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Chapter 33: The Politics of Boom and Bust (1920-1932) (p.

753-766)
The Republican Old Guard Returns President Warren G. Harding was kindly and charming on the outside, but weak and daft on the inside, and did not like to say no to his corrupt politician friends Hardings Cabinet included: Brilliant Secretary of State Charles Evans Hughes, Secretary of the Treasury aluminum king Andrew W. Mellon, and Secretary of Commerce Herbert Hoover But also included anticonservationist Secretary of the Interior Albert B. Fall and attorney general crook Harry M Daugherty Hardings weak-willed presidency allowed new Old Guard to resettle in Washington, reversing the reforms of the Progressive Era The new Old Guard made a laissez-faire government that helped businesses profit by getting control of the courts and the administrative bureaus Harding appointed four Supreme Court justices in his 3-year presidency, most of whom became strong reactionaries, except for Chief Justice Taft: 1923 Adkins v. Childrens Hospital reversed the ruling of Muller v. Oregon that said that women deserved special workplace protection, because women were now the legal equals of men under the 19th Amendment Corporations were allowed to expand, antitrust laws were ineffective, and the ICC was taken over by pro-trust men; Secretary Hoover encouraged cooperation, standardization, and unification because disliked the inefficiency of competition

GOP Reaction at the Throttle

The Aftermath of War Under the war government, reformers had hoped for more government regulation of big business, but most government intervention was done away with after the war: The War Industries Board was dismantled The 1920 Esch-Cummings Transportation Act pulled the government out of the railroads, encouraged their private consolidation, and promised that the ICC would help them profit The 1920 Merchant Marine Act sold much of the war-time fleet for cheap, and the 1915 La Follette Seamans Act said that American shipping could not compete with that of foreigners Labor suffered; strikes and unions were broken by injuctions, exploiting racial and ethnic divisions, and accusations of Communism, 1922 the Railway Labor Board cut wages by 12%, and 1920s union membership dropped 30% Veterans were among the few non-business groups to benefit from the war: 1921 Congress created the Veterans Bureau that provided hospitals and rehabilitation for the disabled 1919 Teddy Roosevelt founded the veterans organization the American Legion that was militantly patriotic and conservative and lobbied for veterans benefits, esp. money, so 1924 despite Harding and Coolidges opposition Congress passed the Adjusted Compensation Act that gave every soldier a government-paid insurance policy America Seeks Benefits Without Burdens After rejecting the Treaty of Versailles, America was still technically at war with Germany, Austria, and Hungary, until July 1921 Congress passed a joint resolution that declared the war over The Harding administration was highly isolationist, but send unofficial observers to League of Nations conventions In the Middle East, the US and Britain had been struggling for oil-drilling concessions, so

Secretary Hughes secured Americas right to drill American business did not want to pay to support a continued ship building program, so disarmament: 1921 to 1922 in the Disarmament Conference in Washington, Secretary Hughes proposed to the worlds major naval powers that ship construction be halted and some ships scrapped, and that the naval and air forces of the US, Britain, and Japan should be in the ratio of 5:5:3 The 1922 Five-Power Naval Treaty kept the 5:5:3 ratio with restrains on British and American fortification of Far Eastern possessions The Four-Power Treaty replaced the Anglo-Japanese Alliance and bound Britain, France, the US, and Japan to maintain the current state of things in the Pacific The 1922 Nine-Power Treaty kept the Open Door in China, the sick man of the far east But these treaties were not very effective at disarmament because other powers continued to arm themselves, and Congress never committed to not use armed force 1928 the Kellogg-Briand Pact (the Pact of Paris) sought to outlaw war except in the case of defense; satisfied the people, but was actually extremely weak and ineffective Hiking the Tariff Higher The 1922 Fordney-McCumber Tariff Law raised average tariff rates from 27% (under Wilson's Underwood Tariff) to 38.5% in order to equalize the cost of American and foreign production, and formed the Tariff Commission which could, along with the president, raise or lower duties by as much as 50% Under Presidents Harding and Coolidge, tariffs were increased on many vital goods and some were decreased on nonessential goods The high tariffs (tariff walls) reduced foreign nations' ability to trade with the US, so slowed their recovery from war, so retarded their ability to pay off war debts to and purchase manufactured goods from the US In response, European nations enacted their own high tariffs, so American trade was hurt, so worsened international economic distress

