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Chapter31ThePoliticsofBoomandBust,1920–1932
I.TheRepublican“OldGuard”Returns
• WarrenG.Harding,inauguratedin1921,lookedpresidential:– Foundhimselfbeyondhisdepthinpresidency• Unabletodetectmoralfaultsinassociates• Couldnotsaynoanddesigningpoliticiansleechedontothisweakness• Washingtoncouldnottellalie,Hardingcouldnottellaliar• Promisedtogatheraroundhim“bestminds”
I.TheRepublican“OldGuard”Returns(cont.)
– CharlesEvansHughes:• Masterful,imperious,incisive,brilliant• Broughttopositionofsecretaryofstateadominatingconservativeleadership
– AndrewW.Mellon:• NewsecretaryofTreasury
– HerbertHoover:• FamedfeederofBelgiansandwartimefoodadministrator• Becamesecretaryofcommerce
I.TheRepublican“OldGuard”Returns(cont.)
• Raisedhissecond-ratecabinetposttofirst-rateimportance• Especiallyindrummingupforeigntradeformanufactures
• Harding's“worstminds”:– SenatorAlbertB.Fall:• Schemingantconservationist• Appointedsecretaryofinterior• Asguardianofnation'snaturalresources,heresembledwolfhiredtoprotectsheep
I.TheRepublican“OldGuard Returns(cont.)
– HarryM.Daugherty:• Big-timecrookin“OhioGang”• Supposetoprosecutewrongdoersasattorneygeneral
II.GOPReactionattheThrottle• Hardingaperfect“front”forindustrialists:– NewOldGuards:• Hopedtocrushreformsofprogressiveera• Hopedtoimproveonoldbusinessdoctrineoflaissez-faire• Wantedgovernmenttokeepitshandsoffbusiness• Wantedgovernmenttoguidebusinessalongpathtoprofits– Achievedgoalbyputtingcourtsandadministrativebureausinsafekeepingoffellowstand-patters
II.GOPReactionattheThrottle(cont.)
– Hardinglivedlessthanthreeyearsaspresident:• Appointedfourofninejustices:• Fortunatechoiceforchiefjusticewasex-presidentTaft,whoperformeddutiesablyandwasmoreliberalthansomeofhisassociates
– SupremeCourtaxedprogressivelegislation:• Killedfederalchild-laborlaw• Strippedawaymanyoflabor'shard-wongains• Rigidlyrestrictedgovernmentinterventionineconomy
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II.GOPReactionattheThrottle(cont.)
• LandmarkcaseAdkinsv.Children'sHospital(1923):– ReverseditsreasoninginMullerv.Oregon(seeChap.28):
» Whichdeclaredwomenneededspecialprotectioninworkplace» Toinvalidateminimum-wagelawforwomen» Reasoning:becausewomenhadvote(19thAmendment),theywerelegalequalofmenandcouldnolongerbeprotectedbyspeciallegislation
– Twocasesframeddebateovergenderdifferences:» Werewomensufficientlydifferentfrommenthattheymeritedspeciallegalandsocialtreatment?
» Orweretheyeffectivelyequalineyesoflawandundeservingofspecialprotectionsandpreferences?
II.GOPReactionattheThrottle(cont.)
– Corporationscouldoncemorerelaxandexpand:• Antitrustlawsignored,circumvented,orfeeblyenforcedbyfriendlyprosecutors• InterstateCommerceCommissiondominatedbymensympathetictomanagersofrailroads• Bigindustrialistsstrivedtoreducerigorsofcompetitionthroughtradeassociations• Althoughassociationsrancountertospiritofantitrustlaws,theirformationencouragedbyHoover
II.GOPReactionattheThrottle(cont.)
• Hoover'sefficiency:– Ledhimtocondemnwasteresultingfromcutthroatcompetition
– Hiscommitmenttovoluntarycooperationledhimtourgebusinessestoregulatethemselvesratherthanberegulatedbybiggovernment
III.TheAftermathofWar
• Wartimegovernmentcontrolsoneconomyswiftlydismantled:–WarIndustriesBoarddisappeared• Withitspassing,progressivehopesformoregovernmentregulationofbigbusinessevaporated
– Returnedrailroadstoprivatemanagementin1920• Crushedhopeforpermanentnationalization• CongresspassedEsch-CumminsTransportationAct:
– Encouragedprivateconsolidationofrailroads
III.TheAftermathofWar(cont.)
