MR. LIPMAN’S APUS MR. LIPMAN’S APUS POWERPOINT POWERPOINT CHAPTER 32CHAPTER 32

Politics of Boom and Bust Politics of Boom and Bust

International and DomesticInternational and Domestic

KEYS TO THE CHAPTERKEYS TO THE CHAPTER

Three Republican Presidents (HCH)Three Republican Presidents (HCH) IsolationismIsolationism Japanese Expansionist Policies Japanese Expansionist Policies High TariffsHigh Tariffs International DebtInternational Debt Over Production on the FarmsOver Production on the Farms Black Tuesday (10/29/1929)Black Tuesday (10/29/1929) Labor Movement Gains Strength Labor Movement Gains Strength

President HardingPresident Harding Pro-Business but plagued by scandalsPro-Business but plagued by scandals

Courts become business oriented Courts become business oriented

AdkinsAdkins v. v. Children’s HospitalChildren’s Hospital (1923)(1923) Reversed Reversed Muller v. Oregon Muller v. Oregon (1908) that said (1908) that said

that women deserved special treatment that women deserved special treatment Held that women had vote, and therefore no Held that women had vote, and therefore no

longer needed special legislation longer needed special legislation Struck down minimum-wage law for womenStruck down minimum-wage law for women

Consolidation in businessConsolidation in business Agreements made to reduce competitionAgreements made to reduce competition Secretary of Commerce Hoover encouraged Secretary of Commerce Hoover encouraged

cooperation / cut throat competition wasteful cooperation / cut throat competition wasteful

Esch-Cummins Transportation Act of 1920Esch-Cummins Transportation Act of 1920 Encouraged private consolidation of railroads Encouraged private consolidation of railroads

1924 – Bonus Baby’s1924 – Bonus Baby’s

• Money that veterans would have gotten had they Money that veterans would have gotten had they stayed in factory jobs (instead of fighting) to be paid stayed in factory jobs (instead of fighting) to be paid as “bonus” in 20 years as “bonus” in 20 years

1921/1922 – D.C. Naval Conference 1921/1922 – D.C. Naval Conference All major powers but Russia invited All major powers but Russia invited

Ration of 5:5:3 Ration of 5:5:3 (US, Britain, Japan) on naval (US, Britain, Japan) on naval battleships and aircraft carriers battleships and aircraft carriers

British and Americans promised to not fortify British and Americans promised to not fortify possessions in Pacific, including Philippines possessions in Pacific, including Philippines • Japanese not subject to these restrictionsJapanese not subject to these restrictions

Four-Power Treaty Four-Power Treaty • US, Britain, France, Japan promised to not seek US, Britain, France, Japan promised to not seek

increased holdings or naval strength in Pacificincreased holdings or naval strength in Pacific

Open Door policy in China now international law Open Door policy in China now international law

Kellogg-Briand Pact Kellogg-Briand Pact (Pact of Paris) (Pact of Paris) Coolidge’s secretary of state (Kellogg) signed pact Coolidge’s secretary of state (Kellogg) signed pact

with France to “renounce war” with France to “renounce war”

Pledge by nations to forsake war (62 sign)Pledge by nations to forsake war (62 sign)

Weaknesses of the Kellogg-Briand PactWeaknesses of the Kellogg-Briand Pact Defensive wars permitted Defensive wars permitted

• Nations could make up excuse of self-defense Nations could make up excuse of self-defense No enforcement provisions No enforcement provisions Lulled Americans into false sense of security Lulled Americans into false sense of security

Effects of the Effects of the high tariff policies:high tariff policies: Europeans needed to sell manufactured Europeans needed to sell manufactured

goods in US to goods in US to • Achieve economic recovery Achieve economic recovery • Pay down war debt to US Pay down war debt to US • Purchase manufactured goods from US Purchase manufactured goods from US

High Tariffs slowed international trade & High Tariffs slowed international trade & caused Europe to retaliate & increase theirs caused Europe to retaliate & increase theirs

