1. “The Politics of Boom and Bust”
Chapter 32
“The Politics of Boom and Bust”

2. Warren G. Harding
Looked presidential, but was very naive and people took advantage of him.
Neither could he detect the corruption of his cabinet
Corrupt people like Senator Albert B. Fall of New Mexico, a scheming anti-conservationist, became secretary of the interior, and Harry M. Daugherty took over reigns as attorney general.

3. Harding and Business Took a Laissez-Faire approach to business
Urged Business to regulate themselves
Plan was not simply for government to keep hands off business, but for government to help guide business along the path to profits
Under Harding, corporations could expand again, and anti-trust laws were not as enforced or downright ignored

4. Supreme Court Chief Justice Taft
Taft appointed Chief Justice of the Supreme Court by Harding in 1920
Justice Taft at the Washington Senators game

5. Post- WWI America
Wartime government controls disappeared (i.e. the dismantling of the War Industries Board) and Washington returned control of railroads to private hands
The Merchant Marine Act of 1920 authorized the Shipping Board, which controlled about 1500 vessels, to get rid of a lot of ships at bargain prices, thus reducing the navy.
Labor membership shrank by 30% from 1920 to 1930

6. Working Toward Peace
Since America had never ratified the Treaty of Versailles, it was still technically at war with Germany, so in July of 1921, it passed a simple joint resolution ending the war.
The Washington “Disarmament” Conference of resulted in a plan in which a 5:5:3 ratio of ships that could be held by the U.S., Britain, and Japan
Frank B. Kellogg, Calvin Coolidge’s Secretary of State, won the Nobel Peace Prize for his role in the Kellog-Briand Pact (Pact of Paris), which said that all nations that signed would no longer use war as offensive means.

7. Five-Power Treaty (1922)
A battleship ratio was achieved through this ratio: US Britain Japan France Italy
Japan got a guarantee that the US and Britain would stop fortifying their Far East territories [including the Philippines].
Loophole  no restrictions on small warships

8. Kellogg-Briand Pact
In light of the casualties that resulted from World War I, Secretary of State Frank B. Kellogg and French Foreign Minister Aristide Briand crafted the Kellogg-Briand Peace Pact. This international peace proposal committed 15 nations to outlawing aggression and war in settling disputes. President Coolidge signed the Pact on January 17, The ceremony took place in the East Room, making use of President Grant’s old Cabinet Table.

9. Republicans Raise the Tariff
Congress passed the Fordney-McCumber Tariff Law, which raised the tariff from 27% to 35%.
Presidents Harding and Coolidge were much more prone to increasing tariffs than decreasing them.
Hurt international trade because of reciprocal tariffs
Started a vicious economic cycle that will lead to a worldwide depression

10. Fordney-McCumber Tariff

11. Teapot Dome Scandal
Albert B. Fall leased land in Teapot Dome, Wyoming, and Elk Hills, California, to oilmen Harry F. Sinclair and Edward L. Doheny, but not until Fall had received a “loan” (actually a bribe) of $100,000 form Doheny and about three times that amount from Sinclair.

12. Harding Dies in Office
President Harding died in bed in San Francisco in the Palace Hotel. He had been sick with pneumonia a few days before. Doctors pronounced that his death was due to a stroke. Harding's death occurred before the full scope of the scandals that had taken place during his administration became known.

13. A Mysterious Death
Within minutes of Warren G. Harding's death at either 7:10, 7:20, or 7:30 p.m. on August 2, 1923, rumors began to circulate. No one present at his demise could give the correct time of death. No one seemed to be sure who was on hand in the San Francisco hotel room when he breathed his last. Most of all, the four physicians who had been caring for Harding for the previous week could not agree on the cause of death. It had something to do with his heart. On the other hand, perhaps it was a stroke. Alternatively, it could have been both, exacerbated by the ptomaine poisoning that he may or may not have experienced a few days earlier in Vancouver. Despite the confusion over the time of death, surely an autopsy would resolve the uncertainty about what killed Warren G. Harding. Except --- there was no autopsy. Mrs. Harding --- the "Duchess," as her husband called her --- would not permit it. Within an hour of his death, he was embalmed, rouged, powdered, dressed, and in his casket. By morning, he was on a train, headed back to Washington, D.C

14. Florence Harding

15. Calvin Coolidge
At 2:30 on the morning of August 3, 1923, while visiting in Vermont, Calvin Coolidge received word that he was President.
New president Calvin Coolidge was serious and never spoke more than he needed to
He rapidly became popular. In 1924, as the beneficiary of what was becoming known as "Coolidge prosperity

16. Calvin Coolidge with Walter Johnson

17. Frustrated Farmers
World War I had given the farmers much prosperity, as they had produced much food for the soldiers.
New technology in farming, such as the gasoline-engine tractor, had increased farm production dramatically.
Overproduction a big problem for farmers

18. Election of 1924 Republicans – Coolidge Democrats John Davis
“the man who builds a factory builds a temple
“The business of America is business”
“Keep cool with Coolidge”
Democrats John Davis
Progressive - Robert La Follette
He gained the endorsement of the American Federation of Labor and the shrinking Socialist Party, and he actually received 5 million votes
**Coolidge easily won election. People voted their pocketbook

20. American Foreign Policy
Isolationism continued to reign in the Coolidge era, as the Senate did not allow America to adhere to the World Court, the judicial part of the League of Nations
In the Caribbean and Latin America, U.S. troops were withdrawn from the Dominican Republic in 1924.
Troops remained in Haiti from
Coolidge took out troops from Nicaragua in 1925, and then sent them back the next year.
Latin America began to resent American involvement

22. German Inflation
The German inflation of One dollar worth 100,000 marks.

23. A woman in Germany in the early 1920s is feeding money into her stove
A woman in Germany in the early 1920s is feeding money into her stove. The cash was worth less, pound-for-pound, than firewood.

