The Politics of Boom and Bust

Essential Facts

• American politics during the Roaring Twenties was dominated by three Republicans — Warren G. Harding, Calvin Coolidge, and Herbert Hoover, and a return to Conservative, business-friendly policies.
• Following World War I, veterans struggled financially and called for government aid. This eventually led to a clash between Veterans and the U.S. military.
• Disarmament became a key international issue as the U.S. and other nations sought to maintain military dominance through a series of treaties.
• The U.S. withdrew from involvement in world affairs, and high tariffs on foreign goods were enacted that hurt domestic and foreign producers.
• The Stock Market Crash occurred in October 1929, initiating the Great Depression.
• Herbert Hoover responded to the plight of farmers with policies that failed to alleviate their problems, including the Smoot-Hawley Tariff (1930).
• European banks started to fail in 1931 as the Great Depression spread.
• Japan challenged the League of Nations in 1931 by invading Manchuria.
• In 1932, American veterans formed the Bonus Army, which was engaged by the U.S. Army in the Battle of Anacostia Flats.

Significance

Foreign and domestic policy during the Roaring Twenties is important to American History because the nation transitioned toward Isolationism and pulled back from progressive reforms, contributing to economic prosperity. However, the Great Depression overshadowed the prosperity, forcing the government to intervene and setting the stage for Franklin D. Roosevelt’s New Deal.

Republican Presidents of the 1920s

• Three Republican Presidents led the U.S. during the 1920s: Warren G. Harding, Calvin Coolidge, and Herbert Hoover.
• The decade started with a recovery from the economic slump after World War I, followed by a period of prosperity.
• This prosperity ended with the sudden onset of the Great Depression.
• Republicans focused on cooperating with big businesses instead of relying on government intervention to solve problems.
• Some government officials exploited public resources for personal gain.
• The U.S. retreated from the international involvement it had during World War I, returning to a policy of military unpreparedness and political Isolationism.

Warren G. Harding (1865–1923) — Harding was the 29th President of the United States (1921–1923). He was known for his campaign slogan, “Return to Normalcy,” and his desire for stability after World War I. His administration focused on pro-business policies, reducing taxes, and limiting government intervention. However, his Presidency was marred by scandals, such as the Teapot Dome Scandal, and he died in office in 1923.

Calvin Coolidge (1872–1933) — Coolidge was the 30th President of the United States (1923–1929), who assumed office after Warren G. Harding’s death. Known for his quiet demeanor, “Silent Cal” was a champion for limited government and business-friendly policies. He reduced taxes during the Roaring Twenties, and his Presidency focused on economic growth and stability, though critics argue he overlooked underlying issues leading to the Great Depression.

Herbert Hoover (1874–1964) — Hoover was a prominent humanitarian and administrator. He led the U.S. Food Administration during World War I, managing food supplies to support the war effort. Known for his efficient organization and promotion of voluntary conservation, he later became the 31st President of the United States, serving from 1929 to 1933 during the onset of the Great Depression.

Isolationism — Isolationism refers to a foreign policy approach in which a nation seeks to minimize involvement in international conflicts, alliances, and political affairs, focusing instead on domestic priorities. In U.S. history, Isolationism was prominent after World War I, driven by disillusionment with global entanglements and a desire to avoid future wars. It influenced policies such as the rejection of the League of Nations and the passage of the Neutrality Acts in the 1930s. Isolationism was reduced as World War II intensified, especially after the attack on Pearl Harbor in 1941.

The Republican “Old Guard” Returns

Warren G. Harding: A Charming Yet Ineffective President

• Harding won the Presidential Election of 1920 and took office in 1921.
• He had a friendly, warm personality and enjoyed engaging with people.
• His kindness was evident in his actions, even brushing off ants instead of crushing them.
• Despite his likability, Harding is often viewed as a weak leader who struggled with the demands of the Presidency.

The Ohio Gang

• Harding was similar to Ulysses S. Grant in failing to recognize the corruption in his associates.
• Harding was surrounded by his friends from Ohio, known as the “Ohio Gang,” who were involved in unethical behavior.
• Harding was often described as a “good guy” who liked to be part of the group and did not want to hurt anyone’s feelings.
• His reluctance to say no to his friends made him vulnerable to manipulation by political opportunists.
• A popular saying compared Harding to George Washington, claiming that while Washington could not tell a lie, Harding could not tell a liar.

Ohio Gang — A group of close friends and political supporters of President Harding, many of whom he appointed to high government positions. This group became infamous for corruption and scandals, including the Teapot Dome Scandal, where government officials accepted bribes in exchange for leasing Federal Oil Reserves. Their actions tainted Harding’s presidency, despite his personal popularity, and symbolized the corruption of the 1920s.

Harding’s Cabinet: The Good

• Harding promised to surround himself with the “best minds.”.
• Charles Evans Hughes, who was appointed Secretary of State, was a strong, brilliant, and somewhat conservative leader.
• Andrew W. Mellon, a wealthy Pittsburgh magnate, became Secretary of the Treasury and was known for his art collection, which he later donated to the nation.
• Herbert Hoover, famous for his work in feeding Belgians during World War I, became Secretary of Commerce.
• Hoover, an energetic businessman and engineer, elevated the importance of the Commerce Department and focused on expanding foreign trade for U.S. manufacturers.

Charles Evans Hughes (1862–1948) — A prominent American statesman, lawyer, and politician (1862–1948), Hughes served as Governor of New York (1907–1910), Associate Justice of the U.S. Supreme Court (1910–1916), Secretary of State (1921–1925), and Chief Justice of the U.S. Supreme Court (1930–1941). He was the Republican candidate for President in 1916, narrowly losing to Woodrow Wilson. As Secretary of State, Hughes played a key role in post-World War I diplomacy, notably at the Washington Naval Conference, where he advocated for arms reduction and international cooperation. His judicial tenure was marked by efforts to balance New Deal reforms with the Constitution.

Andrew Mellon (1855–1937) — Mellon was a wealthy industrialist and U.S. Secretary of the Treasury from 1921 to 1932. He advocated for pro-business policies, including tax cuts, reduced government spending, and support for Laissez-Faire Economics. His fiscal policies, known as “Mellonomics,” were credited with stimulating the economy during the 1920s but later criticized during the Great Depression.

Harding’s Cabinet: The Bad

• Harding’s Cabinet also included corrupt individuals.
• Senator Albert B. Fall from New Mexico, a strong opponent of conservation, was appointed Secretary of the Interior.
• Fall’s appointment was criticized as he was seen as unfit to protect the nation’s natural resources.
• Harry M. Daugherty, a lawyer and part of the Ohio Gang, was made Attorney General.
• Daugherty, known for his corrupt activities, was tasked with prosecuting criminals but was himself involved in illegal activities during Prohibition.

Albert B. Fall (1861–1944) — Secretary of the Interior under President Warren G. Harding, known for his involvement in the Teapot Dome Scandal. He illegally leased federal oil reserves at Teapot Dome, Wyoming, and Elk Hills, California, to private companies in exchange for bribes. Fall was the first U.S. cabinet member to be convicted of a felony while in office.

Harry M. Daugherty (1860–1941) — Attorney General under President Warren G. Harding, implicated in multiple scandals, including allegations of accepting bribes and involvement in illegal liquor permits during Prohibition. Though he was never convicted, Daugherty’s tenure ended in disgrace, contributing to the tarnished reputation of the Harding Presidency.

GOP Reaction at the Throttle

Harding’s Weak Leadership

• Harding was considered weak-willed and easily influenced by industrialists.
• A group of opportunistic individuals took advantage of Harding, and Progressive reforms fell by the wayside.
• This new “Old Guard” sought to have the government actively involved in supporting business growth instead of the old laissez-faire approach.
• The Old Guard achieved their goals by placing allies in key positions, including the courts and administrative agencies, ensuring their control throughout the decade.

Conservative Old Guard of the Republican Party — The Conservative Old Guard of the Republican Party represented the party’s traditional faction during the early 20th Century. This group prioritized business interests, Protective Tariffs, and limited government intervention. They often opposed Progressive reforms and sought to maintain the status quo.

Laissez-Faire — An economic philosophy advocating minimal government intervention in markets, allowing businesses to operate freely based on supply and demand. This principle became central to U.S. policy during the Gilded Age, supporting industrial growth and individual investments. Critics argue it led to monopolies, poor working conditions, and income inequality, prompting calls for reforms.

Harding’s Influence on the Supreme Court

• During his time in office, Harding appointed four of the nine Supreme Court justices.
• Several of his appointees were staunch conservatives who resisted reforms for nearly two decades.
• Harding’s best choice was former President William Howard Taft, who became Chief Justice.
• Taft performed his duties well and was more liberal than expected.

William Howard Taft (1857–1930) — Taft served as the 27th President of the United States (1909–1913) and later as Chief Justice of the Supreme Court (1921–1930), making him the only person to hold both positions. As President, he emphasized Trust Busting, Tariff Reform, and Conservation, continuing many Progressive-era policies. However, his more conservative approach often alienated Progressives, contributing to a split in the Republican Party during the 1912 Election.

Conservative — A political ideology favoring traditional institutions, limited government intervention, and gradual change over rapid reforms. Conservatives often emphasize free-market principles, personal responsibility, and maintaining social order. In U.S. history, conservative movements have influenced policies on taxation, federal power, and social issues. This ideology played a significant role during periods like the 1920s when economic policies favored business growth and limited government regulation.

The Supreme Court and the Reversal of Progressive Legislation

• In the early 1920s, the Supreme Court struck down several progressive laws.
• It invalidated a federal child labor law and rolled back many of labor’s gains.
• The Court also limited government involvement in the economy.
• In Adkins v. Children’s Hospital (1923), the Court overturned Muller v. Oregon, which had previously provided special workplace protections for women.
• The Adkins ruling argued that since women had gained the right to vote through the 19th Amendment, they were now equal to men and no longer required special protection.
• This created a debate over gender differences, asking whether women deserved special treatment or should be treated as equals under the law.
• A similar debate about racial differences would later influence affirmative action policies.

Muller v. Oregon (1908) — Muller v. Oregon was a landmark U.S. Supreme Court case upholding an Oregon law limiting women’s work hours to ten per day in certain industries. The Court ruled the law constitutional, citing women’s physical well-being as essential to public health. The case set a precedent for protective labor laws and featured Louis D. Brandeis’s influential “Brandeis Brief.”

Adkins v. Children’s Hospital (1923) — A Supreme Court decision that struck down a minimum wage law for women in Washington, D.C., ruling it unconstitutional. The Court argued that the law violated the freedom of contract protected by the Fifth Amendment, especially since women now had the right to vote and were seen as equal in this regard. This case marked a retreat from labor reforms and reflected a shift toward economic individualism in the 1920s.

Affirmative Action — A set of policies and practices intended to address historical inequalities and discrimination by promoting equal opportunities in education, employment, and other areas for minorities. It seeks to improve access for underrepresented groups, including racial minorities and women, through measures such as targeted recruitment and consideration of diversity in decision-making. While supporters argue it fosters inclusion and rectifies systemic disparities, critics contend it can lead to reverse discrimination and challenge the principle of meritocracy.

Corporate Expansion and Reduced Regulation Under Harding

• Under Harding, corporations were able to expand and relax due to the lack of government oversight.
• Antitrust Laws were often ignored or weakly enforced by friendly prosecutors in the Attorney General’s office (similar to British Salutary Neglect in the Colonial Era).
• The Interstate Commerce Commission was dominated by people who were sympathetic to railroads.
• Harding’s supporters were focused on administering laws rather than creating new ones.
• Big industrialists took advantage, setting up Trade Associations to reduce competition.
• These Associations, such as those for cement manufacturers, coordinated product standards, advertising, and strategies in dealings with railroads and labor.
• Although the associations often conflicted with Antitrust Laws, Secretary Hoover supported them.
• Hoover believed in the efficiency of voluntary cooperation and encouraged businesses to regulate themselves rather than relying on government regulation.

