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His 122 ch 26 republican resurgence and decline
- 2. The Election of 1920 1920 Election Warren G. Harding (R) and James Cox (D) Harding promised “return to normalcy” (meaning return to cultural era before WWI) Conservatism vs. Modernity Harding won “NORMALCY”
- 3. Harding (R) 404 E.C. 16, 152, 200 Cox (D) 127 E.C 9, 147, 353
- 4. Early appointees jailed for corruption Harding raised the tariff. Ohio Gang Reverse progressive policies Chief Justice William Howard Taft ―Reverse a few decisions‖ Struck down minimum wage law for women Struck down child labor law Limited regulatory power of federal agencies. Slumping Economy National Debt 1 billion in 1914 to 24 billion in 1920 Vetoed War Veteran Bonus Bill arguing that it would increase the federal deficit HARDING APPOINTEES AND POLICY: ―FOOLED AGAIN‖
- 5. HARDING AND THE OHIO GANG
- 6. ANDREW MELLON AND TRICKLE DOWN ECONOMICS
- 7. Mellon: Secretary of the Treasury (1920-1932Harding, Coolege and Hoover administrations; 3rd richest man in U.S.) 1920‘s Reduced government spending Lowered 1926 taxes (from 65% before 1921 to 20% in Repealed Revenue the wartime excess profits tax Act of 1926 Lowered estate taxes Repealed the gift tax MELLON‘S TREASURY POLICIES
- 8. High Tarriffs on imported goods Fordney-McCumber Tariff of 1922 increased rates on chemical and metal products to prevent revival of German chemical and steel industries Increased tariffs on imported agricultural products Regulatory reform Appointed industry insiders to regulatory agencies to ensure regulatory policies friendly to business Lax Regulation and excess investment speculation by the rich and banking institutions led to the financial collapse that resulted in the Great Depression Anti-lynching bill Defeated in Senate HARDING-MELLON DOMESTIC POLICIES
- 9. Macroeconomic Theory: Economic growth most effectively created by lowering barriers for people to produce (supply) goods and services. Policy: lower taxes and less regulation SUPPLY SIDE ECONOMICS
- 10. t* = the tax rate at which maximum revenue is generated without negatively affecting growth. LAFFER CURVE
- 11. Income Growth in Average After-Tax Income, By Income Group Graph, pg 19 Congressional Budget Office, October 2011 1979 2007 Lowest quintile Highest quintile
- 12. War Debts and Reparations Repayment of war loans from U.S. to allies were contingent on reparations from Germany to the allies. Germany could not afford the reparations. U.S. began making loans to Germany to pay reparations to the allies Paradoxical Foreign & Domestic Policies Payment of war debt from allies Allies can’t pay war debt by selling goods to U.S. because of high tariff on imports ISOLATIONISM IN FOREIGN AFFAIRS
- 13. U.S. Army: Did not maintain conscription army U.S. Navy Arms Race U.S. and Britain Japanese expansion Washington Naval Conference of 1921 Charles Evans Hughes: ―end it now‖ 5 Power Treaty: U.S., Britain, France, Italy, Japan DISARMAMENT; U.S. ISOLATIONISM AND THE KELLOGG-BRIAND PACT
- 14. 5 Major Powers agree to limit size of navies by limiting the number of ships Refrain from further fortification of bases in Pacific U.S. & Great Britain agreed not to build new naval bases north of Singapore or west of Hawaii Partition U.S. Dominated Western Hemisphere Great Britain dominated North Sea to Singapore Japan dominated Western Pacific Substantive problems Limited only certain ships No enforcement Germany and Russia excluded 5 POWER TREATY
- 15. The World Court 15 international judges to arbitrate disputes between nations U.S. refused to join the World Court Improving Relations in Latin America Reversal of Wilsonian diplomacy Recognized the government in power, regardless of how it got there ISOLATIONISM IN FOREIGN AFFAIRS
- 16. Administrative Corruption Tea Pot Dome scandal Government owned oil deposit administered by the Interior Department Secretary of the Interior Albert Fall let private companies exploit the oil in exchange for bribes Harding died in office August 2, 1923 “Silent Cal” Calvin Coolidge Presidency should return to post-imperialistic ways introduced by Teddy Roosevelt, “speak softly & carry a big stick.” THE HARDING SCANDALS
- 18. Pro-Business Conservatism Coolidge, “The chief business of the American people is business.” Businesses =best entities to regulate business The Election of 1924 Calvin Coolidge (R) vs. John W. Davis (D) and Robert La Follett (P) THE HARDING SCANDALS
- 20. Stabilizing the Economy Herbert Hoover led the Commerce Department, the most active agency in the Federal Government. Encouraged trade associations to stabilize the market by promoting voluntary cooperation in sharing information and promote standardization and efficiency The Business of Farming Agriculture- weakest section of economy in 1920’s Wartime boom: 1914-1920 sales of agricultural products abroad. Speculation in farmland and increased debt to acquire new land THE NEW ERA
- 21. 1920: Commodity prices collapsed as European agriculture returned to pre-war levels Overproduction=lower crop prices 18 months: Cotton $0.35/pound to $0.13/pound 1926 bumper cotton crop caused collapse of prices (South tasted Great Depression) wheat $2.50/bushel to less than $1/bushel Paradox of efficiency, technology and crop prices Bankruptcies and foreclosures & McNary-Haugen bill ―equality for agriculture in benefits of protective tariff‖ Surplus American crops to be sold on world market FARMING BUBBLE BURSTS
- 22. CHARLES MCNARY (R, OREGON ) GILBERT HAUGEN (R, IOWA)
