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The Politics of Boom and Bust, 1920-1932: Republican Return, Scandals, and Economic Fallout

This chapter explores the political landscape of the 1920s, focusing on the return of Republican "Old Guard" leaders, the scandals that plagued the Harding administration, and the economic consequences of post-war policies. It also examines the high tariffs, President Coolidge's term, the struggles of farmers, the 1924 presidential election, and the foreign policy challenges faced by the United States.

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The Politics of Boom and Bust, 1920-1932: Republican Return, Scandals, and Economic Fallout

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  1. Chapter 32 The Politics of Boom and Bust, 1920–1932

  2. I. The Republican “Old Guard” Returns • In 1921 Warren G. Harding, looked presidential • But depended on cabinet • Harding’s “best minds” • Charles Evans Hughes (Sec of State) • Andrew W. Mellon (Sec of Treasury) • Herbert Hoover (Sec of Commerce) • Harding’s “worst minds” • Senator Albert B. Fall (Sec of Interior) • Harry M. Daugherty (Attorney General)

  3. II. GOP Reaction at the Throttle • Harding a “front” for enterprising industrialists • Crushed the reforms of the progressive era • Corporations expand power / influence • Antitrust laws were feebly enforced (less competition) • Condemned the waste from cutthroat competition • “Voluntary cooperation” • Businesses should regulate themselves, not big gov’t

  4. III. The Aftermath of War • Wartime economy was swiftly dismantled • Federal Government control was surrendered • Labor loss power in postwar decade • Railway wages cut 12% (1922), unsuccessful strike • Union membership declined dramatically • Veterans reaped lasting gains from the war • Veterans Bureau created (hospitals & job rehab) • Veterans’ “bonus”-Adjusted Compensation Act-1924

  5. IV. America Seeks Benefits Without Burdens • U.S. rejected the Treaty of Versailles • Mid-East oil secured for American companies • Disarmament was an issue for Harding • Washington “Disarmament Conference” 1921-1922 • 10 year naval holiday • A Four-Power Treaty –Pacific status quo • The Nine-Power Treatykept ‘Open Door’ in China • Kellogg-Briand Pact • Outlawed war as policy

  6. p731

  7. Limits Imposed by Washington Conference, 1921–1922 Figure 32-1 p731

  8. V. Hiking the Tariff Higher • Fordney-McCumber Tariff Law (1922) • Average tariff increased to 38.5% • The U.S. high-tariffs set off a chain reaction • International trade is a two-way street • European producers felt the squeeze • Europe began erecting tariff walls • Economies / GovernmentsDestabilized

  9. VI. The Stench of Scandal • Harding scandals • Forbes (Veterans Bureau) = $200 million fraud • Teapot Dome scandal • Naval oil reserves land and bribes • Scandal of Attorney General Daugherty • Illegal sale of pardons and liquor permits • Harding was spared theses events • Died on August 2, 1923 • Not involved in scandals (probably) • Worse scandals/disgrace since President Grant

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  11. VII. “Silent Cal” Coolidge • VP Coolidge was sworn into office by his father • Coolidge was not touched by the scandals • True to Republican philosophy, (Pro-business) • Supported efforts to reduce taxes and debts

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  13. VIII. Frustrated Farmers • Farmers in a post-war bust cycle • Peace brought lower demand & prices • Machines increased productivity, unemployment • The McNary-Haugen Bill (1924-1928) • Authorizing the government to buy up surpluses

  14. p735

  15. IX. A Three-Way Race for the White House in 1924 • Republicans nominated “Silent Cal” • Democrats split had between “wets” and “drys” • 102 ballots, John W. Davis was nominated • Robert La Follette’s new Progressive party • Most liberal candidate/party • Election returns • “Cautious Cal” 15,718,211 to Davis 8,385,283 • The electoral college • 382=Coolidge, 136=Davis, and 13=La Follette

  16. Map 32-1 p736

  17. X. Foreign-Policy Flounderings • Isolation continued to reign in the Coolidge era • U.S. didn’t adhere to the World Court • American occupies Latin America • Dominican Republic, Haiti, Nicaragua • International debts a major concern • Private loans, allied war debts & German reparations • In 1914 - debtor nation to the sum of $4 billion • In 1922, a creditor nation to the sum of $16 billion

  18. XI. Unraveling the Debt Knot • America insisted on getting its money back • Germany owed reparations to France & Britain • Coolidge said no debt cancellations • The Dawes Plan (1924) • It rescheduled German reparations payments • Further American private loans to Germany • The United States never did get its money • But it harvested a bumper crop of ill will.

