chapter 31 lecture - oak park independent · • congress (1912) created veterans bureau to operate...

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Chapter 31The PoliticsofBoomandBust,1920–1932

Presented by:

Mr. Anderson, M.Ed., J.D.

I.TheRepublican“OldGuard”Returns

• WarrenG.Harding, inaugurated in1921,lookedpresidential:– Foundhimselfbeyondhisdepthinpresidency

• Unabletodetectmoralfaultsinassociates• Couldnotsaynoanddesigningpoliticiansleechedontothisweakness

• Washingtoncouldnottellalie,Hardingcouldnottellaliar

• Promisedtogatheraroundhim“bestminds”

I.TheRepublican“OldGuard”Returns(cont.)

– CharlesEvansHughes:• Masterful,imperious,incisive,brilliant• Broughttopositionofsecretaryofstateadominatingconservativeleadership

– AndrewW.Mellon:• NewsecretaryofTreasury

– HerbertHoover:• FamedfeederofBelgiansandwartimefoodadministrator

• Becamesecretaryofcommerce

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I.TheRepublican“OldGuard”Returns(cont.)

• Raisedhissecond-ratecabinetposttofirst-rateimportance

• Especiallyindrummingupforeigntradeformanufactures

• Harding's “worst minds”:– SenatorAlbertB.Fall:

• Schemingantconservationist• Appointedsecretaryofinterior• Asguardianofnation'snaturalresources,heresembledwolfhiredtoprotectsheep

I.TheRepublican“OldGuardReturns(cont.)

– HarryM.Daugherty:• Big-timecrookin“OhioGang”• Supposetoprosecutewrongdoersasattorneygeneral

II.GOPReactionattheThrottle• Harding aperfect “front” for industrialists:

– NewOldGuards:• Hopedtocrushreformsofprogressiveera• Hopedtoimproveonoldbusinessdoctrineoflaissez-faire

• Wantedgovernmenttokeepitshandsoffbusiness• Wantedgovernmenttoguidebusinessalongpathtoprofits

– Achieved goal byputting courts andadministrative bureausin safekeeping offellow stand-patters

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II.GOPReactionattheThrottle(cont.)

– Hardinglivedlessthanthreeyearsaspresident:• Appointedfourofninejustices:• Fortunatechoiceforchiefjusticewasex-presidentTaft,whoperformeddutiesablyandwasmoreliberalthansomeofhisassociates

– SupremeCourtaxedprogressivelegislation:• Killedfederalchild-laborlaw• Strippedawaymanyoflabor'shard-wongains• Rigidlyrestrictedgovernmentinterventionineconomy

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• LandmarkcaseAdkinsv.Children'sHospital (1923):– Reversed its reasoning inMuller v. Oregon (see Chap.28):

» Which declared women needed special protection inworkplace» To invalidate minimum-wage law forwomen» Reasoning: because women hadvote (19th Amendment), theywere legal equal ofmenandcould no longer beprotected byspecial legislation

– Twocases frameddebateovergender differences:» Werewomen sufficiently different frommenthat theymeritedspecial legal andsocial treatment?

» Orwere theyeffectively equal in eyesof lawandundeservingof special protections andpreferences?

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– Corporationscouldoncemorerelaxandexpand:• Antitrustlawsignored,circumvented,orfeeblyenforcedbyfriendlyprosecutors

• InterstateCommerceCommissiondominatedbymensympathetictomanagersofrailroads

• Bigindustrialistsstrivedtoreducerigorsofcompetitionthroughtradeassociations

• Althoughassociationsrancountertospiritofantitrustlaws,theirformationencouragedbyHoover


• Hoover's efficiency:– Ledhimtocondemnwasteresultingfromcutthroatcompetition

– Hiscommitmenttovoluntarycooperationledhimtourgebusinessestoregulatethemselvesratherthanberegulatedbybiggovernment

III.TheAftermathofWar

• Wartime government controls oneconomyswiftlydismantled:– WarIndustriesBoarddisappeared

• Withitspassing,progressivehopesformoregovernmentregulationofbigbusinessevaporated

– Returnedrailroadstoprivatemanagement in1920• Crushedhopeforpermanentnationalization• CongresspassedEsch-CumminsTransportationAct:

– Encouraged private consolidation of railroads

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III.TheAftermathofWar(cont.)