– PledgedInterstateCommerceCommissiontoguaranteerailroadprofitability
– Newphilosophywastosaverailroads
– Governmenttriedtogetoutofshippingbusiness:– MerchantMarineAct(1920)authorizedShippingBoardtosellmostofhastilybuiltwartimefleet
– Boardoperatedremainingvesselswithoutmuchsuccess– UnderLaFolletteSeaman'sAct(1915),Americanshippingcouldnotthriveincompetitionwithforeignshipping
III.TheAftermathofWar(cont.)
• Lackinggovernmentsupport,laborlimpedalongbadlyinpostwardecade:– Bloodysteelstrikecrushedin1919– RailwayLaborBoardcutwages12%in1922• Whenworkersstruck,AttorneyGeneralDaughertyclampedinjunctiononstrikers
– Needyveteransreapedlastinggainsfromwar:• Congress(1912)createdVeteransBureautooperatehospitalsandprovidevocationalrehab
III.TheAftermathofWar(cont.)
• Veteransorganizedintopressuregroups• AmericanLegiondemonstratedmilitantpatriotism,rock-ribbedconservatism,zealousantiradicalism,and• Aggressivepushforveterans'benefits,especially“adjustedcompensation”tomakeupforwageswhileinservice• Wonwith1924passageofAdjustedCompensationAct:• Gaveformersoldiersapaid-upinsurancepolicyduein20years• Added$3.5billiontocostofwar
IV.AmericaSeeksBenefitsWithoutBurdens
• Makingpeacewithfallenfoe:– U.S.A.,havingrejectedTreatyofVersailles,technicallyatwarwithGermany,Austria,andHungary:• In1921Congresspassedsimplejointresolutionthatdeclaredwarover• IsolationenthronedinWashington• ContinuedtoregardLeagueasunclean• HardingatfirstevenrefusedtosupportLeague'sworldhealthprogram
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IV.AmericaSeeksBenefitsWithoutBurdens(cont.)
– SecretaryHughessecuredforU.S.oilcompaniesrighttoshareinMiddleEastoilexploitations
– DisarmamentanissueforHarding:• Businessmendidnotwanttofinancenavalbuildingprogramstartedduringwar• Washington“DisarmamentConference”1921-1922:
– InvitationssenttoallbutBolshevikRussia– AgendaincludednavaldisarmamentandsituationinFarEast– Hughesdeclared10-year“holiday”onconstructionofbattleships– Proposedscaled-downnaviesofAmericaandBritainwithparity– Ratio5:5:3forU.S.A.,England,andJapaninFivePowerTreaty,1922
Figure 31-1 p723
IV.AmericaSeeksBenefitsWithoutBurdens(cont.)
– Four-PowerTreaty–pactboundBritain,Japan,France,andUnitedStatestopreservestatusquoinPacific
– China—“SickManoftheFarEast”—helpedbyNine-PowerTreaty(1922),whosesignatoriesagreedtonailwide-openOpenDoorinChina
– Conferenceimportant,but:» Norestrictionsonconstructionofsmallerwarships» Congressmadenocommitmenttouseofarmedforce
• Kellogg-BriandPact(1928):– SecretaryofstateFrankB.KelloggwonNobelPeacePrizeforhisrole;KelloggsignedPactwithFrenchforeignminister
IV.AmericaSeeksBenefitsWithoutBurdens(cont.)
• Newparchmentpeacedelusory:– Defensivewarsstillpermitted– Pactadiplomaticderelictandvirtuallyuseless– ReflectedAmericanmind(1920s):• Willingtobelulledintofalsesenseofsecurity• Sameattitudeshowedupinneutralismof1930s
V.HikingtheTariffHigher• BusinesspeoplesoughttokeepU.S.markettothemselvesbythrowinguptariffwalls– Fordney-McCumberTariffLaw:• Lobbyistswantedtoboostaveragefrom27%to38.5%,almostashighasTaft'sPayneAldrichTariffof1909• Dutiesonfarmproduceincreased• Flexibility:presidentcouldincreaseordecreasedutiesasmuchas50%• HardingandCoolidgemorefriendlytoincreasesthanreductions
V.HikingtheTariffHigher(cont.)
