Politics of Politics of Boom & BustBoom & Bust

1920-19321920-1932

Election of 1920Election of 1920

• Warren G. Warren G. HardingHarding (R) (R) defeats James M. defeats James M. CoxCox (D) (D) –Calvin Calvin CoolidgeCoolidge - VP - VP

• Warren G. Warren G. HardingHarding (R) (R) defeats James M. defeats James M. CoxCox (D) (D) –Calvin Calvin CoolidgeCoolidge - VP - VP

The 1920 ElectionThe 1920 Election

• Election marks a return of the Republican Old Guard

• Warren G. Harding–The 29th President calls for a return to “normalcy”

• Election marks a return of the Republican Old Guard

• Warren G. Harding–The 29th President calls for a return to “normalcy”

• Harding called the “best Harding called the “best likedliked man of his man of his generation”generation”

• Great Great personalitypersonality but a but a mediocre mediocre mindmind

• Harding called the “best Harding called the “best likedliked man of his man of his generation”generation”

• Great Great personalitypersonality but a but a mediocre mediocre mindmind

Harding’s Harding’s

PresidencPresidencyy

The Poker CabinetThe Poker Cabinet• Harding pledged the “Harding pledged the “best best

mindsminds” of his generation” of his generation

• Harding is surrounded by his Harding is surrounded by his cronies the “cronies the “Ohio GangOhio Gang””

• Like Like GrantGrant he is incapable of he is incapable of detecting or controlling the detecting or controlling the corruptioncorruption in his office in his office

• Harding pledged the “Harding pledged the “best best mindsminds” of his generation” of his generation

• Harding is surrounded by his Harding is surrounded by his cronies the “cronies the “Ohio GangOhio Gang””

• Like Like GrantGrant he is incapable of he is incapable of detecting or controlling the detecting or controlling the corruptioncorruption in his office in his office

President Warren Harding (front row, third from right), Vice-President Calvin Coolidge

(front row, second from right), and members of the cabinet.

President Warren Harding (front row, third from right), Vice-President Calvin Coolidge

(front row, second from right), and members of the cabinet.

The Ohio GangThe Ohio Gang

The BestThe Best• Sec. of State Sec. of State Charles Charles

Evans HughesEvans Hughes

• Sec of Treasury Sec of Treasury Andrew Andrew Mellon Mellon

• Sec of Commerce Sec of Commerce Herbert Herbert HooverHoover

• Sec. of State Sec. of State Charles Charles Evans HughesEvans Hughes

• Sec of Treasury Sec of Treasury Andrew Andrew Mellon Mellon

• Sec of Commerce Sec of Commerce Herbert Herbert HooverHoover

And the RestAnd the Rest• Sec of Interior Sec of Interior Albert FallAlbert Fall

• Attorney General Attorney General Harry M. Harry M. DaughertyDaugherty

• Sec of Interior Sec of Interior Albert FallAlbert Fall

• Attorney General Attorney General Harry M. Harry M. DaughertyDaugherty

• Harding’s Cabinet sets the Harding’s Cabinet sets the stage for an adoption of a stage for an adoption of a new improved new improved laissez-fairelaissez-faire with government with government aidingaiding businessbusiness

• Harding’s Cabinet sets the Harding’s Cabinet sets the stage for an adoption of a stage for an adoption of a new improved new improved laissez-fairelaissez-faire with government with government aidingaiding businessbusiness

Domestic Aftermath Domestic Aftermath of Warof War

• Government controls of Government controls of industryindustry quickly dismantled quickly dismantled

• InterstateInterstate Commerce Commerce Commission is again Commission is again controlled by controlled by railroadrailroad interestsinterests

• Government controls of Government controls of industryindustry quickly dismantled quickly dismantled

• InterstateInterstate Commerce Commerce Commission is again Commission is again controlled by controlled by railroadrailroad interestsinterests

• RailroadsRailroads returned to returned to privateprivate control control

• Esch-CumminsEsch-Cummins Transportation Act passed Transportation Act passed encouraging encouraging consolidationconsolidation & guaranteed & guaranteed profitabilityprofitability

• RailroadsRailroads returned to returned to privateprivate control control

• Esch-CumminsEsch-Cummins Transportation Act passed Transportation Act passed encouraging encouraging consolidationconsolidation & guaranteed & guaranteed profitabilityprofitability

• RailwayRailway Board imposed a Board imposed a 12%12% pay cut on rail workers pay cut on rail workers leading to a 2 month leading to a 2 month strikestrike–Railroad strike broken by Railroad strike broken by

Attorney General Attorney General DaughertyDaugherty

–Sweeping Sweeping injunctionsinjunctions led to led to unionunion membership drop of 30% membership drop of 30%

• RailwayRailway Board imposed a Board imposed a 12%12% pay cut on rail workers pay cut on rail workers leading to a 2 month leading to a 2 month strikestrike–Railroad strike broken by Railroad strike broken by

Attorney General Attorney General DaughertyDaugherty

–Sweeping Sweeping injunctionsinjunctions led to led to unionunion membership drop of 30% membership drop of 30%

• In an act of reconciliation In an act of reconciliation Eugene V. DebsEugene V. Debs pardoned pardoned & released from prison by & released from prison by HardingHarding

• In an act of reconciliation In an act of reconciliation Eugene V. DebsEugene V. Debs pardoned pardoned & released from prison by & released from prison by HardingHarding

Race Riots in the Race Riots in the NorthNorth• BlackBlack workers lured to the workers lured to the

north by north by factoryfactory jobs faced jobs faced increasing hostilityincreasing hostility

• Riots broke out in many Riots broke out in many northern cities in the northern cities in the summer of summer of 19191919 leaving leaving many deadmany dead

• BlackBlack workers lured to the workers lured to the north by north by factoryfactory jobs faced jobs faced increasing hostilityincreasing hostility

• Riots broke out in many Riots broke out in many northern cities in the northern cities in the summer of summer of 19191919 leaving leaving many deadmany dead

Needy VeteransNeedy Veterans• VeteransVeterans Bureau created to Bureau created to

aid needy veterans in 1921aid needy veterans in 1921

• American LegionAmerican Legion founded founded by Theodore Roosevelt Jr.by Theodore Roosevelt Jr.

