CHAPTER 32
Politics of Boom and Bust, 1920–1932
1. “Old Guard” Returns (pp. 798–800)
a. This section outlines the probusiness Republican administrations of the 1920s, which
favored small government and ended the push for “progressive” reforms. As with Grant
after the Civil War, the authors spare little in their caustic description of the first of these
presidents, Warren G. HARDING. Focus on the Supreme Court actions affecting the
status of women that the authors term “anti-progressive.” Do you remember the Supreme
Court’s reasoning in the 1908 Muller v. Oregon case when it came out in favor of special
protection for women in the workplace? How and why was this view changed when
similar protections were overturned in the case of Adkins v. Children’s Hospital (1923)?
*** Should the law treat women and men completely equally? If so, why? If not, in what
areas should women be treated differently?
(1) Muller v. Oregon (1908):

Women are deserving of special protection in the workplace
(2) Adkins v. Children’s Hospital (1923):

since women now have the vote, they are the legal equals of men

they no longer need or deserve special protection or treatment

invalidated minimum wage law for women
(3) Your view:

Brady: all persons deserve protection against abuse and mistreatment by
those in power.

Those members of society without full benefits of equality deserve special
protection (ex. children)
Charles Evans Hughes—HARDING’S SECRETARY OF STATE
Andrew W. Mellon –HARDING’S SECRETARY OF TREASURY
Herbert Hoover –HARDING’S SECRETARY OF COMMERCE
Sen. Albert B. Fall –HARDING’S SECRETARY OF INTERIOR, AN ANTICONSERVATIONIST
Harry M. Daugherty—HARDING’S ATTORNEY GENERAL, BIG TIME CROOK IN THE OHIO
GANG
“laissez-faire” economics –GOVERNMENT SHOULD STAY OUT OF ECONOMY (THIS
DECADE: GOVERNMENT SHOULD HELP BIG BUSINESS)
William Howard Taft –HARDING-APPOINTED CHIEF JUSTICE OF THE SUPREME COURT
“Ohio Gang”—Harding’s cronies—crooked—used Harding’s position and stupidity for
personal gain
2. Harding Years, 1921–1923 (pp. 800–805)
a. This section highlights the growth of big business and the difficulties of labor unions
during the 1920s. Note also on p. 756 a law passed in 1924 called the Adjusted
COMPENSATION Act that promised big benefits to World War I veterans in twenty
years. Internationally, America returned to its isolationist roots in the 1920s. Not being
part of the League of NATIONS, the country signed a series of disarmament treaties,
including the 1922 “FIVE- Power NAVAL Treaty” (that limited U.S., British, and Japanese
warship tonnage at a ratio of 5:5:3). Later in the decade, the idealistic KELLOGG - Briand
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Pact, supposedly outlawing war, was signed. Higher American tariffs temporarily helped
American business but hurt European economies trying to recover from the devastation
of World War I. Corruption was also exposed in the Harding administration typified by
Interior Secretary Albert B. FALL and the oil-related scandal called TEAPOT DOME.
After Harding’s death in 1923, the new president was the flinty, conservative, morally
straight Calvin “SILENT Cal” Coolidge from the state of VERMONT.
Esch-Cummins Transportation Act (1920) –ENCOURAGED PRIVATE CONSOLIDATION OF
RRs & PLEDGED ICC TO GUARANTEE THEIR PROFITABILITY
Merchant Marine Act (1920) –SOLD OFF MOST OF GOVERNMENT OWNED MERCHANT
FLEET TO PRIVATE OWNERS
Veterans Bureau (1921) –ORGANIZED TO SET UP VETERANS HOSPITALS
Washington “Disarmament” Conference (1921–1922) –CONFERENCE AIMED AT
REDUCING NAVAL SPENDING BY GETTING ALL NAVAL POWERS TO REDUCE NAVAL
TONNAGE
Fordney-McCumber Tariff (1922)—RAISED AVERAGE TARIFF RATES FROM 27% TO
38.5%, GAVE PRESIDENT THE RIGHT TO RAISE OR LOWER RATES ON INDIVIDUAL
GOODS BY 50%, CAUSED EUROPE TO RAISE TARIFFS IN RESPONSE, REDUCING
TRADE, HURTING ALL
**Teapot Dome Scandal (1923) --So what was the Teapot Dome scandal? The affair took its name from Teapot
Dome, a rock formation in Wyoming that looked like a teapot and, more importantly, stood atop a large government naval
oil reserve. The scandal was the most famous of several scandals that ruined the reputation of President Warren G. Harding,
who served from March 1921 to August 1923 and is often described as the worst president our country has ever had. At its
bare bones, Teapot Dome is a simple case of bribery. Secretary of the Interior Albert Fall, a former senator from New
Mexico and a friend of Harding's, was convicted of taking bribes from oil executives. Oilman Harry Sinclair obtained
leases to drill for oil at Teapot Dome, Wyoming, and Edward Doheny acquired leases for reserves at Elk Hills, California.
Fall received in the neighborhood of $400,000 in cash and gifts from Doheny and Sinclair. Like the details of the various
Enron accounting maneuvers, the details of the oil leasing were complicated. For the public it was reduced to Fall granting
favors to friends who had given him a great deal of money.
3. Coolidge Years, 1923–1929 (pp. 805-–809)
a. Farmers in the 1920s were in a depressed state a decade ahead of the rest of the
nation. *** How did the end of wartime demand plus farm mechanization (symbolized by
the new tractors) contribute to lower prices for farm products?