• Insixyears,theyauthorized32upwardcharges• Duringsametime,theyorderedonlyfivereductions
– High-tariffcoursesetoffchainreaction:• Europeanproducersfeltsqueeze• ImpoverishedEuropeneededtosellitsmanufacturedgoodstoUnitedStatestobeabletorepaywardebts
• AmericaneededtogiveforeigncountriesachancetomakeaprofitinordertobuyU.S.exports
• Internationaltrade,Americansslowtolearn,atwo-waystreet
V.HikingtheTariffHigher(cont.)
• Americanscouldnotselltoothersunlesstheyboughtfromthem—orlentthemmoreU.S.dollars• TariffsagametwocouldplayasEuropeansrespondedwithhighertariffs• WholeEuropean-Americantariffbattledeepenedinternationaleconomicdistress,providingonemorerungonladderbywhichAdolfHitlerscrambledtopower
VI.TheStenchofScandal
• Loosemoralityandget-rich-quickismofHardingeraresultedinseriesofscandals:
• 1923ColonelCharlesR.ForbesforcedtoresignasheadofVeteransBureau– Lootedgovernmentof$200million,chieflyinbuildingofveterans'hospitals
– Sentencedtotwoyearsinfederalpenitentiary• TeapotDomescandal:
– InvolvedpricelessnavaloilreservesatTeapotDome(Wyoming)andElkHills(California)
VI.TheStenchofScandal (cont.)
– SecretaryofinteriorAlbertFallinducedsecretaryofnavytotransferpropertiestoInteriorDepartment
– Hardingsignedsecretorder– FallleasedlandstooilmenHarrySinclairandEdwardDohenybutnotuntilhereceivedbribe(“loan”)of$100,000fromDohenyandaboutthreetimesthatamountfromSinclair
– TeapotDomefinallycametowhistlingboil» Fall,Sinclair,andDohenyindicatedin1924» Casedraggedonuntil1929» Fallfoundguiltyoftakingbribe,sentencedtooneyearinjail
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VI.TheStenchofScandal (cont.)
» Twobribegiversacquittedwhilebribetakerconvicted» Sinclairservedseveralmonthsinjailforhaving“shadowed”jurorsandforrefusingtotestifybeforeSenatecommittee
– AcquittalofSinclairandDohenyunderminedfaithincourts• ScandalofAttorneyGeneralDaugherty:
– Senateinvestigation(1924)ofillegalsaleofpardonsandliquorpermits
– Forcedtoresign,triedin1927,butreleasedafterjurytwicefailedtoagree
VI.TheStenchofScandal (cont.)
• Hardingsparedfullrevelationofiniquities:– EmbarkedonspeechmakingtouracrosscountryallthewaytoAlaska• Onreturn,hediedinSanFranciscoonAugust2,1923
– Brutalfact:Hardingnotstrongenoughforpresidency—ashehimselfprivatelyadmitted
– ToleratedpeopleandconditionsthatsubjectedRepublictoitsworstdisgracesincedaysofPresidentGrant
VII.“SilentCal”Coolidge
• VicePresidentCoolidgeswornintoofficebyhisfather:
• EmbodiedNewEnglandvirtuesofhonesty,morality,industry,andfrugality• Seemedtobecrystallizationofcommonplace• Hadonlymediocrepowersofleadership• Speechesinvariablyboring• TruetoRepublicanphilosophy,hebecame“highpriestofgreatgodBusiness”
VII.“SilentCal”Coolidge (cont.)
• Hands-offtemperament;apostleofstatusquo• ThriftynaturecausedhimtosympathizewithSecretaryofTreasuryMellon'sefforttoreducetaxesanddebts• CoolidgeslowlygaveHardingregimebadlyneededmoralfumigation• Coolidgenottouchedbyscandals
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VIII.FrustratedFarmers
• Farmersinboom-or-bustcycleinpost-wardecade– Peacebrought:• Endtogovernment–guaranteedhighpricesandmassivepurchasesbyothernations• Foreignproductionreenteredstreamofworldcommerce
– Machines:• Threatenedtoplowfarmersunderavalancheofoverabundantcrops
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VIII.FrustratedFarmers(cont.)
