Does Big Business Run America - DOC by dct24465


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									The 1920’s -- ―The Business of America is Business‖

A.     Transition from war
                a. Spanish Influenza – following ―the great war‖ an outbreak of an especially virulent flu
                      epidemic killed tens of millions of people around the world. Contrary to the name,
                      the flu probably started in the US Midwest, was caught by soldiers on both sides and
                       then spread around the world.
                       1. More people died from the flu than from the war
                b. Return of soldiers led to a temporary increase in unemployment.
                      1.Inflation rose dramatically as people spent money saved during the war (by 1920
                         prices had more than doubled over pre-war levels).
                    i. Race riots developed in many northern cities as returning soldiers faced a shortage
                        of housing.
                 c.     Labor loses
                   ii. Pres. Wilson did not back labor in the spate of strikes following the war – striking
                        workers were associated with communism and other radical groups
                  iii. Following the war many strikes broke out – workers had been unable to strike
                        during the war.
                  iv. Seattle – a general strike was called on behalf of shipyard workers – Mayor Hanson
                        called for troops to break up the strike
                   v. Boston – police could not afford price hikes – they went on strike that led to rioting
                        and looting. Governor Calvin Coolidge called in the National Guard to break the
                  vi. Coal miner’s strike – John Lewis the leader of the United Mine Workers demanded
                        a wage increase, a 6-hour day, and a 5day week. As they prepared to strike,
                        Attorney General A. Mitchell Palmer ruled that a strike would be illegal since
                        technically we were still at war.
                d.      Red Scare
                 vii. Soviet leaders let the world know that their goal was domination of the world, and
                        they made gains in territory along their eastern border.
                viii. Mail bombs were sent to 38 prominent Americans during April 1919. Al but 1 was
                        intercepted. Attorney General A. Mitchell Palmer (who was also a target) blamed
                        the bombs on communist sympathizers.
                                   1. He and the new Federal Bureau of Investigation attacked aliens and
                                   2. Many Russian immigrants were arrested, beaten, and many were
                                   3. Few people spoke up to protest, a new group was formed to protest
                                       Palmer’s actions – The American Civil Liberties Union.
                                   4. People eventually tired of Palmer’s warnings when little that he said
                             e.Nativism – the evil side of Nationalism.
                                   5. Ku Klux Klan was reformed in Georgia to attack Blacks and
                                       Catholics. At one point in the early 1920’s they had over 5 million
                                   6. Sacco and Vanzetti – 2 Italian Americans were accused of killing 2
                                       people in a shoe factory – despite the fact there was no evidence
                                       against them they were found guilty and executed.
       B.     Republicans take over – Pledge a return to ―normalcy‖
a.             a.Election of 1920 – Americans were tired of war, flu, strikes, and Progressivism in
                    i. Republicans nominated Warren Harding from Ohio because he was handsome (this
                       was the first election in which women could vote) and manageable.
                   ii. Democrats went with James Cox from Ohio (his VP was Franklin Roosevelt) as an
                       anti prohibition, progressive candidate.
                  iii. Harding wins easily – 404 – 127 in the Electoral College
b.   President Harding
                    i. Stated immediately that the US would not join the League of Nations
                   ii. Signed a separate peace with Germany in 1921
                  iii. Signed an apology to Colombia so that US oil companies would be allowed to do
                       business there.
                  iv. Charles Evans Hughes – Secretary of State does a great job of negotiating a treaty
                       with other military powers.
                                  1. 4 power treaty – US, Great Britain, Japan, and France would respect
                                       each others possessions
                                  2. 9-power treaty – all powerful nations would leave the China
                                       independent and allow everyone to trade there.
c.   Harding’s Cabinet
                    i. Andrew Mellon – Pittsburgh banker. He felt government should be run like a
                       business. As Secretary of Treasury he tried to reduce spending as much as
                       possible. He wanted to reduce taxes on the wealthy so that they would be able to
                       invest more into new business. He felt that the middle class should pay the brunt of
                       the tax load.
                   ii. Tariff of 1922 – reinstated many tariffs from the 19th Century. The result actually
                       hurt the US by limiting how much European countries could spend in the US –
                       these countries owed the US money and could not afford to borrow to buy
                       expensive US materials
                  iii. Most Progressive gains were done away with (Taft was now chief justice of S.C.)
