1. Politics and Prosperity
Chapter 21
Politics and Prosperity

2. A Republican Decade Election of 1920
Republican Warren G. Harding v.James Cox
Hardings’s campaign pledge appealed to Americans
He called for a “return to normalcy”
Americans were tired of European problems and feared their spread to the USA
Harding was elected

3. Demobilization Transition from wartime to peace time
unemployment rose; women and blacks fired, anti-immigrant sentiment
wages fell
prices remain inflated due to the war
people continue to buy, using credit

4. Demobilization recession of 1920-21; prices and production fell
farm crises caused by overproduction, credit, lack of conservation
situation in Russia worsens; fear of communism grips the nation

5. Types of Economic Systems
Capitalism - Private ownership of property
- Profit motive
Socialism Collective ownership of property
- Peaceful means to achieve
objective
- Motive is “to each as needed”
Communism- Collective ownership through
violence if necessary

6. Russian Revolution
Russia’s revolution in March, 1917 began as an attempt to bring democracy to Russia
Czar Nicholas II was overthrow
Instead, chaos erupted

7. Russian Revolution Civil War broke out
Lenin and his communist followers led the Red Army
The White Army battled for 2 1/2 yrs but was defeated
(1924) The Bolsheviks “majority” took power

8. Communism Under Lenin 1. The government owned all land and property
2. A single political party controlled the
government
3. The needs of the country always took
priority over the rights of individuals
IMPORTANT! Creates a classless society

9. US FEARS EMERGE
Lenin changed the name of the country from Russia to the Union of Soviet Socialist Republics (USSR)
The Soviet Union was the largest country in the world in terms of land
It was near the largest in terms of population
The USA refused to recognize the country because of communism

10. US FEARS STALIN Joseph Stalin took over the country when Lenin died
He consolidated his power by killing his opponents
He brutally oppressed all opposition

11. The Red Scare Americans feared a communist takeover
Feared immigrants could be radicals and communists
Began a campaign to label and neutralize all communist threats

12. Schenck v. US
Schenck mailed letters to people telling them to avoid the draft
Said it was his 1st Amendment right
US jailed him because it went against Espionage Act
Caused “clear and present danger”
Like yelling “FIRE”
Started faulty accusations

13. Gitlow v. New York Gitlow was a socialist
he called for people to overthrow the government
went against 1st Amendment rights
New York accused him of criminal anarchy
An anarchist is someone who opposes all government

14. The Palmer Raids
1919 – Bombs found in post office addressed to prominent Americans, including Oliver Wendal Holmes, John D. Rockefeller.
A Bomb was detonated at Mitchell Palmer’s house.
Bombs blamed on anarchists and communists.

15. The Palmer Raids Attorney General A. Mitchell Palmer
Nov, 1919 to May 1920 was a Socialist holiday
Interrogated and arrested thousands of poor people, mostly immigrants
Deported over 500 without evidence.
After months of raids, they netted 3 pistols
By summer 1920 hysteria died down and most Americans failed to support the witch-hunts there were no results!

16. Sacco & Vanzetti
Italian immigrants arrested for murder/burglary of a shoe factory near Boston
Sacco a shoemaker Venzetti a fish peddler
Railroaded by Judge Thayer who allowed their trial to be about their political views and lack of service in WWI
Convicted not from evidence but for political views, in clear violation of the Constitution
Executed August 23, 1927 in spite of protests in many major cities here and abroad

17. WHY STRIKE? Real cause of strikes was the doubling of cost of living
people worked harder and longer
high rent
high food
unemployment

18. Labor Strikes Seattle General Strike (1919)
called by shipyard workers for increased salary and shorter hours
joined by 110 local unions representing 60,000 workers
peaceful
industrialists use propaganda and scare tactics – communist threat – to weaken support for the unions
strike ends after only 5 days with no gains by the unions and anti-union sentiment high

19. Labor Strikes The Boston Police Strike (1919)
police commissioner fired 19 officers for joining the union
75% of the police force walked out in protest
state militia was called in by Governor Coolidge after 2 nights of violence
police force was replaced by unemployed veterans
Coolidge “There is no right to strike against public safety by anarchy”

