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The Politics of Boom and Bust, 1920


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Title: The Politics of Boom and Bust, 1920

Chapter 32
  • The Politics of Boom and Bust, 19201932

I. The Republican Old Guard Returns
  • Warren G. Harding, inaugurated in 1921, looked
  • Found himself beyond his depth in the presidency
  • He was unable to detect moral halitosis in his
    evil associates
  • He could not say no and designing politicians
    leeched on to this weakness
  • Washington could not tell a lie, Harding could
    not tell a liar
  • He promised to gather around him the best minds
    of the party

I. The Republican Old Guard Returns (cont.)
  • Hardings best minds
  • Charles Evans Hughes
  • Masterful, imperious, incisive, brilliant
  • Brought to the position of secretary of state a
    dominating conservative leadership
  • Andrew W. Mellon
  • New secretary of the Treasury
  • Herbert Hoover
  • Famed feeder of the Belgians and wartime food
  • Became secretary of commerce

I. The Republican Old Guard Returns (cont.)
  • Raised his second-rate cabinet to first-rate
  • Especially in drumming up foreign trade for US.
  • Hardings worst minds
  • Senator Albert B. Fall
  • A scheming anticonservationist
  • Appointed secretary of the interior
  • As guardian of the nations natural resources, he
    resembled the wolf hired to protect the sheep

I. The Republican Old GuardReturns (cont.)
  • Harry M. Daugherty
  • A big-time crook in the Ohio Gang
  • Was supposed to prosecute wrongdoers as attorney

II. GOP Reaction at the Throttle
  • Harding was a perfect front for enterprising
  • New Old Guards
  • Hoped to crush the reforms of the progressive era
  • Hoped to improve on the old business doctrine of
  • They simply wanted the government to keep its
    hands off business,
  • But for the government to guide business along
    the path to profits
  • They achieved their purpose by putting the courts
    and administrative bureaus in safekeeping of
    fellow stand-patters

II. GOP Reaction at the Throttle(cont.)
  • Harding lived less than three years as president
  • But appointed four of the nine justices
  • His fortunate choice for chief justice was
    ex-president Taft, who performed his duties ably
    but was more liberal than some of his cautious
  • The Supreme Court axed progressive legislation
  • It killed a federal child-labor law
  • Stripped away many of labors hard-won gains
  • Rigidly restricted government intervention in the

II. GOP Reaction at the Throttle(cont.)
  • Landmark case Adkins v. Childrens Hospital
  • It reversed its own reasoning in Muller v. Oregon
    (see p. 645)
  • Which declared women to be deserving of special
    protection in the workplace
  • And invalidated a minimum-wage law for women
  • Reasoning because women now had the vote (19th
    Amendment), they were the legal equal of men and
    could no longer be protected by special
  • These two cases framed a debate over gender
  • Were women sufficiently different from men that
    they merited special legal and social treatment?
  • Or were they effectively equal in the eyes of the
    law and undeserving of special protections and

II. GOP Reaction at the Throttle(cont.)
  • Corporations could once more relax and expand
  • Antitrust laws were often ignored, circumvented,
    or feebly enforced by friendly prosecutors
  • The Interstate Commerce Commission came to be
    dominated by men who were personally sympathetic
    to the managers of the railroads
  • Big industrialists strived to reduce the rigors
    of competition
  • Associations that ran counter to the spirit of
    existing antitrust legislation, their formation
    was encouraged by Hoover

II. GOP Reaction at the Throttle(cont.)
  • Hoovers efficiency
  • Led him to condemn the waste resulting from
    cutthroat competition
  • His commitment to voluntary cooperation led him
    to urge businesses to regulate themselves rather
    than be regulated by big government.

