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The Politics of Boom and Bust

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					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”

				
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