                                  1. Hammer v. Dagenhart (1918) Supreme Court ruled that child labor
                                       was o.k.
                                  2. Adkins v. Children’s Hospital – S.C. ruled minimum wage was
                  iv. Scandal – Harding’s cabinet was known as the Ohio Gang
                                  1. Harding liked to drink (during prohibition) and play poker
                                  2. Head of Veterans Bureau stole money earmarked for veteran’s
                                  3. Attorney General Daugherty sold his influence on important cases
                                  4. Teapot Dome scandal – Secretary of Interior Albert Fall leased
                                       public land to oil companies for $400,000. He was sent to jail for 1
                   v. Harding dies on August 2, 1923 from a heart attack
         C. President Calvin Coolidge
a.   Coolidge was considered extremely honest – he was what the US needed after Harding
b.   Coolidge said, ―The business of America is business‖ and little else.
c.   Coolidge returned to a type of Social Darwinism – ―a man is worth the wages he can earn‖
                    i. Since poverty is a sin, gov’t should not tax the virtuous to assist the unworthy
                   ii. Gov’t should do very little, and spend even less
d.   Economic conditions – most Americans were doing well during the 1920’s
                    i. Wages were up, but did not go up as fast as corporate earnings
e.   Scientific Management and the assembly line – invented by Frederick Taylor and used by Henry
     Ford. This increased the productivity of labor, but made their job even more tedious.
                  i. The Ford Motor Company was able to lower the price of the Model T, and pay its
                      employees more money.
                 ii. As the economy got larger, trusts and big business were unable to corner as many
        D. Election of 1924 ends Progressivism
a. Coolidge is reelected over Democrat (and Catholic) Al Smith and Progressive Robert LaFollette
        E. .    Other issues of the time to be somewhat familiar with
a. Scopes Monkey Trial
b. Prohibition
c. Charles Lindbergh
d. Harlem Renaissance
e. Rise of professional sports
Herbert Hoover, or what is the worst possible thing I could do? O.K. let’s do that!

   A. Cracks in the foundation
          a. President Hoover felt that business should not be regulated
          b. Farmers produced more each year but were limited in how much they could sell, gains in
              productivity outpaced market gains.
          c. High tariffs limited the European market and resulted in reprisals (Hawley Smoot Tariff
              resulted in average tariff rates of 40%)
          d. Stock Market was soaring in the late 20’s – much of the speculation had little financial
              basis. Much of the investment was on a margin.
          e. American economy was not balanced – wealthy 5% controlled majority of wealth, many
              workers could not afford the things they manufactured.
          f. American banks had loaned billions to European countries.
   B. October 1929
          a. October 24th – stock prices drop markedly. J.P. Morgan and associates attempt to pool
              money to keep the market up (a strategy that had worked twice before).
          b. October 29th – stocks completed a disastrous week, no one could hold up stock prices at
              this point
   C. Hoover’s policies – he wanted to convince Americans that things were not that bad, if confidence
      could be restored than so could the ―roaring 20’s‖
          a. Most business leaders felt that this was a normal turn of the business cycle and that
              nothing should be done
          b. Hoover cut income tax to encourage spending (only the richest 1-2 % paid taxes) and
          c. Hoover opposed deficit spending, and insisted on staying on the gold standard
          d. Businesses and Banks were failing at a record rate 9000 banks failed 1930-1933 – every
              bank failure wiped out hundreds or thousands of families’ savings
          e. The election of 1930 gave the Democrats a majority in the House – they blamed Hoover
              for the crisis.
                    i. Hoover blankets, Hoover flags, later Hooverville’s
                   ii. Hoover still felt relief was a local responsibility – vetoed relief efforts
          f. Europe’s economy collapses – countries could no longer borrow from US banks.
              Countries devalued their currency, which resulted in lower prices for American farmers.
