The Politics of Boom and Bust

Chapter 32

AP

What is meant by the “Republican Decade”?

• The Executive Branch was dominated by three Republican presidents

• Congress was Republican

• TR died in 1919 --- Progressive wing of the Republican party died with him

The Election of 1920• Rep: Warren Harding - Ohio

• Dem: James Cox - Ohio

Harding Cox

–Electoral Vote: 404 127

–Popular Vote: 16 m 9 m–Percentage: 60 % 34%

The Election of 1920• The reason Harding wins…

“I am not fit for this office and should never have been here.” … WGH

The Election of 1920

• 1920 is the first presidential election in which women participate

Who was Warren G. Harding?

• Senator from Ohio• Less than

“Presidential” leadership skills

• Unclear and vague• Promised a “return

to normalcy”

“I cannot hope to be one of the great presidents, but perhaps I may be remembered as one of the best loved.”

- Harding

Harding – Personal Conduct?

• Never committed a crime

• Gambled …

• Hypocrite…

• 1905 – 1920 Carrie Philips…

• 1919 Nan Britton…

Nan Britton & Carrie Phillips

Harding’s Cabinet?

• Charles Evans Hughes – Sec. of State• Herbert Hoover – Sec. of Commerce• Andrew Mellon – Sec. of Treasury• Ohio Gang…

– Albert Fall – Sec. of Interior– Charles Forbes – Veterans Bureau– Harry M. Daugherty – Attorney General

“John, I can’t make a …thing out of this tax problem. I listen to one side and they seem right, and then… I talk to the other side and they seem just as right… I know somewhere there is an economist who knows the truth, but I don’t know where to find him and haven’t the sense to know him and trust him when I find him…What a job!” - WGH

Harding Scandals

“I have no problem with my enemies…But…my Gdmn friends…, they’re the ones that keep me walking the floors at night.” WGH

Harding Scandals

• Charles Forbes …

• Thomas Miller…

• Harry Daugherty…

• Albert Fall – Teapot Dome Scandal …

President and Mrs. Harding

Harding’s Domestic Policy

• Fordney-McCumber Tariff (1922)…

• Reduction of taxes…–Less spending, less government,

less presidential power• Immigration Act of 1921…

Harding’s Foreign Policy?“We seek no part in directing the destiny of the world” - Harding

• Isolationism

• Signed a Congressional joint resolution ending WWI

• Opposed U.S. membership in League

• Washington Naval Conference (1921)…

• Foreign Debt…

• Dawes Plan…

•

Harding’s Death

• Disillusioned and despondent over scandals• Took trip to Alaska and California• Died at the Palace Hotel in San Francisco in

1923• No autopsy• Doc Sawyer – Mrs. Harding’s doctor and

Surgeon General – diagnosed ptomaine poisoning – probably a stroke

Calvin Coolidge

• Republican President

• Pro-business• Keep taxes down

and profits up• Give businesses

more credit to expand

• High tariffs on imports

“…the chief business of the American people is business…The man who builds a factory builds a temple – the man who works there worships there.” --Calvin Coolidge

“Silent Cal”

• “Four – fifths of all our troubles in this life would disappear if we would only sit down and keep still”

The Coolidge Presidency

• Honest and respectable…

• Immigration Act of 1924…

• Federal Income Tax and “Trickle-down Economics”

• McNary-Haugen farm bill…

• Kellogg-Briand Pact 1928…

Herbert Hoover – The Great Engineer

• Sec. of Commerce• Assist business

community• Associative state…• Bureau of

Standards..• Trade associations..• Regulatory

commissions…

What was the nature of the “Bull Market”?

• Stock prices increased…

• Speculation…

• Market value…

• Dow Jones Industrial Average …

What weakness was developing in the market?

• 4 million Americans invested (3%)

• Margin accounts…

• Investment trusts…

• Corporations and banks ...

• Dow increased from 191 to 381 in 5 months in 1929

What was the nature of the Crash of 1929?

