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Ch 16

Ch 16. Warren G. Harding elected President in 1920. Ohio Gang

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Ch 16

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  1. Ch 16

  2. Warren G. Harding elected President in 1920. • Ohio Gang • 1923 Tea Pot Dome Scandal. Secretary of the interior Albert B. Fall, secretly allowed private interest to lease lands containing U.S. Navy oil reserves at Teapot Dome, Wyoming and Elk Hills, CA. Secretary Fall became the first cabinet member to be sent to prison. • Pres. Dies in 1923 of heart disease

  3. Vice President Calvin Coolidge is sworn in to office after Harding’s death. Coolidge is then elected as President in 1924.

  4. Henry Ford built the first Model T in 1908. By the early 1920’s automobiles had become a standard part of American life. By 1925 21 of 26 families owned a car. • Assembly lines became commonplace • Airline industry started to flourish. (1903 Wright brothers had the first successful flight in the Kitty Hawk). • Charles Lindbergh flew the first solo transatlantic flight in 1927

  5. Credit had become an accepted way to purchase goods. • Welfare Capitalism- Companies allowed workers to buy stock, participate in profit sharing and receive benefits like medical care and pensions.

  6. Farmers in 1920’s • With technological advances in fertilizers, pesticides, seed varieties and farm machinery farmers were producing more crops. But, higher yields without corresponding consumption caused prices to drop on the price of crops. In addition, the cost of producing crops increased because of cost to farmers of increased technology.

  7. In addition, During World War I the government encouraged Farmers to produce more to meet the demand of the country and the soldiers abroad. To do so, many of the farmers bought more land at inflated prices to produce more crops. While demand was high the farmers received a good return on their investment. However, when consumption leveled out and cost to produce increased the farmers were making less and still had to pay the high interest rate mortgages on their property.

  8. Congress tried to assist the farmers multiple times. From 1924-28 Senator McNary and Rep Haugen proposed the McNary Haugen Bill calling for federal government aid to purchase surplus crops and sell them abroad and to protect the American market with high tariffs. Congress passed the Bill twice but Pres. Coolidge vetoed it both times. He did so because he said farmers would intentionally over produce their crops to get paid and then the oversees markets would be flooded

  9. Mellon program • Andrew Mellon was named secretary of treasury by Pres. Harding. President Coolidge kept him as sec. of treasury during his administration as well. • Mellon believe the government should be run like a business • 1921 he convinced Congress to create the Bureau of Budget and General Accounting office

  10. Mellon’s Goals • To balance Budget • Reduce government debt • And cut taxes • He cut govt spending and federal spending fell from 6.4 billion to 3 billion in 7 years.

  11. Interest on the national debt was huge during World War I. Prior to WWI national debt was $5.7 billion in 1917 and $26 billion by 1920. Mellon refinanced debt at a lower interest rate and convinced the federal reserve to lower their interest rates • These steps along with consumer spending reduced the debt from $26 billion to $ 7 billion by 1929.

  12. Mellon also lowered taxes. He believed lower taxes allowed consumers to spend more. Thus, truly increasing the revenue taken in by the government through sales tax. In addition, lower taxes allowed for business expansion and investing. Thus, making the economy grow.

  13. Supply-side Economics :Economy grows and the government would actually collect more taxes at a lower rate than if would if it kept tax rates high.

  14. Before World War I the U.S had owed billions of dollars more to foreign investors that foreign investors owed to America. By the end of the war the situation was reversed. By the end of the 1920’s the U.S was the dominate economic power in the world. Its national income was far greater than that of Britain, Germany, France and Japan combined.

  15. America became Isolationists. • Washington Conference-Great Britain, France, Italy, China, Japan ,Belgium, the Netherlands and Portugal met to discuss disarmament. • Five-Power Naval Limitation Treaty: Britain, France, Italy, Japan and U.S 10 year moratorium on building warships • Four-Power Treaty: U.S Japan, France, and Britain accepted island possessions in the Pacific • Nine-Power Treaty: Guarantees China’s Independence

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