– Pledged Interstate Commerce Commission toguaranteerailroad profitability

– Newphilosophy was tosave railroads

– Governmenttriedtogetoutofshippingbusiness:

– Merchant Marine Act (1920)authorized Shipping Board tosell most ofhastily built wartime fleet

– Board operated remaining vessels without muchsuccess– Under LaFollette Seaman's Act (1915), American shippingcould not thrive incompetition with foreign shipping


• Lackinggovernment support, labor limpedalongbadlyinpostwar decade:– Bloodysteelstrikecrushedin1919– RailwayLaborBoardcutwages12%in1922

• Whenworkersstruck,AttorneyGeneralDaughertyclampedinjunctiononstrikers

– Needyveterans reapedlastinggainsfromwar:• Congress(1912)createdVeteransBureautooperatehospitalsandprovidevocationalrehab


• Veteransorganizedintopressuregroups• AmericanLegiondemonstratedmilitantpatriotism,rock-ribbedconservatism,zealousantiradicalism,and

• Aggressivepushforveterans' benefits,especially“adjustedcompensation” tomakeupforwageswhileinservice

• Wonwith1924passageofAdjustedCompensationAct:

• Gaveformersoldiersapaid-upinsurancepolicyduein20years

• Added$3.5billiontocostofwar

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IV.AmericaSeeksBenefitsWithoutBurdens

• Makingpeacewith fallenfoe:– U.S.A.,havingrejectedTreatyofVersailles,technicallyatwarwithGermany,Austria,andHungary:• In1921Congresspassedsimplejointresolutionthatdeclaredwarover

• IsolationenthronedinWashington• ContinuedtoregardLeagueasunclean• HardingatfirstevenrefusedtosupportLeague'sworldhealthprogram

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IV.AmericaSeeks BenefitsWithout Burdens(cont.)

– SecretaryHughessecuredforU.S.oilcompaniesrighttoshareinMiddleEastoilexploitations

– DisarmamentanissueforHarding:• Businessmendidnotwanttofinancenavalbuildingprogramstartedduringwar

• Washington“DisarmamentConference” 1921-1922:– Invitations sent toall butBolshevik Russia– Agenda included navaldisarmament andsituation in FarEast

– Hughes declared 10-year“holiday” onconstruction ofbattleships– Proposed scaled-down navies ofAmerica andBritain with parity– Ratio 5:5:3forU.S.A.,England, and Japan in FivePower Treaty,1922

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Figure 31-1 p723


– Four-Power Treaty– pactbound Britain, Japan, France,andUnited States topreserve status quo inPacific

– China—“Sick Manof theFarEast”—helped byNine-PowerTreaty (1922), whose signatories agreed tonail wide-openOpen Door inChina

– Conference important, but:

» Norestrictions onconstruction of smaller warships» Congress madenocommitment touse ofarmed force

• Kellogg-BriandPact (1928):– Secretaryof stateFrankB.Kellogg won Nobel PeacePrizeforhis role;Kellogg signed Pactwith French foreign minister


• Newparchment peacedelusory:– Defensivewarsstillpermitted– Pactadiplomaticderelictandvirtuallyuseless– ReflectedAmericanmind(1920s):

• Willingtobelulledintofalsesenseofsecurity• Sameattitudeshowedupinneutralismof1930s

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V.HikingtheTariffHigher• Businesspeople soughttokeepU.S.markettothemselvesbythrowing uptariffwalls– Fordney-McCumberTariffLaw:

• Lobbyistswantedtoboostaveragefrom27%to38.5%,almostashighasTaft'sPayneAldrichTariffof1909

• Dutiesonfarmproduceincreased• Flexibility:presidentcouldincreaseordecreasedutiesasmuchas50%

• HardingandCoolidgemorefriendlytoincreasesthanreductions

V.HikingtheTariffHigher(cont.)