• Forced Congress to pass a Forced Congress to pass a Bonus BillBonus Bill in 1922 in 1922–Harding Harding vetoedvetoed it it

• VeteransVeterans Bureau created to Bureau created to aid needy veterans in 1921aid needy veterans in 1921

• American LegionAmerican Legion founded founded by Theodore Roosevelt Jr.by Theodore Roosevelt Jr.

• Forced Congress to pass a Forced Congress to pass a Bonus BillBonus Bill in 1922 in 1922–Harding Harding vetoedvetoed it it

The 1924 Bonus BillThe 1924 Bonus Bill• Congress passes the Congress passes the

Adjusted CompensationAdjusted Compensation Act giving every veteran a Act giving every veteran a paid-up paid-up insuranceinsurance policy policy payable in 20 yearspayable in 20 years

• Congress passes the Congress passes the Adjusted CompensationAdjusted Compensation Act giving every veteran a Act giving every veteran a paid-up paid-up insuranceinsurance policy policy payable in 20 yearspayable in 20 years

Reactionary CourtReactionary Court• Harding will appoint Harding will appoint 44 out out

of the 9 supreme court of the 9 supreme court justices including justices including William William Howard TaftHoward Taft as Chief as Chief JusticeJustice

• Most of these judges are Most of these judges are increasingly increasingly conservativeconservative

• Harding will appoint Harding will appoint 44 out out of the 9 supreme court of the 9 supreme court justices including justices including William William Howard TaftHoward Taft as Chief as Chief JusticeJustice

• Most of these judges are Most of these judges are increasingly increasingly conservativeconservative

• Courts begin to dismantle Courts begin to dismantle progressiveprogressive era laws era laws

• Child laborChild labor restrictions restrictions weakened, weakened, labor rightslabor rights stripped, & stripped, & minimum wageminimum wage for women is invalidated in for women is invalidated in Adkins v Children’s Adkins v Children’s HospitalHospital

• Courts begin to dismantle Courts begin to dismantle progressiveprogressive era laws era laws

• Child laborChild labor restrictions restrictions weakened, weakened, labor rightslabor rights stripped, & stripped, & minimum wageminimum wage for women is invalidated in for women is invalidated in Adkins v Children’s Adkins v Children’s HospitalHospital

• Fordney-McCumberFordney-McCumber Tariff Tariff –Tariffs raised to Tariffs raised to 38.5%38.5% on on

average from the 27% of the average from the 27% of the UnderwoodUnderwood Tariff of Wilson Tariff of Wilson

• Fordney-McCumberFordney-McCumber Tariff Tariff –Tariffs raised to Tariffs raised to 38.5%38.5% on on

average from the 27% of the average from the 27% of the UnderwoodUnderwood Tariff of Wilson Tariff of Wilson

Higher TariffsHigher Tariffs

• Tariff Tariff CommissionCommission gives the gives the presidentpresident the power to raise the power to raise or lower or lower individualindividual tariffs tariffs–Harding & Coolidge will Harding & Coolidge will

make make 3232 upward changes in upward changes in sixsix years years

–Tariff increases make Tariff increases make economic economic recoveryrecovery in in EuropeEurope more difficultmore difficult

• Tariff Tariff CommissionCommission gives the gives the presidentpresident the power to raise the power to raise or lower or lower individualindividual tariffs tariffs–Harding & Coolidge will Harding & Coolidge will

make make 3232 upward changes in upward changes in sixsix years years

–Tariff increases make Tariff increases make economic economic recoveryrecovery in in EuropeEurope more difficultmore difficult

The Harding ScandalsThe Harding Scandals

• 1921: Interior Sec Fall 1921: Interior Sec Fall illegally selling illegally selling oil leasesoil leases without without competitivecompetitive biddingbidding

• 1929: Will be found guilty 1929: Will be found guilty of of briberybribery

• 1921: Interior Sec Fall 1921: Interior Sec Fall illegally selling illegally selling oil leasesoil leases without without competitivecompetitive biddingbidding

• 1929: Will be found guilty 1929: Will be found guilty of of briberybribery

Teapot Dome ScandalTeapot Dome Scandal

Harding and CoolidgeHarding and Coolidge

• SenateSenate investigates investigates scandalsscandals

• Assistant head of bureau Assistant head of bureau commitscommits suicidesuicide

• Bureau chief Bureau chief Charles Charles ForbesForbes forced to forced to resignresign

• SenateSenate investigates investigates scandalsscandals

• Assistant head of bureau Assistant head of bureau commitscommits suicidesuicide

• Bureau chief Bureau chief Charles Charles ForbesForbes forced to forced to resignresign

Veterans Bureau Veterans Bureau ScandalScandal

• 1923: President Harding 1923: President Harding dies of dies of pneumoniapneumonia & & thrombosisthrombosis–Calvin CoolidgeCalvin Coolidge becomes becomes

presidentpresident

• 1923: President Harding 1923: President Harding dies of dies of pneumoniapneumonia & & thrombosisthrombosis–Calvin CoolidgeCalvin Coolidge becomes becomes

presidentpresident

• 1924: Attorney General 1924: Attorney General DaughertyDaugherty investigated for investigated for illegal sale of illegal sale of pardonspardons & & liquorliquor permits permits

• Forced to Forced to resignresign

• 1924: Attorney General 1924: Attorney General DaughertyDaugherty investigated for investigated for illegal sale of illegal sale of pardonspardons & & liquorliquor permits permits

• Forced to Forced to resignresign

• Role of gov’t in business:Role of gov’t in business:–make business profitable (tax cuts make business profitable (tax cuts

& tariffs = “trickle down”)& tariffs = “trickle down”)

– less regulation (less regulation (laissez fairelaissez faire & & facilitate consolidation)facilitate consolidation)

–businessmen should run gov’tbusinessmen should run gov’t

–hostile to unions (conservative hostile to unions (conservative Supreme Court)Supreme Court)