HUGE SURPLUSES (PRODUCTIVITY) AND LESS MARKET FOR AG PRODUCTS
LED TO HUGE DROP IN PRICES

ONE IN FOUR FARMS SOLD FOR TAXES IN THE 1920s
b. (It’s important to have a general understanding of the structure of postwar debts
and reparations because they contributed both to the onset of the Depression and
to the rise of Hitler in Germany.) 3 REASONS ALLIES SHOULD NOT HAVE HAD TO
REPAY WAR DEBTS: 1. ALLIES SPENT LIVES, US SPENT MOSTLY $$ AND
SHOULD CONSIDER THEM AS WAR EXPENSES. 2. BORROWED $ MOSTLY SPEN
IN US FUELING WARTIME ECONOMIC BOOMPROSPERITY 3. US POSTWAR
TARIFFS MADE IT IMPOSSIBLE FOR THEM TO SELL GOODS TO RAISE $$. Look at
the flowchart on p. 764. The U.S. insisted on getting its $10 billion or so in war debts paid
back from France and Britain. Because they couldn’t earn dollars by selling goods to the
U.S., what was their main source of funds to repay these war debts? (REPARATIONS
FROM GERMANY) What happened in 1929 when Wall Street bankers started calling in
the loans they had made to Germany under the 1924 DAWES Plan?—INTERNATIONAL
FINANCIAL CRISIS
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Capper-Volstead Act (1921) –ATTEMPT TO HELP BELEAGUERED FARMERS OF 1920sEXEMPTED FARMERS’ MARKETING COOPS FROM ANTI TRUST PROSECUTION
McNary-Haugen Bill/Coolidge veto –GOVERNMENT TO PURCHASE FARM SURPLUSES
FOR SALE OVERSEAS, FUNDED BY TAX ON FARMERS, TWICE VETOED BY
COOLIDGE—NEVER PASSED
John W. Davis –DEMOCRATIC CANDIDATE 1924
Robert M. La Follette –PROGRESSIVE CANDIDATE 1924
**Dawes Plan (1924) --The Dawes Plan was the result of negotiations between Germany and the US Government.
The plan allowed the co-ordination of reparations repayments, making these more manageable. This involved paying
reduced payments until 1929, when the situation would be reappraised. The scale of the reassessment is worthy to note,
reparations payments in 1922 had been some $2 billion, the figure for 1914 was set at $50million. This large reduction in
reparations payments was accompanied by a loan of $200 million from the US government which would allow for heavy
investment in the German infrastructure. Linked to this agreement was the introduction of the new Reichsbank and the
replacement of the old German Mark with the Rentenmark. The Dawes plan also provided for the gradual removal of
French and Belgian troops from the Rhineland.
4. Hoover Years, 1929–1933 (pp. 809–812)
a. In the 1928 election, Republican Herbert Hoover defeated the first Catholic presidential
nominee, Democrat Al SMITH of New YORK. The authors use words like industry, thrift,
self-reliance, dignity, integrity, and humanitarian but also stiff and thin-skinned to
describe the apparently well-qualified Hoover, a self-made millionaire. With the 1929
Agricultural MARKETING Act, Hoover moved modestly to help farm cooperatives help
themselves, but soon afterwards, Congress passed the HAWLEY- Smoot Tariff bill which
raised average import duties to 60 percent. *** Why do the authors say on p. 767 that this