   D. Foreign policy and Hoover
          a. Hoover started the ―Good neighbor‖ policy, which promised that the US would not
              interfere with nations south of our border – repudiated the Roosevelt Corollary of the
              Monroe Doctrine.
          b. Hoover allowed Japan to build up their Navy in the pacific – had little choice.
          c. France asked US to sign a pact with them against Italy – US refuses but does pass
              ―escalator‖ clause to allow military build-up in case of emergency.
          d. Hoover convinces European nations to pass a 1-year moratorium on debt between
              countries to allow economy to rebound.
          e. Japan attacks China’s province of Manchuria – China asks for help, but all other nations
              are preoccupied with depression and little is done. Secretary of State Stimson criticizes
              Japan to no avail.
          f. Congress frees the Philippines in 1933 over Hoover’s veto – this act will backfire, it
              allows Japan to conquer the Philippines easily later.
   E. Hoover acts domestically
          a. Starts National Credit Association to loan $500 million – little of this was loaned.
          b. Congress in 1932 creates the Reconstruction Finance Corporation with power to loan
              $1.5 billion. Unfortunately the RFC could only loan to those with sufficient collateral, so
              those who needed it most could not get a loan. By the end of 1932 they had only loaned
              $30 million.
          c. Bonus Army marches on Washington D.C.
                    i. WWI veterans had been promised an insurance policy; they wanted to be able to
                       cash the policy to help them now. Congress and Hoover said no.
                   ii. After the protest march many veterans had nowhere to go so they formed a
                       ―Hooverville‖ in the park across from the White House.
                  iii. Hoover ordered them evicted in July of 1932 – police attempted to remove the
                       veterans – 2 vets were killed and 7 police were wounded
                  iv. Sec of War Hurley called in the Army (Hoover did not stop him), and General
                       MacArthur attacked the vets and drove them out of the city using troops, tanks,
                       tear gas, and machine guns.
                   v. This action appalls the nation and guarantees Hoover’s defeat (It’s not like he
                       had much chance anyway) in the November election.
   F. Election of 1932
          a. Republicans stay with Hoover
          b. Democrats choose Franklin D. Roosevelt who is Governor of New York
                    i. FDR is opposite of Hoover, gregarious, fun loving, against prohibition, and a
                       distant relative of Teddy Roosevelt.
                   ii. FDR is deliberately vague about what he will do – he realizes that he needs to
                       make no promises to become elected.
          c. FDR easily defeats Hoover and becomes President.

The New Deal

   A. Awaiting the inauguration
         a. Hoover had no influence, and Roosevelt had no power.
         b. Hoover would not help FDR in any way, he wanted FDR to say Hoover’s ideas were
         c. In February, Michigan’s Governor closed all banks to stop further bank runs – other
             states followed.
         d. Roosevelt chose a cabinet made up of people with a wide range of opinions and
         e. FDR’s inauguration speech ―the only thing we have to fear is fear itself‖
   B. The hundred days – FDR amazed and excited Americans with the speed he was able to
      implement his ideas and programs. These programs gave Americans confidence that the gov’t
      was capable of solving the nation’s problems.
        a. Emergency Bank legislation – allowed banks to get access to cash, this relieved the bank
        b. Volstead Act – legalized the sale of light wine and beer
        c. The Agricultural Adjustment Act (AAA) – plan to increase prices farmers received by
            limiting production
                  i. Farmers would be subsidized by the gov’t if they did not plant 1/3 to ¼ of their
                 ii. The Fed. Gov’t would buy non-perishable crops and store them until there was a
                     market for them
                iii. Larger farmers were helped more than smaller ones, sharecroppers in the South
                     were hurt by the plan—their land was the land taken out of production.
        d. Section 7a – offered federal guarantees that unions could organize legally
        e. Public Works Administration (PWA)– set up to fund projects to produce jobs—little of
            the $3.3 billion was spent
        f. Civilian Conservation Corps (CCC) – offered work relief jobs instead of handouts –
            young men worked in the country to build parks, dams, reservoirs, and protect forests and
        g. National Recovery Act (NRA) – set minimum wages and maximum hours – if industries
            agreed to the standards set, the gov’t would agree to limit competition in that industry.
            The NRA also eliminated child labor and allowed unions to organize.
        h. Removal of the gold standard – FDR was looking for a way to increase inflation (or at
            least stop deflation). He allowed the price of gold to go up (decreasing the value of the
        i. Lowering of interest rates—this made the cost of a loan go down, more people and
            business could afford to borrow money.