• Role of gov’t in business:Role of gov’t in business:–make business profitable (tax cuts make business profitable (tax cuts

& tariffs = “trickle down”)& tariffs = “trickle down”)

– less regulation (less regulation (laissez fairelaissez faire & & facilitate consolidation)facilitate consolidation)

–businessmen should run gov’tbusinessmen should run gov’t

–hostile to unions (conservative hostile to unions (conservative Supreme Court)Supreme Court)

Harding & Coolidge Harding & Coolidge Economic AgendaEconomic Agenda

• Reject gov’t help of ordinary Reject gov’t help of ordinary citizenscitizens

• Reduce National Debt by making Reduce National Debt by making gov’t smallergov’t smaller

• Reject gov’t help of ordinary Reject gov’t help of ordinary citizenscitizens

• Reduce National Debt by making Reduce National Debt by making gov’t smallergov’t smaller

Harding & Coolidge Harding & Coolidge Economic AgendaEconomic Agenda

Foreign Policy Foreign Policy Under Under

Harding & Harding & CoolidgeCoolidge

War Declared OverWar Declared Over• War declared War declared officiallyofficially over over

by Congress in by Congress in 19211921

• IsolationismIsolationism firmly firmly entrenched but Congress entrenched but Congress will send will send observersobservers to the to the League of NationsLeague of Nations

• War declared War declared officiallyofficially over over by Congress in by Congress in 19211921

• IsolationismIsolationism firmly firmly entrenched but Congress entrenched but Congress will send will send observersobservers to the to the League of NationsLeague of Nations

Oceanic Arms RaceOceanic Arms Race• BritainBritain & & JapanJapan are locked are locked

in contest to dominate the in contest to dominate the oceansoceans

• USUS navy is on the verge of navy is on the verge of surpassing Great Britainsurpassing Great Britain

• BritainBritain & & JapanJapan are locked are locked in contest to dominate the in contest to dominate the oceansoceans

• USUS navy is on the verge of navy is on the verge of surpassing Great Britainsurpassing Great Britain

• WashingtonWashington Disarmament Disarmament Conference (1921-1922)Conference (1921-1922)–Meets to plan world Meets to plan world

disarmamentdisarmament

–Leads to Naval Treaties Leads to Naval Treaties limiting limiting ship buildingship building

• WashingtonWashington Disarmament Disarmament Conference (1921-1922)Conference (1921-1922)–Meets to plan world Meets to plan world

disarmamentdisarmament

–Leads to Naval Treaties Leads to Naval Treaties limiting limiting ship buildingship building

Five Power TreatyFive Power Treaty• Sets ship ratio at Sets ship ratio at 5-5-35-5-3 for for

US, Great Britain, & JapanUS, Great Britain, & Japan

• US & Great Britain agree US & Great Britain agree not to fortify not to fortify PacificPacific holdingsholdings

• JapanJapan under no obligation under no obligation begins to begins to fortifyfortify

• Sets ship ratio at Sets ship ratio at 5-5-35-5-3 for for US, Great Britain, & JapanUS, Great Britain, & Japan

• US & Great Britain agree US & Great Britain agree not to fortify not to fortify PacificPacific holdingsholdings

• JapanJapan under no obligation under no obligation begins to begins to fortifyfortify

Four Power TreatyFour Power Treaty• Replaces the Anglo-Replaces the Anglo-

Japanese Pact of Japanese Pact of 19021902

• US, Great Britain, France, & US, Great Britain, France, & Japan agree to maintain Japan agree to maintain the the status quostatus quo in the in the PacificPacific

• Replaces the Anglo-Replaces the Anglo-Japanese Pact of Japanese Pact of 19021902

• US, Great Britain, France, & US, Great Britain, France, & Japan agree to maintain Japan agree to maintain the the status quostatus quo in the in the PacificPacific

Nine Power TreatyNine Power Treaty• All parties agree to the All parties agree to the

Open DoorOpen Door policy in China policy in China • All parties agree to the All parties agree to the

Open DoorOpen Door policy in China policy in China

• No restrictions put on No restrictions put on building building smallersmaller ships ships

• Congress declared that the Congress declared that the US has no US has no militarymilitary obligations effectively obligations effectively killing the killing the agreementsagreements

• No restrictions put on No restrictions put on building building smallersmaller ships ships

• Congress declared that the Congress declared that the US has no US has no militarymilitary obligations effectively obligations effectively killing the killing the agreementsagreements

LoopholesLoopholes

Limits Imposed by Washington Conference

• NicaraguaNicaragua 1926: US 1926: US Marines land & stay until Marines land & stay until 1933 when Somoza placed 1933 when Somoza placed in powerin power

• NicaraguaNicaragua 1926: US 1926: US Marines land & stay until Marines land & stay until 1933 when Somoza placed 1933 when Somoza placed in powerin power

Latin AmericaLatin America

• MexicoMexico–US & Mexico clash over US & Mexico clash over

control of control of oil rightsoil rights in in MexicoMexico

–US regains pre-US regains pre-19171917 holdingsholdings

–Mexican Mexican PresidentPresident is is assassinatedassassinated

• MexicoMexico–US & Mexico clash over US & Mexico clash over

control of control of oil rightsoil rights in in MexicoMexico

–US regains pre-US regains pre-19171917 holdingsholdings

–Mexican Mexican PresidentPresident is is assassinatedassassinated

• ClarkClark Memorandum (1928) Memorandum (1928)–Repudiates Repudiates Roosevelt Roosevelt

CorollaryCorollary at the at the International Conference of International Conference of American StatesAmerican States

–US would US would nevernever interveneintervene to to protect US protect US property rightsproperty rights

• ClarkClark Memorandum (1928) Memorandum (1928)–Repudiates Repudiates Roosevelt Roosevelt

CorollaryCorollary at the at the International Conference of International Conference of American StatesAmerican States

–US would US would nevernever interveneintervene to to protect US protect US property rightsproperty rights

