. to obey to the World Court (the judicial sector
   of the League of Nations)
2. In the Caribbean and Latin America, U.S. troops were withdrawn from
   the Dominican Republic in 1924, but remained in Haiti from 1914 to
   1934.
3. he mediated a situation with Mexico where the Mexicans were claiming sovereignty over oil resources.

XI. Unraveling the Debt Knot

1. Because America demanded that Britain and France pay their debts,
   those two nations forced Germany to pay.
2. This caused Germany to have extremely high inflation.
3. In 1924, Charles Dawes engineered the Dawes Plan which made the German debt a little bit more manageable.
4. The money was basically circulated and the United States was never truly paid back in full.

XII. The Triumph of Herbert Hoover, 1928

1. Hoover believed in “Rugged Individualism” which said that America could only be fixed by the strong and determined.
2. Hoover campaigned on the Radio and thrived with it.
3. Hoover had never been elected to public office before.

XIII. President Hoover’s First Moves

1. Hoover’s Agricultural Marketing Act which included: the 1930, the Farm Board created the Grain Stabilization Corporation and the Cotton Stabilization Corporation to imprve prices and control surpluses.
2. The Hawley-Smoot Tariff of 1930 raised the tariff to 60%!

XIV.The Great Crash Ends the Golden Twenties

1. October 29, 1929, a devastating stock market crash caused by
   over-speculation and overly high stock prices built only upon
   non-existent credit struck the nation.
2. 40 million had been lost in total.
3. By the end of 1930, 4 million Americans were jobless, and two years later, that number shot up to 12 million.
4. Over 5,000 banks collapsed in the first three years of the Great Depression.
5. Lines formed exponentially at soup kitchens and at homeless shelters.

XV. Hooked on the Horn of Plenty

1. The nation’s capacity to produce goods had overestimated what consumers wanted.
2. Also, an over-expansion of credit allowed a lot of debt.
3. In 1930, a terrible drought scorched the Mississippi Valley and thousands of farms were sold to pay for debts.
4. Villages of shanties and ragged shacks were called Hoovervilles and
   were inhabited by the people who had lost their jobs

XVI. Rugged Times for Rugged Individualists

1. Hoover was blamed for things that were not his fault, but he could have done more.
2. He believed in laissez-faire economics and felt that through the business cycle, the economy would work itself out.

XVII. Hoover Battles the Great Depression

1. Finally, Hoover voted to withdraw $2.25 billion to start projects to alleviate the suffering of the depression.
• The Hoover Dam of the Colorado River was one such project.
2. The Muscle Shoals Bill, which was designed to dam the Tennessee
   River and was ultimately embraced by the Tennessee Valley Authority,
   was vetoed by Hoover.
3. In 1932, Congress passed the Norris-La Guardia Anti-Injection Act,
   which outlawed anti-union contracts and forbade the federal courts to
   issue injunctions to restrain strikes, boycotts, and peaceful picketing

XVIII. Routing the Bonus Army in Washington

1. Many veterans, whom had not been paid their compensation for WWI, marched to Washington, D.C. to demand their entire bonus.
2. But they made a mess and were mostly just disliked.

XIX. Japanese Militarists Attack China

1. In September 1931, Japan, alleging provocation, invaded Manchuria and shut the Open Door.
2. The League of Nations met, but it simply drove Japan out of the League.
3. Secretary of State Henry Stimson did indicate that the U.S.
   probably would not interfere with a League of Nations embargo on Japan but did not actually do anything.
4. The lack of action allowed Japan to bomb Shanghai.

XX. Hoover Pioneers the Good Neighbor Policy

1. Hoover was deeply interested in relations south of the border, and
   during his term, U.S. relations with Latin America and the Caribbean
   improved greatly.
2. The lack of money decreased American imperialism.