• Gasoline-enginetractorrevolutionizedfarms:– Couldgrowbiggercropsonlargerareas– Improvedefficiencyandexpandedacreagepiledupmoreprice-dampeningsurpluses
– Witheringdepressionsweptthroughagriculturaldistrictsin1920s,whenonefarminfoursoldfordebtortaxes
• Schemesaboundedforbringingrelieftohard-pressedfarmers:– Bipartisan“farmbloc”fromagriculturalstatescoalescedinCongressin1921andsucceededingettingsomehelpfullawspassed
VIII.FrustratedFarmers(cont.)
• Capper-VolsteadAct:– Exemptedfarmers'marketingcooperativesfromantitrustprosecution
• McNary-HaugenBill(1924-1928):– Soughttoboostagriculturalpricesbyauthorizinggovernmenttobuyupsurplusesandsellthemabroad
– Governmentlossestobemadeupbyspecialtaxonfarmers– Congresstwicepassedbill– Coolidgetwicevetoedit– Farmpricesstayeddown;farmers'politicaltemperaturesstayedhigh,reachingfeverpitchinelectionof1924
IX.AThree-WayRacefortheWhiteHousein1924
• Electionof1924:– Republicansnominated“SilentCal”atsummerconventioninCleveland
– DemocratshaddifficultychoosingcandidateatconventioninNewYorkbecausesplitby:• “Wets”vs.“drys”• Urbanitesvs.farmers• Fundamentalistsvs.Modernists• Northernliberalsvs.southernstand-patters• Immigrantsvs.old-stockAmericans
IX.AThree-WayRacefortheWhiteHousein1924(cont.)
• DemocratsfailedbyonevotetopassresolutioncondemningKuKluxKlan• Deadlockedforunprecedented102ballots,conventionturnedtoconservativeWallStreetlawyerJohnW.Davis• Fieldwide-openforaliberalcandidate:
– SenatorRobert(“FightingBob”)LaFollettesprangforthtoleadnewProgressiveparty
– GainedendorsementofAmericanFederationofLabor– SupportfromshrinkingSocialistparty– Farmershismajorconstituency
IX.AThree-WayRacefortheWhiteHousein1924(cont.)
– LaFollette'sProgressiveparty:• Fieldedonlyapresidentialticket• Nocandidatesforlocaloffice• ProvedshadowofrobustprewarProgressivecoalition• Platformcalledforgovernmentownershipofrailroadsandreliefforfarmers• Lashedoutatmonopolyandantlaborinjunctions• UrgedconstitutionalamendmenttolimitSupremeCourt'spowertovoidlawspassedbyCongress
IX.AThree-WayRacefortheWhiteHousein1924(cont.)
• Electionreturns:• LaFollettepollednearlyfivemillionvotes• “CautiousCal”andoil-smearedRepublicansover-whelmedDavis:15,718,211to8,385,283• Electoralcountstoodat382forCoolidge,136forDavis,andthirteenforLaFollette,allfromhishomestateofWisconsin(seeMap31.1)• ProsperityunderminedLaFollette'sreformmessage
Map 31-1 p728
X.Foreign-PolicyFlounderings• IsolationcontinuedtoreigninCoolidgeera:
• SenatenotallowAmericatoadheretoWorldCourt• Coolidgehalfheartedlyandunsuccessfullypursuedfurthernavaldisarmament• InterventioninCaribbeanandCentralAmerica:
– Troopswithdrawn(aftereight-yearstay)fromDominicanRepublicin1924
– RemainedinHaiti(1914-1934)– AmericainNicaraguaintermittentlysince1909;Coolidgebrieflyremovedtroopsin1925,butin1926hesentthembackwheretheystayeduntil1933
– OilcompaniesclamoredformilitaryexpeditiontoMexicoin1926,butCoolidgeresisted;U.S.-Mexicantensionsincreased
X.Foreign-PolicyFlounderings (cont.)
– Internationaldebtsovershadowedallforeign-policyproblemsin1920s:• Complicatedtangleofprivateloans,Alliedwardebts,andGermanreparationspayments(seeFigure31.2)• 1914:U.S.A.adebtornationtosumof$4billion• 1922:U.S.A.acreditornationtosumof$16billion
Figure 31-2 p729
X.Foreign-PolicyFlounderings (cont.)