The War DebtsThe War Debts• WWI changed America WWI changed America

from a from a debtordebtor to to lenderlender

• EuropeanEuropean powers were powers were unable to unable to pay backpay back war war debts so they wanted the debts so they wanted the US to US to write offwrite off the debts the debts

• WWI changed America WWI changed America from a from a debtordebtor to to lenderlender

• EuropeanEuropean powers were powers were unable to unable to pay backpay back war war debts so they wanted the debts so they wanted the US to US to write offwrite off the debts the debts

European Debts to the USEuropean Debts to the US

• Committee meets to Committee meets to discuss discuss cancelingcanceling war war debtsdebts

• CoolidgeCoolidge refused to refused to consider consider cancelingcanceling the debt the debt

• Committee meets to Committee meets to discuss discuss cancelingcanceling war war debtsdebts

• CoolidgeCoolidge refused to refused to consider consider cancelingcanceling the debt the debt

Dawes Plan (1924)• Sought to solve Sought to solve debtdebt

problemproblem• US lent money to US lent money to GermanyGermany• GermanyGermany paid reparations paid reparations

to to FranceFrance & & BritainBritain• FranceFrance & & BritainBritain repaid repaid USUS

debtsdebts

• Sought to solve Sought to solve debtdebt problemproblem

• US lent money to US lent money to GermanyGermany• GermanyGermany paid reparations paid reparations

to to FranceFrance & & BritainBritain• FranceFrance & & BritainBritain repaid repaid USUS

debtsdebts

• 1929: 1929: YoungYoung Plan replaces Plan replaces the Dawes Plan & reduces the Dawes Plan & reduces scheduleschedule of payments for of payments for GermanyGermany

• 1929: 1929: YoungYoung Plan replaces Plan replaces the Dawes Plan & reduces the Dawes Plan & reduces scheduleschedule of payments for of payments for GermanyGermany

In God We Trust - all others pay cash

• By 1931, all By 1931, all European powers European powers (except (except FinlandFinland) ) had had defaulteddefaulted on on their loanstheir loans

• We got We got nothingnothing back but back but bad bad feelingsfeelings from the from the alliesallies

• By 1931, all By 1931, all European powers European powers (except (except FinlandFinland) ) had had defaulteddefaulted on on their loanstheir loans

• We got We got nothingnothing back but back but bad bad feelingsfeelings from the from the alliesallies

For three For three generations, generations, you’ll have to you’ll have to slave away!slave away!

Kellogg-Briand PactKellogg-Briand Pact• Outlawed Outlawed offensiveoffensive war but war but

allowed allowed defensivedefensive action action

• Treaties reflected the US Treaties reflected the US mood of mood of isolationismisolationism & & wishfulwishful thinking thinking

• Outlawed Outlawed offensiveoffensive war but war but allowed allowed defensivedefensive action action

• Treaties reflected the US Treaties reflected the US mood of mood of isolationismisolationism & & wishfulwishful thinking thinking

Coolidge’s Coolidge’s

PresidencPresidencyy

Frustrated FarmersFrustrated Farmers• Boom or Bust cycle hits Boom or Bust cycle hits

farmersfarmers in the 1920’s in the 1920’s• War War pricesprices & & mechanizedmechanized

farming led to major farming led to major increase in crop increase in crop productionproduction

• Boom or Bust cycle hits Boom or Bust cycle hits farmersfarmers in the 1920’s in the 1920’s

• War War pricesprices & & mechanizedmechanized farming led to major farming led to major increase in crop increase in crop productionproduction

• Overproduction led to farm Overproduction led to farm surplussurplus & prices & prices droppeddropped quickly quickly

• 1 out of 1 out of 44 farms sold for farms sold for debtsdebts in the 1920s in the 1920s

• Overproduction led to farm Overproduction led to farm surplussurplus & prices & prices droppeddropped quickly quickly

• 1 out of 1 out of 44 farms sold for farms sold for debtsdebts in the 1920s in the 1920s

Farm BillsFarm Bills• Capper-VolsteadCapper-Volstead Act: Act:

–Exempted farming Exempted farming cooperativescooperatives from from anti-trustanti-trust lawslaws

• McNary-HaugenMcNary-Haugen Bill: Bill:–Government would buy Government would buy

surplussurplus crops & sell them crops & sell them abroadabroad

• Capper-VolsteadCapper-Volstead Act: Act: –Exempted farming Exempted farming

cooperativescooperatives from from anti-trustanti-trust lawslaws

• McNary-HaugenMcNary-Haugen Bill: Bill:–Government would buy Government would buy

surplussurplus crops & sell them crops & sell them abroadabroad

• Coolidge twice Coolidge twice vetoedvetoed the the bill & farm prices bill & farm prices stayed stayed lowlow

• Coolidge twice Coolidge twice vetoedvetoed the the bill & farm prices bill & farm prices stayed stayed lowlow

• Republicans nominate Republicans nominate CoolidgeCoolidge

• Democrats turn to Wall St. Democrats turn to Wall St. lawyer lawyer John DavisJohn Davis

• Progressive Party runs Progressive Party runs Bob LaFolletteBob LaFollette

• Republicans nominate Republicans nominate CoolidgeCoolidge

• Democrats turn to Wall St. Democrats turn to Wall St. lawyer lawyer John DavisJohn Davis

• Progressive Party runs Progressive Party runs Bob LaFolletteBob LaFollette

Election of 1924Election of 1924

Coolidge WinsCoolidge Wins• Coolidge 382 Coolidge 382

• Davis 136 Davis 136

• LaFollette 13LaFollette 13

• Nation too Nation too prosperousprosperous to be to be concerned with concerned with reformreform

• Coolidge continues to carry out Coolidge continues to carry out Harding’s conservative Harding’s conservative programsprograms

• Coolidge 382 Coolidge 382

• Davis 136 Davis 136

• LaFollette 13LaFollette 13

• Nation too Nation too prosperousprosperous to be to be concerned with concerned with reformreform

• Coolidge continues to carry out Coolidge continues to carry out Harding’s conservative Harding’s conservative programsprograms