- 23. McNary Haugen Bill vetoed twice by Coolidge Hoover opposed it in favor of Hoover Plan Efficiency, electricity, diversity, production reduction and cooperative associations Keep tariff on imports high Basis for Opposition Big business leaders opposed it Involved government regulation in business of farming Cause farmers to become dependent on government regulation and destroyed self reliance HOOVER, COOLIDGE AND MORAL HAZARD
- 24. Setbacks for Unions Unions weakened by Red Scare In 1929 membership dropped by 1.5 million The American Plan “Yellow Dog” contracts “Welfare Capitalism” profit sharing, bonuses, pensions, health programs THE NEW ERA
- 25. Summer 1927: while vacationing in the Black Hills of South Dakota, Calvin Coolidge announced, ―I do not choose to run for President in 1928. If I take another term I will be in the White House until 1933…10 years in Washington is longer than any man has had it—too long!‖ COOLIDGE DECIDES NOT TO RUN IN 1928
- 26. Coolidge chose not to endorse a candidate. Regarding Hoover: ―For six years that man has given me unsolicited advice—all of it bad‖ Nomination of Dawes as Vice President would be ―a personal affront‖ Herbert Hoover won the nomination for Republicans REPUBLICAN CONVENTION OF 1928
- 27. We in America today are nearer to the final triumph over poverty than ever before in the history of this land... We shall soon with the help of God be in sight of the day when poverty will be banished from this land.‖ HOOVER ACCEPTANCE SPEECH
- 28. Herbert C. Hoover (R) Alfred E. Smith (D) 444 87 ELECTION OF 1928 21,391,381 15,016,443
- 30. ―I have no fears for the future of our country‖
- 32. OCTOBER 29, 1929
- 40. Passed in 1930 Authored by Republican protectionist advocates in Congress, Representatives, Willis C. Hawley and Reed Owen Smoot Initially intended to protect farmers by reducing farm imports from overseas Corporate lobbyists convinced Congress to add hundreds of items Hawley-Smoot Tariff actually raised prices on most raw materials and consumer products Other countries retaliated against goods from the U.S. causing exports to plummet Depression deepened SMOOT –HAWLEY TARIFF
- 41. SMOOT-HAWLEY TARIFF •May 1930: 1,200 economists signed a petition against the tariff •Henry Ford went to the White House to beg Hoover to veto the tariff •J.P. Morgan CEO ―I almost went down on my knees to beg Hoover to veto the ‗asinine‘ tariff.‖ •Tariff taxed 3,200 products at a rate of 60% U.S. Imports decreased 66% from 4.4 billion in 1929 to 1.9 billion in 1933. Steep reduction in imports had a negative effect on banks already weakened by the stock market crash.
- 42. Speculation in stocks had replaced speculation in real estate prior to 1929 Buying stock ―On Margin‖ Banks and Brokers Margin calls and stock value Domino effect on banks when stock speculators could not pay margin calls STRUCTURAL PROBLEMS WITH THE STOCK MARKET
- 43. High prices, low wages and mounting consumer debt Mellon‘s financial policies did not trickle down to consumers 1/3 of personal income was held by the top 5% of the population Profits invested in business expansion and speculation while wages did not rise Consumer spending declined Investment in new factories and businesses plummeted Small businesses and consumers increased borrowing Result was weakened businesses, weakened consumers and weak banks STRUCTURAL FLAWS IN BROADER ECONOMY
- 44. Value of paper currency tagged to size of national gold reserves Money supply shrinks or falls depending on amount of gold in a national treasury When economic output, prices and savings began to fall in 1929, Hoover administration and Mellon tightened the money supply Mellon, ―purge the rottenness out of the system‖ Defaults and bank failures fed deflation From 1929 to 1933, 40% of American banks disappeared and millions of Americans lost their entire savings (FDIC did not yet exist). Nation‘s money supply shrank by 1/3 1936 U.S. along with 36 other nations abandoned the gold standard Money supply expanded, leading to economic growth GOLD STANDARD
- 45. The Human Toll of the Depression People with jobs worked fewer hours By 1933, 13 million people were out of work Soup Kitchens run by local charities depended on donations Hoover’s Efforts at Recovery Too little too late Government funds for construction projects to local governments who had no tax revenue Local and state agencies cut back on employees PRESIDENT HOOVER, THE ENGINEER
- 46. Japan Invades China Japanese investors demanded recourse by Japanese government 1931 explosion destroyed a section of railway in Manchuria Japan invaded Manchuria to protect its investment Japanese invasion rendered the post WWI treaties moot. Neither the League of Nations nor the United States responded to China’s please for assistance. Japan withdrew from the League of Nations in response to a resolution condemning Japan’s invasion. Stresses and Strains at home mean Japan’s invasion of Manchuria is not an issue for American people. GLOBAL CONCERNS
Notas del editor
- In the 1920 election for president, the Republicans chose Warren G. Harding as their candidate, and the Democrats chose James Cox. Harding proposed a return “to normalcy” in his campaign, championing a return to the way the United States was before the Great War. Harding would win the presidency. Harding, much like Grant, was a poor selector of qualified candidates for his cabinet. Many of his appointees landed in prison or barely escaped prosecution. During his administration, he would push for, and receive, an increase in the protective tariff.