• Americaninvestorsloaned$10billiontoforeignersin1920s,butmostinvestmentremainedwithinU.S.A.• Keyknotindebttanglewas$10billionU.S.TreasuryhadloanedtoAlliesduringwar– AlliesprotestedU.S.demandforrepaymentasunfair– FrenchandBritishstressedtheyhadsufferedtremendouslossesagainstcommonfoe
– America,theyargued,shouldwriteoffloansaswarcosts– BorroweddollarsfueledwartimeboominU.S.economy,wherenearlyallAlliedpurchaseshadbeenmade
– Finalstraw,protestedEuropeans,wasAmerica'spostwartariffsmadeitalmostimpossibleforEuropeanstosellgoodstoearndollarstopaydebts
XI.UnravelingtheDebtKnot
• Allieddebtsaffectedpolicyonreparations:– FrenchandBritishdemanded$32billioninreparationspaymentsfromGermany
– AllieshopedtousemoneytosettlewardebtssinceU.S.A.demandedrepayment
– AsGermanysufferedtremendousinflation,someEuropeansproposeddebtsandreparationsbescaleddownorevencanceled
– Coolidgerejectedanyideaofdebtcancellation
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XI.UnravelingtheDebtKnot(cont.)
• DawesPlan(1924):• NegotiatedbyCharlesDawes,abouttobeCoolidge'srunningmate• RescheduledGermanreparationspayments• OpenedwayformoreprivateAmericanloanstoGermany• Wholefinancialcyclebecamemorecomplicated:
– U.S.bankersloanedmoneytoGermany,– GermanypaidreparationstoFranceandBritain,– FormerAlliespaidwardebtstoUnitedStates
XI.UnravelingtheDebtKnot(cont.)
• WhenU.S.loansdriedupaftercrashof1929,jungleofinternationalfinancequicklyturnedtodesert• PresidentHerbertHooverdeclaredone-yearmoratoriumin1931,butmostdebtorssoondefaulted– Except“honestlittleFinland,”whichstruggledalongmakingpaymentsuntillastofdebtdischargedin1976
• UnitedStatesneverdidgetitsmoney,butharvestedbumpercropofillwill
XII.TheTriumphofHerbertHoover,1928
• 1928presidentialrace:– Coolidgedecidednottorun– HerbertHooverbecameRepublicancandidate:• Nominatedonplatformofprosperityandprohibition
– DemocratsnominatedAlfredC.Smith• “Al(cohol)Smith,”soakinglyanddrippingly“wet”whencountrystilldevotedto“nobleexperiment”ofprohibition• Seemedtobeabrasivelyurban• WasRomanCatholic
XII.TheTriumphofHerbertHoover(cont.)
– Radioplayedkeyroleincampaignforfirsttime:– HelpedHoovermorethanSmith
– Hooverdecriedun-American“socialism”• Preached“ruggedindividualism”• Neverhavingbeenelectedtopublicoffice,hewasthin-skinnedinfaceofcriticism• Didnotadapttogive-and-takeofpoliticalaccommodation• Realpowerlayinhisintegrity
– Hishumanitarianism– Hispassionforassemblingfacts
XII.TheTriumphofHerbertHoover(cont.)
– Hisefficiency– Histalentforadministration– Hisabilitytoinspireloyaltyincloseassociateswhocalledhim“theChief”
• Hooverbestbusinessperson'scandidate:– Self-mademillionaire,herecoiledfromanythingsuggestingsocialism,paternalism,or“plannedeconomy,”
– Yetassecretaryofcommerce,heexhibitedsomeprogressiveinstincts:» Endorsedlaborunions» Supportedregulationofradiobroadcastingindustry» Flirtedwithideaofgovernment-ownedradio
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XII.TheTriumphofHerbertHoover(cont.)
– Indicationsoflow-levelcampaigners:• ReligiousbigotryagainstSmith'sCatholicism
– WhiteHousewouldbecomebranchofVaticanwith“Rum,Romanism,andRuin”
• Southshiedawayfrom“cityslicker”AlSmith– Electionreturns:• Hoovertriumphedinlandslide:
– Bagged21,391,993popularvotestoSmith's15,016,169– Electoralcountof444toSmith's87
• BigRepublicanvictory;HooversweptfiveformerConfederatestatesandallBorderStates(seeMap31.2)
Map 31-2 p731
XIII.PresidentHoover'sFirstMoves
– Hoover'sself-helpresponsestounorganizedwageearnersanddisorganizedfarmers
– AgriculturalMarketingAct(June1929):• Designedtohelpfarmershelpthemselvesthroughproducers'cooperatives• SetupFederalFarmBoardwithrevolvingfundof½billiondollarsatitsdisposal• Moneylenttofarmorganizationsseekingtobuy,sell,andstoreagriculturalsurpluses
XIII.PresidentHoover'sFirstMoves(cont.)