• Insixyears,theyauthorized32upwardcharges• Duringsametime,theyorderedonlyfivereductions

– High-tariffcoursesetoffchainreaction:• Europeanproducersfeltsqueeze• ImpoverishedEuropeneededtosellitsmanufacturedgoodstoUnitedStatestobeabletorepaywardebts

• AmericaneededtogiveforeigncountriesachancetomakeaprofitinordertobuyU.S.exports

• Internationaltrade,Americansslowtolearn,atwo-waystreet

V.HikingtheTariffHigher(cont.)

• Americanscouldnotselltoothersunlesstheyboughtfromthem—orlentthemmoreU.S.dollars

• TariffsagametwocouldplayasEuropeansrespondedwithhighertariffs

• WholeEuropean-Americantariffbattledeepenedinternationaleconomicdistress,providingonemorerungonladderbywhichAdolfHitlerscrambledtopower

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VI.TheStenchofScandal

• Loosemorality andget-rich-quickism ofHarding eraresulted inseriesofscandals:

• 1923ColonelCharlesR.ForbesforcedtoresignasheadofVeteransBureau

– Lootedgovernment of$200 million, chiefly inbuilding ofveterans' hospitals

– Sentenced to twoyears in federalpenitentiary

• TeapotDomescandal:– Involvedpriceless naval oil reserves atTeapot Dome(Wyoming) andElkHills (California)

VI.TheStenchofScandal(cont.)

– Secretaryof interior Albert Fall induced secretaryofnavytotransfer properties to Interior Department

– Harding signed secret order– Fall leased lands tooilmen HarrySinclair andEdwardDohenybut notuntil he received bribe (“loan”) of$100,000fromDohenyand about three times thatamount fromSinclair

– Teapot Dome finally cametowhistling boil» Fall, Sinclair, andDoheny indicated in1924

» Case draggedonuntil 1929» Fall found guilty oftaking bribe, sentenced tooneyearin jail

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» Twobribe givers acquitted while bribe takerconvicted» Sinclair served several months in jail forhaving“shadowed” jurors and for refusing to testify beforeSenatecommittee

– Acquittal ofSinclair andDohenyundermined faith incourts

• ScandalofAttorneyGeneralDaugherty:– Senate investigation (1924)of illegal sale ofpardons andliquor permits

– Forced to resign, tried in1927, but released after jury twicefailed toagree


• Harding spared fullrevelation ofiniquities:– EmbarkedonspeechmakingtouracrosscountryallthewaytoAlaska• Onreturn,hediedinSanFranciscoonAugust2,1923

– Brutalfact:Hardingnotstrongenoughforpresidency—ashehimselfprivatelyadmitted

– ToleratedpeopleandconditionsthatsubjectedRepublictoitsworstdisgracesincedaysofPresidentGrant

VII.“SilentCal”Coolidge

• VicePresident Coolidge sworn intooffice byhisfather:

• EmbodiedNewEnglandvirtuesofhonesty,morality,industry,andfrugality

• Seemedtobecrystallizationofcommonplace• Hadonlymediocrepowersofleadership• Speechesinvariablyboring• TruetoRepublicanphilosophy,hebecame“highpriestofgreatgodBusiness”

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VII.“SilentCal” Coolidge(cont.)

• Hands-offtemperament;apostleofstatusquo• ThriftynaturecausedhimtosympathizewithSecretaryofTreasuryMellon'sefforttoreducetaxesanddebts

• CoolidgeslowlygaveHardingregimebadlyneededmoralfumigation

• Coolidgenottouchedbyscandals

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VIII.FrustratedFarmers

• Farmersinboom-or-bust cyclein post-wardecade– Peacebrought:

• Endtogovernment–guaranteedhighpricesandmassivepurchasesbyothernations

• Foreignproductionreenteredstreamofworldcommerce

– Machines:• Threatenedtoplowfarmersunderavalancheofoverabundantcrops

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VIII.FrustratedFarmers(cont.)