III. The Aftermath of War
  • Wartime government controls on the economy were
    swiftly dismantled
  • The War Industries Board disappeared
  • With its passing, progressive hopes for more
    government regulation of big business evaporated
  • Returned railroads to private management in 1920
  • Some hope for permanent nationalization
  • Congress passed the Esch-Cummins Transportation
  • Encouraged private consolidation of the railroads

III. The Aftermath of War(cont.)
  • Pledged the Interstate Commerce Commission to
    guarantee their profitability
  • New philosophy was to save the railroads from the
  • Government tried to get out of the shipping
  • The Merchant Marine Act (1920) authorized the
    Shipping Board to dispose of much of the hastily
    built wartime fleet
  • The Board operated the remaining vessels without
    conspicuous success
  • Under the La Follette Act (1915) , American
    shipping could not thrive in competition with

III. The Aftermath of War(cont.)
  • Labor limped along badly in the postwar decade,
    lack of government support
  • Bloody strike in the steel industry in 1919
  • The Railway Labor Board ordered a wage cut of 12
    in 1922
  • General Daugherty claimed on the strikers an
  • Needy veterans reaped lasting gains from the war
  • Congress (1912) created the Veterans Bureau to
    operate hospitals and provide vocational rehab.

III. The Aftermath of War(cont.)
  • Veterans organized into pressure groups
  • The American Legion was distinguished for its
    militant patriotism, rock-ribbed conservatism,
    and zealous antiradicalism.
  • Aggressive for veterans benefit
  • Critics denounced a holdup bonus for the
    millions of veterans
  • Won in 1924 the passage of the Adjusted
    Compensation Act
  • Gave former soldiers a paid-up insurance policy
    due in 20 years
  • Adding 3.5 billion to the cost of the war

IV. America Seeks Benefits Without Burdens
  • Making peace with the fallen foe
  • The United States, having rejected the Treaty of
    Versailles, was technically at war with Germany,
    Austria, and Hungary
  • In July Congress passed a simple joint resolution
    that declared the war officially over
  • Isolation was enthroned in Washington
  • Continued to regard the League as an unclean
  • Harding at first even refused to support the
    Leagues world health program

IV. America Seeks Benefits Without Burdens (cont.)
  • Secretary Hughes secured for American oil
    companies the right to share in oil exploitations
  • Disarmament was an issue for Harding
  • Had businessmen to finance the ambitious naval
    building program during the war
  • Washington Disarmament Conference 1921-1922
  • Invitations went out to all but Bolshevik Russia
  • The double agenda included naval disarmament
  • The situation in the Far East
  • Hughes declared a ten-year holiday on the
    construction of battleships
  • He proposed scaled-down navies of America and
    Britain ratio 553. The third was for Japan.

IV. America Seeks Benefits Without Burdens (cont.)
  • A Four-Power Treaty the pact bound Britain,
    Japan, France and the United States to preserve
    the status quo in the Pacific.
  • Gave Chinathe Sick Man of the Far Eastthe
    Nine-Power Treaty (1922), whose signatories
    agreed to nail wide-open the Open Door in China
  • No restrictions
  • Placed on small warships
  • Congress made no commitment to the use of armed
  • Kellogg-Briand Pact
  • Secretary of state Frank B. Kellogg won the Nobel
    Peace Prize for his role Kellogg signed the Pact
    with the French foreign minister.

IV. America Seeks Benefits Without Burdens (cont.)
  • The new parchment peace was delusory
  • Defensive wars were still permitted
  • The pact was a diplomatic derelict and virtually
  • It reflected the American mind (1920s)
  • Willing to be lulled into a false sense of
  • This same attitude showed up in the neutralism of
    the 1930s.

Figure 32-1 p731
V. Hiking the Tariff Higher
  • Businesspeople sought to keep the market to
    themselves by throwing up tariff walls
  • Fordney-McCumber Tariff Law
  • Lobbyists wanted to bust the average from 27 to
    38.5, almost as high as Tafts Payne Aldrich
    Tariff of 1909 (see Appendix.)
  • Duties on farm produce were increased
  • Flexibility the president could increase or
    decrease duties as much as 50
  • Harding was more friendly to increases than

V. Hiking the Tariff Higher(cont.)
  • In six years they authorized 32 upward charges
  • During this same time, the White House ordered
    only 5 reductions
  • The high-tariff course set off a chain reaction
  • European producers felt the squeeze
  • Impoverished Europe needed to sell its
    manufactured goods to the United States
  • America needed to give foreign countries a chance
    to make a profit
  • International trade, Americans were slow to
    learn, is a two-way street.