– In1930FarmBoardcreated:• GrainStabilizationCorporationandCottonStabilizationCorporation• Bolstersaggingpricesbybuyingupsurpluses• Suffocatedbyavalancheoffarmproduce
– HooverduringcampaignpromisedtocallCongressintosessiontobringabout“limited”changeintariff
XIII.PresidentHoover'sFirstMoves(cont.)
• Hawley-SmootTariff(1930):– BytimepassedbybothhousesofCongress:• Turnedouttobehighestprotectivetariffinnation'speacetimehistory• Averagedutyonnon-freegoodsraisedfrom38.5%tonearly60%• Toforeigners,itwasblowbelowtradebelt:
– Seemedlikedeclarationofeconomicwaronentireworld– Reversedpromisingworldwidetrendtowardreasonabletariffs
XIII.PresidentHoover'sFirstMoves(cont.)
– PlungedbothAmericaandothernationsdeeperintodepressionthathadalreadybegun
– IncreasedinternationalfinancialchaosandforcedUnitedStatesfurtherintobogofeconomicisolationism
– Andeconomicisolationism,bothathomeandabroad,playedintohandsofhate-filledGermandemagogue,Hitler
XIV.TheGreatCrashEndstheGoldenTwenties
– Speculativebubble:• Fewpeoplesensedpermanentplateauofprosperitywouldsoonbreak• Pricesonstockexchangecontinuedtospiralupward• Createdfool'sparadiseofpaperprofits• Afewtriedtosoundwarnings
– CatastrophiccrashinOctober1929:• PartiallycausedbyBritishwhoraisedinterestrates• Foreigninvestorsanddomesticspeculatorsbegantodump“insecurities”
XIV.TheGreatCrashEndstheGoldenTwenties(cont.)
• TensionsbuilttopanickyBlackTuesdayofOctober29,1929:– 16,410,030sharesofstockssoldinsave-who-mayscramble– WallStreetbecamewailingwallasgloomanddoomreplacedboom
– Suicidesincreasedalarmingly– Unbelievablelossesinbluechipsecurities– Byendof1929,stockholderslost$40billioninpapervalues(seeFigure31.3)
Figure 31-3 p733
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XIV.TheGreatCrashEndstheGoldenTwenties(cont.)
• Stock-marketcollapseheraldedbusinessdepression:– Athomeandabroad– MostprolongedandprostratinginAmericanorworldexperience– Nootherindustrializednationsufferedsosevereasetback– Endof1929:fourmillionworkersjobless– Twoyearslater,figurehadtripled– Hungryanddespairingworkerspoundedpavementsinsearchofwork
– Miseryandgloomincalculable– Over5,000bankscollapsedinfirstthreeyears– Carryingdownwiththemsavingsoftensofthousandsofordinarycitizens
XIV.TheGreatCrashEndstheGoldenTwenties(cont.)
– Countlessthousandslosthomesandfarmstoforeclosure– Breadlinesformed;soupkitchensdispensedfood– Familiesfeltstress,asjoblessfathersnursedguiltandshameatnotbeingabletoprovideforfamily
– Breadlessbreadwinnersblamedthemselvesforplight– Mothersnursedfewerbabiesasbirthratedropped
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XV.HookedontheHornofPlenty• WhatcausedGreatDepression?– Overproductiononbothfarmandfactory• Depressionof1930soneofabundance,notwant• “Greatglut”or“plagueofplenty”• Nation'sabilitytoproducegoodsclearlyoutrancapacitytoconsumeorpayforthem• Toomuchmoneygoingintohandsofwealthy:
– Whoinvesteditinfactoriesandotheragenciesofproduction– Notenoughgoingintosalariesandwagestorevitalizepurchasingpower
XV.HookedontheHornofPlenty(cont.)