move played “directly into the hands of a hate-filled German demagogue, Adolf Hitler”? IT
WORSENED FINANCIAL CONDITIONS IN EUROPE BY HALTING TRADE AND
ABILITY TO PAY WAR DEBTS. IT WAS ECONOMIC ISOLATIONISM AND HITLER
USED GERMANY’S TREATMENT BY ALLIES AS REASON TO RALLY GERMAN
NATIONALISM AND REBELLION AND RE….AGAINST ALLIES
Alfred E. Smith/1928 election
Agricultural Marketing Act (1929)
Federal Farm Board –ESTABLISHED BY AGRICULTURAL MARKETING ACT, IT HAD
REVOLVING FUND TO BUY SURPLUSES TO KEEP PRICES UP. SOON BURIED UNDER
EXCESSIVE SURPLUSES
**Hawley-Smoot Tariff (1930)
5. Crash and Depression (pp. 812–815)
a. The chart on p. 768 shows that the value of common stocks declined by 75 percent
between its high when the market crashed on “Black TUESDAY” in October 1929 and its
low in 1932. A stock market “crash” is caused when everyone wants to SELL (buy or sell)
and no one wants to BUY (buy or sell) their ownership of shares in companies. *** What
do you think might cause people suddenly to dump their shares on the market?
THEY LOSE CONFIDENCE IN THE VALUE OF THEIR SHARES, THEY THINK THE PRICE
IS ABOUT TO FALL DRAMATICALLY
b. The authors provide a number of graphic examples of how the “foundations of
America’s social and political structure” were severely and almost fatally shaken by the
decade-long Great Depression, which descended starting in 1930. The stock market
crash, by reducing the savings of investors and creating a negative psychological mood,
was only one small factor in the onset of this Depression. Summarize these three main
causes of the Depression cited by the authors.
OTHER PROBLEMS:
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
STOCK MARKET CRASH

TECHNOLOGICAL UNEMPLOYMENT

DROUGHT IN MISSISSIPPI RIVER VALLEY 1930
(1) Overproduction and income disparities: MORE GOODS WERE PRODUCED
THAN COULD BE BOUGHT/SOLD. TOO MUCH INCOME CONCENTRATED INTO
FEW HANDS FURTHER REDUCED THE NUMBER OF CONSUMERS
(2) Overexpansion of credit: ALLOWED PEOPLE TO BORROW BEYOND THEIR
MEANS, FURTHER STIMULATE PRODUCTION
(3) Economic problems abroad:

EUROPE NEVER FULLY RECOVERED ECONOMICALLY FROM WWI

TRADE DEPRESSION CAUSED BY HIGH US TARIFFS

WAR DEBT/REPARATONS FIASCO

CHAIN REACTION—BANK IN VIENNA FAILED, CAUSING OTHERS TO FOLLOW
Speculative bubble –STOCK MARKET PRICES TOO HIGH--OVERVALUED
Great Depression—LONGEST DEEPEST FINANCIAL CRISIS IN US HISTORY
**“Hoovervilles”—STANTYTOWNS BUILT OUT OF TRASH BY HOMELESS, POOR
6. Hoover and the Depression (pp. 815–818)
a. Hoover was a humanitarian, but as a conservative he felt government handouts to the
poor would destroy the “national fiber.” When Hoover did substantially alter his principles
by spending large sums of government money, it was for public works such as the
HOOVER Dam and for the RECONSTRUCTION Finance Corporation (RFC). Who
received funds from the RFC and how did this illustrate the conservative Hoover’s belief
that the benefits of such programs would eventually “trickle down” to the masses?