1928 Election1928 Election• Republicans nominate Republicans nominate

Herbert HooverHerbert Hoover–Declares “we are nearer the Declares “we are nearer the

final triumph over final triumph over povertypoverty than ever before”than ever before”

• Republicans nominate Republicans nominate Herbert HooverHerbert Hoover–Declares “we are nearer the Declares “we are nearer the

final triumph over final triumph over povertypoverty than ever before”than ever before”

• Democrats nominate Democrats nominate Al Al SmithSmith from New York, a from New York, a ““wetwet”, ”, CatholicCatholic, urbanite, urbanite–Anti-Anti-CatholicCatholic bigotry figures bigotry figures

into electioninto election

• Democrats nominate Democrats nominate Al Al SmithSmith from New York, a from New York, a ““wetwet”, ”, CatholicCatholic, urbanite, urbanite–Anti-Anti-CatholicCatholic bigotry figures bigotry figures

into electioninto election

• HooverHoover wins by 444 to 87 wins by 444 to 87 electoral votes carrying 5 electoral votes carrying 5 former former ConfederateConfederate states states

• Franklin Delano RooseveltFranklin Delano Roosevelt elected Governor of New elected Governor of New YorkYork

• HooverHoover wins by 444 to 87 wins by 444 to 87 electoral votes carrying 5 electoral votes carrying 5 former former ConfederateConfederate states states

• Franklin Delano RooseveltFranklin Delano Roosevelt elected Governor of New elected Governor of New YorkYork

1928 1928 ElectionElection

Hoover’s Hoover’s PresidencPresidenc

yy

Herbert HooverHerbert Hoover• ““Great Great EngineerEngineer” & ” &

““Wonder BoyWonder Boy””

• Prototypical Prototypical businessmanbusinessman

• Humanitarian Humanitarian vs.vs. rugged rugged individualistindividualist

• ““Great Great EngineerEngineer” & ” & ““Wonder BoyWonder Boy””

• Prototypical Prototypical businessmanbusinessman

• Humanitarian Humanitarian vs.vs. rugged rugged individualistindividualist

The Great Crash of The Great Crash of 19291929

1929-302.8 Million Households

PYRAMID

2%2% $50,000 or more $50,000 or more a yeara year

3% $10,000 or more

a year

25% $1,500 or less a year

70%$2,500 or less a year

Limited income of

most families and could not

buy goods

• 1920s: 1920s: StockStock values values increased & the economy increased & the economy prospersprospers

• 1920s: 1920s: StockStock values values increased & the economy increased & the economy prospersprospers

Hoover Bull MarketHoover Bull Market

• Many critics concerned Many critics concerned that economy has that economy has overheatedoverheated

• Worries about Worries about stock stock marketmarket & & bankingbanking system system aboundabound

• Many critics concerned Many critics concerned that economy has that economy has overheatedoverheated

• Worries about Worries about stock stock marketmarket & & bankingbanking system system aboundabound

• Federal Federal Reserve Reserve refuses to refuses to make make loans for loans for margin margin buyingbuying of of stocksstocks

• Federal Federal Reserve Reserve refuses to refuses to make make loans for loans for margin margin buyingbuying of of stocksstocks

• Farmers desperate for Farmers desperate for financialfinancial relief relief

• Agricultural Agricultural MarketingMarketing Act Act creates producers creates producers cooperativescooperatives

• Farmers desperate for Farmers desperate for financialfinancial relief relief

• Agricultural Agricultural MarketingMarketing Act Act creates producers creates producers cooperativescooperatives

• Tuesday, October 29, 1929: Tuesday, October 29, 1929: –““Black TuesdayBlack Tuesday” ”

–Stock marketStock market crashes crashes –16,000,00016,000,000 shares sold at shares sold at

declining pricesdeclining prices

• Tuesday, October 29, 1929: Tuesday, October 29, 1929: –““Black TuesdayBlack Tuesday” ”

–Stock marketStock market crashes crashes –16,000,00016,000,000 shares sold at shares sold at

declining pricesdeclining prices

• Bankers call brokers wanting their money!

• Brokers go to investors to collect their money to pay the

bank loans borrowed by broker for investor

• Orders to sell any price… swamped the market--nobody

would buy

• Brokers go under--stocks are worthless--investors loose

their savings!

• Run on the BanksRun on the Banks: People begin to panic and go to

banks---try to withdraw their money…Banks don’t have any

money to give back

• Banks close---people lost their savings

• Businesses close---could not pay back loans to banks.

• Workers loose their jobs

• No money to buy consumer products

• Sales fall---more businesses shut down

• More workers lose their jobs

Great Great CrashCrash

Investors

Businesses and WorkersInvestors lose

millions.

Businesses lose profits.

Consumer spending drops.

Workers are laid

off.

Businesses cut investment and

production. Some fail.

Banks

Businesses and workers cannot repay bank loans.

Savings accounts are wiped

out.

Bank runs

occur.

Banks run out of

money and fail.

World Payments

Overall U.S. production plummets.

U.S. investors have little or no

money to invest.

U.S. investments in

Germany decline.

German war payments to Allies fall off.

Europeans cannot afford

American goods.

Allies cannot pay debts to

United States.

Great Great CrashCrash

Investors

Investors lose millions.

Businesses lose profits.

Great Great CrashCrash

Investors

Businesses and WorkersInvestors lose

millions.

Businesses lose profits.

Consumer spending drops.

Workers are laid

off.

Businesses cut investment and

production Some fail.

Great Great CrashCrash

Investors

Businesses and WorkersInvestors lose

millions.

Businesses lose profits.

Consumer spending drops.

Workers are laid

off.

Businesses cut investment and

production Some fail.

Banks

Businesses and workers cannot repay bank loans.

Savings accounts are wiped

out.

Bank runs

occur.

Banks run out of money

and fail.

World Payments

Overall U.S. production plummets.

U.S. investors have little or no

money to invest.

U.S. investments in

Germany decline.

German war payments to Allies fall off.

Europeans cannot afford

American goods.

Allies cannot pay debts to

United States.