V. Hiking the Tariff Higher(cont.)
  • They could not sell to others in quantity unless
    they bought from them in quantityor lent them
    more U.S. dollars
  • Erecting tariff walls was a game that two could
  • The whole European-American tariff situation
    further deepened the international economic
    distress, providing one more rung on the ladder
    by which Adolf Hitler scrambled to power.

VI. The Stench of Scandal
  • Loose morality and get-rich-quickism of the
    Harding era resulted in a series of scandals
  • Scandals
  • 1923 Colonel Charles R. Forbes, caught with hand
    in the till, was forced to resign as head of the
    Veterans Bureau
  • Looted the government of 200 million, chiefly in
    the building of veterans hospitals
  • He was sentenced to two years in a federal
  • Teapot Dome scandal
  • Involved priceless naval oil reserves at Teapot
    Dome (Wyoming) and Elk Hills (California)

VI. The Stench of Scandal(cont.)
  • Secretary of the interior Albert B. Fall induced
    his careless colleague, the secretary of the
    navy, to transfer these valuable properties to
    the Interior Department
  • Harding indiscreetly signed the secret order
  • Fall quietly leased the lands to oilmen Harry F.
    Sinclair and Edward L. Doheny,
  • But not until he received a bribe (loan) of
    100,000 from Doheny and about three times that
    amount in all from Sinclair
  • Teapot Dome finally came to a whistling boil
  • Fall, Sinclair, and Doheny were indicated 1924
  • Case dragged on until 1929
  • Fall was found guilty of taking a bribe,
    sentenced to one year in jail

V. The Stench of Scandal(cont.)
  • The two bribe givers were acquitted while the
    bribe taker was convicted
  • Sinclair served several months in jail for having
    shadowed jurors and for refusing to testify
    before a Senate committee.
  • The acquittal of Sinclair and Doheny undermined
    faith in the courts.
  • Scandal of Attorney General Daugherty
  • A Senate investigation (1924) of illegal sale of
    pardons and liquor permits
  • Forced to resign, tried in 1927, but released
    after the jury twice failed to agree.

V. The Stench of Scandal(cont.)
  • Harding was spared the full revelation of these
  • He embarked on a speechmaking tour across the
    country all the way to Alaska
  • On return he died in San Francisco on August 2,
  • The brutal fact is that Harding was not a strong
    enough man for the presidencyas he himself
    privately admitted.
  • Such was his weakness that he tolerated people
    and conditions that subjected the Republic to its
    worst disgrace since the days of President Grant.

VII. Silent Cal Coolidge
  • Vice President Coolidge was sworn into office by
    his father
  • He embodied the New England virtues of honesty,
    morality, industry, and frugality
  • He seemed to be a crystallization of the
  • Had only mediocre powers of leadership
  • His speeches were invariably boring
  • True to Republican philosophy, he became the
    high priest of the great god Business

VII. Silent Cal Coolidge(cont.)
  • His philosophy was a hands-off temperament
  • His thrifty nature caused him to sympathize with
    Secretary of the Treasury Mellons effort to
    reduce taxes and debts
  • Coolidge slowly gave the Harding regime a badly
    needed moral fumigation
  • Coolidge was not touched by the scandals.

VIII. Frustrated Farmers
  • Farmers in a boom-or-bust cycle in the post-war
  • Peace brought
  • End to government guaranteed high prices and
    massive purchases by other nations
  • Foreign production reentered the stream of world
  • Machines
  • Threatened to plow the farmers under over their
    own overabundant crops

VIII. Frustrated Farmers(cont.)
  • The gasoline-engine tractor was working a
    revolution on American farms
  • They could grow bigger crops on larger areas
  • Improved efficiency and expanded agricultural
    acreage helped to pile up more price-dampening
  • A withering depression swept through agricultural
    districts in the 1920s, when one farm in four was
    sold for debt or taxes.
  • Schemes abounded for bringing relief to the
    hard-pressed farmers
  • A bi-partisan farm bloc from the agricultural
    states coalesced in Congress in 1921 and
    succeeded in getting some helpful laws passed.