INSURANCE COMPANIES, BANKS, AGRICULTURAL ORGANIZATIONS,
RAILROADS

THESE BUSINESSES WOULD IN TURN BE ABLE TO CONTINUE TO EMPLOY
PEOPLE AND MAYBE HIRE MORE
**“Trickle down” economic theory –PRIME THE PUMP; INVEST IN BUSINESS AND/OR THE
WEALTHY WHO WILL INVEST $$ IN ENTERPRISES CREATING JOBS
Norris-LaGuardia Act (1932) –OUTLAWED YELLOW DOG CONTRACTS, STOPPED USE
OF INJUNCTIONS AGAINST STRIKES OR LABOR ACTIONS
“Yellow dog” contracts -- A yellow-dog contract is a requirement by a firm that the worker agree not to engage in
collective labor action. Such contracts are not enforceable in the U.S.
7. Bonus Army and Foreign Events (pp. 818-–821) The final blow to Hoover’s reputation
occurred in 1932 when he ordered General Douglas MCARTHUR to evict the remaining
elements of the BONUS Army, a large group of World War I veterans who came to
Washington to demand early payment of war bonuses. Overseas, Japan was expanding
without restraint by the League of Nations. *** What do the authors mean (pp. 774–775)
when they conclude that “collective security died and World War II was born in 1931 on
the windswept plains of Manchuria”?

LEAGUE OF NATIONS FAILED TO USE ITS POWER TO ACT WHEN JAPAN
INVADED CHINA

FIRST OF A SERIES OF ACTS OF AGGRESSION LEAGUE WOULD NOT STOP
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**Bonus Army (1932) –
Did the bonus army get their bonus?
Years later, Congress finally decided to give them their bonus.
Who are the bonus army?
in 1924 Congress voted to give WW1 veterans a bonus, but not to be paid until 1945. but in 1932 the US experienced a
period of depression. as a result about 15,000 vets descended on Washington D.C....
Why was the bonus army formed?
The "Bonus Army" was a rag-tag collection of displaced, out-of-work WW1 veterans who marched on Washington D.C.
during the depths of the great Depression, to demand cash payment of a monetary "bonus"...
What was the bonus army and how were they awarded?
In 1924, a grateful Congress voted to give a bonus to World War I veterans - $1.25 for each day served overseas, $1.00 for
each day served in the States. The catch was that payment would not be made...
Who forced the bonus army to disband?
Herbert Hoover did. He feared they would spark some violence and called in the National Guard. They teargassed the group
and ended up killing up an 11 month old baby.
Read more: http://wiki.answers.com/Q/What_was_the_bonus_army#ixzz1GJayfMct
Gen. Douglas MacArthur -Manchuria (1931) -Henry L. Stimson –HOOVER’S SECRETARY OF STATE-REFUSED TO BACK LEAGUE OF
NATIONS IN ATTEMPT TO USE ECONOMIC PRESSURE AGAINST JAPAN AFTER IT
INVADED CHINA-----STIMSON DOCTRINE: 1932: US REFUSED TO RECOGNIZE ANY
TERRITORIAL ACQUISITIONS GAINED BY FORCE
**“Collective security” –SECURITY PROVIDED BY LEAGUE OF NATIONS OR UNITED
NATIONS, ALL FOR ONE, ONE FOR ALL; AGREEMENT TO LIVE BY AGGREED UPON
INTERNATIONAL ORDER, TO SOLVE CONFLICTS BY TALK, BRINING WEIGHT OF ALL
MEMBER NATIONS TO BEAR UPON THOSE INVOLVED IN THE CONFLICT
**“Good Neighbor” policy –MORE BENEVOLENT, LESS INTERVENTIONIST VERSION OF
MONROE DOCTRINE THAN ROOSEVELT COROLLARY; INITIATED BY HOOVER,
CONTINUED BY FDR.
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