Great Great CrashCrash

Investors

Businesses and WorkersInvestors lose

millions.

Businesses lose profits.

Consumer spending drops.

Workers are laid

off.

Businesses cut investment and

production Some fail.

Banks

Businesses and workers cannot repay bank loans.

Savings accounts are wiped

out.

Bank runs

occur.

Banks run out of money

and fail.

World Payments

Overall U.S. production plummets.

U.S. investors

have little or no money to

invest.

U.S. investments in Germany

decline.

German war payments to Allies fall off.

Europeans cannot afford

American goods.

Allies cannot pay debts to

United States.

Effects of the Stock Market Crash

Great DepressionGreat Depression• Nov. 13: Nov. 13: $30,000,000,000$30,000,000,000 in in

stock value wiped outstock value wiped out

• Dec. 3: Hoover declares Dec. 3: Hoover declares that that confidenceconfidence in the in the economy has been economy has been reestablishedreestablished

• Nov. 13: Nov. 13: $30,000,000,000$30,000,000,000 in in stock value wiped outstock value wiped out

• Dec. 3: Hoover declares Dec. 3: Hoover declares that that confidenceconfidence in the in the economy has been economy has been reestablishedreestablished

• January 1930:January 1930:–UnemploymentUnemployment at 4,000,000 at 4,000,000–President meets with President meets with

Congressional leaders to Congressional leaders to discuss discuss public workspublic works programprogram

–Charles Evans HughesCharles Evans Hughes succeeds William Howard succeeds William Howard Taft as Taft as Chief JusticeChief Justice

• January 1930:January 1930:–UnemploymentUnemployment at 4,000,000 at 4,000,000–President meets with President meets with

Congressional leaders to Congressional leaders to discuss discuss public workspublic works programprogram

–Charles Evans HughesCharles Evans Hughes succeeds William Howard succeeds William Howard Taft as Taft as Chief JusticeChief Justice

• Congress passes Congress passes Public Public BuildingsBuildings Act $230,000,000 Act $230,000,000 in public buildingin public building

• Congress appropriates Congress appropriates $300 million for $300 million for road road constructionconstruction

• Congress passes Congress passes Public Public BuildingsBuildings Act $230,000,000 Act $230,000,000 in public buildingin public building

• Congress appropriates Congress appropriates $300 million for $300 million for road road constructionconstruction

• Highest Highest protectiveprotective tariff in tariff in peacetime history peacetime history

• 10281028 prominent economists prominent economists sign sign protestprotest claiming it will claiming it will worsenworsen the depression the depression

• Highest Highest protectiveprotective tariff in tariff in peacetime history peacetime history

• 10281028 prominent economists prominent economists sign sign protestprotest claiming it will claiming it will worsenworsen the depression the depression

Hawley-Smoot Tariff Hawley-Smoot Tariff (1930)(1930)

It Does!It Does!It Does!It Does!

• Exacerbates feelings of Exacerbates feelings of internationalinternational tension & tension & tradetrade war war

• Exacerbates feelings of Exacerbates feelings of internationalinternational tension & tension & tradetrade war war

You’re on your own.

DEBTS

•US high tariffs (Hawley-Smoot Tariff) caused Great Britain and France to not trade with

US

•US became “economic

isolationist”

•Because of this, Great Britain and

France did not pay back war

debts to the US

•GB and France defaulted on

their debt because they had paid in

blood

•US high tariffs (Hawley-Smoot Tariff) caused Great Britain and France to not trade with

US

•US became “economic

isolationist”

•Because of this, Great Britain and

France did not pay back war

debts to the US

•GB and France defaulted on

their debt because they had paid in

blood

US INVESTORS

WALL STREET BANKER

S

GERMANY

PRIVATE

LOANS

PRIVATE

LOANS

US TREASUR

Y

GREAT BRITAI

NFRANC

E

ALLIED

WAR

DEBT

PAYMENT

S

ALLIED

WAR

DEBT

PAYMENT

S

WAR DEBT

PAYMENTS

WAR DEBT

PAYMENTS“REPARATIO

NS”“REPARATIO

NS”

Great Depression Great Depression EventsEvents

• October 1930: October 1930: –UnemploymentUnemployment reaches 4.5 reaches 4.5

million million

–Hoover establishes Hoover establishes Committee for Committee for UnemploymentUnemployment Relief Relief

–Seeks aid at Seeks aid at locallocal level level

• October 1930: October 1930: –UnemploymentUnemployment reaches 4.5 reaches 4.5

million million

–Hoover establishes Hoover establishes Committee for Committee for UnemploymentUnemployment Relief Relief

–Seeks aid at Seeks aid at locallocal level level

“Hoovervilles”

• Nov. 1930: Nov. 1930: DemocratsDemocrats gain gain control of control of HouseHouse & gain 8 & gain 8 seats in the seats in the SenateSenate

• Nov. 1930: Nov. 1930: DemocratsDemocrats gain gain control of control of HouseHouse & gain 8 & gain 8 seats in the seats in the SenateSenate

• December 1930: December 1930: –Congress appropriates Congress appropriates

$116,000,000 for $116,000,000 for public public worksworks

–Bank of the Bank of the USUS (private New (private New York Bank) fails - York Bank) fails - 400,000400,000 depositors lose depositors lose savingssavings

–13001300 banks have closed banks have closed since the crashsince the crash

• December 1930: December 1930: –Congress appropriates Congress appropriates

$116,000,000 for $116,000,000 for public public worksworks

–Bank of the Bank of the USUS (private New (private New York Bank) fails - York Bank) fails - 400,000400,000 depositors lose depositors lose savingssavings

–13001300 banks have closed banks have closed since the crashsince the crash

Bank RunsBank Runs

19311931

BUSTED

• January 1931:January 1931:–Presidential report claims Presidential report claims

5,000,0005,000,000 unemployed unemployed

–Hoover reports to Congress Hoover reports to Congress he is against repeal of he is against repeal of prohibitionprohibition

• January 1931:January 1931:–Presidential report claims Presidential report claims