21. Labor Strikes The Steel Strike (1919)
365,000 steel workers in western PA & Midwest walked out
lasted from Sept to Jan. 1920
owners hired private police – governor supported owners
18 strikers were killed, many beaten, jailed thought it was communism
recruited African Americans & immigrants for replacement workers (scabs)
returned to work with no gains

22. Labor Strikes The United Mine Workers Strike (1919)
Wages set by government in 1917; could not strike during war
John L. Lewis is newly elected, called for strike
President Wilson demanded they return to work; Lewis officially ended the strike but unofficially encouraged workers not to return to work
After about a month, Wilson compromised and arbitrated a 14% increase in wages

23. Coal miners were evicted from company housing during the strike
The United Mine Workers Strike (1919)
Coal miners were evicted from company housing during the strike

24. *After 1920 labor strikes sharply declined
* Unions did not have the support of the public
*Higher wages after the recession led to less desire for strikes

25. Republican Leadership
All three branches were dominated by Republicans ( )
Presidents Harding, Coolidge & Hoover
Majority in Congress
Supreme Court Chief Justice - Former Republican President, W.H. Taft

26. Republican Leadership
All 3 branches were considered conservative, meaning that they denounced progressive changes.
Little or no government interference for social ills (poverty, epidemics, etc.)
Promotion of business interests
Smallest government in terms of people, finances, and scopes of interests possible

27. The Harding Presidency
Appointments varied from friends and family
Foreign policy was centered on isolationism and disarmament
Domestic policy centered on social stability, which included a strict immigration policy
Teapot Dome Scandal prominent business leaders to some people that were inexperienced, incompetent, or dishonest
overshadows his legacy

28. Foreign Policy
Isolationism - no involvement in European, Asian, or African conflicts (does not apply to Latin America)
Washington Conference
USA, Great Britain, France, and Japan agree to destroy some of their navy force and limit the amounts and types of new ships

29. DISARMAMENT
A program which nations of the world would voluntarily give up their weapons
policy for peace and stability

30. NATIVISM Movement to favor native born citizens
because of isolationism
Why did it flare up again?
Patriotism- Americans believed foreigners could not be loyal
religion- most nativists were Protestant and mistrusted all other religions
urban conditions- Americans blamed problems in cities on immigrants
jobs- workers feared immigrants would take their job
red scare- most immigrants came from Europe and afraid of communism

31. Foreign Policy Fordney-McCumber Tariff - 1922 Dawes Plan - 1924
High duties on many products to discourage imports
Dawes Plan
Restructured Germany’s reparation payments and gave them loans

32. Domestic Policy
“Less government in business and more business in government.”
Appointed businessmen to cabinet posts and encouraged pro-business policies
tariffs
few safety or labor regulations
lower taxes for upper income brackets and corporations

33. Domestic Policy Immigration Policy 1921 – Quota system established.
3% of population in USA in 1910 census would be admitted from each country.
National Origins Act
Quotas adjusted to 2% of 1890 census
does not apply to Asians - they are still subject to the Chinese Exclusion Act
does not apply to Mexicans - they are encouraged to work on southwestern farms

34. Teapot Dome Scandal
As investigations of various members of the Harding Administration begins, the president dies naturally on Aug. 2, 1923
The scandals that erupt after his death taint his time in office, although he was not directly involved

35. Teapot Dome Scandal
Secretary of the Interior illegally granted drilling rights to private industries in Elk Hills, CA and Teapot Dome, WY. He then accepted $300,000 in kickbacks
Director of Veterans Bureau – Charles Forbes pocketed millions
Attorney General Harry Daugherty was convicted of accepting bribes

36. Coolidge Presidency
VP Coolidge became president when Pres. Harding died. He was elected in 1924.
“The chief business of the American people is business.”
Coolidge is known more for what he did not do than for what he did

37. Coolidge Presidency Laissez-Faire economics
reduced inheritance and income taxes
refused to regulate the stock market
refused to give flood assistance to Mississippi River victims

41. Coolidge Presidency Foreign Policy Kellogg - Briand Treaty (1927)
15 countries agreed not to declare war on each other

