The Politics of Boom and Bust, 1920

1
Chapter 32

• The Politics of Boom and Bust, 19201932

2
I. The Republican Old Guard Returns

• Warren G. Harding, inaugurated in 1921, looked
  presidential
• 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

3
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
  administrator
• Became secretary of commerce

4
I. The Republican Old Guard Returns (cont.)

• Raised his second-rate cabinet to first-rate
  importance
• Especially in drumming up foreign trade for US.
  manufactures.
• 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

5
I. The Republican Old GuardReturns (cont.)

• Harry M. Daugherty
• A big-time crook in the Ohio Gang
• Was supposed to prosecute wrongdoers as attorney
  general.

6
II. GOP Reaction at the Throttle

• Harding was a perfect front for enterprising
  industrialists
• New Old Guards
• Hoped to crush the reforms of the progressive era
• Hoped to improve on the old business doctrine of
  laissez-faire
• 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

7
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
  associates
• 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
  economy

8
II. GOP Reaction at the Throttle(cont.)

• Landmark case Adkins v. Childrens Hospital
  (1923)
• 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
  legislation.
• These two cases framed a debate over gender
  differences
• 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
  preferences?

9
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

10
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.

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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
  Act
• Encouraged private consolidation of the railroads

13
III. The Aftermath of War(cont.)

• Pledged the Interstate Commerce Commission to
  guarantee their profitability
• New philosophy was to save the railroads from the
  country.
• Government tried to get out of the shipping
  business
• 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
  foreigners.

14
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
  injunction
• Needy veterans reaped lasting gains from the war
• Congress (1912) created the Veterans Bureau to
  operate hospitals and provide vocational rehab.

15
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

16
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
  thing
• Harding at first even refused to support the
  Leagues world health program

17
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.

18
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
  force.
• 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.

19
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
  useless
• It reflected the American mind (1920s)
• Willing to be lulled into a false sense of
  security
• This same attitude showed up in the neutralism of
  the 1930s.

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Figure 32-1 p731
22
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
  reductions.

23
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.

24
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
  play
• 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.

25
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
  penitentiary
• Teapot Dome scandal
• Involved priceless naval oil reserves at Teapot
  Dome (Wyoming) and Elk Hills (California)

26
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

27
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.

28
V. The Stench of Scandal(cont.)

• Harding was spared the full revelation of these
  iniquities
• He embarked on a speechmaking tour across the
  country all the way to Alaska
• On return he died in San Francisco on August 2,
  1923
• 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.

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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
  commonplace
• 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

31
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.

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VIII. Frustrated Farmers

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

34
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
  surpluses
• 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.

35
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.

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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.

38
IX. A Three-Way Race for the White House in 1924
(cont.)

• 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
  party,
• But his majority constituency were the
  price-pinched farmers

39
IX. A Three-Way Race for the White House in 1924
(cont.)

• 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
  injunctions
• Urged a constitutional amendment to limit the
  Supreme Courts power to invalidate laws passed
  by Congress.

40
IX. A Three-Way Race for the White House in 1924
(cont.)

• 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)

41
Map 32-1 p736
42
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
  1924
• They remained in Haiti (1914-1934).

43
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
  1933
• 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
  32.2)
• 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.

44
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
  Allies
• Uncle Sam held their IOUsand he wanted to be
  paid
• 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

45
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.

46
Figure 32-2 p737
47
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.

48
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
  complicated
• 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.

49
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.

50
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51
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
  prohibition
• 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

52
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

53
XII. The Triumph of Herbert Hoover (cont.)

• His efficiency
• His talent for administration
• His ability to inspire loyalty in close
  associates
• They called him the Chief.
• He was the best businesspersons candidate
• Self-made millionaire, he recoiled from anything
  suggesting socialism, paternalism, or planned
  economy,
• 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
  radio.

54
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
  32.2).

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Map 32-2 p739
57
XIII. President Hoovers First Moves

• Hoovers administrations responses to the
  unorganized wage earners and the disorganized
  farmers
• 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
  disposal
• Money was lent generously to farm organizations
  seeking to buy, sell, and store agricultural
  surpluses.

58
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
  produce
• Hoover during the campaign promised to call
  Congress into session to bring about limited
  change in the tariff.

59
XIII. President Hoovers First Moves (cont.)

• The Hawley-Smoot Tariff (1930)
• By the time it was through both houses of
  Congress
• 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

60
XIII. President Hoovers First Moves (cont.)

• It plunged both America and other nations deeper
  into the terrible depression that had already
  begun
• 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.

61
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
  upward
• And created a fools paradise of paper profits
• There were a few prophets who tried to sound
  warnings
• The catastrophic crash came in October 1929
• Partially caused by the British who raised
  interest rates

62
XIV. The Great Crash Ends the Golden Twenties
(cont.)

• 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).

63
XIV. The Great Crash Ends the Golden Twenties
(cont.)

• The stock-market collapse heralded a business
  depression
• At home and abroad
• The most prolonged and prostrating in American or
  world experience
• No other industrialized nation suffered so
  severely
• 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
  years
• Carrying down with them the savings of tens of
  thousands of ordinary citizens.

64
XIV. The Great Crash Ends the Golden Twenties
(cont.)

• Countless thousands lost their home and farms to
  foreclosure
• 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.

65
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Figure 32-3 p741
67
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68
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
  wealthy
• Who in turn invested it in factories and other
  agencies of production.
• Nothing going into salaries and wages
  revitalizing purchasing power.

69
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
  recovered
• 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.

70
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
  calamity
• A host of citizens had lost everything
• They wanted to workbut there was no work.

71
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.

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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.

74
XVI. Rugged Times for Rugged Individualists
(cont.)

• He was convinced that industry, thrift, and
  self-reliance were the virtues that made America
  great
• 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.

75
XVI. Rugged Times for Rugged Individualists
(cont.)

• 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
  Humanitarian

76
XVI. Rugged Times for Rugged Individualism (cont.)

• Most of the criticism of Hoover was unfair
• His efforts probably prevented a more serious
  collapse
• His expenditures for relief, revolutionary for
  the day, paved the path for the enormous federal
  outlays of his New Deal successor, Franklin
  Roosevelt.

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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.

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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
  companies.
• 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

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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
  self-liquidating
• 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.

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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.

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XVI. Hoover Battles the Great Depression (cont.)

• Hoovers woes
• Increased by a hostile Congress
• The Republican majority proved highly
  uncooperative
• 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.

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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
  bonus
• The Bonus Expeditionary Force (BEF), some
  20,000, went to the capital summer of 1932
• They erected shacks on vacant lotsa gigantic
  Hooverville
• After two were killed, Hoover ordered the army to
  evacuate the unwanted guests.

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XVIII. Routing the Bonus Army in Washington
(cont.)

• The Bonus Army
• Led by General Douglas MacArthur
• With bayonets and tear gas
• And with far more severity than Hoover had
  planned
• 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.

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XIX. Japanese Militarists Attack China

• Militaristic Japan stole the Far Eastern
  spotlight
• 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.

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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.

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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
  1930s
• 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.

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XX. Hoover Pioneers the Good Neighbor Policy

• Hoover and relations with Americas southern
  neighbors
• 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
  goodwill
• Strove to abandon the interventionist twist given
  by the Monroe Doctrine of Theodore Roosevelt

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XX. Hoover Pioneers the Good Neighbor Policy
(cont.)

• 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.

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