Chapter 32 - The Politics of Boom and Bust

The Republican "Old Guard" Returns

• Harding was inaugurated in 1921 with him not being able to see the corruption in his own staff
• ==Hughes== ==was the secretary of state, Mellon was the secretary of treasury, and Hoover was the secretary of commerce==
• Senator Albert B. Fall was an anti-conservationist who was the secretary of the interior and Harry M. Daugherty was the attorney general, with both of them being corrupt

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GOP Reaction at the Throttle

• Industrialists wanted the government to stop legislating business
• The Supreme Court struck down progrssive legislation in the first years of the 1920s
• Corporations under Harding were able to expand without having to worry about antitrust laws
• ==Interstate Commerce Commission== ==was run by men who were sympathetic to those who managed the railroads==

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The Aftermath of War

• Industrialists convinced the government to give up control on the economy
• Esch-Cummins Transportation Act of 1920 returned the railroads to private management
• ==Merchant Marine Act of 1920== ==authorized the government to sell its wartime fleet of 1,500 vessels at low prices==
• The La Follette Seaman's Act of 1915 improved working conditions for sailors and was economically bad for American shipping industry
• Congress created the Veterans Bureau to operate hospitals and provide vocational rehabilitation for the disabled in 1921

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America Seeks Benefits Without Burdens

• Due to the rejection of the Treaty of Versailles, the U.S. had technically been at war with Germany, Austria, and Hungary for 3 years, following the armistice
• In July of 1921, Congress passed a joint resolution that officially declared that the war was over
• Harding refused to support the League of Nations’ world health program with him hating the League
• Hughes was able to get rights for American oil companies to be able to share oil lands in the Middle East with Britain
• Many of the world powers met at the Washington Disarmament Conference to discuss the disarmament of their respective navies
• A ==Four-Power Treaty== ==between Japan, Britain, Frame, and the U.S. replaced the Anglo-Japanese Treaty==
• The ==Kellogg-Briand Pact== ==was ratified in 62 nations, with it attempting to outlaw war with the exception of defensive wars being permissible==

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Hiking the Tariff Higher

• The ==Fordney-McCumber Tariff Law of 1922== ==raised tariffs from 27% to 35%==
  • This happened because businessmen didn’t want Europe to come into American markets with cheap goods, following the war
• Europe needed to sell goods to America in order to get money to repay its war debts

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The Stench of Scandal

• Colonel Forbes was caught stealing $200 million from the government
• The ==Teapot Dome Scandal of 1921== ==consisted of secretary of the interior, Albert B. Fall== convincing the secretary of navy to transfer land full of valuable oil to the interior Department with Fall being bribed to lease the lands and Attorney General Daugherty being accused of illegally selling pardons and liquor permits
• Harding died on August 2, 1923

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"Silent Cal" Coolidge

• Coolidge became president and was described as shy
• Coolidge didn’t change the business-friendly policies that Harding had created

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Frustrated Farmers

• Farms struggled due to the Federal government having stopped guaranteeing high prices with other nations starting to grow more crops
• Machines allowed farmers to grow more crops but this led to prices decreasing as there were now crop surpluses
• The ==Capper-Volstead Act== ==kept farmers’ marketing cooperatives from having to face anti-trust prosecution==
• ==McNary-Haugen Bill== ==was created to keep agricultural prices high by authorizing the government to buy the crop surpluses and then sell them abroad==
  • Was vetoed by Coolidge as it would’ve cost the government money

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A Three-Way Race for the White House in 1924

• Before the election of 1924, the Democratic party was split into several different factions
• Senator La Follette led the new liberal Progressive party
  • Progressives called for government ownership of railroads and relief for farmers with them being opposed to monopolies and anti-labor injunctions
  • Progressives supported a constitutional amendment in order to limit the Supreme Court’s power to invalidate laws passed by Congress
• Coolidge won the election of 1924

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Foreign-Policy Flounderings

• Isolationism continued in Coolidge’s second term
• Caribbean and Central America were exceptions to this
• The mexican government declared control over its oil resources in 1926
• America became a creditor to the world after WWI with it loaning money to several different countries
• U.S. demanded to be repaid $10 billion dollars that it had loaned to the Allies in WWI
• Allies protested the debt, with them pointing out that they had lost many troops and that the U.S. should write off the loans as war costs
  • U.S.’s postwar tariffs made it difficult for the Allies to make money in order to repay their debts

