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Chapter 33

• Back to Business as Usual:– Government violation of Laissez-faire– Anti-labor actions– Ethnic stereotyping and discrimination– Corruption, graft…– Isolationism (unless business interests are at

stake)– Weak Presidents: Harding, Coolidge

Warren G. Harding

• 2nd rate editor• 2nd rate politician• 2nd rate husband• Worst president ever

– Played 18 holes every day– During prohibition played poker and drank till

3 A.M. most nights• Couldn’t say NO. Delegated authority.

Made some terrible appointments. Some good ones also.

Women’s “Rights” back & forth• 1896 the New York State legislature passed the Bakeshop Act. This act

prevented workers in New York bakeries from working more than 10 hours in a day, and more than 60 hours in a week.

• 1905: Lochner v. New York. By a 5-4 vote, the Supreme Court rejected the argument that the law (Bakeshop Act) was necessary to protect the health of bakers, deciding it was a labor law attempting to regulate the terms of employment, and calling it an "unreasonable, unnecessary and arbitrary interference with the right and liberty of the individual to contract." (5th & 14th

Amendments )• 1908: Muller v. Oregon. A landmark decision in United States Supreme

Court history, as it justifies both sex discrimination and usage of labor laws during the time period. The case upheld Oregon state restrictions on the working hours of women as justified by the special state interest in protecting women's health.

• 1923: Adkins v. Children's Hospital. the Supreme Court ruled that a Federal minimum wage law for women working in hospitals in the District of Columbia was an unconstitutional infringement on the liberty of contract under fifth amendment due process

Democratic Nominating Convention1924 is a mess:

• Conflicts– Wets vs. Drys– City vs. Country– Fundamentalist vs. Modernist– Northerners vs. Southerners– Bourgeoisie vs. Booboisie

• Takes 102 tries to choose John Davis, a Wall Street banker!!!!!!!!

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Since both major parties choose ultra-conservative candidates

• Progressives:– “Fighting Bob” LaFollette– AFL jump on board– Socialist Party endorses– But 80+% are farmers– 5,000,000 votes – Coolidge gets 15,000,000+

You can’t be aReformer in

GOOD Times

“The Business of America Is Business” Calvin Coolidge

• Back to Laissez-Faire (unless labor gets out of hand) economics

• Frugal• Dry sense of humor (Coolidge Effect)• Lazy, lazy, lazy. Slept 14 hours a night, then

took an afternoon nap.• Lowered taxes and spending• Helped create Dawes Plan that helps create

temporary RICH times but ultimately the Great Depression.

Hero worship. The progression has been:

– 1660: Religious Leader (Mathers, Bradford)– 1776: Civilian politician (Washington, Jefferson)– 1820: Military hero (Jackson)– 1880: Businessmen (Carnegie, Rockefeller, etc)– 1920: Entertainer and/or Criminals

• Babe Ruth (athletes)• Valentino (actors)• Capone (gangsters)• Lindberg (daredevils)

AMERICAN HEROES OF THE 20s

q In 1929, Americans spent $4.5 billion on entertainment (includes sports)q People crowded into baseball games to see their heroesqBabe Ruth was a larger than life American herowho played for YankeesqHe hit 60 homers in 1927

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ENTERTAINMENT AND ARTSq Even before sound, movies offered a means of escape through romance and comedyq First sound movies: Jazz Singer (1927) q First animated with sound: Steamboat Willie(1928)qBy 1930 millions ofAmericans went to the movies each week

Walt Disney's animated Steamboat Willie marked the

debut of Mickey Mouse. It was a seven minute long black and

white cartoon.

MUSIC AND ARTq Famed composer George Gershwinmerged traditional elements with American Jazzq Painters like Edward Hopperdepicted the loneliness of American life qGeorgia O’ Keeffecaptured the grandeur of New York using intensely colored canvases

Gershwin

Hopper’s famous “Nighthawks”

Radiator Building, Night, New York , 1927Georgia O'Keeffe

By 1928 the coming crash is apparent to some

• Middle-East partitioned under Sykes-Pichot and Balfour Agreement

• Dawes Plan is bankrupting Europe– American investment in Europe is the only

thing keeping it going.• Major agricultural overproduction• McNary-Haugen Bill to help farmers

vetoed TWICE by Coolidge

Election of 1828

• Get election map

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Black Tuesday Oct. 29th 1929• $40,000,000,000 lost in 2 months• No more loans to Germany = world-wide

bankruptcy• 4 million jobless Americans• 5,000 banks declare bankruptcy• Smoot-Hawley Tariff raises it still higher

Business Cycle 1890-1940

Some industries are CRASH proof Hoover’s response = Huge federal spending, but still Trickle Down

– Hoover Dam– RFC

• Banks• Insurance co’s• RR’s• Local Gov’ts

– Went fishing to appear calm and in-charge– Agricultural Marketing Act

• Set up Agric. Coops• Federal Farm Act $1/2 Billion in loans. Too little, too late

Result was:– Hoovervilles– Hoover Flags– Hoover Blankets– Bonus Army and “Battle of Anacostia Flats”

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World Wide Effects

• Hitler, • Mussolini, • Franco (Spain)• Hirohito

– Attacks China • League of Nations does nothing• US issues Stimson Doctrine• WWII has begun in 1932

CAUSES OF THE

GREAT DEPRESSION

Most Common Reasons:

• Post War Boom• Republican Economic Policies• Excessive Speculation• Banking Rules (or lack thereof)• Overproduction (& no NEW products)• Agricultural Sector• Massive unequal distribution of $$$

Your author’sexplanation

Post War Economic Boom

• “Roaring 20’s”• America owned ¾ of the world’s cars

(23,000,000)• 72% increase in worker productivity• 80% increase in business profits• 1927 saw 550,000,000 shares of stocks

sold• 1929 saw 1,100,000,000 shares sold

Republican Economic Policies

• Herbert Hoover Trickle-Down policies• Sec. of State Mellon lowered taxes of the

rich and businesses– US Steel got a $15 Billion dollar tax REFUND– Incomes over $60,000 got huge tax CUTS– Raised taxes of thr Middle Class

• Businesses used these savings to further automate factories and fired workers.