  19. Figure 32-2 p737

  20. p738

  21. XII. The Triumph of Herbert Hoover, 1928 • Coolidge decided not to run again • Herbert Hoover became the Republican candidate • “Prosperity and prohibition” platform • Democrats nominated Alfred C. Smith • “Abrasively urban” and Roman Catholic • Election returns: Hoover in a landslide • Hoover 21,391,993 votes, Smith 15,016,169 • Hoover wins electoral count of 444 to 87

  22. p739

  23. Map 32-2 p739

  24. XIII. President Hoover’s First Moves • The Agricultural Marketing Act (June 1929) • Created Federal Farm Bureau fund ($½ billion) • The Hawley-Smoot Tariff (1930) • Highest peacetime protective tariff history (60%) • Seemed like ‘economic warfare’ to other nations • It plunged America/Europe deeper into terrible depression

  25. XIV. The Great Crash Ends the Golden Twenties • Catastrophic crash came in October 1929 • The British raised interest rates • Investors/speculators began to sell their “insecurities” • Black Tuesday(October 29, 1929) • $40 billion in paper values losses • The stock-market collapse heralded a depression • Unemployment doubled in 2 years • 5000+ banks collapsed in three years • Countless lost their home and farms to foreclosure

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  27. Figure 32-3 p741

  28. p742

  29. XV. Hooked on the Horn of Plenty • What caused the Great Depression? • Farm & Factory 0verproduction • Wealth concentration • Stock Overexpansion (Buying on ‘margin’) • Defaults on loans owed to America (from WWI) • Drought in the Mississippi valley • America’s social and political structure trembled

  30. p743

  31. XVI. Rugged Times for Rugged Individualists • “Hoovervilles” became common • Hoover was against government handouts • Believed in “rugged individualism” • Didn’t want “soul-destroying” government dole • Decided to help railroads, banks, & rural credit • Goal to restore the top of the economic pyramid • Most of the criticism of Hoover was unfair • Hoover was concerned about unemployed, homeless • His efforts prevented a more serious collapse • His plan paved the path for the New Deal

  32. p744

  33. XVII. Hoover Battles the Great Depression • Immense sums for useful public works • EG: Hoover Dam on the Colorado River • Fought all “socialistic” schemes • Vetoed the Muscle Shoals Bill • Reconstruction Finance Corporation (1932) • $ to major industries, companies, state/local gov’ts • Norris-La Guardia Anti-Injunction Act (1932) • No anti-union (yellow dog) contracts • No feds used to restrain strikes, boycotts, picketing • Hoover’s political woes • Hostile Republican Congress, then Democratic (1930)

  34. XVIII. Routing the Bonus Army in Washington • World War I vets hard-hit by the depression • 200,000 vets go to Washington in protest • The “Bonus Army” demands early payments • Hoover orders army to evacuate vets • Makes Hoover even more unpopular

  35. p747

  36. XIX. Japanese Militarists Attack China • Japan invades Manchuria (Sept, 1931) • The U.S. fires “paper bullets” • Stimson doctrine (1932) • Japan bombs Shanghai, China (1932) • With shocking losses to civilians • Collective security dies • World War II strategies are born

  37. XX. Hoover Pioneers the Good Neighbor Policy • U.S. relations with America’s southern neighbors • After the stock market crash of 1929 • Hoover became an advocate of international goodwill • Treaty with Haiti troops out in 1934 • In Nicaragua troops leave in 1933 (after 20 years) • Hoover engineered the foundation

  38. p749

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