• Oct. 23 – Dow lost 21 points in 1 hour

• Oct. 28 – 38 points lost (13%)

• Oct. 29 – Black Tuesday

– 16.4 million shares sold

– Over 1 million shares – no buyers

– Brokers called in margin accounts

• Nov. - $30 billion gone

The floor of the New York Stock Exchange – Oct. 1929

Panic on Wall Street –October, 1929

“The fundamental business of the country…is on a sound and prosperous basis.” - Hoover

What were the underlying causes of the Depression?

• Overproduction – underconsumption…

• Farming…

• Unequal distribution of income…

• Stock market crash…

• Bank failures…

• Tariff and foreign debt policies…

Family incomes 1929?

• 2.3% over $10,000

• 8% over $5,000

• 71% less than $2,500

• 60% less than $2,000

• Over 42% less than $1,500

• 21% less than $1,000

• Ave. farm income $962

What was the effect of the market crash?

• Undermined confidence• Production decreased• Workers laid off• Lay offs led to further decline in

spending• More cut-backs• More lay-offs

Unemployed in Chicago

Why did banks close?

• Banks had loaned money to speculators

• People defaulted on their loans

• Depositors began to withdraw funds

• 1930-1933 – 9,000 banks closed

• Millions in deposits lost

• Nation’s money supply fell by 1/3

• Decline in purchasing power

“Run” on the bank

How does the Depression become world wide?

• Europe – war debts…

• Germany – reparations…

• 1930 Hawley Smoot Tariff – highest protective tariff

– Europe could not sell to the U.S.

– Set up tariffs against U.S. products

– We could not sell to Europe

– International trade dropped by 40%

What is the human toll of the Depression?

• Farm families lost farms

• Bank closing denied people savings to fall back on when they were unemployed

• Unemployment in 1932:

– Cleveland 50%

– Akron 60%

– Toledo 80%

• Psychological…

What was the impact of the Depression on people’s lives?

• Poor diet

• Poor medical and health care

• Delayed lives

• Families split up

• Schools closed (no taxes)

• Suicide rate up 30%

Who helped the unemployed?

• Existing relief systems inadequate

• Private charities….

• State governments…

• Government officials…

• Soup kitchens …

• Hoovervilles…

• Riding the rails…

Hoovervilles

Bread Lines

What was the condition of rural American?

• Farm incomes down 60%• 1/3 of all farmers lost their land• Dust Bowl ….

What was Hoover’s response to the depression?

• Sec. of Treasury Mellon – “wait it out”

• Hoover

– commitment to localism and private initiative

–Solutions outside of government

–Summoned business leaders to Washington…

–Called for state and local governments to create public works

–1930 President’s Committee for Unemployment and President’s Organization for Unemployment Relief…

Hoover’s response?

• National Credit Corporation…

• Crisis worsened

• Election of 1930…

• Unemployment…

Hoover Dam – Public Works

What was the Reconstruction Finance corporation?

• $2 billion in loans to banks, insurance companies, and railroads

• Public upset…

• Later: $2 billion to state and local governments for job creating public works – only $30 million allocated

• Hoover: against this – said it would open the door to socialism and collectivism

Nature of Protests?

• 1932 – mood desperate

• Hunger March

– communist organizers led march against Ford

– 4 killed and 50 wounded

How did farmers respond to falling prices?

• Farms were foreclosed

• Burned crops – corn and wheat

• Spilled milk

• “Farmers Holiday”

• Blocked roads – prevent food from getting to market

• Used force to try to prevent foreclosures

What was the Bonus Army?

• 10,000-20,000 unemployed WWI veterans

• Patman Bill – government should pay a bonus to WWI veterans that was due in 1945

• House of Rep. approved/Senate voted down

• Hoover ordered Gen. Douglas McArthur to disperse the Bonus Army

Bonus Army Camp

Bonus Army at “Anacostia Flats”