Antitrust Laws — Antitrust Laws prevent monopolies, promote competition, and restrict unfair business practices. Key laws include the Sherman Antitrust Act (1890), which prohibits monopolistic behavior, and the Clayton Antitrust Act (1914), which targets price discrimination and mergers that stifle competition. These laws aim to protect consumers, ensure market fairness, and prevent corporate dominance in the economy.

Interstate Commerce Commission — The Interstate Commerce Commission (ICC), established in 1887 by the Interstate Commerce Act, was the first federal regulatory agency in the United States. Lawmakers established the Commission to oversee and regulate the railroad industry, ensure fair rates, and prevent discriminatory practices like rebates for favored customers. Over time, its authority expanded to include other forms of transportation. The ICC is an example of early efforts to regulate big businesses and protect public interests.

Trade Associations — Organizations formed by businesses within the same industry to promote their common interests, share information, and establish standards. During the 1920s, trade associations became prominent as businesses sought to collaborate on production methods, pricing, and lobbying efforts. They were part of the shift toward Cooperative Capitalism, where industries worked together to stabilize markets and limit competition without direct government regulation.

Cooperative Capitalism — An economic system where businesses and industries collaborate to regulate competition and stabilize markets without heavy government intervention. This approach gained traction in the 1920s, with Trade Associations playing a role in setting production standards and prices. Proponents argued it created efficiency and economic growth, while critics argued it limited competition and concentrated power within industries, similar to Monopolies.

The Aftermath of War

The End of Wartime Economic Controls

• Government economic controls that were put in place during World War I were quickly removed.
• The War Industries Board was dissolved, ending hopes for continued government regulation of big business.
• In 1920, the government returned control of the railroads to private management.
• Reformers had hoped that wartime government operation of the railroads would lead to permanent government oversight.
• Instead, Congress passed the Esch-Cummins Transportation Act (1920), which encouraged the consolidation of railroads and guaranteed their profitability through the Interstate Commerce Commission.
• The new approach encouraged the railroads’ success instead of trying to protect the public from them, as seen in earlier progressive efforts.

War Industries Board — A government agency established in 1917 to coordinate industrial production during World War I. Under Bernard Baruch’s leadership, the WIB managed resources, set priorities, and streamlined manufacturing to meet military needs. It standardized goods, reduced waste, and maximized efficiency, playing a central role in mobilizing the U.S. economy for war.

Nationalization — The process by which a government takes ownership and control of private industries or assets, often to ensure public access, improve efficiency, or protect national interests. In the U.S., Nationalization has been used during crises, such as government control of railroads during World War I, though it remains controversial due to concerns over efficiency and private property rights.

Esch-Cummins Transportation Act (1920) — A law that returned railroads to private control after their Nationalization during World War I. It aimed to stabilize the railroad industry through federal regulation while encouraging efficiency and profitability. The act also created the Railroad Labor Board to resolve disputes and allowed government loans to railroads, providing a balance between private enterprise and federal oversight.

Railroad Labor Board — A federal agency established under the Esch-Cummins Transportation Act (1920) to mediate disputes between railroad companies and workers. Its purpose was to maintain operations in the railroad industry by resolving wage disputes and working conditions. The Board had the authority to issue recommendations, but its decisions were not always enforceable, leading to tensions and strikes in the 1920s as labor and management often disagreed over its rulings.

The Federal Withdrawal from the Shipping Business

• The government wanted to exit the shipping industry after World War I.
• The Merchant Marine Act (1920) gave the Shipping Board control over about 1,500 vessels and allowed it to sell much of the fleet at low prices.
• The Board operated the remaining vessels with limited success.
• The La Follette Seaman’s Act of 1915 made it difficult for American shipping to compete with foreign shipping.
• Foreign crews were often paid poorly and given substandard food, making them less expensive to maintain.

Seamen’s Act (1915) — It improved working conditions and rights for sailors on U.S. merchant ships. It mandated fair wages, regulated working hours, improved safety standards, and allowed sailors to leave ships in foreign ports. It addressed exploitation and harsh conditions for seamen and was a victory for labor rights in the maritime industry.

Robert M. La Follette (1855–1925) — La Follette, known as “Fighting Bob,” was a Progressive Era politician and reformer who served as Governor of Wisconsin (1901–1906) and U.S. Senator (1906–1925). He supported Progressive Reforms such as the regulation of railroads, the taxation of corporations, and direct democracy measures like the Initiative and Referendum. La Follette’s “Wisconsin Idea” emphasized government accountability and expertise, making his state a model for national reforms.

Merchant Marine — The Merchant Marine is a fleet of commercial ships owned by a nation. During peacetime, it transports goods and passengers. In times of war, it often supports military efforts by carrying troops, supplies, and equipment.

Wisconsin Idea — The “Wisconsin Idea” refers to a Progressive Era reform philosophy originating in Wisconsin under Governor Robert La Follette. It focused on using experts from universities to inform public policy, improve government efficiency, and address social and economic issues. Key aspects included regulation of railroads and utilities, tax reform, and labor protections. The Wisconsin Idea became a model for progressive governance, linking academic research with practical solutions to public problems.

Labor Struggles in the Postwar Decade

• After World War I, workers faced difficulties without government support.
• A violent strike in the steel industry in 1919 was broken, partly by exploiting ethnic and racial divisions and labeling strikers as Communists by calling them “Reds.”
• In 1922, the Railway Labor Board ordered a 12% wage cut, sparking a two-month strike.
• The strike ended when Attorney General Daugherty, aligned with business interests, issued one of the most sweeping injunctions in U.S. history.
• As a result, unions struggled in the hostile political climate, and union membership decreased by nearly 30% between 1920 and 1930.

Great Steel Strike of 1919 — A nationwide strike involving over 350,000 steelworkers demanding better wages, shorter hours, and union recognition. The strike, led by the American Federation of Labor, faced strong resistance from employers and government officials, who labeled the workers as radicals and Communists. The strike ultimately failed.

American Federation of Labor — The American Federation of Labor (AFL) was a major labor organization founded in 1886. It focused on skilled workers and collective bargaining. During World War I, the AFL, under Samuel Gompers, supported the war effort and advocated for workers’ rights, including better wages and shorter hours, while discouraging strikes to ensure industrial stability.

Great Railroad Strike of 1922 — A major labor strike by railroad shop workers protesting wage cuts and poor working conditions. The strike led to widespread disruption of rail services and violence. The Federal Government, siding with the railroads, issued injunctions to suppress the strike as hostility toward organized labor increased.

Injunction — A legal order issued by a court to compel or prevent specific actions. During labor disputes, injunctions were frequently used to restrict strikes, picketing, or union activities. In the early 20th Century, they became a powerful tool for employers and the government to curb organized labor, often increasing tensions between workers and authorities. They were frequently employed by employers to limit organized labor’s power, leading to tensions between workers and the judicial system. The Norris-La Guardia Act (1932) restricted their use in labor cases, favoring workers’ rights.

Veterans and the Rise of the American Legion

• Military veterans were among the few groups to benefit from the war.
• In 1921, Congress established the Veterans Bureau, which operated hospitals and provided vocational rehabilitation for disabled veterans.
• Veterans formed pressure groups to advocate for their rights, and Colonel Theodore Roosevelt Jr. founded the American Legion in Paris in 1919.
• The Legion became known for its patriotism, conservatism, and opposition to radicalism.
• It also lobbied for veterans’ benefits, especially financial compensation.
• They sought “adjusted compensation” to make up for the wages they lost when they left their factory jobs to serve in the military.

Veterans Bureau — A federal agency established in 1921 to provide services and benefits to U.S. military veterans, including medical care, rehabilitation, and pensions. The bureau was damaged due to corruption under Charles R. Forbes, who embezzled funds and engaged in fraud. Despite the scandal, it laid the foundation for modern veterans’ services and eventually became part of the Department of Veterans Affairs.

American Legion — A patriotic organization founded in 1919 by World War I veterans to advocate for veterans’ rights and benefits. The group lobbied for better care, pensions, and educational opportunities for veterans while promoting Americanism and anti-communist values. It helped shape public policy toward veterans in the 20th Century.

Veterans and the Adjusted Compensation Act

• Critics labeled the veterans’ demand for compensation as a “holdup bonus.”
• Veterans used their influence to push Congress into passing a Bonus Bill in 1922, but President Harding vetoed it.
• In 1924, after regrouping, the veterans successfully convinced Congress to pass the Adjusted Compensation Act.
• The Act provided veterans with a paid-up insurance policy that would be paid out in 200 years, totaling about $3.5 billion in additional war costs.
• President Coolidge vetoed the bill, but Congress overrode his veto, ensuring the veterans received their benefits.

Holdup Bonus — A term used by critics to describe the Adjusted Compensation Act of 1924, implying that the law was a form of undue pressure on the government to pay World War I veterans additional compensation. Opponents, including fiscal Conservatives, argued the bonuses were theft of taxpayer money and referred to them disparagingly as a “holdup.” 

Adjusted Compensation Act (1924) — A 1924 law granting World War I veterans bonuses as compensation for wages lost during military service. Veterans received certificates redeemable in 20 years, effectively delaying immediate payouts. Known as the “Bonus Act,” it faced opposition from fiscal Conservatives, including President Calvin Coolidge, who vetoed it. Congress overrode the veto. However, it contributed to the Bonus Army protests during the Great Depression.

America Seeks Benefits Without Burdens

Harding and the Postwar Peace Effort

• The U.S. was still technically at war with Germany, Austria, and Hungary nearly three years after the Armistice due to its rejection of the Treaty of Versailles.
• In July 1921, Congress passed a joint resolution declaring the war officially over.
• The Harding Administration pursued Isolationism, and the Senate’s opposition to the League of Nations helped.
• Harding initially refused to support even the League’s World Health Program, viewing it as undesirable.
• Despite this, the U.S. recognized the League’s importance and sent “unofficial observers” to Geneva, Switzerland, to monitor its activities.

Armistice of November 11, 1918 — The Armistice was an agreement signed between the Allies and Germany that ended fighting on the Western Front in World War I. It took effect at 11 a.m. on November 11, 1918, marking the cessation of hostilities. The armistice required Germany to withdraw troops, surrender military equipment, and accept Allied terms. It paved the way for the Treaty of Versailles and is commemorated as Armistice Day, now Veterans Day in the United States.

Joint Resolution — A legislative measure passed by both the House of Representatives and the Senate, often used for specific purposes such as declaring war, amending the Constitution, or approving budgetary measures. Unlike bills, Joint Resolutions may have a more limited scope but carry the same force of law once signed by the President. They are also used to address urgent or special issues that require immediate attention by Congress.

Rivalry for Middle Eastern Oil

• Harding could not completely isolate the U.S. from global affairs, especially over the Middle East.
• A rivalry developed between America and Britain over oil drilling concessions in the region.
• Experts recognized oil would be essential for future conflicts, and it had been crucial to the Allied victory in World War I.
• Secretary of State Hughes secured rights for American oil companies to share access to oil in the Middle East.

Middle East — A geopolitical region that covers Western Asia and parts of North Africa, including countries such as Saudi Arabia, Iran, Egypt, and Turkey. Historically, it has been viewed as the cradle of civilization and the birthplace of major religions like Judaism, Christianity, and Islam. The term “Middle East” gained widespread usage in the early 20th Century, though it does not have exact boundaries.