– Overexpansion:• Ofcredit(installment-plans)overstimulatedproduction• Newlaborsavingtechnologiescausedunemployment
– Economicanemiaabroad:• BritainandContinentneverfullyrecoveredfromWWI• Chain-reactionfinancialcollapseinEurope• Internationaltradedeclinedbecauseoftariffs• Europeanuncertaintiesoverreparations,wardebts,anddefaultsonloansowedtoAmerica• ManyoftheseconditionscausedbyUncleSam'snarrow-visionedpolicies
XV.HookedontheHornofPlenty(cont.)
– Nature:droughtscorchedMississippivalleyin1930• Thousandsofhomesandfarmssoldatauctionfortaxes• Farmtenancyorrental—aspeciesofpeonage—spreadamongbothwhitesandblacks
– By1930sdepressionhadbecomenationalcalamity• Manycitizenslosteverything• Wantedtowork—buttherewasnowork
XV.HookedontheHornofPlenty(cont.)
• America's“uniqueness”nolongerseemedsounique,noritsManifestDestinysomanifest:– DepressionabafflingwraithAmericanscouldnotgrasp
– Initiativeandself-respectstifled– Manysleptintin-and-papershantytownscynicallynamedHoovervilles
– FoundationsofAmerica'ssocialandpoliticalstructuretrembled
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XVI.RuggedTimesforRuggedIndividualists
• Hoover'sexaltedreputationaswonder-workerandefficiencyengineercrashed–WouldhaveshoneinprosperousCoolidgeyears– GreatDepressionprovedtobebeyondhisengineeringtalents• Distressedbywidespreadmisery• As“ruggedindividualist,”heshrankfromheresyofgovernmenthandouts
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XVI.RuggedTimesforRuggedIndividualists(cont.)
– Convincedthatindustry,thrift,andself-reliancewerevirtuesthatmadeAmericagreat• Fearedthatgovernmentdolingoutdoleswouldweaken,perhapsdestroy,nationalfiber• Reliefbylocalgovernmentagenciesbrokedown• Hooverfinallyhadtoreluctantly:
– Turnfromdoctrineoflog-cabinindividualismand– Acceptpropositionthatwelfareofpeopleduringanationalcatastropheadirectconcernofnationalgovernment
XVI.RuggedTimesforRuggedIndividualists(cont.)
• Hooverworkedoutcompromisebetween– Oldhand-offphilosophy– And“soul-destroying”directdolebeingusedinEngland– Hewouldassisthard-pressedrailroads,banks,andruralcreditcorporation» Iffinancialhealthrestoredattopofeconomicpyramid» Unemploymentwouldberelievedatbottomontrickle-downbasis
– Partisancriticssneeredat“GreatHumanitarian”
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XVI.RuggedTimesforRuggedIndividualism(cont.)
– MostofcriticismofHooverunfair:• Hiseffortsprobablypreventedmoreseriouscollapse• Hisexpendituresforrelief,revolutionaryforday,pavedpathforenormousfederaloutlaysofhissuccessor,FranklinRoosevelt
XVII.HooverBattlestheGreatDepression
• Hoover's“trickle-down”philosophy:– RecommendedCongressvoteimmensesumsforusefulpublicworks• SecuredfromCongressappropriationstotaling$2.25billionforsuchprojects• MostimposingofpublicenterpriseswasgiganticHooverDamonColoradoRiver– Hugeman-madelakeforpurposesofirrigation,floodcontrol,andelectricpower
– Sternlyfoughtallschemeshethought“socialistic”
XVII.HooverBattlestheGreatDepression(cont.)
• ConspicuouswasMuscleShoalsBill:– DesignedtodamTennesseeRiver– Hevetoedmeasurebecauseheopposedgovernmentsellingelectricityincompetitionwithprivatecompanies
– In1932CongressrespondedtoHoover'sappeal:• EstablishedReconstructionFinanceCorporation(RFC):
– Provideindirectreliefbyassistinginsurancecompanies,banks,agriculturalorganizations,railroads,andevenhard-pressedstateandlocalgovernments
– Topreserveindividualcharacter,noloanstoindividuals
XVII.HooverBattlestheGreatDepression(cont.)
– “Pump-priming”loanshelped,butprojectslargelyself-liquidating
– Governmentprofitedtotuneofmanymillionsofdollars– Giantcorporationsalsobenefited
• IronythatthriftyandindividualisticHooveractuallysponsoredprojectwithstrongNewDealishflavor
XVII.HooverBattlestheGreatDepression(cont.)
