Chapter 25, Section 1: Politics and Prosperity Main Idea: As the Republican party returned to power in the 1920s, the economy boomed.
A. Republicans in Office n n Warren Harding won the 1920 election using the campaign slogan “Back to Normalcy,” which meant a return to a simpler time (pre-WWI). Harding Takes Office n n For his top cabinet posts, Harding chose capable men u u Andrew Mellon – Secretary of the Treasury u u Herbert Hoover – Secretary of Commerce Corruption & Scandals n n For other posts, he chose his friends from home, known as the “Ohio Gang.” While Harding was honest, many of them were not, resulting in many scandals. u u Charles Forbes, head of the Veterans Bureau, was convicted of stealing millions from it. After, many other scandals came to the surface, leading to Harding’s death from a heart attack. n Tea Pot Dome Scandal- Secretary of Interior Albert Fall secretly leased government land in California & Wyoming to private oil companies in exchange for bribes; he was tried and found guilty (1st cabinet member sent to prison) Tea Pot Dome Scandal- Tea Pot Dome Scandal- Coolidge Takes Office n n “Silent Cal” – response to woman’s bet … “You lose.” “Silent Cal” n n Wins Election of 1924: “Keep Cool With Coolidge.”
Elk Hills, California 1912 U.S. NAVY O I L Teapot Dome, Wyoming Property of U.S. NAVY President William H. Taft The oil reserves of Teapot Dome, Wyoming, and Elk Hills, California shall be for US Naval use only.
I appoint Albert Fall to be the Secretary of the Interior. President Warren G. Harding Psssssst. Albert, Take this. Ooh la la! A hundred thousand dollars! Why thank you very much Harry Sinclair of the Mammoth Oil Corp and Edward Doheny of Pan American Petroleum.
Elk Hills, California Teapot Dome, Oil reserved for U.S. NAVY Mammoth Oil Corp 1921 U.S. NAVY O I L Pan American Petroleum Hey, the bribe worked, Harry. Our buddy Albert let us lease Naval reserves and drill for oil. Sssssweet Ed!
Secretary of the Interior Albert Fall Harry Sinclair (Mammoth Oil Corp.) Edward L. Doheny (Pan- American Petroleum) Yo, Albert buddy! How about letting Edward and I drill for oil in Elk Hills and Teapot Dome! But that’s Naval property! You can’t drill there! Maybe $100,000 would help you change your mind! Why didn’t you say so, Ed? You’ve got a deal!
B. Coolidge Prosperity n Like Harding, Coolidge was very pro-business. Industry Booms n ” refers to the economic boom of the mid- to late- 1920s, while Coolidge was President. n “Coolidge Prosperity” refers to the economic boom of the mid- to late- 1920s, while Coolidge was President. n Factory production increased, which meant more jobs were created, which meant incomes rose, which meant spending increased, which meant more economic growth, which meant …… n boosted sales by n Advertising boosted sales by convincing people they’d be happier if they bought certain products Advertising n n Buy now, pay later- installment buying (buying on credit) encouraged people to buy things they really couldn’t afford. This increased both the demand for goods, as well as consumer debt (people owed more than they had). “Perhaps one of the more important accomplishments of my administration has been minding my own business.” “The business of America is business.”
A Booming Economy: The 1920’s Income increases People purchase more goods Companies earn higher profits Companies expand and hire more people
n People getting rich from the stock market encouraged others to invest. n Buying on margin is like buying stocks on credit. This can be dangerous because stock values don’t always rise. n By 1928, stock values rose faster than company values. Some experts warned that the “Great Bull Market” would not last forever, but most investors ignored the warnings. A Soaring Stock Market As the economy boomed, the stock market soared. Stock values skyrocketed & many investors got rich (called a bull market).
How does the stock market work? You buy 100 shares of stock of x $5.00 per share How much money have you invested? $500.00 Scenario #1 stock increases to $20 per share 100 shares of stock x $20.00 per share How much are your 100 shares of stock now worth? $2,000.00 How much profit have you made? $2,000.00 stock value - $500.00 initial investment $1,500.00 net profit
How does the stock market work? You buy 100 shares of stock of x $5.00 per share How much money have you invested? $500.00 Scenario #2 stock decreases to $1 per share 100 shares of stock x $1 per share How much are your 100 shares of stock now worth? $100.00 How much money have you lost? $100.00 stock value - $500.00 initial investment $400.00 net loss
C. A Limited Role in World Affairs n After WWI, the U.S. was now the world’s leading power, but most Americans wanted to stay out of European affairs & keep to ourselves (isolationism). u The U.S. signed a separate peace treaty with the losers of the war and would not join the League of Nations. Latin America n n Trade between US & Latin America increased. At times, we intervened to protect our interests there. u u Nicaragua – US Marines were sent to protect American plantations & RRS during a revolution there u u Mexico – A US diplomat worked out a compromise The Soviet Union n Russia became the Soviet Union after V.I. Lenin (Bolshevik Revolution) installed a communist gov’t. n U.S. refused to recognize the new government due to anti-communist feelings (no private property or religion). u We still sent $20 million in aid to starving Russians in 1921.
Pursuing Peace n n Because militarism was one of the main causes of WWI, many people in the 1920s favored disarmament. u Disarmament- reducing armed forces and weapons n n By the end of the decade, the US & 61 other nations signed the Kellogg-Briand Pact, which “outlawed” war u u It’s one fatal flaw, however, was that it didn’t say how it would keep the peace. u u What would happen to aggressive nations?