Middle East Oil Drilling Concessions — Agreements established primarily in the early to mid-20th Century between Middle Eastern governments and foreign oil companies, granting exploration and extraction rights. Notable examples include the 1901 concession in Persia (now Iran) to the Anglo-Persian Oil Company and the 1933 agreement between Saudi Arabia and Standard Oil of California. These concessions impacted the region’s economic and political importance, leading to substantial foreign involvement in the Middle East.

Harding and the Naval Disarmament Effort

• Harding eventually took steps toward military disarmament.
• Business leaders were reluctant to continue financing the expensive naval building program from the war and pushed Harding to address the issue.
• A dangerous naval arms race was developing between the U.S., Britain, and Japan. 
• Britain still had the world’s largest Navy, but the growing U.S. Navy was close to surpassing it.

Disarmament After World War I — A series of international efforts aimed at reducing military armaments to promote peace and prevent future conflicts. Key events included the Washington Naval Conference (1921–1922), where major powers agreed to limit naval capacities, and the Treaty of Versailles, which imposed severe restrictions on German military forces. These efforts reflected widespread anti-war sentiment but were often undermined by rising global tensions in the 1930s.

Naval Arms Race — A competitive buildup of naval forces, particularly among major powers like Britain, the U.S., and Japan, during the early 20th Century. Following World War I, the Washington Naval Conference was held to slow this race by establishing ratios for battleship and aircraft carrier tonnage. While it was temporarily effective, renewed rivalries and technological advancements in the 1930s reignited competition, contributing to tensions that led to World War II.

Washington Naval Conference

• Public concern in the U.S. over the naval arms race led to the Washington Naval Conference (1921-1922).
• Invitations were extended to all major naval powers except Russia because the U.S. refused to recognize its Communist government.
• The conference had two main goals: achieving naval disarmament and addressing increasing tensions in the Far East.

Far East — A geographic term referring to East Asia and Southeast Asia, including countries such as China, Japan, Korea, Vietnam, and the Philippines. Historically used by Western nations, the term reflects the region’s location relative to Europe. The Far East has been a focal point for trade, cultural exchange, and political conflicts, including events like the Opium Wars, the Boxer War, Japanese expansionism, and the Cold War.

U.S. Naval Proposal

• At the start of the Conference, Secretary of State Hughes surprised delegates by presenting a complete disarmament plan.
• He proposed a 10-year “holiday” on battleship construction and suggested scrapping some of the existing dreadnoughts.
• Hughes suggested that America and Britain maintain equality in battleships and aircraft carriers but that Japan should have a smaller fleet under a 5:5:3 ratio.
• The Japanese ambassador was offended by the proposal.

Battleship — A large, heavily armed warship designed for naval dominance, characterized by thick armor and powerful artillery. Battleships were the centerpiece of naval fleets from the late 19th Century through World War II. They played critical roles in projecting military power but became less dominant with the rise of aircraft carriers and advanced submarines.

Dreadnought — A revolutionary type of battleship introduced by Britain in 1906, named after HMS Dreadnought. It featured an “all-big-gun” design with large-caliber guns and steam turbine engines, making it faster and more powerful than earlier Battleships. The dreadnought’s introduction sparked a global naval arms race, particularly between Britain and Germany, and redefined naval warfare in the early 20th Century.

Power Treaties

• Negotiations led to the creation of the Five-Power Treaty (1922), which included ship ratio agreements but also offered compensation to Japan.
• The Treaty established a 5:5:3 ship ratio for America, Britain, and Japan, respectively.
• The U.S. and Britain agreed they would not fortify their territories in the Far East, including the Philippines, but Japan was allowed to fortify its positions.
• A Four-Power Treaty replaced the Anglo-Japanese Alliance, binding Britain, Japan, France, and the U.S. to maintain the status quo in the Pacific, which pleased Japan.
• The Nine-Power Treaty sought to stabilize China. Signatories committed to maintaining the Open Door Policy, which offered China some economic and political support.

Five-Power Treaty — An agreement reached at the Washington Naval Conference in 1922 between the U.S., Britain, Japan, France, and Italy to limit naval armaments. The treaty set a ratio for capital ship tonnage (5:5:3:1.75:1.75) and restricted the construction of new battleships and aircraft carriers. It was an early effort at arms control.

Four-Power Treaty — A 1921 treaty between the U.S., Britain, Japan, and France, also concluded at the Washington Naval Conference. It replaced the Anglo-Japanese Alliance and committed the signatories to respect each other’s Pacific territories and resolve disputes through negotiation, aiming to maintain stability in the Pacific region.

Nine-Power Treaty — Signed in 1922 at the Washington Naval Conference, this treaty involved the U.S., Britain, Japan, France, Italy, China, Belgium, the Netherlands, and Portugal. It affirmed China’s sovereignty and upheld the Open Door Policy, ensuring equal access to China’s markets for all signatories. The treaty sought to stabilize East Asia but lacked enforcement mechanisms.

Open Door Policy — A U.S. diplomatic initiative proposed by Secretary of State John Hay in 1899 and 1900 that sought to ensure equal trading rights for all nations in China while preserving China’s territorial integrity. It intended to prevent any single power from monopolizing trade within its sphere of influence. The policy reflected U.S. interests in maintaining access to Chinese markets and limiting European and Japanese dominance in the region.

Limitations and Criticism of the Washington Disarmament Conference Outcomes

• The Harding Administration claimed success over the progress toward disarmament.
• However, the treaties did not restrict the construction of smaller warships, and other nations continued to build cruisers, destroyers, and submarines while the U.S. fell behind.
• When Congress ratified the Four-Power Treaty, it made clear that it would not commit to using armed force or joint action, effectively rendering the treaty meaningless.
• The American public appeared content to rely on diplomatic agreements and idealistic hopes for security rather than on military strength and practical realism.

Cruisers — Medium-sized warships designed for long-range operations, often serving as escorts for larger fleets or conducting independent missions. They are faster and more versatile than battleships but carry lighter armor and armament. During the early 20th Century, cruisers were key in scouting, commerce protection, and later in anti-aircraft and missile defense roles.

Destroyers — Small, fast warships primarily designed to escort larger vessels and protect them from smaller, more agile threats like torpedo boats and submarines. They are equipped with torpedoes, guns, and later advanced radar and anti-submarine systems, playing crucial roles in naval warfare, especially during both World Wars.

Submarines — Underwater vessels capable of stealthy operations, armed with torpedoes and sometimes missiles. Submarines became strategically significant during the World Wars for disrupting enemy supply lines and conducting reconnaissance. Their ability to operate covertly transformed naval warfare, challenging traditional surface fleets.

The Kellogg-Briand Pact

• Later in the decade, there was widespread public support in America to outlaw war, believing that nations could avoid conflict by pledging to renounce war as a tool of national policy.
• Secretary of State Frank B. Kellogg, who later won the Nobel Peace Prize for his efforts, was initially skeptical about the idea.
• However, after over 2 million petition signatures were sent to Washington, Kellogg, along with the French French Minister of Foreign Affairs Aristide Briand, signed the Kellogg-Briand Pact in 1928.
• Officially known as the Pact of Paris, the agreement was ratified by 62 nations.

Frank B. Kellogg (1856–1937) — U.S. Secretary of State from 1925 to 1929, known for his role in international peace efforts during the 1920s. Kellogg co-authored the Kellogg-Briand Pact, earning the Nobel Peace Prize in 1929. His work reflected the Interwar Period’s widespread desire to prevent future conflicts through diplomacy and legal agreements.

Kellogg-Briand Pact (1928) — A 1928 international agreement signed by 15 nations, including the U.S., France, and Germany, to renounce war as a means of resolving disputes. Eventually joined by over 60 countries, the pact lacked enforcement mechanisms, limiting its effectiveness in preventing aggression during the 1930s.

Interwar Period — The Interwar Period was the period between World War I (1918) and World War II (1939), marked by significant political, economic, and social changes worldwide. It saw the rise of totalitarian regimes in Germany, Italy, and Japan, economic turmoil during the Great Depression, and the failure of the League of Nations to maintain peace. The period was characterized by unresolved tensions from World War I, shifts in global power, and the build-up to World War II.

The Kellogg-Briand Pact: A False Sense of Security

• The Kellogg-Briand Pact proved to be ineffective.
• It still allowed defensive wars, but any aggressor could easily claim self-defense.
• Lacking enforcement, it was useless in a real conflict and failed to prevent aggression.
• It reflected the American mindset of the 1920s, which sought security through diplomacy instead of military preparedness, and set the stage for American isolation and neutrality in the 1930s.

Hiking the Tariff Higher

U.S. Foreign Economic Policy in the 1920s: Tariffs and Shortsightedness

• In the 1920s, U.S. foreign economic policy suffered.
• Business leaders focused on the prosperous domestic market and sought to protect it by imposing high tariffs to block foreign competition.
• This was driven by fears that cheap foreign goods, particularly from recovering European nations, would flood the U.S. market after the Depression of 1920-1921.

Protective Tariff — A tax on imported goods designed to shield domestic industries from foreign competition by raising the price of imports. Widely used in the United States during the 19th and early 20th Centuries, Protective Tariffs benefited manufacturers but often upset farmers and consumers by increasing costs for imported goods.

Depression of 1920–1921 — A sharp but brief economic downturn in the United States, marked by high unemployment, deflation, and reduced industrial production. Triggered by the post-war transition to a peacetime economy, it was intensified by declining demand, tight monetary policies, and falling agricultural prices. The government responded with limited intervention, allowing market forces to correct the economy. Recovery started in late 1921, leading to the economic boom of the 1920s.

The Fordney-McCumber Tariff and Its Impact

• The Fordney-McCumber Tariff was passed with the help of lobbyists and significantly increased tariff rates.
• Tariffs were raised from an average of 27% under the Underwood Tariff to 38.5%, nearly matching the high rates of the Payne-Aldrich Tariff.
• Duties on farm products were also increased, and the government declared that the general tariff rates were intended to equalize the cost of American and foreign production.
• For the first time, the tariff system allowed flexibility. The President, with advice from the Tariff Commission, could adjust duties by up to 50%.

Lobbyists — Individuals or groups hired to influence lawmakers and government officials on behalf of special interests. They push for specific legislation, policies, or regulations that benefit their clients, which may include corporations, Trade Associations, or Nonprofit Organizations. Lobbyists play a significant role in shaping public policy, often by providing expertise, drafting proposals, or mobilizing support, but they are also criticized for contributing to unequal access and potential corruption in the political process.

Fordney-McCumber Tariff (1922) — A 1922 law that raised U.S. tariffs on imported goods to protect American industries and farmers from foreign competition. It established the highest tariff rates in U.S. history at the time and gave the president authority to adjust rates. While it benefited domestic producers, it worsened international economic tensions, hindered global trade, and contributed to retaliatory tariffs, complicating post-World War I economic recovery.

Underwood Tariff (1913) — The Underwood Tariff, enacted under President Woodrow Wilson, significantly lowered tariff rates to encourage trade and reduce costs for consumers. It was a major victory for tariff reform advocates and introduced a graduated Federal Income Tax, authorized by the 16th Amendment, to replace lost tariff revenue.

Payne-Aldrich Bill (1909) — The Payne-Aldrich Bill was a controversial law intended to lower tariffs but ultimately preserved many high rates due to amendments added during congressional debates. Signed by President William Howard Taft, the bill disappointed Progressives who sought significant tariff reductions. It created a divide within the Republican Party and increased criticism of Taft.