• Norris-LaGuardiaAnti-InjunctionAct(1932):– Outlawed“yellow-dog”(antiunion)contracts– Forbadefederalcourtstoissueinjunctionstorestrainstrikes,boycotts,andpeacefulpicketing
• Hooverdidinauguratenewpolicy:• Byendofterm,hehadstarteddownroadtowardgovernmentassistanceforneedycitizens—aroadFranklinRooseveltwouldtravelmuchfarther
XVII.HooverBattlestheGreatDepression(cont.)
• Hoover'swoes:– IncreasedbyhostileCongress– Republicanmajorityprovedhighlyuncooperative– In1930,DemocratsgainedcontrolofHouseandalmostofSenate
– InsurgentRepublicanscould—anddid—combinewithDemocratstoharassHoover
– SomeofHoover'stroublesdeliberatelymanufacturedbyCongress
XVIII.RoutingtheBonusArmyinWashington
• VeteransofWWIhard-hitbydepression:• IfHawley-SmootTariffa“bonus”toindustry,• Veteranswantedearlypaymentof1924“bonus”scheduledtobepaidin1945• ManyveteranspreparedtogotoWashington
– Todemandimmediatepaymentofentirebonus– “BonusExpeditionaryForce”(BEF)ofsome20,000wenttocapitalinsummerof1932
– Erectedshacksonvacantlots—agigantic“Hooverville”– AfterCongressvoteddownbonusbill,BEForderedtoleave– 6,000left;Hooverthenorderedarmytoremoverest
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XVIII.RoutingtheBonusArmyinWashington(cont.)
– GeneralDouglasMacArthurledefforttooustBonusArmywithbayonetsandteargas• UsedfarmoreforcethanHooverplanned• Brutalepisodebroughtadditionalabuseononce-popularHoover
– TimeripeningforDemocraticParty—andFranklinD.Roosevelt—tocashinonHoover'scalamities
XIX.JapaneseMilitaristsAttackChina
• Depressionincreasedinternationaldifficulties• MilitaristicJapanstoleFarEasternspotlight:
• September,1931:JapaneseimperialistslungedintoManchuria• AmericahadstrongsentimentalstakeinChina,butfewsignificanteconomicinterests• Americansstunnedbyactofnakedaggression
– FlagrantviolationofLeagueofNationscovenantandotherinternationalagreementssolemnlysignedbyTokyo
– NottomentionAmericansenseoffairplay
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XIX.JapaneseMilitaristsAttackChina(cont.)
– YetWashingtonrebuffedLeagueattemptstosecureU.S.cooperationineconomicpressureonJapan
–WashingtonandSecretaryofStateHenryL.Stimsondecidedtofireonlypaperbullets• So-calledStimsondoctrine(1932):
– DeclaredUnitedStateswouldnotrecognizeanyterritorialacquisitionsachievedbyforce
– Righteousindignation—orpreach-and-runpolicy—wouldsubstituteforsolidinitiatives
– VerbalslapnotdeterJapan'smilitarists• BombedShanghai(1932)killingmanycivilians
XIX.JapaneseMilitaristsAttachChina(cont.)
– Norealsentimentforarmedinterventionamongdepression-riddenAmericans,whoremainedstronglyisolationistduringthe1930s
– CollectivesecuritydiedandWorldWarIIbornin1931inManchuria
XX.HooverPioneerstheGoodNeighborPolicy
• RelationswAmerica'ssouthernneighbors:– Hooverinterestedinoften-troublednationsbelowRioGrande
– Afterstockmarketcrashof1929:• EconomicimperialismlesspopularathomeinU.S.A.
– Hooveradvocatedinternationalgoodwill• StrovetoabandoninterventionisttwistgivenMonroeDoctrinebyTheodoreRoosevelt
XX.HooverPioneerstheGoodNeighborPolicy(cont.)
– NegotiatedwithHaitiforwithdrawalofU.S.troopsby1934
– In1933,lastU.S.marinesleftNicaraguaafteralmostcontinuousstayofsometwentyyears
– HooverengineeredfoundationstonesofGoodNeighborpolicy• Uponthem,roseimposingedificeundersuccessor,FranklinRoosevelt
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