VIII. Frustrated Farmers(cont.)
  • The Capper-Volstead Act
  • Exempted farmers marketing cooperatives from
    antitrust prosecution
  • The McNary-Haugen Bill (1924-1928)
  • Sought to keep agricultural prices high by
    authorizing the government to buy up surpluses
    and see them abroad
  • Government losses were to be made up by a special
    tax on the farmers
  • Congress twice passed the bill,
  • But frugal Coolidge twice vetoed it
  • Farm prices stayed down, and farmers political
    temper-atures stayed high, reaching a fever pitch
    in the election of 1924.

IX. A Three-Way Race for the White House in 1924
  • Election of 1924
  • Nominated Silent Cal at their convention in
    Cleveland in the summer of 1924
  • Democrats had more difficulty choosing a
    candidate in their convention in New York
  • The party was split between wets and drys
  • Urbanites and farmers
  • Fundamentalists and Modernists
  • Northern liberals and southern stand-patters,
    immigrants and old-stock Americans.

IX. A Three-Way Race for the White House in 1924
  • The Democrats failed by one vote to pass a
    resolution condemning the Ku Klux Klan
  • Deadlocked for an unprecedented 102 ballots, the
    convention turned to John W. Davis
  • Now wide-open for a liberal candidate
  • Senator Robert (Fighting Bob) La Follette
    sprang forth to lead a new Progressive party
  • He gained the endorsement of the American
    Federation of Labor
  • He enjoyed the support of the shrinking Socialist
  • But his majority constituency were the
    price-pinched farmers

IX. A Three-Way Race for the White House in 1924
  • La Follettes new Progressive party
  • Fielding only a presidential ticket, with no
    candidates for local office
  • Proved only a shadow of the robust Progressive
    coalition of prewar days
  • Its platform called for government ownership of
    railroads and relief for farmers
  • It lashed out at monopoly and antilabor
  • Urged a constitutional amendment to limit the
    Supreme Courts power to invalidate laws passed
    by Congress.

IX. A Three-Way Race for the White House in 1924
  • Election returns
  • La Follette polled nearly 5 million votes
  • Cautious Cal and the oil-smeared Republicans
    over-whelmed Davis, 15,718,211 to 8,385,283
  • The electoral count stood at 382 for Coolidge,
    136 for Davis, and 13 for La Follette, all from
    his home state of Wisconsin (see Map 32.1)

Map 32-1 p736
X. Foreign-Policy Flounderings
  • Isolation continued to reign in the Coolidge era
  • The Senate would not allow America to adhere to
    the World Court
  • Coolidge only halfheartedly and unsuccessfully
    pursued further naval disarmament
  • American outward looking
  • The armed interventionism in the Caribbean and
    Central America
  • American troops were withdrawn (after an
    eight-year stay) from the Dominican Republic in
  • They remained in Haiti (1914-1934).

X. Foreign-Policy Flounderings(cont.)
  • America was in Nicaragua intermittently since
    1909 Coolidge briefly removed them in 1925 in
    1926 he sent them back where they stayed until
  • American oil companies clamored for a military
    expedition to Mexico in 1926
  • Overshadowing all other foreign-policy problems
    in 1920s was the issue of international debts
  • Complicated tangle of private loans Allied war
    debts and German reparations payments (see Figure
  • In 1914 America had been a debtor nation to the
    sum of 4 billion
  • By 1922, it had become a creditor nation to the
    sum of 16 billion.