Tariff Commission — A federal agency established in 1916 to study and recommend tariff policies for the United States. Renamed the U.S. International Trade Commission in 1974, it was tasked with providing objective analysis of trade issues and advising the government on tariff rates. Under the Fordney-McCumber Tariff Law of 1922, the Commission played a role in helping the President adjust tariffs based on economic conditions and foreign trade practices.

Harding and Coolidge’s Support for Tariff Increases

• Presidents Harding and Coolidge favored tariff increases rather than reductions, which aligned with their support for American business.
• They authorized 32 tariff increases over six years, affecting key commodities like dairy products, chemicals, and pig iron.
• Only five tariff reductions were made during the same period, including on minor items like mill feed, bobwhite quail, paintbrush handles, phenol, and acrylic acid.

The Consequences of High Tariffs on Global Trade

• The high-tariff policies affected European businesses.
• European nations, struggling with postwar chaos, needed to sell goods to the U.S. to help recover economically and pay off their war debts.
• America, in turn, needed to allow foreign nations to profit from trade so that they could purchase American goods and have the money to repay their debts.
• The U.S. was slow to realize that international trade is a two-way street: to sell in large quantities, it needed to buy from others or lend more money.
• European nations responded by raising tariffs on American products.
• The Increase in trade restrictions worsened economic conditions worldwide.
• The economic turmoil was one of the factors that helped Adolf Hitler rise to power in Germany.

The Stench of Scandal

Scandals and Corruption During the Harding Era

• The Harding Presidency was plagued by a series of scandals.
• In 1923, Colonel Charles R. Forbes, a former army deserter, was caught embezzling funds and resigned as head of the Veterans Bureau.
• Forbes had been appointed to his position by Harding.
• Forbes and his associates stole about $200 million, mostly related to the construction of veterans’ hospitals.
• He was sentenced to two years in a Federal Penitentiary for his crimes.

Federal Penitentiary — A high-security prison operated by the U.S. Federal Government to hold people convicted of federal crimes. Established under the Department of Justice, Federal Penitentiaries started with facilities like Leavenworth in 1895 and expanded in the 20th Century.

The Teapot Dome Scandal

• The Teapot Dome Scandal was one of the most shocking scandals of the Harding Era. 
• It involved the Federal Oil Reserves in Teapot Dome (Wyoming) and Elk Hills (California), which were controlled by the U.S. Navy.
• In 1921, Secretary of the Interior Albert B. Fall persuaded the Secretary of the Navy to transfer control of these oil reserves to the Interior Department, which Harding approved.
• Fall turned around and secretly leased the land to two oilmen, Harry F. Sinclair and Edward L. Doheny.
• Fall received bribes (payments) from them, including a $100,000 “loan” from Doheny and around three times that amount from Sinclair.

Federal Oil Reserves — Public lands set aside by the U.S. government to store oil for national security and emergency purposes. These reserves became central to the Teapot Dome Scandal in the 1920s, where private companies gained access to them through bribery. The reserves are managed to ensure a stable supply of energy and were created to protect U.S. interests in times of war or crisis.

The Teapot Dome Scandal Consequences

• The Teapot Dome Scandal, which initially seemed minor, became a major public issue by March 1923, two years after Harding’s Presidency started.
• Fall, Sinclair, and Doheny were indicted in 1924, but the case dragged on through the courts until 1929.
• Fall was found guilty of accepting a bribe and was sentenced to one year in prison.
• In a strange twist, Sinclair and Doheny were acquitted, but Sinclair served several months in jail for jury tampering and refusing to testify before a Senate committee.

The Aftermath of the Teapot Dome Scandal

• The Teapot Dome Scandal damaged the government’s reputation and raised concerns among citizens about public officials selling off the nation’s natural resources.
• The acquittal of Sinclair and Doheny eroded trust in the Judicial System, leading to the spread of cynical sayings such as, “You can’t put a million dollars in jail” and “In America, everyone is assumed guilty until proven rich.”
• The scandal fueled disillusionment with both the government and the courts.

Attorney General Daugherty and His Scandalous Actions

• In 1924, reports of Attorney General Daugherty’s involvement in illegal activities, including the sale of pardons and liquor permits, led to a Senate investigation.
• Daugherty was forced to resign. Although he was tried in 1927, the jury failed to reach a verdict twice, and he was released.
• During the trial, Daugherty hinted at deeper corruption, suggesting that a larger investigation might uncover wrongdoing within the White House.

Harding’s Death and Legacy

• Harding was aware of the scandal but was spared from repercussions.
• While on a speechmaking tour across the country, including a trip to Alaska, Harding fell ill and died on August 2, 1923, in San Francisco from pneumonia and thrombosis.
• Some have suggested that his death may have been caused by a broken heart due to the disloyalty of those around him.
• The public mourned Harding’s death, unaware of the full extent of Washington, D.C.’s corruption.

Thrombosis — A medical condition characterized by the formation of a blood clot (thrombus) within a blood vessel, obstructing the flow of blood. It can occur in veins (venous thrombosis) or arteries (arterial thrombosis) and may lead to serious complications like stroke, heart attack, or pulmonary embolism if the clot travels to critical organs.

“Silent Cal” Coolidge

Coolidge’s Swift Ascension to the Presidency

• News of Harding’s death reached Vice President Calvin Coolidge, who was visiting his father’s New England farmhouse.
• In a quiet and humble setting, with only two kerosene lamps for light, Coolidge’s father, a justice of the peace, used the family Bible to administer the Presidential Oath to his son, officially making Coolidge the 30th President of the United States.
• Coolidge’s ascension to the Presidency in such a simple setting reflected his character, which embodied the New England virtues of honesty, morality, industry, and frugality.
• Known for his stern, serious demeanor, Coolidge was often described as having a thin nose and tightly set lips, reflecting his no-nonsense personality.
• As a youth, he was noted for his hard work. His father claimed he could extract more sap from a maple tree than any other boy.
• Known as “Silent Cal,” Coolidge became famous in Washington for his quiet nature.

Coolidge Maintains the Status Quo

• Coolidge was often seen as a representation of the ordinary, with a personality marked by shyness and mediocre leadership abilities.
• Although he occasionally showed a dry sense of humor in private, his public speeches were often seen as dull and unremarkable.
• Coolidge was a strong proponent of maintaining the status quo and did not position himself as a reformer fighting for social change.
• As a staunch Republican, Coolidge embraced the philosophy of business, famously declaring that “the man who builds a factory builds a temple” and that “the man who works there worships there.”

Coolidge’s Cautious Leadership and Post-Scandal Recovery

• Coolidge’s hands-off, cautious nature aligned perfectly with the times. His frugal approach to governance made him supportive of Secretary of the Treasury Andrew Mellon’s efforts to reduce taxes and the national debt.
• Coolidge allowed American businesses to thrive, contributing to the period of prosperity.
• Despite the lingering effects of the Teapot Dome Scandal, Coolidge’s transparent honesty helped restore some credibility to the Republican Party.
• While the public was initially shocked by the Teapot Dome Scandal, many people quickly became indifferent, with some excusing the wrongdoers and even criticizing prosecutors for continuing the investigations.
• Some argue that the morality of the American public was dulled by the prosperity of the 1920s.

Frustrated Farmers

Farmers in the Postwar Economic Cycle

• After the war, farmers were faced with the bust part of the boom-or-bust cycle.
• While the war was ongoing, farmers earned substantial profits, with wheat soaring to $3 a bushel by the spring of 1920.
• However, with the end of the war came an end to government-supported high prices and a reduction in foreign purchases.
• Global production of crops resumed, bringing more competition to the market.

The Impact of Mechanization and Overproduction on Farmers

• The rise of the gasoline-engine tractor revolutionized farming, allowing farmers to cultivate and sow vast amounts of land more efficiently, similar to the impact of the McCormick Reaper on harvesting.
• Farmers could now work in larger areas with fewer horses and laborers, increasing productivity.
• Encouraged by the wartime boom, farmers expanded their acreage, particularly in the upper Midwest’s “Wheat Belt.”
• However, increased efficiency and overproduction led to surpluses, which drove crop prices down.
• In the 1920s, agricultural areas experienced a severe depression, and one in four farms was sold due to debt or taxes.

McCormick Reaper — A mechanical farming tool invented by Cyrus McCormick in 1831, revolutionizing agriculture by automating the harvesting of crops. The reaper significantly increased productivity, reduced labor demands, and expanded commercial farming, particularly in the U.S. Midwest. It played a key role in the agricultural growth of the 19th Century, contributing to the economic development of farming regions.

Wheat Belt — A region in the U.S., primarily encompassing the Great Plains, known for large-scale wheat production. The area includes states like Kansas, Nebraska, and North Dakota, where the combination of fertile soil, mechanized farming tools like the McCormick Reaper, and favorable climate made wheat farming highly profitable. It became a critical part of the U.S. agricultural economy in the late 19th and early 20th Centuries.

Efforts to Assist Farmers During the 1920s

• A bipartisan “farm bloc” in Congress, formed in 1921, worked to pass laws that eased the plight of farmers.
• The Capper-Volstead Act was passed, exempting farmers’ marketing cooperatives from antitrust laws and helping them organize more effectively.
• The McNary-Haugen Bill, supported by the farm bloc from 1924 to 1928, aimed to raise agricultural prices by allowing the government to purchase surpluses and sell them abroad, with the costs covered by a special tax on farmers.
• Although Congress passed the bill twice, President Coolidge vetoed it both times, maintaining his stance against government intervention.
• As farm prices remained low, farmers’ frustration grew, reaching its peak during the 1924 Election.

Capper-Volstead Act (1922) — A 1922 law that allowed farmers to form Farmer Cooperatives to market their products without violating Antitrust Laws. It intended to help farmers improve their bargaining power and compete with large agricultural corporations. The act provided legal protections for these Cooperatives, promoting collective action to stabilize prices and increase profits.

Farmer Cooperatives — Organizations formed by farmers to collectively buy supplies, process goods, or market crops, improving efficiency and profitability. Enabled by the Capper-Volstead Act, these Cooperatives gave farmers greater control over pricing and distribution. They were especially important during the 1920s and 1930s as farmers faced economic hardships.

McNary-Haugen Bill — A proposed U.S. agricultural policy during the 1920s that sought to subsidize farmers by purchasing surplus crops at guaranteed prices and selling them on international markets. Though passed by Congress twice, it was vetoed by President Coolidge, who opposed government intervention.

A Three-Way Race for the White House in 1924

The 1924 Election: Coolidge vs. Divided Democrats

• In the summer of 1924, the Republicans nominated Coolidge for President with the slogan “Keep Cool and Keep Coolidge.”
• The Democratic Party struggled to select a candidate, facing deep divisions at their convention in New York’s Madison Square Garden.
• The party was split along cultural lines and various political factions, including the Ku Klux Klan.

Ku Klux Klan at the 1924 Democratic National Convention — The Ku Klux Klan (KKK) significantly influenced the 1924 Democratic National Convention as part of its resurgence in the 1920s. The Klan opposed Catholic, Jewish, and immigrant groups, and its presence at the Convention led to intense debate and a resolution condemning the organization. The resolution narrowly failed, demonstrating the Klan’s power within the Democratic Party at the time.

The 1924 Democratic Convention: The Nomination of John W. Davis

• The Democratic Convention was deadlocked for 102 ballots.
• After a long and unenthusiastic search, the convention finally nominated John W. Davis, a wealthy corporate lawyer associated with J.P. Morgan & Company.
• Davis was as conservative as his Republican counterpart, Calvin Coolidge.