• Gasoline-enginetractorrevolutionizedfarms:– Could grow bigger cropson larger areas– Improvedefficiency andexpanded acreagepiled upmoreprice-dampening surpluses

– Withering depression swept through agricultural districts in1920s, when one farmin four sold fordebtor taxes

• Schemesaboundedforbringingrelieftohard-pressedfarmers:

– Bipartisan “farmbloc” fromagricultural states coalesced inCongress in1921 andsucceeded ingetting somehelpfullaws passed

VIII.FrustratedFarmers(cont.)

• Capper-VolsteadAct:– Exempted farmers' marketing cooperatives fromantitrustprosecution

• McNary-HaugenBill (1924-1928):– Sought toboost agricultural prices byauthorizinggovernment tobuyupsurpluses andsell them abroad

– Government losses tobemadeupbyspecial taxon farmers

– Congress twicepassed bill– Coolidge twice vetoed it– Farmprices stayeddown; farmers' political temperaturesstayedhigh, reaching feverpitch in election of1924

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IX.AThree-WayRacefortheWhiteHousein1924

• Election of1924:– Republicansnominated“SilentCal” atsummerconventioninCleveland

– DemocratshaddifficultychoosingcandidateatconventioninNewYorkbecausesplitby:• “Wets” vs.“drys”• Urbanitesvs.farmers• Fundamentalistsvs.Modernists• Northernliberalsvs.southernstand-patters• Immigrantsvs.old-stockAmericans

IX.AThree-WayRacefortheWhiteHousein1924(cont.)

• DemocratsfailedbyonevotetopassresolutioncondemningKuKluxKlan

• Deadlockedforunprecedented102ballots,conventionturnedtoconservativeWallStreetlawyerJohnW.Davis

• Fieldwide-openforaliberalcandidate:– Senator Robert (“Fighting Bob”) LaFollette sprang forth tolead newProgressive party

– Gained endorsement ofAmerican Federation ofLabor– Support fromshrinking Socialist party– Farmershis major constituency


– LaFollette'sProgressiveparty:• Fieldedonlyapresidentialticket• Nocandidatesforlocaloffice• ProvedshadowofrobustprewarProgressivecoalition• Platformcalledforgovernmentownershipofrailroadsandreliefforfarmers

• Lashedoutatmonopolyandantlaborinjunctions• UrgedconstitutionalamendmenttolimitSupremeCourt'spowertovoidlawspassedbyCongress

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• Election returns:• LaFollettepollednearlyfivemillionvotes• “CautiousCal” andoil-smearedRepublicansover-whelmedDavis:15,718,211to8,385,283

• Electoralcountstoodat382forCoolidge,136forDavis,andthirteenforLaFollette,allfromhishomestateofWisconsin(seeMap31.1)

• ProsperityunderminedLaFollette'sreformmessage

Map 31-1 p728

X.Foreign-Policy Flounderings• Isolation continued toreign inCoolidge era:

• SenatenotallowAmericatoadheretoWorldCourt• Coolidgehalfheartedlyandunsuccessfullypursuedfurthernavaldisarmament

• InterventioninCaribbeanandCentralAmerica:– Troops withdrawn (aftereight-year stay)fromDominicanRepublic in1924

– Remained inHaiti (1914-1934)– America inNicaragua intermittently since 1909;Coolidgebriefly removed troops in1925, but in 1926hesent thembackwhere theystayed until 1933

– Oil companies clamored formilitary expedition toMexico in1926, butCoolidge resisted; U.S.-Mexicantensions increased

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X.Foreign-Policy Flounderings(cont.)

– Internationaldebtsovershadowedallforeign-policyproblemsin1920s:• Complicatedtangleofprivateloans,Alliedwardebts,andGermanreparationspayments(seeFigure31.2)

• 1914:U.S.A.adebtornationtosumof$4billion• 1922:U.S.A.acreditornationtosumof$16billion

Figure 31-2 p729

X.Foreign-Policy Flounderings(cont.)