Business in America suffer in future because Business in America suffer in future because can’t sell goods competitively overseas can’t sell goods competitively overseas

Cost of goods to consumers would riseCost of goods to consumers would rise

Teapot Dome Scandal Teapot Dome Scandal 1921 – Albert B. Fall (secy of interior) got 1921 – Albert B. Fall (secy of interior) got

Secy of the Navy Denby to transfer naval oil Secy of the Navy Denby to transfer naval oil reserves at Teapot Dome, Wyoming and reserves at Teapot Dome, Wyoming and Calif. to control of Interior Department Calif. to control of Interior Department

Fall leased these lands to oil developers Sinclair and Fall leased these lands to oil developers Sinclair and Doheny and received bribes from bothDoheny and received bribes from both

Case dragged on until 1929 Case dragged on until 1929 • Fall got year in jail; Sinclair & Doheny acquited Fall got year in jail; Sinclair & Doheny acquited

Increased distrust of government and courts Increased distrust of government and courts

Teapot dome investigationTeapot dome investigation(An overwhelming, advancing force that many believe would (An overwhelming, advancing force that many believe would

crush everything in its path. In the long run it didn’t)crush everything in its path. In the long run it didn’t)

Harding’s attempt to escape the scandalsHarding’s attempt to escape the scandals 1923 – cross-country speaking tour to Alaska 1923 – cross-country speaking tour to Alaska August 2, 1923 died of pneumonia and August 2, 1923 died of pneumonia and

thrombosis (blood clot in a blood vessel)thrombosis (blood clot in a blood vessel) Harding’s legacy Harding’s legacy

Worst news of corruption came out after Worst news of corruption came out after death death

Too weak to be a good president Too weak to be a good president “ “Silent Cal” Coolidge takes over and his Silent Cal” Coolidge takes over and his

philosophy says gov’t should support philosophy says gov’t should support business, not right social wrongs business, not right social wrongs

““Silent Cal”Silent Cal”----------------------Favors Favors

Business Business and wants to and wants to

reduce reduce governmentgovernment

Problems for farmers in 1920s: Problems for farmers in 1920s: overproduction and declining pricesoverproduction and declining prices High prices drastically declined & productivity High prices drastically declined & productivity

up (over supply reduces prices forcing more up (over supply reduces prices forcing more production)production)

Congress tries to help but President uses veto Congress tries to help but President uses veto powerpower

Brings increase in progressive movement by Brings increase in progressive movement by farmers againfarmers again

A Three-Way Race for President 1924A Three-Way Race for President 1924

Results Results Coolidge won Coolidge won

with 54% of the with 54% of the popular votepopular vote

La Follette La Follette (progressive) only (progressive) only won Wisconsin, won Wisconsin, but polled well in but polled well in Midwest & Midwest & mountain states mountain states

Davis (Democrat) Davis (Democrat) got South and got South and cities with large cities with large immigrant immigrant populationspopulations

Coolidge continues Coolidge continues isolationism policies isolationism policies except except in Latin America where we still keep troops:in Latin America where we still keep troops: Dominican Republic Dominican Republic until 1924 until 1924 Haiti, Haiti, 1914 – 19341914 – 1934 NicaraguaNicaragua, off-and-on 1909, 1926 – 1933, off-and-on 1909, 1926 – 1933 MexicanMexican nationalization of oil reserves nationalization of oil reserves

• US businessmen want armed intervention US businessmen want armed intervention but Coolidge relies on diplomacybut Coolidge relies on diplomacy

• International debt brings the most issuesInternational debt brings the most issues

International debt problem $10B loaned by US to International debt problem $10B loaned by US to Allies during WWI Allies during WWI US wants to be paid backUS wants to be paid back Allies thought US should write it offAllies thought US should write it off

• They had suffered the casualtiesThey had suffered the casualties• Their $ had financed boom in US economy Their $ had financed boom in US economy • US’s tariffs made it impossible to sell goods US’s tariffs made it impossible to sell goods