La Follette and the Progressive Party in the 1924 Election

• With the major parties divided, Senator Robert “Fighting Bob” La Follette of Wisconsin, at 69, led a new Progressive Movement.
• La Follette garnered support from the American Federation of Labor, and the declining Socialist Party, but his main base came from struggling farmers affected by low prices.
• His Progressive Party, which only ran a Presidential Candidate and lacked candidates for local offices, was largely symbolic, reflecting a weakened version of the prewar Progressive Movement.
• The Party’s platform called for government ownership of railroads, relief for farmers, opposition to monopolies, and anti-labor injunctions. It also supported a Constitutional Amendment to limit the Supreme Court’s ability to invalidate laws passed by Congress (Judicial Review).

Party Platform — A Party Platform is a formal statement of a political Party’s principles, policies, and goals, outlining its stance on key issues such as the economy, healthcare, foreign policy, and social programs. Platforms are typically adopted at National Party Conventions and serve as a guide for candidates and voters.

The 1924 Election Results: Coolidge’s Victory and La Follette’s Effort

• In the 1924 Election, La Follette earned nearly 5 million votes, a respectable showing, but was overshadowed by Coolidge’s dominance.
• Coolidge and the Republican Party easily won the election, defeating Davis with 15,718,211 votes to 8,385,283.
• The electoral count was 382 for Coolidge, 136 for Davis, and 13 for La Follette.
• All of La Follette’s Electoral Votes were from Wisconsin.
• While La Follette’s campaign injected a more progressive perspective into the decade, the prosperity of the 1920s made his message less appealing to many voters, ensuring Coolidge’s victory.

Foreign-Policy Flounderings

Coolidge and Isolationist Policies

• Isolationism remained a dominant theme during the Coolidge Administration.
• Despite Coolidge’s efforts, the Senate refused to allow the U.S. to join the World Court, which was part of the League of Nations.
• Coolidge halfheartedly pursued further naval disarmament, and his attempts were unsuccessful.

Intervention in the Caribbean and Central America

• While the U.S. maintained an isolationist stance, it actively intervened in the Caribbean and Central America.
• American troops were withdrawn from the Dominican Republic in 1924 after an eight-year presence, but they remained in Haiti from 1914 to 1934.
• In 1925, Coolidge briefly withdrew U.S. troops from Nicaragua but sent 5,000 soldiers back in 1926, where they stayed until 1933.
• When Mexico started asserting control over its oil resources in 1926, American oil companies pushed for military action, but Coolidge managed the crisis through diplomacy.
• Despite his handling of the Mexican situation, Coolidge’s military interventions in other countries fueled anti-American sentiment in Latin America.

International Debts and America’s Shift in Financial Power

• The 1920s were dominated by the complex financial issues of international debts involving private loans, Allied war debts, and German reparations.
• World War I drastically changed America’s financial position: in 1914, the U.S. was a debtor nation with a $4 billion deficit, but by 1922, it had become a creditor nation with a $16 billion surplus.
• The U.S. Dollar emerged as a global financial powerhouse, rivaling the British Pound.
• American investors lent around $10 billion to foreign nations during the 1920s, but this large sum was insufficient to revive the global economy fully.
• Despite the large-scale loans, Americans were less inclined to invest abroad compared to the British before the war, preferring lucrative domestic investment opportunities.

The Debt Crisis: U.S. Loans to the Allies and European Complaints

• A key issue in the 1920s was the $10 billion that the U.S. Treasury had lent to the Allies during and after World War I.
• The U.S. demanded repayment, and the Allied nations, particularly France and Britain, argued that the demand was unfair, pointing out that they had borne the brunt of the fighting until the U.S. entered the war.
• The Allies contended that America should consider the loans as part of the war costs, just as they had to accept the loss of millions of young men in battle.
• The Europeans also argued that much of the borrowed money had been used to buy goods and products from the U.S., which fueled America’s booming wartime economy.
• They also complained that America’s postwar tariffs made it nearly impossible for them to sell goods to earn the money needed to repay their debts.

Unraveling the Debt Knot

The Strain of Reparations and Economic Collapse in Germany

• America’s insistence on repaying its war loans hardened the position of the Allies, particularly in their dealings with Germany.
• France and Britain demanded that Germany pay reparations totaling around $32 billion as compensation for war damages.
• The Allies hoped to use these payments to pay off their debts to the U.S.
• In 1923, France sent troops into Germany’s Ruhr Valley to threaten Germany, hoping it would be convinced to make its reparations payments.
• In response, the German government allowed its currency to inflate, leading to hyperinflation. By October 1923, a loaf of bread cost 480 million Marks (approximately $120 million in pre-inflation money).
• This hyperinflation pushed German society to the brink of chaos, threatening to destabilize the entire international financial system.

The U.S. Stance on War Debts and Reparations

• Some politicians called for reducing or canceling war debts and reparations due to the economic strain they were causing.
• Many Americans viewed this as an unfair attempt to avoid paying debts. One politician said, “We went across, but they won’t come across.”
• Coolidge dismissed calls for debt cancellation and said, “They hired the money, didn’t they?”
• The U.S. remained firm, insisting there was no connection between the debts owed to America and the reparations Germany was required to pay.

The Dawes Plan

• The Dawes Plan (1924), largely negotiated by Charles Dawes, rescheduled Germany’s reparations payments and allowed the U.S. to make loans to Germany.
• This created a complex financial cycle: U.S. bankers loaned money to Germany, which then paid reparations to France and Britain. The former Allies used the money from Germany to pay off war debts to the United States.
• The entire system depended on the flow of American credit, which dried up after the Stock Market Crash (1929), leading to a collapse in international finance.
• In 1931, President Hoover declared a one-year debt moratorium. Soon after, all debtor nations defaulted — except for Finland, which continued payments until the last of its debt was paid off in 1976.

One-Year Debt Moratorium — A 1931 proposal by President Hoover to temporarily suspend payments on intergovernmental debts and reparations during the Great Depression. Intended to ease financial pressures on Debtor Nations and stabilize the global economy, the plan received initial support but proved insufficient to address the economic crisis.

Debtor Nations — Countries that owe financial obligations to foreign governments, institutions, or private lenders. After World War I, many European nations became debtors to the United States due to war loans and reparations. The economic strain of these debts contributed to global instability, particularly during the Great Depression, when many Debtor Nations struggled to meet their obligations.

Dawes Plan (1924) — A 1924 agreement designed to resolve the economic crisis in Germany caused by World War I reparations. The plan, led by Charles Dawes, restructured Germany’s reparations payments, reduced the annual amounts, and provided loans from the U.S. to stabilize the German economy. It temporarily eased tensions between Germany and its creditors, contributing to a brief period of economic recovery in Europe during the 1920s.

Charles Dawes (1865–1951) — An American banker, politician, and diplomat who served as Vice President of the United States (1925–1929) under President Calvin Coolidge. Dawes was awarded the Nobel Peace Prize in 1925 for his role in crafting the Dawes Plan, which sought to alleviate postwar reparations issues in Europe. His work reflected the growing influence of the U.S. in international diplomacy.

Credit — Credit is a financial arrangement in which a borrower receives goods, services, or funds with the agreement to repay the lender at a later date, often with interest. It became widely accessible during the 1920s, fueling consumerism but also contributing to financial instability during the Great Depression.

The Aftermath of the U.S. Debt Demands and the Rise of Neutrality

• Widespread resentment toward the U.S. spread through Europe, even though nations failed to repay their war debts to America.
• French crowds sometimes attacked American tourists.
• Across Europe, America was depicted as greedily demanding more from the Allies.
• This negative response contributed to the development of U.S. neutrality laws in the 1930s, as many Americans were disillusioned by the war’s financial aftermath and the global animosity it fueled.

The Triumph of Herbert Hoover, 1928

Coolidge’s Withdrawal and Hoover’s Nomination in 1928

• Coolidge decided not to seek re-election in 1928.
• His logical successor was Herbert Hoover, the Secretary of Commerce.
• Although Hoover was unpopular with Political Bosses, he was admired by the public, and many supporters asked, “Hoo, but Hoover?”
• Hoover was nominated by the Republican Party on a platform that praised the ongoing prosperity and supported the continuation of Prohibition.

National Prohibition — National Prohibition was established by the 18th Amendment, ratified in 1919, and enforced by the Volstead Act. It banned the production, sale, and transportation of alcoholic beverages across the United States. It sought to reduce crime and social problems but led to widespread illegal activity, such as Bootlegging and Speakeasies, until its repeal by the 21st Amendment in 1933.

Alfred E. Smith’s Candidacy in the 1928 Election

• The Democratic Party nominated Alfred E. Smith, the four-time Governor of New York and a colorful personality known for his quick wit, liberalism, and hands-on approach to politics.
• Smith was staunchly “wet” — for allowing alcohol consumption — during a time when the nation was still committed to Prohibition, which hurt his appeal in “dry,” rural areas.
• His urban background as a native New Yorker made him seem out of touch with the growing rural population, and his Roman Catholic faith alienated many in an overwhelmingly Protestant nation.
• To appease opponents, the Democrats paired Smith with a dry running mate and included a dry platform, but the efforts to balance the issue of alcohol were ultimately ineffective.
• Smith’s candidacy struggled, hampered by deep political and cultural divides.

The Role of Radio in the 1928 Election

• Radio played a crucial role in the 1928 Election, benefiting Hoover more than Smith.
• While Smith had more personal charisma, his thick New York accent did not translate well on the radio, alienating many listeners.
• Hoover’s dignified style was well-received on the airwaves, projecting an image of both grassroots appeal and statesmanlike confidence.
• Hoover used radio to decry “un-American socialism” and champion “rugged individualism.”
• This resonated with a broad audience and boosted his appeal.

Herbert Hoover: A Symbol of American Success

• Hoover embodied the American success story, blending the values of two centuries.
• As a poor orphan who worked his way through Stanford University, Hoover embraced 19th-century ideals of industry, thrift, and self-reliance.
• He became a successful mining engineer and businessman, adopting the efficiency-focused doctrines of the Progressive Era.
• A small-town boy from Iowa and Oregon, Hoover had traveled and worked abroad, which deepened his commitment to avoiding foreign entanglements.
• His international experiences reinforced his belief in American individualism, free enterprise, and limited government.

A Business-Like Candidate

• Hoover carried himself in a dignified, business-like fashion.
• Despite his international experience and honors, he was shy and reserved in public.
• Having never held public office before, Hoover was not used to the turmoil of politics, which made him sensitive to criticism and slow to adjust.
• His strength lay in his integrity, humanitarianism, fact-based decision-making, efficiency, and administrative talent, which earned him the loyalty of his close associates, who referred to him as “the Chief.”
• Hoover was the ideal candidate for business interests, a self-made millionaire who opposed Socialism, Paternalism, and a “planned economy.”
• However, as Secretary of Commerce, he showed some progressive leanings. He endorsed labor unions and supported federal regulation of the radio broadcasting industry, even briefly considering government ownership of radio, similar to the British Broadcasting Corporation (BBC).

Socialism — An economic and political ideology that advocates collective or government ownership of the means of production to reduce inequality and provide public welfare. Leaders like Eugene V. Debs promoted socialist policies, influencing labor reforms and calling for economic justice.

Paternalism — A system or policy where authority figures or institutions make decisions for individuals, assuming responsibility for their welfare while limiting their autonomy. Historically, Paternalism has been evident in labor relations, colonial governance, and social reforms, often justified as being kind and well-meaning but criticized for creating inequality and restricting personal freedoms.