- Following the conclusion to the Great War, most Americans desired to return to their isolationist days before the war. The Red Scare, the return to a high tariff rate, and immigration restriction were all examples of these desires. Although the United States would never join the League of Nations, it was not long before it sent unofficial observers to the League to combine forces to fight international crime. War loans to the Allies were contingent on reparations from the Germans. When the Great Depression struck, Germany began to get loans from the United States to pay its debts. After a one-year moratorium negotiated by Hoover, the Allies would default on their loans and Congress would forbid further loans to any government that had already defaulted on its debts to the United States.
- The isolationist strain was quite evident in the U.S .Senate’s refusal to join the World Court, which was composed of fifteen international judges that were charged to arbitrate disputes between nations. Following the Great War, the Harding administration turned its attention to improving relations with Latin America and the Caribbean nations. Hoover would reverse a policy of Wilson and would recognize any government, regardless of the manner in which it came to power. Franklin Roosevelt would remove the marines from Nicaragua and Haiti and ended any claim that the United States had to Cuba.
- The major issue of Harding’s administration was the Tea Pot Dome scandal. The Tea Pot Dome was a government-owned oil deposit that was administered by the Interior Department. Secretary of the interior Albert Fall let private companies exploit the oil there, and soon afterward was discovered to have taken bribes in return for allowing the companies to have their way. Harding would die in office before too many of these scandals erupted. Harding would be succeeded by his vice-president, Calvin Coolidge. He believed that the presidency should return to the post-imperialistic ways introduced by Roosevelt.
- Conservatives in the White House Warren G. Harding (left) and Calvin Coolidge (right).
- Coolidge believed that businesses were the best entity to regulate businesses. Coolidge would distance himself from the corruption of the Harding administration and in 1924 was nominated for his own term by the Republican party. The Democrats would nominate Robert La Follette. Coolidge won.
- The efficiency craze, already discussed in earlier chapters, led to the transformation of the Commerce Department into the most active agency in the government. Led by Herbert Hoover, it encouraged economic growth and the creation of more trade associations to stabilize the markets. Farmers were still the weakest sector of the economy. Elevated by the wartime boom, the farmers bought on credit to plant and harvest more. When the boom ended, they found themselves with too much land and too much debt. As a result, farms were foreclosed on and bankruptcies were rampant. Congress would try to help them, but by the time legislation was passed, it was vetoed by Coolidge, who considered the concept unconstitutional.
- Unions had been weakened by the Red Scare and the strikes of 1919. A brief depression in 1921 further added to this weakness, and membership dropped by 1.5 million in 1929, to 3.5 million. Anti-union sentiment was strongest in the South. During the war, demands for military clothing created a boom for the textile-based South. After the war, the lack of military need as well as changing fashion for women caused a dramatic decline in the need for southern products. A prolonged walkout at the Loray Mill in Gastonia, North Carolina, escalated into conflict and involved two deaths.
- Campaign sheet music The sheet music for the Democratic nominee, Alfred E. Smith (left) and the Republican nominee, Herbert Hoover (right) drew on popular tunes and motifs of the time.
- Herbert Hoover “I have no fears for the future of our country,” Hoover told the nation at his inauguration in 1929.
- By 1933, 13 million people were no longer employed, and those who still had jobs found themselves working fewer hours. Soup kitchens would be created to feed the hungry, and local welfare agencies would run our of charity and funds. Thousands of unemployed men would hop trains in search of jobs. Known as hobos, they would continue on the rails until they found employment.Hoover would try to restore American confidence in the economy by accelerating the start of government-funded construction projects to employ more people. However, as these projects expanded, local and state government agencies continued to cut back.
- When an explosion in 1931 destroyed a section of railway in Manchuria, Japanese investors demanded recourse. Japan used this as cause to enter into this northern province of China. The entrance of its army rendered the Nine Power Treaty, the Kellogg-Briand Pact, and pledges before the League of Nations all moot. China would request assistance from the League as well as the United States. Neither would respond. When the League condemned its actions, Japan withdrew from the agreements. Citizens in the United States were not overly concerned with the crisis in the Pacific; they were more concerned with their own affairs and the dwindling economy at home.
- Japan and China Japan’s seizure of Manchuria in 1931 prompted this American condemnation.