US insistence on repayment led to cycle of US insistence on repayment led to cycle of financial problems in Europefinancial problems in Europe

• France & Britain demand reparations from G. of $32 billion France & Britain demand reparations from G. of $32 billion

• Berlin inflated its currency to repay debtsBerlin inflated its currency to repay debts

German Inflation- Might as well burn itGerman Inflation- Might as well burn it

The The Dawes Plan of 1924Dawes Plan of 1924 further complicated further complicated the international financial system the international financial system US bankers loaned $ to GermanyUS bankers loaned $ to Germany Germany paid reparations to France and BritainGermany paid reparations to France and Britain Allies paid war debts to USAllies paid war debts to US

System would break down if US credit endedSystem would break down if US credit ended This occurred with 1929 crash This occurred with 1929 crash

Effects of the financial meltdown (in 1929) Effects of the financial meltdown (in 1929) European nations defaulted on their debts European nations defaulted on their debts US never got its money US never got its money Bitter feelings against US in Europe Bitter feelings against US in Europe A cause of isolationism in the US in the 1930sA cause of isolationism in the US in the 1930s

Results of 1928 Election {Hoover vs. Smith}Results of 1928 Election {Hoover vs. Smith} ““Hoover wins some democrats”Hoover wins some democrats”

• Southerner Democrats broke from Smith because of Southerner Democrats broke from Smith because of his Catholicism, “wettism”, foreignism, liberalism his Catholicism, “wettism”, foreignism, liberalism

Hoover wins a landslide with 58% of the voteHoover wins a landslide with 58% of the vote

Not a typical politicianNot a typical politician• Never before elected to public officeNever before elected to public office• Not used to criticism, compromise and Not used to criticism, compromise and

asking for votesasking for votes• Real power was in humanitarianism, Real power was in humanitarianism,

organization, and honesty organization, and honesty

Hoover’s first moves are to try and help farmers Hoover’s first moves are to try and help farmers and to seek increase in tariffand to seek increase in tariff

Effects of the Effects of the Hawley-Smoot TariffHawley-Smoot Tariff (60%)(60%) Reversed worldwide trend for more Reversed worldwide trend for more

reasonable tariffs reasonable tariffs Huge trade gaps between US and Huge trade gaps between US and

foreigners foreigners Plunged US and world deeper into Plunged US and world deeper into

(already begun) depression(already begun) depression Forced US to retreat further into Forced US to retreat further into

isolationism isolationism

October 1929 - Great Crash ends roaring 1920sOctober 1929 - Great Crash ends roaring 1920s Foreign and domestic investors began a sell-off Foreign and domestic investors began a sell-off October 29, 1929 – “Black Tuesday” October 29, 1929 – “Black Tuesday”

• Scramble to sell of over 16 million shares Scramble to sell of over 16 million shares December 1929 - $40 billion in paper wealth erased December 1929 - $40 billion in paper wealth erased

Effects of the Crash Effects of the Crash Unemployed workers Unemployed workers

• 1930 – 4 million 1930 – 4 million • 1932 – 12 million1932 – 12 million

Wages slashedWages slashed 5,000 banks failed erasing savings5,000 banks failed erasing savings Homes and farms foreclosed on Homes and farms foreclosed on

Panicked Stock Traders outside the NYSEPanicked Stock Traders outside the NYSE

A BANK RUN AFTER THE CRASHA BANK RUN AFTER THE CRASH

Unemployment Unemployment Line in the Line in the DepressionDepression

Causes of Causes of the Great the Great

DepressionDepression----------------------Sound Sound

familiar to familiar to issues issues today?today?