Planned Economy — An economic system where government authorities control the production, distribution, and pricing of goods and services, often through centralized planning. This system contrasts with market economies and seeks to allocate resources efficiently based on societal needs rather than market demand. Planned Economies were prominent in socialist states, such as the Soviet Union, during the 20th Century.

Mudslinging in the 1928 Campaign

• As Smith’s campaign gained momentum, his theme song, “The Sidewalks of New York,” played over the airwaves, but the election quickly descended into negative tactics.
• Despite Hoover and Smith’s efforts to keep the campaign clean, lower-level campaigners turned to mudslinging tactics.
• Smith’s Catholicism became a focal point for attacks, as rumors spread that a vote for Smith was a vote for the Pope and that his Presidency would turn the White House into a branch of the Vatican.
• The campaign stirred up anti-Catholic sentiment, promoting slogans like “Rum, Romanism, and Ruin.”
• Hoover’s attempt to stop the rumors failed.

Smith’s Struggles with the Southern Vote

• The South, often seen as “100 percent American” and a stronghold of the Ku Klux Klan, strongly opposed Smith.
• While the South might have accepted a Catholic, a “wet,” or someone of Irish descent, Smith’s combination of Catholicism, support for the repeal of Prohibition, urban background, and liberal views made him an unappealing candidate to the South.

Hoover’s Landslide Victory in the 1928 Election

• Hoover won the 1928 Election by a landslide, securing 21,391,993 popular votes compared to 15,016,169 for Smith.
• Hoover’s electoral count was 444 to Smith’s 87, with the Republicans also gaining a strong majority in the House of Representatives.
• Hoover’s appeal extended even to Southern Democrats, many of whom were “Hoovercrats” — dry Southern Democrats.
• Hoover became the first Republican in 52 years, aside from Harding’s 1920 victory in Tennessee, to win a State that seceded during the Civil War, sweeping five former Confederate States and all the old Border States.

President Hoover’s First Moves

Prosperity and Exclusion

• Under Hoover, the U.S. enjoyed prosperity in the late 1920s, with soaring stock prices in a bull market that seemed to defy financial norms.
• However, two large groups of Americans did not benefit from the national wealth: industrial workers and farmers.

Bull Market — A financial market characterized by rising prices and investor optimism, often driven by strong economic indicators, high demand for stocks, or positive market sentiment. Bull Markets typically occur during periods of economic expansion and can last for months or years, encouraging increased investment and speculation.

Bear Market — A financial market marked by falling prices and widespread pessimism, often triggered by economic downturns, declining corporate earnings, or external shocks. Bear Markets reflect reduced investor confidence and are typically associated with prolonged periods of economic contraction or recession, leading to cautious or defensive investment strategies.

Hoover’s Response to Farmers

• In line with his philosophy of promoting self-help, Hoover’s administration responded to farmers’ struggles with the Agricultural Marketing Act (1929).
• The Act sought to help farmers help themselves by supporting Farm Cooperatives. It established the Federal Farm Board, which received a $500 million revolving fund.
• The Farm Board loaned money to farm organizations to help them buy, sell, and store agricultural surpluses.

Agricultural Marketing Act (1929) — A U.S. law enacted to stabilize agricultural prices and assist struggling farmers by promoting cooperative marketing and reducing surpluses. It established the Federal Farm Board to provide loans and financial support to Farmer Cooperatives. The act failed to address deeper economic issues and was overwhelmed by the Great Depression.

Federal Farm Board — Created under the Agricultural Marketing Act (1929), this agency intended to support farmers by encouraging cooperative marketing and purchasing surplus inventory to stabilize prices. Despite its efforts, the Board struggled to manage declining farm incomes during the Great Depression, and its interventions were criticized.

Farm Board’s Efforts to Stabilize Agricultural Prices

• In 1930, the Farm Board created the Grain Stabilization Corporation and the Cotton Stabilization Corporation to help stabilize falling prices.
• Their main goal was to boost low prices by purchasing surplus grain and cotton from farmers.
• However, both agencies were overwhelmed by an excess of produce. Because of this, wheat prices fell to 57 cents a bushel, and cotton dropped to five cents a pound.

Grain Stabilization Corporation — A government-backed entity created under the Federal Farm Board in 1930 to stabilize grain prices during the Agricultural Crisis of the Great Depression. It purchased surplus grain to support market prices, but its efforts were largely ineffective as global overproduction and falling demand continued to depress prices.

Cotton Stabilization Corporation — Established by the Federal Farm Board in 1930 to stabilize cotton prices by buying surplus cotton from farmers. Despite significant purchases, the corporation failed to prevent price declines due to oversupply and reduced global demand.

Agricultural Crisis of the Great Depression — A severe economic downturn for American farmers during the 1930s, marked by falling crop prices, overproduction, and mounting debt. The crisis, which was worsened by the Great Depression, left many farmers unable to repay loans or cover costs, leading to widespread foreclosures and farm abandonment. Contributing factors included declining international markets, tariff barriers, and natural disasters like the Dust Bowl. Government programs such as the Agricultural Adjustment Act sought to provide relief but had mixed results.

Agricultural Adjustment Act (AAA) — A 1933 New Deal program aimed at reducing agricultural overproduction to stabilize crop prices and support farmers during the Great Depression. The act paid farmers to limit production by leaving fields fallow or destroying surplus crops and livestock. While it improved prices, the AAA was criticized for displacing tenant farmers and sharecroppers. The Supreme Court declared it unconstitutional in 1936, leading to revised farm policies.

Dust Bowl — A series of devastating dust storms during the 1930s caused by drought and poor agricultural practices, primarily affecting the Great Plains Region. It destroyed farms, displacing thousands of families and contributing to the Agricultural Crisis of the Great Depression. Many affected farmers migrated westward, particularly to California, in search of work and better living conditions, as depicted in John Steinbeck’s The Grapes of Wrath.

The Grapes of Wrath — A 1939 novel by John Steinbeck that portrays the struggles of the Joad family, displaced farmers from Oklahoma, as they migrate to California during the Dust Bowl and the Great Depression. The book plays on themes of poverty, injustice, and resilience, emphasizing the plight of migrant workers and the exploitation they faced. It is a landmark work of American literature and earned Steinbeck the Pulitzer Prize.

Farmers and the Tariff as a Means of Relief

• As financial ruin loomed, farmers turned to the tariff as a potential solution to their struggles.
• During the Presidential campaign, Hoover, who was inexperienced in politics, made a politically unwise pledge to call a special session of Congress to discuss agricultural relief and propose limited changes to the tariff.
• These promises, aimed at helping farmers, likely won Hoover many votes in the Midwestern Farm Belt.

Special Session of Congress — A meeting called by the President outside the regular legislative schedule to address urgent matters, such as national crises or pressing legislation.

Midwestern Farm Belt — A region in the central United States known for its highly productive agricultural lands, covering Iowa, Illinois, Indiana, Missouri, and Nebraska. This area, often referred to as the “Corn Belt,” is characterized by fertile soil, favorable climate, and large-scale farming of crops such as corn and soybeans, along with livestock production. The Farm Belt played an important role in U.S. agriculture during the 19th and 20th Centuries and suffered from the Dust Bowl and the Great Depression.

The Smoot-Hawley Tariff

• The Smoot-Hawley Tariff (1930) was established to help farmers by providing tariff protection for agricultural products.
• However, due to intense lobbying, the bill was expanded in the Senate, with around 1,000 amendments added.
• As a result, it became the highest protective tariff in U.S. peacetime history, raising the average duty on nonfree goods from 38.5% (under the Fordney-McCumber Act of 1922) to nearly 60%

Smoot-Hawley Tariff (1930) — A U.S. law that raised tariffs on over 20,000 imported goods to record levels, aiming to protect American industries during the Great Depression. Sponsored by Senator Reed Smoot and Representative Willis Hawley, the tariff triggered retaliatory actions from other countries, reducing international trade and increasing the global economic downturn. It is often cited as a policy misstep that escalated the effects of the Great Depression.

The Smoot-Hawley Tariff and Its Global Impact

• Foreign nations viewed the Smoot-Hawley Tariff as hostile, as it appeared to declare economic warfare against them.
• It reversed a promising global trend toward more reasonable tariffs and widened the trade gaps.
• The tariff deepened the Great Depression in both the U.S. and other nations, contributing to international financial instability.
• This move pushed the U.S. further into economic isolationism, which, in turn, played into the hands of Adolf Hitler, who capitalized on the global turmoil and resentment in Germany.

The Great Crash Ends the Golden Twenties

The Illusion of Unstoppable Prosperity

• When Hoover took office on March 4, 1929, the economy seemed to be thriving, and there were few signs of impending trouble.
• The “long boom” of economic prosperity appeared endless, driven by new industries such as automobiles, radio, and movies.
• However, the Farm Belt remained burdened by debt.
• America’s expanding economy seemed on the verge of permanent prosperity, but the speculative bubble was nearing its breaking point.
• Stock prices continued to rise, creating a false sense of wealth.
• Hoover’s early attempts to curb speculation through the Federal Reserve Board failed.
• While a few voices warned of impending disaster, the frenzy and success of stock market activity drowned out their concerns.

The Stock Market Crash of 1929 and Its Aftermath

• The Stock Market Crash of October 1929 was triggered in part by Britain, which raised interest rates to attract capital back from American investments.
• This led to foreign investors and cautious domestic speculators selling off their stocks, initiating a wave of panic-driven selling.
• On October 29, 1929, “Black Tuesday,” a staggering 16,410,030 shares were sold in a desperate scramble to unload stocks.
• Wall Street, once a symbol of prosperity, became a place of despair as the mood shifted from boom to bust.
• By the end of 1929, two months after the crash, stockholders had lost $40 billion — more than the total cost of World War I to the United States.

Black Tuesday (1929) — On October 29, 1929, the U.S. stock market experienced a catastrophic crash, marking the beginning of the Great Depression. Panic selling led to a record number of shares traded, wiping out billions of dollars in wealth. The collapse was driven by speculative investments, high levels of debt, and declining economic confidence, signaling the end of the 1920s economic boom.

The Impact of the Great Depression on Employment

• The Stock Market Crash led to the most prolonged and devastating Depression in American and world history, but no industrialized nation suffered as severely as the U.S.
• By the end of 1930, four million Americans were unemployed, and the number tripled by 1932.
• Desperate people searched the streets for jobs, but businesses were unable to hire.
• For those who remained employed, wages and salaries were often drastically reduced.
• A popular Democratic song criticized Republicans and summed up the situation: “Mellon pulled the whistle, Hoover rang the bell, Wall Street gave the signal, And the country went to hell.”

The Devastation of the Great Depression

• The Great Depression spread misery across the country.
• Over 5,000 banks collapsed in the first three years, taking the savings of their customers with them.
• Thousands of Americans lost their homes and farms due to foreclosure, while breadlines and soup kitchens became common.
• Sellers stood on street corners, trying to sell their wares for mere pennies.
• Fathers, unable to provide for their families, grappled with guilt and shame despite the understanding that the economic system, not personal failure, was to blame.
• The strain was felt in families as birth rates dropped, with hard times affecting even the nation’s reproduction rates.

Hooked on the Horn of Plenty

Causes of the Great Depression

• The Depression was largely caused by overproduction in farming and industry despite the nation’s abundant supply of goods and products.
• It was marked by the “great glut” where supply far exceeded demand.
• The U.S. economy produced more goods than it could consume, with wealth concentrated in the hands of a few. These people invested in production rather than increasing wages, which might have boosted consumer purchasing power.
• The overexpansion of credit through installment buying overstimulated production, leading many consumers to overextend themselves financially.
• Technological advancements in labor-saving machinery contributed to unemployment, which increased to already high levels during the “threadbare thirties.”