X. Foreign-Policy Flounderings(cont.)
  • American investors loaned some 10 billion to
    foreigners in the 1920s
  • The key knot in the debt tangle was the 10
    billion that the U.S. Treasury had loaned to the
  • Uncle Sam held their IOUsand he wanted to be
  • The Allies protested that the demand for
    repayment was grossly unfair
  • The French and the British pointed out, with much
    justice, that they had held up a wall of flesh
    and bone against the common foe, until the
    Americans were ready to enter
  • America, they argued, they should write off its
    loans as war costs

X. Foreign-Policy Flounderings(cont.)
  • The real effect of their borrowed dollars had
    been to fuel the boom in the already roaring
    wartime economy in America, where nearly all the
    purchases had been made
  • Final straw, protested the Europeans, was that
    Americas postwar tariff walls made it almost
    impossible for them to sell their goods to earn
    the dollars to pay their debts.

Figure 32-2 p737
XI. Unraveling the Debt Knot
  • Germanys war debts
  • America insisted on getting its money back
  • The French and British demanded 32 billion in
    reparations payments
  • The Allies hoped to settle their debt with the
    United States
  • Debt cancellations
  • Some statesmen wanted the debts to be scaled down
    or even canceled
  • Calvin Coolidge turned aside any suggestions of
    debt cancellation.

XI. Unraveling the Debt Knot(cont.)
  • The Dawes Plan (1924)
  • Was largely negotiated by Charles Dawes, about to
    be Coolidges running mate
  • It rescheduled German reparations payments
  • And opened the way for further American private
    loans to Germany
  • The whole financial cycle now became still more
  • As U.S. bankers loaned money to Germany,
  • Germany paid reparations to France and Britain,
  • And the former Allies paid war debts to the
    United States.

XI. Unraveling the Debt Knot(cont.)
  • When that well dried up after the great crash of
    1929, the jungle of international finance quickly
    turned into a desert
  • President Herbert Hoover declared a one-year
    moratorium in 1931
  • except honest little Finland, which struggled
    along making payments until the last of its debt
    was discharged in 1976
  • The United States never did get its money, but it
    harvested a bumper crop of ill will.

XII. The Triumph of Herbert Hoover, 1928
  • 1928 presidential race
  • Coolidge decided not to run again
  • Herbert Hoover became the candidate
  • Nominated on a platform of both prosperity and
  • Democrats nominated Alfred C. Smith
  • Al(cohol) Smith, soakingly and drippingly wet
    when the country was devoted to the noble
    experiment of prohibition
  • He seemed to be abrasively urban
  • He was Roman Catholic

XII. The Triumph of Herbert Hoover (cont.)
  • Radio played prominently in this campaign for the
    first time
  • It helped Hoover more than Smith
  • Hoover decried un-American socialism
  • And preached rugged individualism
  • Never having been elected to public office , he
    was thin-skinned in the face of criticism
  • He did not adapt readily to necessary
    give-and-take of political accommodation
  • His real power lay in his integrity
  • His humanitarianism
  • His passion for assembling the facts

XII. The Triumph of Herbert Hoover (cont.)
  • His efficiency
  • His talent for administration
  • His ability to inspire loyalty in close
  • They called him the Chief.
  • He was the best businesspersons candidate
  • Self-made millionaire, he recoiled from anything
    suggesting socialism, paternalism, or planned
  • Yet as secretary of commerce, he had exhibited
    some progressive instincts
  • He endorsed labor unions
  • He supported federal regulation of the new radio
    broadcasting industry
  • He flirted with the idea of government-owned

XII. The Triumph of Herbert Hoover (cont.)
  • Indications of low-level campaigners
  • Religious bigotry against Smiths Catholicism
  • The White House would become a branch of the
    Vaticancomplete with Rum, Romanism, and Ruin
  • The South shied away from city slicker Al Smith
  • Election returns
  • Hoover triumphed in a landslide
  • He bagged 21,391,993 popular votes, to 15,016,169
    for Smith
  • Hoover electoral count of 444 to Smiths 87.
  • Big Republican victory Hoover swept five former
    Confederacy states and all Border States(see Map

Map 32-2 p739
XIII. President Hoovers First Moves
  • Hoovers administrations responses to the
    unorganized wage earners and the disorganized
  • The Agricultural Marketing Act (June 1929)
  • Designed to help the farmers help themselves,
    largely through producers cooperatives
  • It set up the Federal Farm Bureau with a
    revolving fund of ½ billion dollars at its
  • Money was lent generously to farm organizations
    seeking to buy, sell, and store agricultural

XIII. President Hoovers First Moves (cont.)
  • In 1930 the Farm Board created
  • The Grain Stabilization Corporation and the
    Cotton Stabilization Corporation
  • Primary goal to bolster sagging prices by buying
    up surpluses
  • They were suffocated by an avalanche of farm
  • Hoover during the campaign promised to call
    Congress into session to bring about limited
    change in the tariff.