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Unraveling the Debt Knot

• France and Britain demanded war reparations from Germany due to America demanding repayment
• The Allies hoped to pay their debts to the Americans with the money they got from Germany
• The ==Dawes Plan of 1924== ==addressed the issue of debt repayment== and set up German reparations and allowed Americans to make private loans to Germany
  • Germany used these loans to pay the reparations which the Allies used to pay their war debts to the Americans with the flow of money being disrupted by a downturn in the global economy leading to this this U.S never fully received its war repayments from Europe

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The Triumph of Herbert Hoover, 1928

• Republicans chose Herbert Hoover as their candidate for the election of 1928 as he supported isolationism, individualism, free enterprise, and small government
  • Hoover was a good leader, had integrity, was a humanitarian, had a passion for assembling facts, was efficient, was talented in terms of administration, and possessed the ability to inspire loyalty in his close associates
• Democrats nominated Alfred E. Smith
• Radio was widely used in election campaigns for the first time which mostly helped Hovoer’s campaign
• Herbert Hoover won the election in a landslide

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President Hoover's First Moves

• Agricultural Marketing Act (1929) was meant to help farmers by setting up the Federal Farm Board which purchased agricultural surpluses in hopes of stabilizing agricultural prices
  • Federal Farm Board created the Grain Stabilization Corporation and the Cotton Stabilization Corporation, which also purchased surpluses
• The corporations failed following the farmers producing too much surplus, which exceeded the budget of the Board
• Hawley-Smoot Tariff of 1930 was meant to be a mild tariff but due to Congress, it turned into a bill that raised the tariff of 60% with the tariff becoming the nation’s highest protective tariff during peacetime with it worsening the depression

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The Great Crash Ends the Golden Twenties

• The stock market crashed in October of 1929 and was partially caused by British who had raised their interest rates in an effort to bring back capital that was taken abroad by American investments
  • Millions of stocks were sold in a panic on “Black Tuesday” of October 29, 1929
  • Stockholders had lost $40 billion two months after the crash
• Millions lost their jobs and thousands of banks closed with the U.S. being the hardest industrialized country that was affected by the crash
• The stock market crash ultimately led to the Great Depression

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Hooked on the Horn of Plenty

• Overproduction by farms and factories was one of the main causes of the Great Depression
• The country’s ability of producing goods outweighed the capacity to purchase them with all the money being invested in factories and other agencies of production
• The overexpansion of credit also played a role in leading to the Great Depression
  • The Great Depression worsened the economic state in Europe which hadn’t yet recovered from World War I

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Rugged Times for Rugged Individuals

• Hoover believed that industry and self-reliance had made America great in the beginning of the depression

• Hoover believed that the government shouldn’t play a role in the welfare of the people and later came to realize that the welfare of the people in a nationwide catastrophe was the government’s direct concern

• ==Hoover== ==created a plan in which the government would help railroads, banks, and rural credit corporations with the hopes that unemployment rates would lessen if financial health was restored==

  • Hoover’s efforts were criticized due to him giving away government money to the big bankers that had supposedly started the Great Depression

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Hoover Battles the Great Depression

• Hoover convinced Congress to allocate $2.25 billion for useful public works such as the Hoover Dam
  • Hoover was against any projects that he saw as “socialist”
• Congress created the ==Reconstruction Finance Corporation== in 1932 which ==lent money to insurance companies, banks, agricultural organizations, railroads, and local and state governments==
• The Norris-LaGuardia Anti-Injunction Act in 1932 outlawed anti-union contracts and stopped federal courts from stopping strikes, boycotts, and peaceful picketing

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Routing the Bonus Army in Washington

• The veterans of WWI were hit hard by the Depression with the “Bonus Expeditionary Force” going to the Capitol in the summer of 1932 with them demanding that Congress fully pay the deferred bonus tat Congress had passed in 1924, which was supposed to be paid in 1945
  • The veteran force refused to leave the Capitol, causing Hoover to send in the army to evacuate the group which led to riots and incidents that brought forth additional public dislike for Hoover

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Japanese Militarists Attack China

• ==Japanese imperialists== ==invaded the Chinese province of Manchuria== which was a direct violation of the League of Nations but the League was unable to take action as it didn’t have America’s support
• Stimson decided to diplomatically attack the Japanese through the Stimson doctrine which declared that the U.S. wouldn’t recognize any territory acquired fy force
  • Japan ignored the doctrine and continued onto Shanghai in 1932 with violence continuing with a lack of intervention from the League

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Hoover Pioneers the Good Neighbor Policy

• Hoover wanted to improve relations with Latin America with him withdrawing American troops from Haiti and Nicragua

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