The Stench of Scandal 1923 head of the Veterans Bureau Charles R. Forbes was caught embezzling In the 1921 Teapot Dome scandal, Secretary of the Interior Albert B. Fall transferred ownership of valuable oil reserves from the navy to the Interior Department, then secretly leased them to oil barons Harry F. Sinclair and Edward L. Doheny with a bribe After the scandal's discovery in March 1923, people lost some faith in the government and were disappointed that the courts had acquitted Sinclair and Doheny 1924 to 1927 Attorney General Dougherty was tried but released for the illegal sale of pardons and liquor permits August 1923 President Harding died of pneumonia and thrombosis after a nationwide speech-making tour These scandals occurred because Harding was too weak to end them Silent Cal Coolidge So Coolidge became president Coolidge was a New Englander, a weak leader, and hands-off to business Wanted, like Secretary Mellon, to reduce taxes and debts Under Coolidge, public anger over the scandals subsided in the midst of prosperity

Frustrated Farmers

During the war, farmers had profitted handsomely, but afterwards, less government and foreign demand for crops, and machines such as the gasoline-engine tractor increased efficiency, so a surplus of crops, so 1920s a depression in crop prices 1921 farmers formed a bipartisan farm bloc that pushed the Capper-Volstead Act that exempted farmers cooperatives from antitrust persecution, and 1924 to 1928 unsuccessfully tried to pass the McNary-Haugen Bill that would have raised crop prices by authorizing to government to buy surpluses to sell abroad Agricultural prices would remain low, so farmers would remain dissatisfied

A Three-Way Race for The Republicans nominated Coolidge for presidential candidate the White House in The Democratic Party was extremely divided by prohibition, cities and farms, 1924 Fundamentalists and Modernists, North and South, and immigrants and native Americans; ended up choosing conservative lawyer John W. Davis for presidential candidate Liberal Senator La Follette led the Progressives, with the support of labor, Socialists, and farmers, and wanted government ownership of railroads and relief for farmers, end of monopoly and antilabor injunctions, and the limiting of the Supreme Courts power to oppose laws passed by Congress Coolidge won the election by a large margin, though La Follette had a respectable showing Foreign-Policy Flounderings For the most part, America remained isolationist and half-heartedly continued to disarm The US often used armed intervention in the Caribbean and Central America, ex. in the Dominican Republic, Nicaragua, Haiti, and esp. Mexico (oil companies were upset that the Mexican government was starting to take over oil resources); many disliked his mailfisted tactics The tangle of international debts: Debts from the war were a tangle of private loans, Allied war debts, and German reparations payments The US had gone from being a debtor country to being a creditor country, ex. lent $10 billion to the Allies But the Allies did not want to repay the US because thought the US should write it off as a cost of war and that their loans helped fuel the US economic boom, and the postwar tariff walls made it difficult to sell goods to earn the money to pay up To pay off their debts to the US, Britain and France demanded that Germany pay them the huge sum of $32 billion in reparations 1923 because of late reparations payments, France occupied Germanys Ruhr Valley, so the German mark hyperinflated Now more people wanted to reduce or cancel the debts, but Coolidge and the public refused The 1924 Dawes Plan made by Charles Dawes rescheduled Germanys reparations payments and allowed further American loans to Germany; so US bankers lent money to Germany, which paid reparations to France and Britain, which paid war debts to the US, so the entire system relied on the strength of US credit Many foreigners were angered by the USs refusal to scale down the debts

Unraveling the Debt Knot

The Republicans nominated popular Secretary of Commerce Herbert Hoover, and The Triumph of supported prosperity, prohibition, individualism, free enterprise (though Hoover had some Herbert Hoover, 1928 Progressive tendencies), and small government

Hoover was an example of an American success story; was an orphan, but graduated from Stanford and became a self-made millionaire through industry, thrift, and selfreliance The Democrats nominated liberal, colorful NY governor Alfred E. Smith, who faced much opposition because he was anti-prohibition, Catholic, and urban For the first time, radio was used prominently in the campaign, to better effect by Hoover than by Smith Hoover won in a landslide, with the support of much of the South

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