Installment Buying — A popular consumer credit method in the 1920s. It allowed people to purchase goods by making small initial payments and paying the remaining balance over time in installments. While it fueled economic growth by increasing consumer spending, it also contributed to high levels of personal debt, leading to financial hardship during the Great Depression.

Layaway — A purchasing method where consumers reserve goods by making small payments over time but do not take possession until the total price is paid. Unlike installment buying, layaway does not involve credit or interest, making it a more conservative approach to purchasing during economic downturns like the Great Depression.

Threadbare Thirties — A term describing the 1930s during the Great Depression and the widespread poverty, unemployment, and economic hardship. Families struggled to afford basic necessities, often relying on makeshift solutions and government relief programs.

Global Economic Factors Contributing to the Great Depression

• The Great Depression was worsened by economic struggles abroad, as Britain and much of Europe had not fully recovered from the aftermath of World War I.
• In 1931, the collapse of a major banking house in Vienna, Austria, triggered a financial crisis in Europe.
• The downturn was also worsened by the protectionist Hawley-Smoot Tariff of 1930, which caused a decline in international trade.
• European instability, particularly with issues related to reparations, war debts, and loan defaults to the U.S., created tensions that negatively impacted the American economy.

European Banking Crisis (1931) — This financial crisis was triggered by the collapse of major European banks that spread panic throughout global markets during the Great Depression. It began with Austria’s Creditanstalt Bank and quickly destabilized other European banks, leading to a loss of confidence, mass withdrawals, and disruptions in international trade and credit systems. The crisis exacerbated global economic instability and worsened the Great Depression.

The Collapse of the Creditanstalt Bank — The failure of Austria’s largest bank, Creditanstalt, in May 1931 due to heavy losses and economic pressure. Its collapse marked the start of the European Banking Crisis, as it undermined confidence in the financial system and triggered a wave of bank failures across Europe. It was an example of the fragility of international banking during the Great Depression.

The Impact of the 1930 Drought on Farmers

• In 1930, a drought struck the Mississippi Valley, making the situation worse for farmers.
• Thousands of farms were sold at auction due to unpaid taxes.
• In some cases, compassionate neighbors would intimidate buyers, bidding only one cent to help the original owners retain their property.
• As a result of the economic crisis, farm tenancy and rental — reminiscent of peonage — started to spread among both white and black farmers, leaving many in dire financial conditions.

Peonage — A system of involuntary servitude where individuals are forced to work to repay debts. Common in the post-Civil War United States, particularly in the South, it trapped African Americans and poor whites in cycles of debt through exploitative labor arrangements, such as sharecropping. It was declared unconstitutional in 1867 but still persisted in various forms until the early 20th Century.

The National Impact of the Depression and Its Social Consequences

• By 1930, the Great Depression was a nationwide catastrophe.
• Unemployment was rampant, and the lack of work contributed to a sense of despair that affected the national spirit.
• America’s sense of “uniqueness” and belief in “Manifest Destiny” were shaken when the Depression presented a challenge that could not be overcome by physical effort alone.
• Initiative and self-respect were undermined, with many turning to panhandling or “charity soup” for survival.
• In some cases, people slept under “Hoover Blankets” (old newspapers), scavenged for food in garbage cans, or cooked their finds in oil drums in makeshift communities called “Hoovervilles.”
• The traditional social and political foundations of America were shaken by the widespread suffering and uncertainty.

Manifest Destiny — Manifest Destiny is the belief that the United States was destined to expand across the North American continent, spreading Democracy and Capitalism. Rooted in Nationalism and a sense of mission, it justified territorial expansion, including the Annexation of Texas, the Oregon Trail migrations, and the Mexican-American War. Critics argue it fueled the displacement of Native American Indians and Mexican citizens, contributing to American Imperialism.

Hoovervilles — Makeshift shantytowns built by homeless people during the Great Depression, named sarcastically after President Herbert Hoover, whom many blamed for the economic crisis. These communities, often constructed from scrap materials, were typically found near cities.

Rugged Times for Rugged Individualists

Hoover’s Struggles to Handle the Great Depression

• Hoover’s reputation faltered as the Great Depression continued.
• Hoover, who thrived during the prosperity of the Coolidge years and envisioned a future without poverty, was unable to deal with the economic crisis.
• Despite his skill and experience, the scale of the Depression proved to be beyond his capabilities, and his efforts to resolve the crisis were insufficient.

Humanitarian Concerns vs. Rugged Individualism

• Hoover faced a dilemma as he struggled to balance his deep humanitarian concerns with his belief in rugged individualism.
• He was troubled by the widespread misery caused by the Great Depression but was unwilling to embrace government handouts, which he saw as a threat to America’s foundational virtues of industry, thrift, and self-reliance.
• Hoover feared that government assistance would undermine the national character, weakening the very qualities that he believed made America great.

Government Intervention and the “Trickle-Down” Theory

• As the Depression continued, local government relief efforts broke down, forcing Hoover to reconsider his belief in individualism.
• Eventually, he acknowledged that the Federal Government needed to address the widespread crisis.
• He sought a compromise between his traditional hands-off approach and the direct government assistance methods being used in England, which he feared would undermine American values.
• Hoover decided to provide aid to struggling industries, such as railroads, banks, and rural credit corporations.
• He hoped that restoring financial stability at the top would eventually benefit those at the bottom through a “trickle-down” effect.
• Hoover hoped that economic recovery in the struggling industries would lead to job creation and relief for the unemployed.

Criticism of Hoover’s Relief Efforts and Their Legacy

• Hoover was criticized by his political opponents, who mocked him as the “Great Humanitarian” for feeding foreign nations but refusing to use government funds to help struggling Americans.
• Critics pointed out that he was willing to lend money to large bankers, whom many blamed for the crisis, and to agricultural organizations to help feed pigs but was not willing to help feed the American people.
• Some criticism was unfair, as Hoover’s efforts likely prevented a worse economic collapse.
• His measures laid the groundwork for the government spending programs that his successor, Franklin D. Roosevelt, implemented in the New Deal.
• Hoover’s Presidency showed that the old methods of individualism and self-reliance could not effectively address a crisis of such magnitude, especially when so many Americans were without the resources to “pull themselves up by their bootstraps.”

Herbert Hoover: Pioneer for the New Deal

Hoover’s Public Works and Opposition to Socialism

• In accordance with his trickle-down policy, Hoover pushed spending on public works projects and secured $2.25 billion from Congress.
• The most notable project was the Hoover Dam on the Colorado River, initiated in 1930 under Hoover’s leadership and completed in 1936 under Roosevelt. The dam created a massive reservoir for irrigation, flood control, and electric power generation.
• Despite supporting public works, Hoover staunchly opposed what he viewed as “Socialist Schemes.” A prime example was the Muscle Shoals Bill, which proposed a dam on the Tennessee River and was eventually adopted by Roosevelt as part of the Tennessee Valley Authority.
• Hoover vetoed the Muscle Shoals Bill primarily because he opposed the government selling electricity in competition with private businesses.

Public Works Projects — Government-funded construction projected intended to create jobs and improve infrastructure. During the Great Depression, these projects provided employment and stimulated the economy while building long-term assets like roads, dams, and public buildings. They were a key component of New Deal recovery efforts.

Hoover Dam — A large public works project completed in 1936 on the Colorado River during the Great Depression. Initially proposed during President Herbert Hoover’s Administration, the Dam provided jobs, generated hydroelectric power, and improved irrigation in the Southwest. It has become a symbol of the Federal Government’s ability to implement large-scale infrastructure development.

Muscle Shoals Bill — A proposed law to develop the Muscle Shoals hydroelectric project on the Tennessee River. First introduced in the 1920s, the bill intended to expand public power and fertilizer production. Opposed by private utility companies and vetoed by President Hoover, it laid the groundwork for later New Deal initiatives like the Tennessee Valley Authority.

Tennessee Valley Authority (TVA) — A New Deal program established in 1933 to provide economic development and modernize the Tennessee Valley Region. The TVA built dams to control flooding, generate hydroelectric power, and improve agricultural practices. It became a model for regional planning and government-led economic revitalization during the Great Depression.

Reconstruction Finance Corporation

• In early 1932, Congress established the Reconstruction Finance Corporation (RFC) with an initial capital of $500 million.
• The RFC was designed as a government lending bank to provide indirect relief by offering loans to insurance companies, banks, agricultural organizations, railroads, and state and local governments in financial distress.
• However, in keeping with Hoover’s belief in preserving individualism and personal responsibility, the RFC was prohibited from offering loans directly to individuals, earning it the nickname “the billion-dollar soup kitchen.”

Reconstruction Finance Corporation (RFC) — A federal agency created in 1932 under President Herbert Hoover to address the economic crisis of the Great Depression. It provided loans to banks, railroads, and other businesses to stabilize key industries and restore confidence in the financial system. Although it was limited in scope at first, the RFC expanded under the New Deal to support broader relief and recovery efforts. Critics argued it primarily benefited large corporations rather than individuals who needed assistance.

Hoover’s Progressive Reforms

• Hoover faced criticism for his perceived “heartlessness,” but he initiated a policy shift, providing government assistance during a crisis.
• It was a step toward the larger Social Welfare Programs that Franklin Roosevelt would implement later.
• Despite benefiting large corporations, which led to the RFC being criticized as “the millionaires’ dole,” the program was similar to the New Deal.
• The RFC provided  “pump-priming” loans, though it was established too late to be effective during the worst years of the Depression.
• The projects supported by the RFC were largely self-liquidating, and the government actually profited from its investments, earning millions of dollars.
• Hoover’s Administration made some strides in supporting labor. After intense debate, Congress passed the Norris-La Guardia Anti-Injunction Act (1932). It outlawed “yellow-dog” anti-union contracts and prevented Federal Courts from issuing injunctions to stop strikes, boycotts, and peaceful picketing.

Pump Priming Loans — Government loans or spending intended to stimulate economic activity by encouraging private investment and job creation. Used during the Great Depression, this approach assumed that initial public investment would “prime the pump” of economic recovery, leading to long-term growth.

Self-Liquidating Projects — Public Works Projects designed to generate revenue sufficient to repay their costs over time. Examples include toll roads and hydroelectric dams, which use fees or sales of services to fund operations and repayment. This concept was central to some New Deal infrastructure projects.

Norris-La Guardia Anti-Injunction Act (1932) — A law restricting the ability of courts to issue injunctions against labor strikes and picketing. It also banned “yellow dog contracts,” which forced workers to agree not to join unions as a condition of employment. The act strengthened labor rights and limited employer influence over union activities.

Yellow Dog Contracts — Employment agreements in which workers pledged not to join or support labor unions as a condition of their job. Common during the early 20th Century, these contracts were outlawed by the Norris-La Guardia Act of 1932, marking a victory for organized labor and promoting collective bargaining rights.

Social Welfare Programs — Government initiatives designed to provide support for individuals and families in need. These programs include financial aid, housing assistance, healthcare, and food security measures. They emerged prominently during the Progressive Era and the New Deal to address economic disparities and ensure a basic standard of living. Social welfare intends to reduce poverty and promote social stability.

Hoover and the Hostile Congress

• Hoover’s difficulties were exacerbated by a Republican-controlled Congress that was often uncooperative, especially during his first two years in office.
• Tensions increased during the final two years of Hoover’s term as the American people, frustrated by the ongoing Depression, voted for more Democrats in the 1930 Congressional Elections, significantly reducing the Republican majority.
• Democrats gained control of the House and nearly took control of the Senate, while some Republicans allied with opposition Democrats to challenge Hoover’s policies.
• Hoover accused Congress of deliberately creating problems for him, stating that they “played politics with human misery” during the national crisis.