5,000,0005,000,000 unemployed unemployed

–Hoover reports to Congress Hoover reports to Congress he is against repeal of he is against repeal of prohibitionprohibition

25% to 40% of workers out of work

Was able to lower it to 14%

• Congress passes Congress passes Bonus Bonus LoanLoan Bill allowing vets to Bill allowing vets to borrow on Bonusborrow on Bonus

• Hoover vetoes the Hoover vetoes the Muscle Muscle ShoalsShoals Bill calling for Bill calling for federal control of federal control of hydroelectrichydroelectric production production on the on the TennesseeTennessee River River

• Congress passes Congress passes Bonus Bonus LoanLoan Bill allowing vets to Bill allowing vets to borrow on Bonusborrow on Bonus

• Hoover vetoes the Hoover vetoes the Muscle Muscle ShoalsShoals Bill calling for Bill calling for federal control of federal control of hydroelectrichydroelectric production production on the on the TennesseeTennessee River River

• ““The Star Spangled The Star Spangled Banner” becomes the Banner” becomes the National AnthemNational Anthem

• ““The Star Spangled The Star Spangled Banner” becomes the Banner” becomes the National AnthemNational Anthem

Scottsboro BoysScottsboro Boys • 99 young black men in young black men in

Scottsboro, Alabama are Scottsboro, Alabama are charged with charged with raping a white raping a white womanwoman

• 99 young black men in young black men in Scottsboro, Alabama are Scottsboro, Alabama are charged with charged with raping a white raping a white womanwoman

• Found Found guiltyguilty of this of this capitalcapital offenseoffense

• Supreme Court will ultimately Supreme Court will ultimately overturnoverturn their convictions. their convictions.

• Case becomes a cause Case becomes a cause célèbrecélèbre for for black civil rightsblack civil rights activistsactivists

• Found Found guiltyguilty of this of this capitalcapital offenseoffense

• Supreme Court will ultimately Supreme Court will ultimately overturnoverturn their convictions. their convictions.

• Case becomes a cause Case becomes a cause célèbrecélèbre for for black civil rightsblack civil rights activistsactivists

• Empire StateEmpire State Building is Building is formally formally dedicated & is dedicated & is tallest buildingtallest building in the world in the world until 1970’suntil 1970’s

• Empire StateEmpire State Building is Building is formally formally dedicated & is dedicated & is tallest buildingtallest building in the world in the world until 1970’suntil 1970’s

• MoratoriumMoratorium on international on international debts debts (1931) (1931) –Major Major AustrianAustrian bank fails bank fails

–Hoover proposes 1-year Hoover proposes 1-year freezefreeze on international on international debtsdebts to help Europe recoverto help Europe recover

• MoratoriumMoratorium on international on international debts debts (1931) (1931) –Major Major AustrianAustrian bank fails bank fails

–Hoover proposes 1-year Hoover proposes 1-year freezefreeze on international on international debtsdebts to help Europe recoverto help Europe recover

• Great BritainGreat Britain goes off the goes off the goldgold standardstandard–US citizens fear US will do the US citizens fear US will do the

same & rush same & rush banksbanks to remove to remove savings in savings in goldgold

–827827 more banks close more banks close

• Al CaponeAl Capone found guilty of tax found guilty of tax evasion, sentenced to evasion, sentenced to 1111 years in federal prisonyears in federal prison

• Great BritainGreat Britain goes off the goes off the goldgold standardstandard–US citizens fear US will do the US citizens fear US will do the

same & rush same & rush banksbanks to remove to remove savings in savings in goldgold

–827827 more banks close more banks close

• Al CaponeAl Capone found guilty of tax found guilty of tax evasion, sentenced to evasion, sentenced to 1111 years in federal prisonyears in federal prison

• Reconstruction Reconstruction FinanceFinance Corporation (1932)Corporation (1932)–Created to lend money to Created to lend money to

banksbanks, , insuranceinsurance companies, & other companies, & other financialfinancial institutions as well as to institutions as well as to railroadsrailroads & local & local governmentsgovernments

• Reconstruction Reconstruction FinanceFinance Corporation (1932)Corporation (1932)–Created to lend money to Created to lend money to

banksbanks, , insuranceinsurance companies, & other companies, & other financialfinancial institutions as well as to institutions as well as to railroadsrailroads & local & local governmentsgovernments

• Seen by many as a dole for Seen by many as a dole for the the richrich, the RFC paved the , the RFC paved the way for the way for the New DealNew Deal of of FDRFDR

• Seen by many as a dole for Seen by many as a dole for the the richrich, the RFC paved the , the RFC paved the way for the way for the New DealNew Deal of of FDRFDR

• Charles Charles Lindbergh’sLindbergh’s baby baby is kidnapped & although a is kidnapped & although a ransomransom is paid the child is is paid the child is found deadfound dead

• Bruno Bruno HauptmannHauptmann found found guilty & sentenced to the guilty & sentenced to the electric chairelectric chair

• Charles Charles Lindbergh’sLindbergh’s baby baby is kidnapped & although a is kidnapped & although a ransomransom is paid the child is is paid the child is found deadfound dead

• Bruno Bruno HauptmannHauptmann found found guilty & sentenced to the guilty & sentenced to the electric chairelectric chair

• Norris-Norris-LaGuardiaLaGuardia Anti- Anti-InjunctionInjunction Act (1932) Act (1932)–Prohibits the use of Prohibits the use of

injunctionsinjunctions in labor disputes in labor disputes except within certain except within certain restrictionsrestrictions

–Outlaws “Outlaws “yellow dogyellow dog” ” contractscontracts

• Norris-Norris-LaGuardiaLaGuardia Anti- Anti-InjunctionInjunction Act (1932) Act (1932)–Prohibits the use of Prohibits the use of

injunctionsinjunctions in labor disputes in labor disputes except within certain except within certain restrictionsrestrictions

–Outlaws “Outlaws “yellow dogyellow dog” ” contractscontracts

The Bonus ArmyThe Bonus Army • Bonus Bonus

ExpeditionaryExpeditionary Force marches Force marches on Washington on Washington seeking seeking redemptionredemption of of the Bonus at the Bonus at full facefull face value value

