THE NEW ERA: 1921 TO 1933

1
THE NEW ERA 1921 TO 1933

• Harding and Normalcy
• Harding gained Republican nomination largely
  because of genial nature and lack of convictions
• hard working and politically astute, Harding was
  also indecisive and unwilling to offend
• Harding appointed able and reputable men to the
  major cabinet posts, including Charles Evans
  Hughes, Herbert Hoover, Andrew Mellon, and Henry
  C. Wallace
• however, many lesser offices, and a few major
  ones, went to his Ohio cronies

2

• The Business of the United States is Business
• Secretary of the Treasury Andrew Mellon dominated
  domestic policy
• Mellon sought to lower taxes on the rich, reverse
  the low-tariff policies of the Wilson period, and
  reduce the national debt by cutting expenses
• his policies had considerable merit, but Mellon
  carried his policies to an extreme
• even with large Republican majorities, Congress
  refused to grant unqualified approval

3

• moreover, the farm bloc, a coalition of
  mid-western Republicans and southern Democrats,
  offset the Republican majority
• Mellon nevertheless balanced the budget and
  reduced the national debt by an average of over
  500 million a year
• the business community heartily approved of the
  policies of the Harding and Coolidge
  administrations

4

• both Harding and Coolidge used appointments to
  convert regulatory bodies, such as the Interstate
  Commerce Commission and the Federal Reserve
  Board, into pro-business agencies that ceased
  almost entirely to restrict the activities of the
  industries over which they had control

5

• The Harding Scandals
• although personally honest, Harding appointed
  cronies known as the Ohio Gang who demonstrated
  a propensity for corruption
• scandals rocked the Veterans Bureau and the
  office of the alien property custodian
• the greatest scandal involved Harding's secretary
  of the interior, Albert B. Fall
• Fall leased naval petroleum reserves to private
  oil companies

6

• a Senate investigation into the Teapot Dome
  Scandal revealed that Fall had received over
  300,000 in loans from these oil companies
• the American people, who had not yet learned the
  extent of the scandals, genuinely mourned
  Hardings death

7

• Coolidge Prosperity
• Vice-President Coolidge had no connection with
  the Harding scandals and cleaned house on taking
  office
• his pro-business philosophy endeared him to
  conservatives
• in 1924, Coolidge easily won the Republican
  nomination
• the badly divided Democrats finally chose a
  compromise candidate after 103 ballots

8

• in the general election, Coolidge easily defeated
  the Democratic challenger, John W. Davies
• Robert M. La Follette, running on the Progressive
  party ticket, finished a distant third

9

• Peace Without a Sword
• Disillusion with the results of World War I led
  Americans to withdraw from foreign involvements,
  but American economic interests made complete
  withdrawal impossible
• while the United States avoided formal alliances,
  diplomatic efforts included the Washington
  Conference (1921), at which leading nations
  agreed to maintain the Open Door in China and to
  limit the costly naval arms race

10

• three far-reaching treaties were drafted
• the Five-Power Treaty limited the number of
  battleships of its signatories
• countries signing the Four-Power Treaty agreed to
  respect each others interests in the Pacific
• the Nine-Power Treaty pledged to maintain Chinas
  sovereignty and the Open Door
• by initiating the Conference, the United States
  regained some of the moral influence lost when it
  refused to join the League
• however, the treaties were essentially toothless

11

• The Peace Movement
• while sincerely desiring peace, Americans refused
  to surrender any sovereignty or to build an
  adequate defense
• so great was the nations desire to avoid foreign
  entanglements that the United States refused to
  join the World Court
• peace societies flourished
• the Carnegie Endowment for International Peace
  and the Woodrow Wilson Foundation worked for
  world peace

12

• many Americans urged pacifism in the conduct of
  foreign policy
• the desire for peace culminated in the
  Kellogg-Briand Pact of 1928
• signed by over fifteen nations, the pact
  renounced war as an instrument of national
  policy

13

• The Good Neighbor Policy
• during the 1920s the continued presence of
  marines and the economic power of the Colossus
  of the North fueled anti-Yankee sentiment in
  Latin America
• under Herbert Hoover, American policy began to
  treat Latin American nations as equals
• the Clark Memorandum (1930) disassociated the
  right of intervention in Latin America from the
  Roosevelt Corollary

14

• according to Clark, the United States right to
  intervene depended on the doctrine of
  self-preservation
• Franklin Delano Roosevelt continued the Good
  Neighbor Policy
• by 1934 the Marines had withdrawn from Nicaragua,
  Haiti, and the Dominican Republic and the United
  States abrogated the right to intervene in Cuba