42. Election of 1928 Coolidge declined to run
Republican candidate, Herbert Hoover, won over the Democrat, Alfred Smith
Campaign revolved around religion and prohibition
Smith is Catholic, anti-prohibition
Hoover is Protestant, pro-prohibition

43. A Business Boom
Recession from early part of the decade gradually declines
Industry successfully changed to a consumer economy
People bought consumer goods, creating demand
Factories fulfilled that demand by hiring employees

44. A Business Boom
Manufacturers introduced installment plans to consumers to keep demand high
People were naïve about the so-called prosperity
By 1929, 60% of cars and 70-90% of household goods were bought on credit
Interest rates varied from 11-40%

45. A Business Boom Electric Power Advertising
during 1920s General Electric supplied many new household appliances
demand for electricity increased dramatically
Advertising
new methods and mass media contributed to a huge impact by advertisements
Gross National Product rose by 6% annually

46. Ford & The Automobile Automobiles invented in 1880s
Henry Ford used innovative techniques to increase production and profit
Between Ford developed his first original cars. He sold 30,000 Model T’s
In 1908 he built his 1st modern factory

47. Ford & The Automobile Principles of Mass Production
assembly line means people stay stationary and the car moves to them
specialization means faster performances by workers
also means boredom
also begins new management class
limited choices in color and options
Model T’s were churned out every 24 seconds

48. Ford & The Automobile
Increased production leads to economies of scale (it’s cheaper per car to produce 10,000 than 50)
Ford dropped prices on Model T to $390, making it affordable to middle class America
Vertical Consolidation - Ford owned glass companies, iron mines, steel mills and coal mines

49. Ford & The Automobile
Ford raised wages for his workers but strictly enforced his rules
Hired immigrants but insisted on their going to school to learn English and he had investigators inspect their homes
By 1936 he declined to 3rd place in the auto industry partly due to resistance to change

50. Industrial Growth Automobile related industries led the boom
Other industries, like movie theaters, oil refineries, airplane manufacturers, grew by leaps and bounds
The top 200 American companies total worth grew from 43 billion to 81 billion ( )

51. Bypassed by the Boom
African Americans and Immigrants did not fare as well in the job market
Farmers continued to struggle with low prices, overproduction, and high debt
These groups will be among the most vulnerable when the ‘boom times’ end

52. The Economy in the Late 1920s
The economy in the 1920s appeared to be in good shape on the surface
Underneath, there were warning signs of impending disaster

53. Economy Appears Healthy
The stock market was taken as an indicator of the general economy
If stock prices went up, the whole economy must be alright
Stock value increased from $25 billion in 1927 to $87 billion in 1929
Average Americans invested in the stock market

54. Economy Appears Healthy
Stock prices are subject to supply and demand
The more people that invest in the market, the higher the demand, and consequently the price of stocks
Two ways to make money from the stock market - earnings and capital gains

55. Economy Appears Healthy
Welfare capitalism
employers gave workers better wages and benefits
organized labor membership declined in the 1920s
The Wildcat and other attractions were added to Hershey Park

56. Labor
Stability
Booming
Stock
Market
Economy
Appears
Healthy
Available
Credit
Consumer
Confidence

57. Economic Danger Signs Rich were getting richer
wealthiest families controlled 34% of the savings
Average families earned $2500 a year and had no savings
Many families had accumulated large consumer debt

58. Economic Danger Signs Stock market was being pushed by speculation
Speculation - high risk investments in hopes of making quick profits
Buying on margin - Paying only a fraction of the cost and borrowing the rest

59. Economic Danger Signs “Too many goods, too little demand”
Assembly lines were producing more products than people were able to buy
Auto industry and housing starts had already slumped before 1929

60. Economic Danger Signs Trouble for Farmers & Workers
Many could not meet their mortgages, forcing 6000 rural banks to fail in the 1920s
Congress passed relief bills in 1927 & 1928 but President Coolidge vetoed them
Many industry workers continued to work in dangerous jobs for small wages
Textile workers in Tennessee - 56 hour week for $10 a week

61. Clear signals of trouble in the economy
Summary
Clear signals of trouble in the economy
Uneven
wealth
Rising
debt
Hardships
of farmers
and
workers
Stock
speculation
Over-
production

62. The End!