C. The rest of the first term – FDR continued to try and improve the nations economy
        a. Amending of the Federal Reserve Act of 1913 – took control away from private banks
            and created a federal agency to regulate the volume of money and interest rates.
        b. Creation of Securities and Exchange Commission – to prevent and punish fraud in the
            sale of stocks
        c. Federal Deposit Insurance Corporation (FDIC) – guaranteed the safety of deposits and
            restored confidence in the banks.
        d. Tennessee Valley Authority – provided electricity to a region of the country that had been
            neglected by private power companies
D. Criticism of FDR – initially few opposed Roosevelt’s policies, but as things got a little better,
   critics on the left and right began to appear.
        a. Conservative critics – Conservatives felt FDR was leading the US on the road to
                  i. American Liberty League – called for a return to minimalist gov’t. This action
                     backfired as FDR no longer made any attempt to appease the conservatives of the
        b. Liberal critics – some felt that FDR had not done enough to redistribute wealth
                  i. Huey Long – governor of Louisiana. He called for a huge increase in taxes on
                     the rich to be given directly to the poor. Long had hopes of becoming Pres. but
                     was assassinated in 1935.
                 ii. Dr. Francis Townsend – proposed a $200 monthly pension to all over the age of
                     60, the money had to be spent that month. The plan was not well thought out.
                iii. Father Charles Coughlin – Royal Oak, Michigan ―radio priest‖ called for the
                     nationalization of the banks – he blamed Jews for the plight of the US.
        c. The Supreme Court – the Supreme Court was still very conservative, they began
            declaring FDR’s programs unconstitutional.
                   i. The Court struck down the farm mortgage relief act, the National Industrial
                      Recovery Act (Section 7a, and the PWA), the NRA, the AAA, and said that
                      Congress had no right to regulate local businesses.
E.   Roosevelt’s response – FDR used these setbacks to further his aims. He blamed those who
     opposed him for the slowness of the recovery. ―If things were done my way…..‖.
         a. The Works Progress Administration (WPA) – hired unemployed workers to build schools
             (Garfield and Washington), roads, and airports. Artists, writers, and musicians were
             hired to write guidebooks, stage plays, paint mural etc.
         b. Wagner Act – outlawed unfair labor practices and gave unions powers that had been
             removed when the S.C. vetoed section 7a. It also created the National Labor Relations
             Board to enforce these provisions.
         c. Resettlement Administration (RA) – created to help displaced farmers (this was the
             ―nice‖ camp in the movie). The goal was to establish cooperative farm communities and
             resettle farmers on gov’t land. Little of the money set aside for this program was spent.
         d. Social Security Act of 1935 – provided pensions for the elderly and unemployment
             compensation. Created a ―safety net‖ for workers.
F.   Election of 1936
         a. Republicans nominate Alf Landon a very liberal Republican, Liberal critics created the
             Union party and nominated William Lemke.
         b. Roosevelt wins in a landslide – carried every state except Maine and Vermont.
G.   ―Packing‖ the Supreme Court
         a. FDR was tired of having the S.C. overturn his programs. He proposed adding 6 members
             to the S.C. His rationale was the elderly members of the court could not keep up with the
         b. It was apparent that the reason was that FDR was tired of losing cases, and the proposal
             fell apart.
         c. The court suddenly became much more liberal and started finding FDR’s new proposals
             constitutional. The threat of action against them caused the court to side with FDR more
H.   Union fight
         a. The American Federation of Labor (AFL) still did not want unskilled workers in their
             union. A rift between John Lewis (the leader of the United Mine Workers) developed
             and he was kicked out of the AFL.
         b. Lewis formed the Congress of Industrial Organization (CIO). This union accepted black
             workers, women, and the unskilled.
         c. Sit-down strike – first used in Flint against GM. Workers sat down next to their work
             area to prevent the use of ―scab‖ labor.
         d. Henry Ford responded to picketers by hiring Pinkerton detectives to beat them at the Ford
             Rouge plant.
         e. Union membership grew to 7.2 million by 1939

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