XIII. President Hoovers First Moves (cont.)
  • The Hawley-Smoot Tariff (1930)
  • By the time it was through both houses of
  • Turned out to be the highest protective tariff in
    the nations peacetime history
  • The average duty on nonfree goods was raised from
    38.5 to nearly 60
  • To angered foreigners, it was a blow below the
    trade belt
  • It seemed like a declaration of economic warfare
    on the entire outside world
  • It reversed a promising worldwide trend toward
    reasonable tariffs

XIII. President Hoovers First Moves (cont.)
  • It plunged both America and other nations deeper
    into the terrible depression that had already
  • It increased international financial chaos and
    forced the United States further into the bog of
    economic isolationism
  • And economic isolationism, both at home and
    abroad, was playing directly into the hands of a
    hate-filled German demagogue, Adolf Hitler.

XIV. The Great Crash Ends the Golden Twenties
  • The speculative bubble
  • Few people sensed that the permanent plateau of
    prosperity would soon break
  • Prices on the stock exchange continued to spiral
  • And created a fools paradise of paper profits
  • There were a few prophets who tried to sound
  • The catastrophic crash came in October 1929
  • Partially caused by the British who raised
    interest rates

XIV. The Great Crash Ends the Golden Twenties
  • Foreign investors and wary domestic speculators
    began to dump their insecurities
  • Tensions built up to the panicky Black Tuesday of
    October 29, 1929
  • 16,410,030 shares of stocks were sold in a
    save-who-may scramble
  • Wall Street became a wailing wall as gloom and
    doom replaced boom
  • Suicides increased alarmingly
  • Losses in blue chips securities were unbelievable
  • By the end of 1929 stockholders lost 40 billion
    in paper values (see Figure 32.3).

XIV. The Great Crash Ends the Golden Twenties
  • The stock-market collapse heralded a business
  • At home and abroad
  • The most prolonged and prostrating in American or
    world experience
  • No other industrialized nation suffered so
  • End of 1929 4 million workers were jobless
  • Two years later the figure had about doubled
  • Hungry and despairing workers pounded the
    pavements in search of work
  • The misery and gloom was incalculable
  • Over 5000 banks collapsed in the first three
  • Carrying down with them the savings of tens of
    thousands of ordinary citizens.

XIV. The Great Crash Ends the Golden Twenties
  • Countless thousands lost their home and farms to
  • Breadlines formed, soup kitchens dispensed food
  • Families felt the stress, as jobless fathers
    nursed their guilt and shame at not being able to
    provide for their families
  • Breadless breadwinners blamed themselves for
    their plight
  • Mothers nursed fewer babies.

Figure 32-3 p741
XV. Hooked on the Horn of Plenty
  • What caused the Great Depression?
  • Overproduction
  • Both farm and factory
  • The depression of the 1930s was one of abundance,
    not want
  • It was the great glut or the plague of plenty
  • The nations ability to produce goods had clearly
    outrun its capacity to consume or pay for them
  • Too much money was going into the hands of the
  • Who in turn invested it in factories and other
    agencies of production.
  • Nothing going into salaries and wages
    revitalizing purchasing power.

XV. Hooked on the Horn of Plenty(cont.)
  • Overexpansion
  • Of credit through installment-plan buying
    overstimulated production
  • Normal technological unemployment
  • Economic anemia abroad
  • Britain and the Continent had never fully
  • A chain-reaction financial collapse in Europe
  • A drying up of international trade
  • European uncertainties over reparations, war
    debts, and defaults on loans owed to America.
  • Many of these conditions had been caused by Uncle
    Sams own narrow-visioned policies.