15

• The Totalitarian Challenge
• the limitations of isolationism became evident in
  1931 when Japan occupied Manchuria in violation
  of both the Nine-Power and the Kellogg-Briand
  pacts
• China appealed to United States and League of
  Nations for aid, but neither would intervene
• the United States announced the Stimson Doctrine,
  which stated that the United States would never
  recognize the legality of territory seized in
  violation of American treaty rights

16

• Stimson Doctrine served only to irritate the
  Japanese
• in January 1932, Japan attacked Shanghai
• the League condemned the aggression, and, in
  response, Japan withdrew from the League

17

• War Debts and Reparations
• quarrels over war debts hindered efforts by the
  former Allies to deal with Japans aggression
• the United States demanded repayment of loans
  made to its allies during World War I
• the Allies could not repay the loans, and the
  American protective tariff made it nearly
  impossible for them to gain the dollars necessary
  to pay the debts
• the Allies added the cost of their debts to
  German reparation payments

18

• Germany could not pay the huge sums assessed for
  reparations and was reluctant even to try
• despite the restructuring of reparations under
  the Dawes (1924) and Young (1929) plans, Germany
  defaulted on its payments in turn, France and
  Britain defaulted on their loans

19

• The Election of 1928
• a successful businessman, a technocrat, and a
  skilled bureaucrat, Herbert Hoover easily won the
  Republican nomination
• he believed that capital and labor could
  cooperate to achieve mutually beneficial goals
• his opponent, Alfred E. Smith, a New York
  Democrat, was in many ways Hoovers antithesis
• a Catholic antiprohibitionist, Smith represented
  the urban, immigrant, machine-style politics of
  the nations cities
• Hoover won a smashing victory

20

• Economic Problems
• the prosperity of the 1920s masked serious flaws
  in the economy
• not all sectors of the economy shared in the
  prosperity the coal and cotton industries lagged
  behind the general economy
• the trend toward consolidation of industries
  continued throughout the period
• voluntary trade associations, with government
  backing, now practiced self-regulation
• the weakest sector of economy was agriculture

21

• while most economic indicators reflected an
  unprecedented prosperity, the boom rested on
  unstable foundations
• maldistribution of resources posed the greatest
  problem
• productive capacity raced ahead of purchasing
  power
• large sums of money were invested in speculative
  ventures rather than in productive enterprises

22

• The Stock Market Crash of 1929
• stock market raced ahead beginning early 1928
• prices climbed still higher during the first half
  of 1929
• the market wavered in September, but few saw
  cause for serious concern
• on October 29, 1929, the stock market collapsed,
  and the boom ended

23

• Hoover and the Depression
• stock market collapse was more a symptom of
  economic woe than the cause of the depression
• the Great Depression was a worldwide phenomenon
  caused primarily by economic imbalances resulting
  from World War I
• in the United States, concentration of wealth,
  speculative investment, and underconsumption
  contributed to the severity of the depression
• Hoover relied upon voluntarism and mutual
  self-interest to cure the economic ills

24

• he rejected classical economics and proposed a
  number of measures to combat the depression
• however, he overestimated the willingness of
  citizens to act in the public interest without
  legal compulsion and relied too much on voluntary
  cooperation
• private charities soon ran out of money
• as the depression deepened, Hoover placed more
  emphasis on balancing the budget, which further
  decreased the supply of money
• the Hawley-Smoot Tariff (1930) imposed high rates
  on manufactured goods, which contracted trade

25

• The Economy Hits Bottom
• in the spring of 1932, thousands of Americans
  faced starvation
• people unable to pay rent established shantytowns
  they called Hoovervilles
• people begged for food while agricultural prices
  dropped so low that farmers organized Farm
  Holiday movements
• in the summer of 1932, twenty thousand World War
  I veterans marched on Washington to seek
  immediate payment of their war bonuses

26

• when Congress rejected their appeal, some refused
  to leave and established a camp on the Anacostia
  Flats
• federal troops dispersed the Bonus Army
• the unprecedented severity of the depression led
  some to propose radical economic and political
  changes

27

• The Depression and Its Victims
• the depression had a profound psychological
  impact on the American people
• there were simply no jobs to be found
• people who lost jobs at first searched for new
  ones after a few months, however, they became
  apathetic
• economic stress brought personal stress
• power shifted within families family size
  decreased
• hopelessness and malnutrition contributed to the
  lack of political radicalism during the depression

28

• The Election of 1932
• Democrats chose Franklin Delano Roosevelt of New
  York to challenge Hoover in 1932
• Roosevelt campaigned on optimism and grand, but
  unspecified, solutions to the nations economic
  woes
• desperate for a change in style and substance,
  Americans rallied to Roosevelt's promises of a
  New Deal

29

• he proposed that the government take whatever
  steps were necessary to protect individual and
  public interests
• Roosevelt won with an electoral margin of 472 to
  59
• the last days of the Hoover administration and a
  lame duck Congress witnessed the nadir of the
  depression