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THE POLITICS OF BOOM AND BUST
POSTWAR TRENDS
Exhausted◦ Debate over League of Nations
Divided America
Unemployment◦ Returning Soldiers
Women / Minorities
Cost of living had doubled
Nativism◦ Prejudice against foreign-born people
Isolationism◦ Policy of pulling away from involvement in world affairs
GOP REACTION
Supreme Court Harding appointed 4 of 9 justices Chief Justice Taft
Axed progressive legislation Child labor laws
Adkins v. Children’s Hospital Reversed decision on Muller v. Oregon Women deserving special protection
Debate over gender differences
AFTERMATH OF WAR
During the war government would not allow strikes◦ Interfere with the war
1919◦ 3,000 strikes◦ 4 million workers walked out
Employers did not want to give raises or join unions◦ Labeled strikers as communists
CONT.
• Boston Police strike▫Governor – Calvin Coolidge
Raise/Right to join union Called in National Guard --- “No right to strike
against public safety” Fired --- hired new policemen
• Steel Mill strike = 1919▫ 300,000 men walked off the job▫ Strike breakers hired▫ Strikers beaten▫Wilson sent plea to end deadlock
STRUGGLES FOR PEACEWarren G. Harding ----- 1921
◦ Inherited problems Arms control, war debts, and reconstruction
Did not understand many of the issues
Ohio Gang◦ President poker-playing cronies
Corrupt friends used offices to become wealthy◦ Graft
NAVAL CONFERENCE
◦ Invited major powers to D.C. Washington Naval Conference = 1921-22 No more war ships be built - 10 yrs
5 major powers scrap largest warships U.S, Japan, G.B, France, Italy
Agreed to Disarm
CONT.
Nine-Power Treaty = 1922 Agreed to nail wide-open the Open Door in China
Kellogg-Briand Pact Forswear war as an instrument of national policy Pact of Paris Ratified by 62 nations Useless? Defensive Wars
HIKING THE TARIFF HIGHERBritain – France
◦ Pay back money they borrowed – $10 billion◦ Could be done in 2 ways
Sell goods to the U.S. Collect reparations
Fordney-McCumber Tariff = 1922◦ Raised taxes on some U.S. imports to 60%◦ Protected U.S. businesses◦ Made it impossible for G.B. and France to
sell enough goods to pay debt
WAR DEBT CONT. Germany defaulted - inflation
French troops marched in
To avoid war◦ American banker sent to negotiate a loan◦ Dawes Plan = 1924 = rescheduled Germany’s reparations◦ American investors loaned Germany the money
$2.5 billion
G.B. – France then paid the U.S.
U.S. repaid with its own money
Caused resentment
TEAPOT DOME SCANDAL• Government set aside oil-rich lands• Teapot Dome, WY and Elk Hills, CA▫ Use by Navy
• Albert B. Fall▫ Land transferred from Navy to Interior Department▫ Secretly leased to private oil companies
▫ Sinclair, Doheny
▫Received more than $400,000 in loans, bonds, and cash
▫ Found guilty of bribery
“I have no trouble with my enemies … But my … friends, they’re the ones that keep me walking the floor at night!”
SCANDAL
Attorney General DaughertyIllegal sale of pardons, liquor licensesResigned / Released
Harding goes on speech making tourHarding Dies in San FranciscoPneumoniaAugust 2, 1923
CALVIN COOLIDGE
V.P. Calvin CoolidgeVermont“Silent Cal”HonestThriftyHands off temperament
FRUSTRATED FARMERS
Boom or Bust Cycle
1920 = Price of wheat shot up $3 a barrel
Machines Grow bigger crops, purchase more land Price dampening surpluses
Coolidge refused to help McNary-Haugen Bill = Buy surpluses
ELECTION OF 1924 Republican = Calvin Coolidge
Democrats = John W. Davis
Progressives = Robert Lafollette
Coolidge wins 382 to 136 to 13
CREDIT
Americans buying less
Overbuying on credit Large consumer debt
Cut back on spending
Rich got Richer – Poor got Poorer Could not purchase a lot of the manufactured goods being
produced
HOOVER - 1928
1928 – Election Republicans = Herbert Hoover
Secretary of Commerce under Harding and Coolidge Self-made millionaire
Democrats = Alfred E. Smith
Radio
Whispering campaign Catholicism
Hoover wins 444 to 87
HOOVER’S 1ST MOVES
Agricultural Marketing Act = June 1929Help farmers help themselvesFederal Farm BoardMoney lent to farm organization seeking to buy, sell, and store agricultural surplusesCotton Stabilization Corp.Grain Stabilization Corp.