XV. Hooked on the Horn of Plenty(cont.)
  • Nature a terrible drought scorched the
    Mississippi valley in 1930
  • Thousands of homes and farms were sold at auction
    for taxes
  • Farm tenancy or rentala species of peonagewas
    spreading among both whites and blacks
  • By the 1930s the depression had become a national
  • A host of citizens had lost everything
  • They wanted to workbut there was no work.

XV. Hooked on the Horn of Plenty(cont.)
  • Americas uniqueness no longer seemed so
    unique, nor its Manifest Destiny so manifest
  • The depression was a baffling wraith that
    Americans could not grasp
  • Initiative and self-respect were stifled
  • Many slept in tin-and-paper shantytowns cynically
    named Hoovervilles
  • The very foundations of Americas social and
    political structure trembled.

XVI. Rugged Times for Rugged Individualists
  • Hoovers exalted reputation as a wonder-worker
    and efficiency engineer crashed
  • He would have shined in the prosperity-drenched
    Coolidge years
  • Now the Great Depression proved to be a task
    beyond his engineering talents
  • He was distressed by the widespread misery
  • As a rugged individualist he shrank from the
    heresy of government handouts.

XVI. Rugged Times for Rugged Individualists
  • He was convinced that industry, thrift, and
    self-reliance were the virtues that made America
  • He feared that a government doling out doles
    would weaken, perhaps destroy, the national fiber
  • Relief by local government agencies broke down
  • Hoover finally had to reluctantly turn from his
    doctrine of log-cabin individualism
  • And accept the proposition that the welfare of
    the people in a national catastrophe is a direct
    concern of the national government.

XVI. Rugged Times for Rugged Individualists
  • He worked out a compromise between
  • The old hand-off philosophy
  • And the soul-destroying direct dole then being
    used in England.
  • He would assist the hard-pressed railroads,
    banks, and rural credit corporation
  • That if financial health were restored at the top
    of the economic pyramid
  • Unemployment would be relieved at the bottom on a
    trickle-down basis.
  • Partisan critics sneered at the Great

XVI. Rugged Times for Rugged Individualism (cont.)
  • Most of the criticism of Hoover was unfair
  • His efforts probably prevented a more serious
  • His expenditures for relief, revolutionary for
    the day, paved the path for the enormous federal
    outlays of his New Deal successor, Franklin

XVII. Hoover Battles the Great Depression
  • Hoovers trickle-down philosophy
  • He recommended that Congress vote immense sums
    for useful public works
  • He secured from Congress appropriations totaling
    2.25 billion for such projects
  • Most imposing of the public enterprises was the
    gigantic Hoover Dam on the Colorado River
  • It was a huge man-made lake for the purposes of
    irrigation, flood control, and electric power
  • He sternly fought all schemes that he thought
    were socialistic.

XVII. Hoover Battles the Great Depression (cont.)
  • Conspicuous was the Muscle Shoals Bill
  • Designed to dam the Tennessee River
  • He vetoed this measure primarily because he
    opposed the governments selling electricity in
    competition with its own citizens in private
  • In 1932 Congress responded to Hoovers appeal
  • Established the Reconstruction Finance
    Corporation (RFC)
  • It was designed to provide indirect relief
  • By assisting insurance companies, banks,
    agricultural organ-izations, railroads, and even
    hard-pressed state and local governments

XVI. Hoover Battles the Great Depression (cont.)
  • But to preserve individualism and character,
  • There would be no loans to individuals.
  • The pump-priming loans were no doubt of
    widespread benefit
  • Projects that it supported were largely
  • The government profited to the tune of many
    millions of dollars
  • Giant corporations benefited
  • The irony is that the thrifty and individualistic
    Hoover actually sponsored the project
  • It actually had a strong New Dealish flavor.