Routing the Bonus Army in Washington

World War I Veterans and the Bonus March

• Many World War I veterans were impacted by the Great Depression, and their attention turned to the Bonus promised to them by the Adjusted Compensation Act.
• The government had voted in 1924 to grant veterans a deferred bonus, payable in 1945, but the economic hardships of the Depression led the veterans to demand early payment.
• In the summer of 1932, tens of thousands of veterans marched on Washington to demand the immediate payment of the Bonus.
• The “Bonus Expeditionary Force” (BEF) set up public camps and shacks on vacant lots, creating an unsanitary Hooverville and posing a public health risk while attempting to pressure Congress into paying the Bonus.
• Despite their efforts, a Bonus Bill narrowly failed to pass in Congress.
• In response, Hoover arranged to pay for about 6,000 marchers to return home.
• The remaining veterans refused to leave despite being ordered to.

Bonus Army — A group of approximately 43,000 World War I veterans and their supporters who marched on Washington, D.C., in 1932 to demand early payment of a promised Bonus for their wartime service. The government had scheduled the payments for 1945, but the Great Depression left many veterans in desperate financial need. The protest ended violently when President Hoover ordered the U.S. Army to forcibly remove the demonstrators, leading to public outrage and tarnishing Hoover’s reputation.

The Battle of Anacostia Flats

• After riots resulted in two deaths, Hoover ordered the U.S. Army to remove the Bonus Army from Washington.
• Hoover accused the marchers of being led by “riffraff and reds,” and a small number were former convicts or Communist agitators.
• General Douglas MacArthur led U.S. troops but used more force than Hoover wanted, including bayonets and tear gas.
• Former soldiers were injured, and their makeshift homes were set on fire in what became known as the “Battle of Anacostia Flats.”
• An 11-month-old “bonus baby” allegedly died from exposure to the tear gas.

Battle of Anacostia Flats (1932) — A violent confrontation on July 28, 1932, between the U.S. Army and members of the Bonus Army, a group of World War I veterans demanding early payment of their service Bonus. The veterans, encamped in Anacostia Flats near Washington, D.C., were forcibly removed under orders from President Hoover. Led by General Douglas MacArthur, the Army used tanks, cavalry, and tear gas, resulting in injuries and widespread destruction. The incident further damaged Hoover’s public image during the Great Depression.

Douglas MacArthur (1880–1964) — A prominent U.S. Army officer who played key roles in multiple conflicts, including World War I, World War II, and the Korean War. In 1932, as Army Chief of Staff, he led the controversial eviction of the Bonus Army from Anacostia Flats, an action criticized for its harshness. Known for his leadership in the Pacific during World War II, MacArthur oversaw Japan’s postwar reconstruction and later commanded United Nations forces during the Korean War, though he was relieved by President Truman in 1951 due to policy disagreements. His career was marked by both military brilliance and contentious decision-making.

Hoover’s Fall from Popularity

• The eviction of the Bonus Army damaged Hoover’s popularity with the public.
• Democrats capitalized, using smear tactics to discredit Hoover.
• Some argued the “Great Engineer” had only succeeded in “ditching, draining, and damning the country.”
• The Depression was unfairly labeled the “Hoover Depression,” and the public was increasingly critical of him.
• Hoover had been portrayed as a crisis-solver, but his efforts failed.
• Franklin D. Roosevelt and the Democratic Party were ready to capitalize on public discontent and take advantage of Hoover’s failures.

Japanese Militarists Attack China

Japan Invades Manchuria

• The Great Depression also contributed to growing difficulties abroad.
• In September 1931, Japan took advantage of the global turmoil to expand its influence in East Asia and invaded Manchuria.
• Japan quickly took control and ended the Open Door Policy.
• This aggressive move escalated Japan’s imperial ambitions at a time when Western powers were preoccupied with the Depression.

Japanese Invasion of Manchuria (1931) — In 1931, Japan invaded Manchuria, a resource-rich region in northeastern China, following the staged Mukden Incident, in which Japanese forces falsely claimed Chinese sabotage on a railway. The invasion marked the start of Japan’s aggressive expansion in Asia, leading to the establishment of the puppet state of Manchukuo. The League of Nations condemned the act but failed to take effective action, undermining its credibility and encouraging further Japanese aggression, contributing to tensions that led to World War II.

Mukden Incident (1931) — A staged event on September 18, 1931, where Japanese military personnel planted explosives on a Japanese-owned railway near Mukden (now Shenyang) in Manchuria and then blamed Chinese forces. The incident served as justification for Japan’s invasion of Manchuria, leading to the establishment of the puppet state of Manchukuo.

Manchukuo — Japan established a puppet state in Manchuria in 1932 following its invasion. Officially headed by China’s last Emperor, Puyi, Manchukuo was controlled by the Japanese military and used as a military base for further territorial expansion. Although its creation was condemned internationally, it showed the weakness of the League of Nations, which was unable to slow Japan’s imperial ambitions.

Puppet State — A country that is formally independent but is effectively controlled by another, more powerful nation. The dominant nation manipulates the Puppet State’s government, policies, and economy to serve its own interests. Examples include Manchukuo, established by Japan in 1932 in Manchuria, which was nominally led by a Chinese Emperor but was under complete Japanese control. Puppet States are often used to expand influence while avoiding direct annexation.

Global Response to the Invasion

• Japan’s Invasion of Manchuria shocked peaceful nations, as it was a clear violation of the League of Nations covenant and other treaties signed by Japan.
• Some Americans expressed outrage and called for boycotts or blockades against Japan.
• Some believed that a strict blockade imposed by the League of Nations, with U.S. support, could have forced Japan to end its aggressive actions and held it accountable.

The U.S. Response to the Invasion

• The League of Nations was unable to take strong action against Japan’s invasion of Manchuria, partially because the U.S. was not a member.
• In 1931, the U.S. rejected efforts to apply economic pressure on Japan, and Secretary of State Henry L. Stimson adopted a weak response known as the Stimson Doctrine.
• The doctrine stated that the U.S. would not recognize any territorial changes achieved by force.
• It did little to alter Japan’s course of action, which bombed Shanghai in 1932, causing civilian casualties.
• While some Americans responded with informal boycotts of Japanese goods, there was no widespread desire for military intervention.
• The U.S. remained focused on its own economic struggles.

Henry L. Stimson (1867–1950) — A U.S. statesman who served as Secretary of War and Secretary of State during key moments in American history. As Secretary of State under President Hoover, Stimson is known for the Stimson Doctrine, which opposed territorial acquisitions by force, particularly in response to Japan’s Invasion of Manchuria in 1931.

Stimson Doctrine — Announced in 1932, this piece of U.S. foreign policy declared the United States would not recognize any territorial acquisitions achieved through aggression. It was a direct response to Japan’s Invasion of Manchuria and the establishment of Manchukuo. The Doctrine intended to discourage military aggression but lacked methods of enforcement.

First Battle of Shanghai (1932) — In early 1932, a conflict between Japan and China raged in and around Shanghai. The conflict was caused by rising tensions and Japanese efforts to assert control in China. It involved urban combat and airstrikes, resulting in significant casualties and destruction. The battle lasted from January to March and ended in a ceasefire. It is also known as the “January 28 Incident” and the “Shanghai Incident.”

The End of Collective Security

• The Invasion of Manchuria (1931) was the end of “collective security” and the beginning of tensions that would lead to World War II.
• The League of Nations had the economic and naval power to stop Japan, but it lacked the resolve to take decisive action. This was partly because the United States was unwilling to support international intervention.
• Despite this, the events of the early 1930s brought the U.S. closer to ending Isolationism than many had anticipated in the early 1920s. The nation was increasingly involved in global affairs, even if only through diplomatic and economic means.

Collective Security — A system in which nations agree to cooperate to maintain peace and deter aggression by collectively responding to threats against any member. The concept was key to the establishment of international organizations like the League of Nations after World War I and later the United Nations. While intended to prevent conflicts through unified action, its effectiveness has often been limited by competing national interests and the failure of key nations to participate or enforce decisions, as seen in the League’s inability to curb aggression in the 1930s.

Hoover Pioneers the Good Neighbor Policy

Hoover’s Goodwill Efforts in Latin America

• Hoover’s Presidency marked a more hopeful shift in U.S.-Latin American relations, with the new President taking a personal interest in the region.
• Shortly after being elected, Hoover went on a goodwill tour of Latin America, traveling aboard a U.S. battleship to strengthen diplomatic ties and promote positive relations with the nations south of the Rio Grande River.

Shift in U.S. Attitude Toward Latin America During the Great Depression

• The Great Depression led to a shift in U.S. attitudes toward its weaker Latin American neighbors, softening its historically aggressive stance.
• After the Stock Market Crash (1929), Americans had fewer resources to invest abroad, and many investments in Latin America struggled.
• As a result, some Americans felt they were more victims of exploitation than perpetrators of “economic imperialism.”
• Economic Imperialism, once popular during the prosperous 1920s, became much less favored in the United States as the Great Depression continued.

Economic Imperialism — A form of control where powerful nations dominate the economies of weaker countries, often without direct political governance. This domination is achieved through investments, trade agreements, and the exploitation of Natural Resources to benefit the controlling nation. Examples include the influence the U.S. and other Western Nations held in Latin America and Asia during the 19th and 20th Centuries, where local economies were shaped to serve foreign interests, sometimes leading to economic dependency and unequal development.

Hoover’s Shift Toward the Good Neighbor Policy

• As an advocate for international goodwill, Hoover wanted to abandon the interventionist approach to the Monroe Doctrine that had been established by Theodore Roosevelt with the Roosevelt Corollary.
• In 1932, Hoover negotiated a treaty with Haiti that led to the complete withdrawal of American troops by 1934, signaling a shift in U.S. foreign policy.
• In 1933, U.S. Marines were also withdrawn from Nicaragua, ending an almost continuous military presence of 20 years.
• Hoover laid the groundwork for the “Good Neighbor Policy,” which promoted cooperation and non-intervention in Latin America.

Roosevelt Corollary to the Monroe Doctrine — Announced by President Theodore Roosevelt in 1904, this extension of the Monroe Doctrine declared that the U.S. would intervene in the financial affairs of Latin American countries to maintain stability and order, preventing European involvement in the region.

Good Neighbor Policy — A U.S. foreign policy introduced by President Franklin D. Roosevelt in the 1930s that sought to improve relations with Latin American countries. It emphasized non-intervention and mutual respect, replacing earlier policies of military intervention, such as the Roosevelt Corollary. The policy sought to strengthen economic and political ties and was exemplified by the withdrawal of U.S. troops from Nicaragua and Haiti. It marked a shift in U.S.-Latin American relations during a period of global instability.

Struggling for Justice at Home and Abroad in the Progressive Era

The notes on this page are based on the 16th edition of The American Pageant. We have expanded on the source material with additional details, corrections, and links to Encyclopedia Entries that explain topics in more detail. For more information, including terms and definitions, see the following:

• AP US History — Units and Topics
• Chapter 28 — America on the World Stage
• Chapter 29 — Progressivism and the Republican Roosevelt
• Chapter 30 — Wilson Progressivism at Home and Abroad
• Chapter 31 — The War to End War
• Chapter 32 — American Life in the Roaring Twenties
• Chapter 33 — Politics of Boom and Bust
• Chapter 34 — Great Depression and the New Deal
• Chapter 35 — Franklin D. Roosevelt and the Shadow of War
• Chapter 36 — America in World War II