• Americaninvestorsloaned$10billiontoforeignersin1920s,butmostinvestmentremainedwithinU.S.A.

• Keyknotindebttanglewas$10billionU.S.TreasuryhadloanedtoAlliesduringwar

– Allies protested U.S.demand for repayment asunfair– FrenchandBritish stressed theyhad suffered tremendouslosses against common foe

– America, theyargued, should writeoff loans aswar costs– Borrowed dollars fueled wartime boom inU.S.economy,where nearly allAllied purchases hadbeen made

– Final straw, protested Europeans, wasAmerica's postwartariffs made italmost impossible forEuropeans tosell goodstoearndollars topaydebts

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XI.UnravelingtheDebtKnot

• Allied debtsaffected policyonreparations:– FrenchandBritishdemanded$32billioninreparationspaymentsfromGermany

– AllieshopedtousemoneytosettlewardebtssinceU.S.A.demandedrepayment

– AsGermanysufferedtremendousinflation,someEuropeansproposeddebtsandreparationsbescaleddownorevencanceled

– Coolidgerejectedanyideaofdebtcancellation

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XI.UnravelingtheDebtKnot(cont.)

• DawesPlan (1924):• NegotiatedbyCharlesDawes,abouttobeCoolidge'srunningmate

• RescheduledGermanreparationspayments• OpenedwayformoreprivateAmericanloanstoGermany

• Wholefinancialcyclebecamemorecomplicated:– U.S.bankers loaned money toGermany,

– Germanypaid reparations toFranceandBritain,– FormerAllies paidwar debts toUnited States

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XI.UnravelingtheDebtKnot(cont.)

• WhenU.S.loansdriedupaftercrashof1929,jungleofinternationalfinancequicklyturnedtodesert

• PresidentHerbertHooverdeclaredone-yearmoratoriumin1931,butmostdebtorssoondefaulted

– Except“honest little Finland,” which struggled alongmakingpayments until last ofdebtdischarged in1976

• UnitedStatesneverdidgetitsmoney,butharvestedbumpercropofillwill

XII.TheTriumphofHerbertHoover,1928

• 1928presidential race:– Coolidgedecidednottorun– HerbertHooverbecameRepublicancandidate:

• Nominatedonplatformofprosperityandprohibition

– DemocratsnominatedAlfredC.Smith• “Al(cohol)Smith,” soakinglyanddrippingly“wet”whencountrystilldevotedto“nobleexperiment”ofprohibition

• Seemedtobeabrasivelyurban• WasRomanCatholic

XII.TheTriumphofHerbertHoover(cont.)

– Radioplayedkeyroleincampaignforfirsttime:– HelpedHoovermorethanSmith

– Hooverdecriedun-American“socialism”• Preached“ruggedindividualism”• Neverhavingbeenelectedtopublicoffice,hewasthin-skinnedinfaceofcriticism

• Didnotadapttogive-and-takeofpoliticalaccommodation• Realpowerlayinhisintegrity

– Hishumanitarianism– Hispassion forassembling facts

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– Hisefficiency– His talent foradministration– Hisability to inspire loyalty inclose associates who calledhim“theChief”

• Hooverbestbusinessperson'scandidate:– Self-made millionaire, he recoiled fromanythingsuggestingsocialism, paternalism, or“planned economy,”

– Yetas secretary ofcommerce,heexhibited someprogressiveinstincts:

» Endorsed labor unions» Supported regulation ofradio broadcasting industry» Flirted with idea ofgovernment-owned radio

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– Indicationsoflow-levelcampaigners:• ReligiousbigotryagainstSmith'sCatholicism

– White House would becomebranchofVaticanwith “Rum,Romanism, and Ruin”

• Southshiedawayfrom“cityslicker”AlSmith– Electionreturns:

• Hoovertriumphedinlandslide:– Bagged 21,391,993 popular votes toSmith's 15,016,169– Electoral countof444 toSmith's 87

• BigRepublicanvictory;HooversweptfiveformerConfederatestatesandallBorderStates(seeMap31.2)