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Republican Economic Policies

• Foreign nations owed US $11 Billion.• Dawes Plan Act• Increased Tariffs• Europe buys less from US market, but still

more than they are exporting TO the US. Thus European gold is going to the US Federal Reserve which is NOT releasing it.

Excessive Speculation

• Post WWI large numbers of people moved to california—housing costs skyrocketed.

• California real estate market bubble burst in 1920.

• Investors turned to Florida. Huge amounts of fraud involved.

• Florida Market crashed in 1927.• Stock brokers make money by “Churning”

Excessive Speculation

• Some brokers lied about value of company to sell more stocks.

• Margin buying is seen by Hoover as very dangerous, and is outlawed in Feb. 1929. Good idea, but the consequences . . . .

• The market is ready to take a fall. Joe Kennedy pulls out of the market when his shoeshine boy gives him stock tips.

Banking Policies• Too much EZ Credit• Margin Buying with bank $$• Believed the stock itself was collateral• Fed Reserve Board did not enforce its

oversight of the banks• NO FDIC yet.• Oct 24th saw a “run” on the market,

J.P. Morgan stepped in with other investors to prop it up.

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=+People Default on Loans

Banks have no money to give people

Banks Close

People Lose savings

Overproduction• New Technologies

– Better Reapers– Better Harvesters– Automated assembly-line jobs– 72% increase in worker productivity– 80% increase in profits– 25% increase in wages

• Tariffs wipe out foreign purchasing• Europe puts tariff on US goods• By 1929 the market is saturated

Farms and factories overproduced beyond the demand.

Overproduction / Reduction in Purchasing

People had little or no

money to spend.

Demand forgoods fell.

Businesses cut production

Workers sufferedfrom wage cuts

and lay offs.

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Agriculture• End of WWI decreases European demand

and increases European production.• Farmers borrowed heavily to increase

production as prices fell. QUANTITY was their answer to falling prices at first.

• Banks call in loans in 1929 . . . .• Dust Bowl 1930-1934• Okies: “When the Okies left Oklahoma and moved to

California, it raised the I.Q. of both states.” Will Rogers

Unequal distribution of wealth

• 1929: Fed Trade Commission reports that the top 1% own 59% of the wealth.

• 60% of families live at $2,000 per year (Minimum Wage).

• 75% increase in wealth for the top 1%

Black Tuesday Oct. 29th 1929• Oct 28th saw a $4 Billion loss• Oct 29th (Black Tuesday) $16 Billion lost.• 1932 saw 6,000 banks (1/4 total) close in 1

year.• $40,000,000,000 lost in 2 months• No more loans to Germany = world-wide

bankruptcy• 4 million jobless Americans• 5,000 banks declare bankruptcy• Smoot-Hawley Tariff raises it still higher

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Whom To Blame??

• Bankers: • NO!!!• Businessmen: • NO!!!• Capitalism: • NO!!!• Yourself: • Yes!!!

In a feeble attempt to help labor Congress passed the Norris-LaGuardia Act:

1. Declared any "yellow dog" contract (under which an employee promised not to become a member of any labor organization) to be unenforceable in any court of the United States.

2. Deprived federal courts of jurisdiction to issue injunctions against peaceful striking, assembling, patrolling, or publicizing facts in connection with a labor dispute.

3. But who’s going to strike in 1932?

There once was a time when everything was cheap,But now prices nearly puts a man to sleep.When we pay our grocery bill,We just feel like making our will --I remember when dry goods were cheap as dirt,We could take two bits and buy a dandy shirt.Now we pay three bucks or more,Maybe get a shirt that another man wore --Tell me how can a poor man stand such times and live?

Well, I used to trade with a man by the name of Gray,Flour was fifty cents for a twenty-four pound bag.Now it's a dollar and a half beside,Just like a-skinning off a flea for the hide --Tell me how can a poor man stand such times and live?

"How Can A Poor Man Stand Such Times And Live?” written and played by Blind Alfred Reed, Dec. 4, 1929, New York City

Oh, the schools we have today ain't worth a cent,But they see to it that every child is sent.If we don't send everyday,We have a heavy fine to pay --Tell me how can a poor man stand such times and live?

Prohibition's good if 'tis conducted right,There's no sense in shooting a man 'til he shows flight.Officers kill without a cause,They complain about funny laws --Tell me how can a poor man stand such times and live?

Most all preachers preach for gold and not for souls,That's what keeps a poor man always in a hole.We can hardly get our breath,Taxed and schooled and preached to death --Tell me how can a poor man stand such times and live?

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Oh, it's time for every man to be awake,We pay fifty cents a pound when we ask for steak.When we get our package home,A little wad of paper with gristle and a bone --Tell me how can a poor man stand such times and live?

Well, the doctor comes around with a face all bright,And he says in a little while you'll be all right.All he gives is a humbug pill,A dose of dope and a great big bill --Tell me how can a poor man stand such times and live?