STOCK MARKET
Dow Jones IndustrialMost widely used barometer of the stock market’s health
Measure based on the stock prices of 30 representative large firms trading on the New York Stock Exchange
Bull MarketPeriod of rising stock pricesAmericans rushed to buy stocks and bonds
GREAT CRASH ENDS GOLDEN 20’S 3% of nation's population owned stocks
Speculation Bought stocks and bonds on the chance of a quick profit
Buying on Margin Paying a small % of a stock’s price as a down payment and
borrowing the rest
Government did little to discourage buying or regulate the market
STOCK MARKET CRASHES
September 1929 Stock prices peaked – then fell Many sold their stocks
October 24 Market took a plunge Panicked – investors unloaded shares
October 29 ---- Black Tuesday Bottom fell out Shareholders frantically tried to sell ----- 16.4 million
Many could not find buyers
Mid – November Investors lost $40 Billion
BANKS / BUSINESS FAILURES Great Depression --- 1929 – 1940 Economy plummeted Unemployment skyrocketed
People panicked Withdrew money from banks
Couldn’t get money Banks invested in stock market
1929600 Banks Closed
193311,000 of the nations 25,000 banks failed
Banks not insured
CONT.
90,000 businesses went bankruptAutomobile / Railroads
Unemployment3% = 192925% = 19331 out of 4 workers out of a job
1929- 1932400,000 farms lost through foreclosure
TARIFF’S
Hawley-Smoot Tariff – 1930Highest protective tariff in peace time history
Foreigners = declaration of economic warfare
Plunged nations deeper into the depression
IsolationismPlayed into the hands of Hitler
CAUSES OF DEPRESSION1. Tariffs and war debt policies
2. Crisis in farm sector
3. The availability of easy credit
4. Unequal distribution of income
Falling demand for consumer goods
Interest rates low – Borrow easily Large debts
THE DEPRESSION Job lost
Evicted from homes Ended up in the streets
Slept in parks, sewer pipes Wrapped themselves in
newspapers to keep warm
Shantytowns Little towns consisting of shacks Scrap materials Orange crates, piano box
“ H O O V E R V I L L E ” I N S E A T T L E , 1 9 3 4
DEPRESSION
Soup Kitchens Free food or low cost food
Bread Lines Lines of people waiting to receive food provided by charitable organizations
CHILDREN Lack of money for health care Milk consumption declined Malnutrition Diet-related diseases
Rickets
Shortened school year Many schools closed
1933 = 2,600 300,000 students
Students went to work
“Hoover Tourists”
HOOVER BATTLES G.D.
HooverTook a cautious approachFelt the government should play a limited roleOpposed any form of federal welfare or Direct reliefCash payments or food provided by the government
Should be done through organized charities
UPSET AMERICANS
Farmers burned their crops Dumped milk Blocked roads
Shantytowns --- “Hoovervilles”
People wrapped in newspapers --- “Hoover Blankets”
Empty pockets turned inside out --- “Hoover Flags”
SOCIAL EFFECTS
Demoralized
Lost will to survive 1928 – 1932
Suicide rate rose more than 30%
Achieving financial security “Never be poor again”
Thriftiness
Families helped families Bonds within communities
BOULDER DAM (HOOVER DAM) Colorado River
Finance dam = Sale of the electric power dam would generate
Water Rights Arizona, California, Colorado,
Nevada, New Mexico, Utah and Wyoming
Helped growth of California’s Agricultural economy
HOOVER FINALLY TAKES ACTION
Federal Home Loan Bank Act = 1932 Lowered mortgage rates Allowed farmers to refinance their farm loans
Reconstruction Finance Corporation = 1932 $2 Billion for financing for banks, life insurance companies, railroads and large businesses
First 5 months - $805 million to corporations Business failures continues
Too little too late
BILLS PASSED CONT.
Norris-La Guardia Anti-Injunction Act 1932Outlaws “Yellow-dog” contractsForbade federal courts to issue injunctions to restrain strikes, boycotts, and peaceful picketing
BONUS ARMY - 1932
Bonus paid to veterans Not until 1945
Wanted bonus now $500 per soldier
Veterans went to capital to support bill
“Hoover thought Marchers were communists and persons with criminal records”
Bill did not pass
Hoover asked protestors to leave
Used army to get rid of protestors
1,000 – gassed
2 people shot
Hoover’s image shot
DUST BOWL
1930’s = Great Plains Farmers exhausted landLittle grass / trees left to hold the soil down
Wind scattered topsoil = exposing sand / gritDust traveled hundreds of miles
Region hit the hardestKansas, Oklahoma, Texas, New Mexico, and Colorado
Thousands left their landMigrated to California and the Pacific Coast
JAPAN
1931Launched a surprise attack
Took Province of Manchuria = China
League of Nations warned to stay outBoycotts