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Map 31-2 p731

XIII.PresidentHoover'sFirstMoves

– Hoover'sself-helpresponsestounorganizedwageearnersanddisorganizedfarmers

– AgriculturalMarketingAct(June1929):• Designedtohelpfarmershelpthemselvesthroughproducers' cooperatives

• SetupFederalFarmBoardwithrevolvingfundof½billiondollarsatitsdisposal

• Moneylenttofarmorganizationsseekingtobuy,sell,andstoreagriculturalsurpluses

XIII.PresidentHoover'sFirstMoves(cont.)

– In1930FarmBoardcreated:• GrainStabilizationCorporationandCottonStabilizationCorporation

• Bolstersaggingpricesbybuyingupsurpluses• Suffocatedbyavalancheoffarmproduce

– HooverduringcampaignpromisedtocallCongressintosessiontobringabout“limited”changeintariff

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• Hawley-Smoot Tariff (1930):– BytimepassedbybothhousesofCongress:

• Turnedouttobehighestprotectivetariffinnation'speacetimehistory

• Averagedutyonnon-freegoodsraisedfrom38.5%tonearly60%

• Toforeigners,itwasblowbelowtradebelt:– Seemed like declaration ofeconomic waronentire world– Reversed promising worldwide trend toward reasonabletariffs


– Plunged both America andother nations deeper into depression thathadalready begun

– Increased international financial chaosand forcedUnitedStates further into bogofeconomic isolationism

– And economic isolationism, both athome andabroad, played intohands ofhate-filled Germandemagogue, Hitler

XIV.TheGreatCrashEndstheGoldenTwenties

– Speculativebubble:• Fewpeoplesensedpermanentplateauofprosperitywouldsoonbreak

• Pricesonstockexchangecontinuedtospiralupward• Createdfool'sparadiseofpaperprofits• Afewtriedtosoundwarnings

– CatastrophiccrashinOctober1929:• PartiallycausedbyBritishwhoraisedinterestrates• Foreigninvestorsanddomesticspeculatorsbegantodump“insecurities”

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XIV.TheGreatCrashEndstheGoldenTwenties (cont.)

• TensionsbuilttopanickyBlackTuesdayofOctober29,1929:

– 16,410,030 shares of stocks sold in save-who-may scramble– Wall Streetbecamewailing wall asgloom anddoomreplacedboom

– Suicides increased alarmingly– Unbelievable losses in blue chipsecurities– Byendof1929, stockholders lost $40billion inpapervalues(seeFigure 31.3)

Figure 31-3 p733

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• Stock-marketcollapseheraldedbusinessdepression:– Athome andabroad– Most prolonged andprostrating inAmerican orworldexperience

– Noother industrialized nation suffered sosevere asetback– Endof1929: fourmillion workers jobless– Twoyears later, figurehad tripled– Hungryanddespairing workers pounded pavements in search ofwork

– Misery andgloom incalculable– Over5,000 bankscollapsed in first three years

– Carrying down with themsavings oftens of thousands ofordinary citizens


– Countless thousands lost homes and farms to foreclosure– Breadlines formed; soup kitchens dispensed food– Families felt stress, as jobless fathers nursed guilt andshame atnot beingable toprovide for family

– Breadless breadwinners blamed themselves forplight– Mothers nursed fewerbabies asbirthrate dropped

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XV.HookedontheHornofPlenty• WhatcausedGreat Depression?

– Overproductiononbothfarmandfactory• Depressionof1930soneofabundance,notwant• “Greatglut”or“plagueofplenty”• Nation'sabilitytoproducegoodsclearlyoutrancapacitytoconsumeorpayforthem

• Toomuchmoneygoingintohandsofwealthy:– Who invested it in factories and otheragencies ofproduction– Notenough going intosalaries and wages to revitalizepurchasing power

XV.HookedontheHornofPlenty(cont.)

