Chapter 26: Republican Resurgence and Decline

“Normalcy”

• Warren G. Harding

• Republican party leader from Ohio

• Promised to safeguard America first

• “Normal” guy

• Return to normalcy: reflected both Harding’s own conservative values and the voter’s desire for stability and order

• Economic decisions of Harding

• Harding is pro-business

• Secretary of Treasury Mellon reduced government spending and lower taxes and spending

• Budget and Accounting Act of 1921 → created a new Bureau of the Budget and a general accounting office

• Lowered income taxes

• The Revenue Act of 1926 → further benefits in high-income group by lowering estate taxes

• Favored high tariffs

• Fordney-McCumber Tariff of 1922 → high rates on chemical and metal products

• New act further extended the duties on agricultural imports

• Harding and racism

• Reversed segregation

• Attacked the Ku Klux Klan

Isolationism in Foreign Affairs

• Reparations from WWI: French got reparations from Germany to return loans, but Germany loaned from U.S. to pay reparations

• Five-Power Treaty

• U.S., Britain, Japan, France, and Italy

• Limited navy size (battleship and carrier)

• Failed

• Kellogg-Briand Pact

• French and U.S. agree to not go to war

• U.S. becomes France’s backdoor security

• The Pact of Paris (27 August 1928)

• U.S. and Latin America

• Hoover sought to improve relations

• (1924) troops leave the Dominican Republic

• Marines leave Nicaragua in 1925 but return because of César Augusto Sandino

• More strains with Mexico

The Harding Scandals

• Ohio Gang

• A group Harding met on K street who had low political positions

• Lined their own pockets

• Teapot Dome Scandal

• Albert B. Fall began signing contracts with friends who wanted access to the oil field (Teapot Dome)

• Conspiracy and bribery

• A year in prison

• First former cabinet official to serve time for misconduct in office

• Calvin Coolidge

• Administered on 2:47 A.M. 3 August 1923 by his dad Colonel John Coolidge in Plymouth, Vermont

• Liked big businesses

• “Silent Cal”

• “Too many laws”

• Coolidge and Businesses

• Nation's welfare due to big businesses

• Industrial improvements

• Strove to end federal regulation of business and industry and reduce taxes as well as the national debt

• Saw economic surge as confirmation

The New Era

• Herbert Hoover

• Lost both parents by 10 years old

• Shy

• Mining engineer

• Democrat → Republican

• Transformed the trifling Commerce Department into the government's most dynamic agency

• Sought new markets

• McNary-Haugen bill

• Sought to secure equality for agriculture in the benefits of the protective tariff

• Called for international sale of agriculture to raise prices of crops

• Vetoed by Coolidge

• Unions in the 20s

• Suffered setbacks

• Brief post-war depression further weakened the unions

• “Yellow-dog” contracts

• Used to suppress union workers

• Only hiring those who agree not to join/be a part of unions

• Only exception was the Railroad Labor Act in 1926

President Hoover, the Engineer

• Election of 1928

• Herbert Hoover (Republican) vs Alfred E. Smith (Democrat)

• Hoover ⇒ child of a rural Quaker family, successful engineer and businessman, the architect of republican prosperity

• Smith → son of Irish immigrants, Roman Catholic, and anti-Prohibition

• Hoover wins

• Agricultural Marketing Act: created a Federal Farm Board to help support voluntary farm “cooperative” ⇒ farmers join together to reduce expenses

• Hawley Smoot Tariff

• Tariff of 1930

• Willis C. Hawley (Republican)

• Reed Owen Smoot (Republican)

• Help farmers by reducing imports of farm products

• A fiasco because it caused retaliation

• Speculation in the stock market

• 1927 stock values go up

• Buying stock “on margin” → pay small down payment and loan the rest

• 29 October 1929: stock market crash reveals the economy's weak foundation

• Causes of the Great Depression

• Businesses maintained high retail prices while taking large profits and holding down wage increases → consumer spending ↓, investments ↓, installment buying ↑, and loans ↑

• Government policies → Andrew Mellon’s tax reduction and hostility towards labor unions, lax enforcement of anti-trust laws

• Gold standard

• Banks: 1929 - 1933 ⇒ 40% of American banks disappeared taking saving accounts of millions

• Unemployment

• 1933→ unemployment rises

• Thousands of desperate men went as hobos for job hunting

• Life in the depression

• Those who had a job got hours and wage cuts

• Hoover blankets → newspapers

• Death from cold exposure

• Suicide rates soar

• Government reaction to depression

• Believed it will fix itself

• Mellon → liquidate everything

• Let things fall and people will buy again

• Hoover → “capitalist are too greedy”

• First let the depression fall on corporate profits than the people

• Hoover → “depression”

• Government construction projects

• 1930 → 25,000 businesses had failed and 5 million unemployed

• Hooverville: squalid shanty towns that housed the destitute and homeless

• Johnson Debt Default Act of 1934: prohibited private loans to any government with debts to the U.S.

• Reconstruction Finance Corporation (RFC)

• $500 million for emergency loans to struggling banks, life insurance companies, and railroads

• Key federal agency

• Farmers

• Angry mobs prevented foreclosures and threatened lynching

• Farmer’s Holiday Association

• Bonus Expeditionary Force: get immediate payment of the cash bonus to nearly 4 million veterans

Global Concerns

• Pan-American Conference

• Havana and Cuba

• Charles Evans Hughs

• U.S. to withdraw its Marines

• Hoover and Latin America: recognized the government in power

• Manchuria

• Japanese troops invade

• Republic of Manchukuo

From Hooverism to the New Deal

• Franklin D. Roosevelt

• Married distant cousin

• Polio

• Depression is due to the Republicans

• Election of 1932

• Hoover vs Roosevelt

• 472 (Roosevelt) to 59 (Hoover)

Chapter 27