1. The Politics of Boom and Bust
APUSH
Mrs. Housenick
2/20/13

2. Politics in the 1920s
Presidents of 1920s brought America out of post-war recession to great prosperity
Did this through cooperation with big business
End to Progressive reform, move to active government aid to business
Much economic prosperity built on unstable foundation

3. Harding as President
Often cited as worst president in American history
Biggest weakness was his inability to see corruption in his own administration (Ohio Gang)
Main goal was to help business
Reversed many Progressive rulings
Antitrust laws not enforced

4. Isolationism in Foreign Policy
No Treaty of Versailles, no League
Disarmament
Holiday on construction of battleships
1928—Kellogg Briand Pact—denounced war as an instrument of foreign policy
Useless policy—why?

5. Political Scandals Series of scandals under Harding
Teapot Dome Scandal—Government leased out priceless oil reserves to businesses for profit.
Harding’s popularity forever diminished, died in office in 1923

6. “Silent Cal” Coolidge Honesty, industry, frugality
Firm believer in laissez-faire, but also government aid to business
Got rid of corruption in Washington
Easily won re-election in 1924

7. Debating Debts
Allies owe US money—resentful, and complain can’t pay back until Germany pays reparations
US refuses to forgive debts, but is willing to lend money to Germany to pay reparations to Allies, so Allies can pay back Americans (Dawes Plan)
Issue of debts created lots of ill will against Americans

8. Herbert Hoover as President
Landslide victory in election of 1928
Ideal businessperson’s candidate
Democratic candidate Al Smith criticized for religion and being “wet”—Rum, Romanism and Ruin speech
Two accomplishments before Depression
Aid to farmers with Federal Farm Board
Hawley-Smoot Tariff—HIGHEST PROTECTIVE TARIFF EVER IN PEACETIME (NEARLY 60%)!!!

9. What caused the stock market crash?
Speculation on the stock market
Prices of stock went up in 1920s, but only because so many people buying
People could even borrow money to play the stock market (buying on margin)
In late 1920s, once people ran out of money or couldn’t borrow any more, they stopped buying, made prices go down

10. Other causes
Credit—people got into too much debt throughout 20s, couldn’t pay it back
Banks
Lent out too much of customer’s money to borrowers
When borrowers didn’t pay back loans, banks couldn’t pay other customers, and banks closed
Unequal distribution of wealth
Small percent of population rich, most barely getting by, couldn’t actually afford products of 20s.

11. The Stock Market Crash
People began to buy stocks less and less—sensing a decline investors began to sell.
Many sold stocks because of “margin calls”
Stock prices plummeted rapidly
October 29, 1929 the worst day BLACK TUESDAY
Over $30 billion lost in total.
Signal the Depression had begun.

12. Bank Failures
When stocks declined, banks lost money they had invested, and money they had lent to speculators.
Some banks forced to close, with this news, Americans began to pull their money out of banks all at one time.
With too many withdrawals, over 3,000 banks collapsed!

13. The Devastation of the Depression
By 1933, more than 9,000 banks had failed.
In 1932 alone, 32,000 companies went out of business.
In 1933, more than 12 million workers were unemployed.
Average family income dropped from $2,300 to $1600 a few years later.

14. Urban Areas
People lost jobs, couldn’t pay mortgage or rent, many people homeless.
People set up shantytowns—little towns of shacks where homeless stayed.
Soup kitchens and bread lines were established by local charities to help the needy.

15. A typical breadline

16. Hoover’s Solutions Very pro-business.
Like most Republicans, Hoover believed in helping businesses first, and that their wealth would “trickle down” to the poor.
Some public works programs (Hoover Dam)
Provided loans to businesses in distress.
However, his solutions didn’t deal with overproduction—even if companies could produce, people were too poor to buy anything!

17. Refusal to Provide Direct Relief
Didn’t want to spend federal money without further income.
Encouraged private charities and state and local governments to help the poor.
By 1932, such agencies were overwhelmed and did not have enough money to help many Americans.
By 1930, Americans were more frustrated and started to blame Hoover for economic problems.

18. The Bonus Army Blunder
In 1924, soldiers had been promised a $1000 bonus. With economic crisis, the House passed a bill which would pay the veterans early.
In 1932, 1,000 soldiers marched across the country to lobby Congress to approve the bill—were called “The Bonus Army.”
Once in Washington, over 15,000 veterans gathered, disappointed when Senate rejected bill.
Many veterans stayed in Washington, because there was nowhere else to go.
Hoover called in troops to force the veterans to leave the city.
Two veterans were killed, 1000s were gassed.
After this incident, most people were ready to get rid of Hoover.

19. Bonus Army Images

20. Bonus Army Images

21. Foreign Policy Concerns
Japanese Imperialism: 1931 invasion of Manchuria
US responds with Stimson Doctrine—US would not recognize any territorial acquisitions achieved by force, did little to stop imperialism of Japanese
Good Neighbor Policy: Hoover smoothes relations with Latin America, removal of troops from Haiti and Nicaragua.