– Overexpansion:• Ofcredit(installment-plans)overstimulatedproduction• Newlaborsavingtechnologiescausedunemployment

– Economicanemiaabroad:• BritainandContinentneverfullyrecoveredfromWWI• Chain-reactionfinancialcollapseinEurope• Internationaltradedeclinedbecauseoftariffs• Europeanuncertaintiesoverreparations,wardebts,anddefaultsonloansowedtoAmerica

• ManyoftheseconditionscausedbyUncleSam'snarrow-visionedpolicies


– Nature:droughtscorchedMississippivalleyin1930• Thousandsofhomesandfarmssoldatauctionfortaxes

• Farmtenancyorrental—aspeciesofpeonage—spreadamongbothwhitesandblacks

– By1930sdepressionhadbecomenationalcalamity• Manycitizenslosteverything• Wantedtowork—buttherewasnowork

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• America's “uniqueness” nolonger seemedsounique, noritsManifestDestiny somanifest:– DepressionabafflingwraithAmericanscouldnotgrasp

– Initiativeandself-respectstifled– Manysleptintin-and-papershantytownscynicallynamedHoovervilles

– FoundationsofAmerica'ssocialandpoliticalstructuretrembled

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XVI.RuggedTimesforRuggedIndividualists

• Hoover's exaltedreputation aswonder-workerandefficiency engineer crashed– WouldhaveshoneinprosperousCoolidgeyears– GreatDepressionprovedtobebeyondhisengineering talents• Distressedbywidespreadmisery• As“ruggedindividualist,”heshrankfromheresyofgovernmenthandouts

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XVI.RuggedTimesforRuggedIndividualists (cont.)

– Convincedthatindustry,thrift,andself-reliancewerevirtuesthatmadeAmericagreat• Fearedthatgovernmentdolingoutdoleswouldweaken,perhapsdestroy,nationalfiber

• Reliefbylocalgovernmentagenciesbrokedown• Hooverfinallyhadtoreluctantly:

– Turn fromdoctrine of log-cabin individualism and

– Acceptproposition thatwelfare ofpeople during anationalcatastrophe adirectconcern ofnational government

XVI.RuggedTimesforRuggedIndividualists (cont.)

• Hooverworkedoutcompromisebetween– Old hand-offphilosophy– And “soul-destroying” directdole being used inEngland– Hewould assist hard-pressed railroads, banks, and rural creditcorporation

» Iffinancial health restored attop ofeconomic pyramid» Unemployment would be relieved atbottom on trickle-down basis

– Partisancriticssneeredat“GreatHumanitarian”

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XVI.RuggedTimesforRuggedIndividualism (cont.)

– MostofcriticismofHooverunfair:• Hiseffortsprobablypreventedmoreseriouscollapse• Hisexpendituresforrelief,revolutionaryforday,pavedpathforenormousfederaloutlaysofhissuccessor,FranklinRoosevelt

XVII.HooverBattlestheGreatDepression

• Hoover's “trickle-down” philosophy:– RecommendedCongressvoteimmensesumsforusefulpublicworks• SecuredfromCongressappropriationstotaling$2.25billionforsuchprojects

• MostimposingofpublicenterpriseswasgiganticHooverDamonColoradoRiver

– Hugeman-made lakeforpurposes ofirrigation, flood control,andelectric power

– Sternlyfoughtallschemeshethought“socialistic”

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XVII.HooverBattlestheGreatDepression (cont.)

• ConspicuouswasMuscleShoalsBill:– Designed todamTennessee River– Hevetoedmeasure because heopposed government sellingelectricity incompetition with private companies

– In1932CongressrespondedtoHoover'sappeal:• EstablishedReconstructionFinanceCorporation(RFC):

– Provide indirect relief byassisting insurance companies,banks, agricultural organizations, railroads, and evenhard-pressed stateand local governments

– Topreserve individual character, no loans to individuals


– “Pump-priming” loans helped, butprojects largely self-liquidating

– Government profited totune ofmanymillions ofdollars– Giantcorporations also benefited

• IronythatthriftyandindividualisticHooveractuallysponsoredprojectwithstrongNewDealishflavor