24. Hyper-Inflation in Germany: 1923

25. German children with stacks of inflated currency, virtually worthless in 1923.

26. Results of Coolidge’s 4+ Years
Huge gains for big-business
No anti-trust legislation
Farmers, factory workers and labor unions suffered tremendously

27. Election of 1928 Republicans – Herbert Hoover Democrats – Alfred Smith
Former Secretary of Commerce and head of the U.S. Food Administration during WWI
Quaker from Oregon who was a Stanford Graduate
Promoted prosperity, prohibition, and rugged individualism
Democrats – Alfred Smith
NY governor who drank heavily
**Radio turned out to be an important factor in the campaign, and Hoover’s personality sparkled on this new medium (compared to Smith, who sounded stupid and boyish).
**Hoover triumphed in a landslide, with 444 Electoral votes to Smith’s 87.

29. Election of 1928

30. Hoover’s First Moves
Hoover’s Agricultural Marketing Act, passed in June of 1929, was designed to help the farmers help themselves, and it set up a Federal Farm Board to help the farmers.
The Hawley-Smoot Tariff of 1930 raised the tariff to an unbelievable 60%
Foreigners hated this tariff that reversed a promising worldwide trend toward reasonable tariffs and widened the yawning trade gaps
Basically followed in the footsteps of the previous two Republican presidents

31. Dangerous Hawley-Smoot Tariff
The Hawley-Smoot Tariff raised tariffs to their highest levels in US history. Its proponents, including President Hoover, believed that the high tariffs would help American industry and agriculture in a time of severe depression. In fact, the opposite occurred. As the United States was a net exporter of both agricultural goods and industrial products, the ensuing worldwide tariff war simply lengthened the depression.

32. The Great Crash Ends the Golden Twenties
Hoover confidently predicted an end to poverty very soon, but on October 29, 1929, a devastating crash caused by over-speculation and overly high stock prices built only upon non-existent credit struck the nation
Losses, even in blue-chip securities, were unbelievable, as by the end of 1929, stockholders had lost over $40 million in paper values .
By the end of 1930, 4 million Americans were jobless, and two years later, that number shot up to 12 million.
Over 5000 banks collapsed in the first three years of the Great Depression

34. © Illinois State Museum
Tough Times
© Illinois State Museum

37. Causes of the Depression
Overproduction of farms and factories which caused a surplus of goods with too few consumers
Unequal distribution of wealth – Too much money in too few hands and when the rich stopped spending the poor could not take up the slack
Over-expansion of credit – buy now and pay later
Technological unemployment
Circular economic problem
Lack of international trade due to high tariffs
Crash of the stock market

38. Hoovervilles
Sacramento
Seattle
Oakland
Central Park New York

39. Hoover Criticized
Hoover unfairly received the brunt of the blame for the Great Depression, but he did pass measures that made the depression less severe than it could have been
Critics noted that he could feed millions in Belgium (after World War I) but not millions at home in America
He did not believe in government tampering of the economic machine, and he felt that depressions like this were simply parts of the natural economic process

40. Hoover Pioneer of New Deal
Voted to withdraw $2.25 billion to start projects to alleviate the suffering of the depression.
Started Hoover Dam project to provide jobs for Americans
Established the Reconstruction Finance Corporation, which became a government lending bank.

42. Turbines

44. Overhead View of Hoover Dam

45. The Bonus Army
Many veterans which had not been paid their compensation marched to Washington, D.C. to demand their entire bonus
The “Bonus Expeditionary Force” erected unsanitary camps and shacks in vacant lots, creating health hazards and annoyance
Riots followed after troops led by General Douglas MacArthur came in to intervene and an eleven month old baby died from exposure to tear gas
“Battle of Anacostia Flats”

46. Japanese Militarists Attack China
In September 1931, Japan, alleging provocation, invaded Manchuria and shut the Open Door.
Peaceful peoples were stunned, as this was a flagrant violation of the League of Nations covenant, and a meeting in Geneva, Switzerland, was arranged
Since the U.S. did no effective thing, the Japanese bombed Shanghai in 1932, and even then, outraged Americans didn’t do much to change the Japanese minds
U.S. and League inactivity led to future aggression of Japan and Germany that led to WWII

47. Japan Invades Manchuria, 1931

48. Hoover Pioneers the Good Neighbor Policy
Hoover was deeply interested in relations south of the border, and during his term, U.S. relations with Latin America and the Caribbean improved greatly
Since the U.S. had less money to spend, it was unable to dominate Latin America as much, and later, Franklin D. Roosevelt would build upon these policies