XVI. Hoover Battles the Great Depression (cont.)
  • Norris-La Guardia Anti-Injunction Act (1932)
  • It outlawed yellow-dog (antiunion) contracts
  • And forbade the federal courts to issue
    injunctions to restrain strikes, boycotts, and
    peaceful picketing.
  • Hoover did inaugurate a significant new policy
  • By the end of his term he had started down the
    road toward government assistance for the needy
    citizensa road that Franklin Roosevelt would
    travel much farther.

XVI. Hoover Battles the Great Depression (cont.)
  • Hoovers woes
  • Increased by a hostile Congress
  • The Republican majority proved highly
  • In 1930 the Democrats controlled the House
  • Insurgent Republicans couldand didcombine with
    opposition Democrats to harass Hoover
  • Some of the presidents troubles were
    deliber-ately manufactured by Congress.

XVIII. Routing the Bonus Army in Washington
  • Veterans of World War I were also hard-hit
    victims of the depression
  • Bonus through the Hawley-Smoot Tariff
  • What did the government owe them for their
    services in 1917-1918?
  • Many veterans were prepared to go to Washington
  • To demand the immediate payment of their entire
  • The Bonus Expeditionary Force (BEF), some
    20,000, went to the capital summer of 1932
  • They erected shacks on vacant lotsa gigantic
  • After two were killed, Hoover ordered the army to
    evacuate the unwanted guests.

XVIII. Routing the Bonus Army in Washington
  • The Bonus Army
  • Led by General Douglas MacArthur
  • With bayonets and tear gas
  • And with far more severity than Hoover had
  • The brutal episode brought down additional abuse
    on the once-popular Hoover.
  • The time was ripening for the Democratic
    Partyand Franklin D. Rooseveltto cash in on
    Hoovers calamities.

XIX. Japanese Militarists Attack China
  • Militaristic Japan stole the Far Eastern
  • In September, 1931 the Japanese imperialists
    lunged into Manchuria
  • America had strong sentimental stake in China,
    but few significant economic interests
  • Americans stunned by this act of naked aggression
  • It was a flagrant violation of the League of
    Nations covenant
  • And other international agreements solemnly
    signed by Tokyo
  • Not to mention the American sense of fair play.

XIX. Japanese Militarists Attack China (cont.)
  • Washington rebuffed initial attempts in 1931 to
    secure American cooperation in applying eco-
    nomic pressure on Japan
  • Washington and Secretary of State Henry L.
    Stimson decided to fire only paper bullets
  • The so-called Stimson doctrine
  • Proclaimed in 1932
  • Declared that the United States would not
    recognize any territorial acquisitions achieved
    by force
  • Righteous indignationor a preach-and-run
    policywould substitute for solid initiatives.

XIX. Japanese Militarists Attach China (cont.)
  • The verbal slap did not deter the march of the
    Japanese militarists
  • They bombed Shanghai in 1932
  • With shocking losses to civilians
  • There was no real sentiment for armed
    intervention among depression-ridden Americans,
    who remained strongly isolationists during the
  • Collective security died and World War II was
    born in 1931 on the Manchuria plains.
  • The Republic came closer to stepping into waters
    of internationalism than American prophets would
    dare to predict in the early 1920s.

XX. Hoover Pioneers the Good Neighbor Policy
  • Hoover and relations with Americas southern
  • Hoover was interested in the often-troubled
    nations below the Rio Grande
  • After the stock market crash of 1929
  • Yankee economic imperialism became less popular
  • Hoover became an advocate of international
  • Strove to abandon the interventionist twist given
    by the Monroe Doctrine of Theodore Roosevelt

XX. Hoover Pioneers the Good Neighbor Policy
  • He negotiated a treaty with Haiti, later
    supplanted by an executive agreement, that
    provided withdrawal of American platoons by 1934
  • In 1933 the last marine leathernecks sailed
    away from Nicaragua after an almost continuous
    stay of some twenty years
  • Hoover, the engineer in politics,
  • Happily engineered the foundation stone of the
    Good Neighbor policy
  • Upon them rose an imposing edifice in the days of
    his successor, Franklin Roosevelt.