• Norris-LaGuardiaAnti-InjunctionAct(1932):– Outlawed “yellow-dog” (antiunion) contracts– Forbade federal courts to issue injunctions to restrainstrikes, boycotts, andpeaceful picketing

• Hoover didinaugurate newpolicy:• Byendofterm,hehadstarteddownroadtowardgovernmentassistanceforneedycitizens—aroadFranklinRooseveltwouldtravelmuchfarther

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• Hoover's woes:– IncreasedbyhostileCongress– Republicanmajorityprovedhighlyuncooperative– In1930,DemocratsgainedcontrolofHouseandalmostofSenate

– InsurgentRepublicanscould—anddid—combinewithDemocratstoharassHoover

– SomeofHoover'stroublesdeliberatelymanufacturedbyCongress

XVIII.RoutingtheBonusArmyinWashington

• Veterans ofWWIhard-hit bydepression:• IfHawley-SmootTariffa“bonus” toindustry,• Veteranswantedearlypaymentof1924“bonus”scheduledtobepaidin1945

• ManyveteranspreparedtogotoWashington– Todemand immediate paymentofentirebonus– “Bonus Expeditionary Force” (BEF)ofsome 20,000 went tocapital in summer of1932

– Erectedshacks onvacantlots—a gigantic “Hooverville”– After Congress voteddown bonus bill, BEFordered to leave

– 6,000 left;Hoover then ordered army toremove rest

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XVIII.RoutingtheBonusArmyinWashington(cont.)

– GeneralDouglasMacArthurledefforttooustBonusArmywithbayonetsandteargas• UsedfarmoreforcethanHooverplanned• Brutalepisodebroughtadditionalabuseononce-popularHoover

– TimeripeningforDemocraticParty—andFranklinD.Roosevelt—tocashinonHoover'scalamities

XIX.JapaneseMilitaristsAttackChina

• Depression increased international difficulties• Militaristic Japanstole FarEasternspotlight:

• September,1931:JapaneseimperialistslungedintoManchuria

• AmericahadstrongsentimentalstakeinChina,butfewsignificanteconomicinterests

• Americansstunnedbyactofnakedaggression– Flagrant violation ofLeagueofNations covenant andotherinternational agreements solemnly signed byTokyo

– Not tomention American sense of fairplay

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XIX.JapaneseMilitaristsAttackChina(cont.)

– YetWashingtonrebuffedLeagueattemptstosecureU.S.cooperationineconomicpressureonJapan

– WashingtonandSecretaryofStateHenryL.Stimsondecidedtofireonlypaperbullets• So-calledStimsondoctrine(1932):

– Declared United Stateswould not recognize anyterritorialacquisitions achieved by force

– Righteous indignation—or preach-and-run policy—wouldsubstitute forsolid initiatives

– VerbalslapnotdeterJapan'smilitarists• BombedShanghai(1932)killingmanycivilians

XIX.JapaneseMilitaristsAttachChina(cont.)

– Norealsentimentforarmedinterventionamongdepression-riddenAmericans,whoremainedstronglyisolationistduringthe1930s

– CollectivesecuritydiedandWorldWarIIbornin1931inManchuria

XX.HooverPioneerstheGoodNeighborPolicy

• Relations wAmerica's southern neighbors:– Hooverinterestedinoften-troublednationsbelowRioGrande

– Afterstockmarketcrashof1929:• EconomicimperialismlesspopularathomeinU.S.A.

– Hooveradvocatedinternationalgoodwill• StrovetoabandoninterventionisttwistgivenMonroeDoctrinebyTheodoreRoosevelt

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XX.HooverPioneers theGoodNeighborPolicy (cont.)

– NegotiatedwithHaitiforwithdrawalofU.S.troopsby1934

– In1933,lastU.S.marinesleftNicaraguaafteralmostcontinuousstayofsometwentyyears

– Hooverengineered foundationstonesofGoodNeighborpolicy• Uponthem,roseimposingedificeundersuccessor,FranklinRoosevelt

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