• Bonus Bonus ExpeditionaryExpeditionary Force marches Force marches on Washington on Washington seeking seeking redemptionredemption of of the Bonus at the Bonus at full facefull face value value

• Hoover, fearing Hoover, fearing communistcommunist revolt, sends the revolt, sends the US ArmyUS Army under under Douglas MacArthurDouglas MacArthur (with Dwight D. (with Dwight D. EisenhowerEisenhower and George and George PattonPatton) to ) to break up the Bonus break up the Bonus ““HoovervillesHoovervilles””

• Hoover, fearing Hoover, fearing communistcommunist revolt, sends the revolt, sends the US ArmyUS Army under under Douglas MacArthurDouglas MacArthur (with Dwight D. (with Dwight D. EisenhowerEisenhower and George and George PattonPatton) to ) to break up the Bonus break up the Bonus ““HoovervillesHoovervilles””

““The Dust Bowl”The Dust Bowl”

Dust BowlDust Bowl

Long-Term Causes of Long-Term Causes of GDGD• Weak industriesWeak industries

• Overproduction of goodsOverproduction of goods

• Uneven income distributionUneven income distribution

• Unstable banking systemUnstable banking system

• Weak international economyWeak international economy

• Weak industriesWeak industries

• Overproduction of goodsOverproduction of goods

• Uneven income distributionUneven income distribution

• Unstable banking systemUnstable banking system

• Weak international economyWeak international economy

Effects of the GDEffects of the GD• 22% of banks fail22% of banks fail

• 30,000 business failures30,000 business failures

• 25-33% unemployment25-33% unemployment

• Total wages drop ($12B - $7B)Total wages drop ($12B - $7B)

• 25% farms lost25% farms lost

• Loss of self-worthLoss of self-worth

• GNP drop ($104B - $56B)GNP drop ($104B - $56B)

• Int’l reparations & trade collapseInt’l reparations & trade collapse

• 22% of banks fail22% of banks fail

• 30,000 business failures30,000 business failures

• 25-33% unemployment25-33% unemployment

• Total wages drop ($12B - $7B)Total wages drop ($12B - $7B)

• 25% farms lost25% farms lost

• Loss of self-worthLoss of self-worth

• GNP drop ($104B - $56B)GNP drop ($104B - $56B)

• Int’l reparations & trade collapseInt’l reparations & trade collapse

Foreign Policy Foreign Policy Under HooverUnder Hoover

• JapanJapan marches into marches into Manchuria in September Manchuria in September 1931 violating the 1931 violating the Kellogg-Kellogg-BriandBriand Pact initiating war Pact initiating war with with ChinaChina

• JapanJapan marches into marches into Manchuria in September Manchuria in September 1931 violating the 1931 violating the Kellogg-Kellogg-BriandBriand Pact initiating war Pact initiating war with with ChinaChina

• US sends representative to US sends representative to the the League of NationsLeague of Nations & & denounces denounces JapaneseJapanese aggression in Manchuriaaggression in Manchuria

• US sends representative to US sends representative to the the League of NationsLeague of Nations & & denounces denounces JapaneseJapanese aggression in Manchuriaaggression in Manchuria

• LyttonLytton Commission of the Commission of the League of Nations League of Nations condemns condemns JapaneseJapanese aggression in aggression in ChinaChina

• JapanJapan quits the League of quits the League of NationsNations

• LyttonLytton Commission of the Commission of the League of Nations League of Nations condemns condemns JapaneseJapanese aggression in aggression in ChinaChina

• JapanJapan quits the League of quits the League of NationsNations

Hoover-Stimson Hoover-Stimson DoctrineDoctrine• US will not recognize any US will not recognize any

gains of gains of foreignforeign territory territory taken by taken by forceforce

• JapaneseJapanese are not deterred - are not deterred - bomb bomb ShanghaiShanghai

• US will not recognize any US will not recognize any gains of gains of foreignforeign territory territory taken by taken by forceforce

• JapaneseJapanese are not deterred - are not deterred - bomb bomb ShanghaiShanghai

Election of 1932Election of 1932

• Republicans re-nominate Republicans re-nominate HooverHoover on the first ballot on the first ballot

• Democrats nominate Democrats nominate Franklin Franklin Delano RooseveltDelano Roosevelt on the on the fourth ballotfourth ballot–John Nance Garner of John Nance Garner of TexasTexas

throws his delegates to throws his delegates to RooseveltRoosevelt for vice-presidency for vice-presidency

• Republicans re-nominate Republicans re-nominate HooverHoover on the first ballot on the first ballot

• Democrats nominate Democrats nominate Franklin Franklin Delano RooseveltDelano Roosevelt on the on the fourth ballotfourth ballot–John Nance Garner of John Nance Garner of TexasTexas

throws his delegates to throws his delegates to RooseveltRoosevelt for vice-presidency for vice-presidency

• RooseveltRoosevelt pledges pledges “A “A New DealNew Deal” for ” for the American the American peoplepeople

• RooseveltRoosevelt wins wins election in a election in a landslide: 472 to landslide: 472 to 59 electoral votes59 electoral votes

• RooseveltRoosevelt pledges pledges “A “A New DealNew Deal” for ” for the American the American peoplepeople

• RooseveltRoosevelt wins wins election in a election in a landslide: 472 to landslide: 472 to 59 electoral votes59 electoral votes

• Post-election “lame duck” Post-election “lame duck” period period worsenedworsened the the depression & the depression & the economyeconomy grinds to a haltgrinds to a halt

• RooseveltRoosevelt refuses to make refuses to make any any commitmentscommitments until he until he is president in March 1933is president in March 1933

• Post-election “lame duck” Post-election “lame duck” period period worsenedworsened the the depression & the depression & the economyeconomy grinds to a haltgrinds to a halt

• RooseveltRoosevelt refuses to make refuses to make any any commitmentscommitments until he until he is president in March 1933is president in March 1933