Consumer Consumer Borrowing in the Borrowing in the

1920s1920s----------------------------------

It will rise even It will rise even higher in the late higher in the late 1990s and 2000s1990s and 2000s

----------------------------In 2007 America In 2007 America has a negative has a negative

savings ratesavings rate

Note Note skater is skater is so happy so happy he is not he is not looking looking aheadahead

Weak farm economyWeak farm economy 1/2 of all Americans still lived in rural areas 1/2 of all Americans still lived in rural areas Farmers never shared in prosperity of 1920s Farmers never shared in prosperity of 1920s Suffered from overproduction, high debt, and Suffered from overproduction, high debt, and

low prices since end of World War I low prices since end of World War I Further hit with severe droughts during 1930sFurther hit with severe droughts during 1930s

Government policies Government policies Lack of regulation over business Lack of regulation over business High tariffs hurt international trade High tariffs hurt international trade Low taxes put tax burden on middle class Low taxes put tax burden on middle class

Hoover does not believe in all out Hoover does not believe in all out government aid: individuals should help government aid: individuals should help themselves – Makes a compromise policy:themselves – Makes a compromise policy: assist those at the top of the economic assist those at the top of the economic

pyramid (such as banks and railroads)pyramid (such as banks and railroads) Relief would Relief would trickle down trickle down to poor (same to poor (same

policy as R. Reagan)policy as R. Reagan)

Spending on relief revolutionary for the time, Spending on relief revolutionary for the time, turned away from decades of laissez-faire turned away from decades of laissez-faire beliefs sets up idea for New Deal under FDRbeliefs sets up idea for New Deal under FDR

Popular Popular feeling feeling in 1932 in 1932 electionelection

Hoover finally recommends Congress Hoover finally recommends Congress appropriate massive sums for public works appropriate massive sums for public works Total of $2.25 billion spent Total of $2.25 billion spent

Hoover Dam begins 1930 & finished 1936 Hoover Dam begins 1930 & finished 1936 Created lake for irrigation, flood control, Created lake for irrigation, flood control,

electric power electric power

1932: Reconstruction Finance Corporation (RFC) 1932: Reconstruction Finance Corporation (RFC) $1/2 billion government lending bank $1/2 billion government lending bank loans to business but not to individualsloans to business but not to individuals

1932 – Norris-La Guardia Act1932 – Norris-La Guardia Act greatest law ever passed for laborgreatest law ever passed for labor

Outlawed “yellow-dog” contracts Outlawed “yellow-dog” contracts (agreement not to join a union as a (agreement not to join a union as a condition of employment) condition of employment)

Forbade federal courts from issuing Forbade federal courts from issuing injunctions to prevent strikesinjunctions to prevent strikes

W W I soldiers want bonus now - Voted in 1924; W W I soldiers want bonus now - Voted in 1924; payable in 1945payable in 1945

Bonus Expeditionary Force (BEF) Bonus Expeditionary Force (BEF) 20K marched on Washington to demand 20K marched on Washington to demand

entire bonus and set up public camps entire bonus and set up public camps Bonus bill fails in Congress Bonus bill fails in Congress

Several thousand refused to leave Several thousand refused to leave Riots kill 2 people Riots kill 2 people Hoover orders General Douglas MacArthur to Hoover orders General Douglas MacArthur to

disperse the Bonus Army & he overdoes itdisperse the Bonus Army & he overdoes it

Police and Bonus Army Clash 1932Police and Bonus Army Clash 1932

Invasion violates league of nations and shocks AmericaInvasion violates league of nations and shocks America

Japan as Breaker of Treaties After Manchuria Japan as Breaker of Treaties After Manchuria

Japanese Japanese portrayed as portrayed as

the the aggressor aggressor

nationnation

US takes paper action against Japan:US takes paper action against Japan: Secretary of State Henry L. Stimson doctrine:Secretary of State Henry L. Stimson doctrine:

• US would not recognize territorial US would not recognize territorial acquisitions gained by force acquisitions gained by force

Japan is not deterredJapan is not deterred 1932 – Japan bombs Shanghai, killing many 1932 – Japan bombs Shanghai, killing many US remains isolationist – refusal during US remains isolationist – refusal during

depression to intervene in China depression to intervene in China • Some say this is when war actually startedSome say this is when war actually started