01:512:104 Lecture 33: Chapter 33
16 May 2018
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Chapter 33 - The Politics of Boom and Bust 1920-1932
The Republican "Old Guard" Returns
• Warren G. Harding looked presidential, but was often overwhelmed with his presidency
o He was unable to detect how bad his evil associates were
• Harding did promise to bring the "best minds" together
o Charles Evans Hughes- Secretary of State
▪ Masterful, imperious, incisive, and brilliant
o Andrew Mellon- Secretary of Treasury
▪ Multimillionare and a collector of art
o Herbert Hoover- Secretary of Commerce
▪ Brought his second rate cabinet post to a first rate importance
▪ Brought up foreign trade for the US manufacturers
• These "best minds" were offset by two of the worst
o Senator Albert B. Fall- Secretary of Interior
▪ Scheming anticonsevrationist
o Harry M. Daugherty- Attorney General
▪ Was supposed to prosecute wrongdoers
GOP Reaction at the Throttle
• Harding was a perfect "front" for enterprising industrialists
o old order came back into being
o hoped to improve the business of laissez-faire
▪ gov't would help guide business to greater profits
• Made courts and administrative bereaus more friendly to their cause
o Harding lived less than three out of four years in office, but apointed four out of nine justices
o some of his choices ended up going against popular currents for the next two decades
o a fortunate choice was Taft who performed his duties and was more liberal about them than his
associates
• Supreme Court killed some progressive laws in the early 1920's
o reverseed its own reasoning in cases like Adkins v. Children's Hospital and Muller v. Oregon (which
stated that women were in need of protection in the workplace)
o invalidated a minimum wage law for women
▪ because women now had the vote, they were now equal to men and therefore could no longer be
protected in special legislation
o caused controversy
• Corporations were better off under Harding
o anti-trust laws were often ignored, circumvented, or feebly enforced
o encouraged to regulate themselves rather than be regualted
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find more resources at oneclass.com
The Aftermath of War
• Wartime government controls on the economy were swiftly dismantled.
• The War Industries Board dissappeared and with that progressive hopes for more government regulation
of big business disappeared.
• Washington returned the railroads to private management in 1920.
• Congress passed the Esch-Cummins Transportation Act of 1920
o encouraged private consolidation of the railroads and pledged the Interstate Commerce Commision to
guarantee their profitability.
• The Merchant Marine Act of 1920 authorized the Shipping Board, which controlled about fifteen hundred
vessels, to dispose of much of the hastily built wartime fleet at bargain-basement prices.
• Under the La Follette Seaman's Act of 1915 American shipping could not thrive in competition with
foreigners.
• Labor was suddenly deprived of its wartime crutch of friendly gov't support.
• A bloody strike in the steel industry was ruthlessly broken in 1919, partly by exploiting ethnic and racial
divisions among the steelworkers and partly by branding the strikers as dangerous "reds"
• The Railway Labor Board ordered a wage cut of 12% in 1922 provoking a 2 month strike.
• Unions wilted in the hostile political environment and membership decreased by nearly 30% between
1920 and 1930
• In 1921 Congress generously created the Veterans Bureau, authorized to operate hospitals and provide
vocational rehibilitation for the disabled.
• Veterans quickly organized into pressure groups.
o The American Legion had been founded in 1919. The legion soon became distinguished for its militant
patriotism, conservatism and zealous antiradicalism.
o The legion also became notorious for its aggressive lobbying for veterans' benefits. The former
servicemen demanded compensation to make up for the wages they had "lost" when they fought.
▪ In 1924 Congress passed the Adjusted Compensation Act which gave every former soldier a paid-up
insurance policy due in twenty years- adding about $3.5 billion to the total cost of the war.
America Seeks Benefits without Burdens
• U.S. rejects Treaty of Versailles & therefore still at war w/ Germany, Austria, & Hungary almost 3 yrs after
the armistice
• July 1921, Congress passes a joint resolution declaring the war officially over
• Harding
o Isolationism
▪ Harding administration continued to regard the League of Nations as unclean, refusing (@ 1st) to support
the League's world health program
▪ As a rivalry between Britain & U.S. in the Middle East over oil-drilling concessions hightened, Harding
couldn't keep his back turned to the rest of the world completely
▪ experts realized that oil would be as much needed for victory in battles of the future as it was during WWI
find more resources at oneclass.com
find more resources at oneclass.com
▪ Secretary Hughes secured the right to share in the exploitation of Middle East for U.S. oil companies
o Disarmament
▪ Harding was pushed by businesspeople that were unwilling to pay out of their pockets for $ to finance the
naval building program started during the war
Hiking the Tariff Higher
• A comparable lack of realism afflicted foreign economic policy in the 1920s.
• Businesspeople sought to keep the prosperous home market to themselves by putting up insurmountable
tariff walls around the US
• They feared a flood of cheap goods from recovering Europe, esp. during the brief but sharp recession of
1920-1921
• Congress passed the Fordney-McCumber Tariff Law in 1922
• Schedules were boosted from the average of 27% under the Underwood Tariff of 1913 to an average of
38.5%
• Duties on farm produce were increased and the principle was proclaimed that the general rates were
designed to equalize the cost of American and foreign production.
• The president was authorized with the advice of the factfinding Tariff Commission to reduce or increase
duties by as much as 50%
• Presidents Harding and Coolidge were far more friendly to tariff increases than to reductions.
• In 6 years they authorized 32 upward changes.
• The high-tariff course set of a chain reaction.
o European producers felt the spueeze. An impoverished Europe need to sell its manufactured goods to the
US if it hoped to achieve economic recovery and to pay its huge war debt.
o America needed to give foreign nations a chance to make a profit from it so that they could buy its
manufactured goods and repay debts.
• The American example spurred European nations to pile up higher barriers themselves
The Stench of Scandal
• 1923- Colonol Charles R. Forbes was head of the Veterans Bureau but had to resign when caught
embezzling
o Had once deserted the army
o Appointed by Harding
o Took about 200 million, mostly from hospitals
o Got 2 yrs. in fed. penitentiary
• 1921- Teapot Dome Scandal
o There were 2 naval oil reserves
▪ Teapot Dome, Wyoming
▪ Elk Hills, California
o Albert B. Fall was secretary of navy
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Chapter 33 - the politics of boom and bust 1920-1932. In 1921 congress generously created the veterans bureau, authorized to operate hospitals and provide vocational rehibilitation for the disabled: veterans quickly organized into pressure groups, the american legion had been founded in 1919. The legion soon became distinguished for its militant patriotism, conservatism and zealous antiradicalism: the legion also became notorious for its aggressive lobbying for veterans" benefits. The former servicemen demanded compensation to make up for the wages they had lost when they fought. In 1924 congress passed the adjusted compensation act which gave every former soldier a paid-up insurance policy due in twenty years- adding about . 5 billion to the total cost of the war. America seeks benefits without burdens: u. s. rejects treaty of versailles & therefore still at war w/ germany, austria, & hungary almost 3 yrs after the armistice.
