The Great Depression

 

I.                    The Republican “Old Guard” Returns

a.       Characteristics of Warren G. Harding

                                                               i.      Was one of the best-liked men of his generation

                                                             ii.      He was easygoing and very kind

                                                            iii.      He hated to hurt people’s feeling by saying no.  People capitalized on this weakness

                                                           iv.      His intelligence was mediocre

                                                             v.      He couldn’t tell if someone was lying

                                                           vi.      Promised return to “normalcy”

b.      What Ideas Did He Represent?

                                                               i.      Opposed to League of Nations

                                                             ii.      Low taxes

                                                            iii.      High tariffs

                                                           iv.      Immigration restrictions

                                                             v.      Aid to farmers

c.       Cabinet

                                                               i.      Secretary of State

1.      Charles Evans Hughes

a.       Was a brilliant and capable leader

                                                             ii.      Secretary of the Treasury

1.      Andrew W. Mellon

a.       Also was intelligent

                                                            iii.      Secretary of Commerce

1.      Herbert Hoover

a.       Did well as the wartime food administrator

                                                           iv.      Secretary of the Interior

1.      Albert B. Fall

a.       Was a scheming anticonservationist

                                                             v.      Attorney General

1.      Harry M. Daugherty

a.       Was supposed to prosecute wrongdoers, but he himself was a crook

II.                 GOP Reaction At the Throttle

a.       Old Guard Restored

                                                               i.      The reforms of the progressive era were wiped out under Harding, Coolidge, and Hoover

                                                             ii.      They favored laissez-faire (not only did they want the government to leave business alone, but guide them to making profits)

                                                            iii.      All presidential appointments would favor this policy

b.      Supreme Court

                                                               i.      Appointed 4 of the 9 justices

                                                             ii.      Most were very conservative except for ex-president Taft, who served as chief justice.  He performed his duties well and was more liberal than the rest

                                                            iii.      However, the Supreme Court did away with much of the progressive legislation:

1.      Killed a federal child-labor law

2.      Stripped away many of labor’s gains

3.      Restricted government intervention in the economy

c.       Adkins v. Children’s Hospital (1923)

                                                               i.      Reversed its decision in Muller v. Oregon, which had declared women to be deserving of special protection in the workplace, and invalidated a minimum-wage law for women

                                                             ii.      They ruled this because of the passage of the 19th Amendment.  Now that women were the legal equals of men, they could no longer be protected by special legislation

                                                            iii.      This question would continue to be debated over the rest of the century:

1.      Were women sufficiently different from men and if they were, did that merit special legal and social treatment?

2.      Affirmative-action policies followed the same question over racial differences

d.      Big Industrialists

                                                               i.      Antitrust laws were ignored, circumvented, or weakly enforced

                                                             ii.      People were appointed to agencies that were sympathetic to the businesses they were supposed to be regulating

                                                            iii.      Secretary Hoover hated waste resulting from competition and encouraged voluntary cooperation among businesses to make more profits (i.e. - standardize products, publicity campaigns, etc.).  He even encouraged companies to regulate themselves

III.               The Aftermath of War

a.       Railroads

                                                               i.      Government returned to private management

                                                             ii.      Reformers had hoped that wartime government operation of the lines might lead to their permanent nationalization

                                                            iii.      Esch-Cummins Transportation Act of 1920 – encouraged private consolidation of the railroads and pledged the Interstate Commerce Commission to guarantee their profitability

b.      Shipping Business

                                                               i.      Government left this industry alone

                                                             ii.      Merchant Marine Act of 1920 – authorized the Shipping Board, which controlled about 1,500 vessels, to dispose of much of the hastily built wartime fleet at low bargain prices

                                                            iii.      The ships could be sold to foreign competitors, which would make it difficult for American shipping to thrive (and would result in bad food and low wages for those who operated the ships (La Follette Seaman’s Act of 1915 had prevented this))

c.       Labor

                                                               i.      Now that government wasn’t supporting labor after the war, bloody strikes erupted

                                                             ii.      Railway Labor Board ordered a wage cut of 12% in 1922, which the president and attorney general supported

                                                            iii.      Unions shrank and membership went down 30% between 1920-1930

d.      Veterans

                                                               i.      Got lasting benefits from the war

                                                             ii.      Veterans Bureau –

1.      Created in 1921

2.      To operate hospitals and provide rehabilitation for the disabled

                                                            iii.      American Legion –

1.      Founded in Paris in 1919 by Colonel Teddy Roosevelt, Jr.

2.      Veterans met to share old stories and let off steam

3.      Became notorious for its aggressive lobbying for veterans’ benefits

a.       They demanded that former servicemen have “adjusted compensation” to make up for the wages they had “lost” when they turned in their factory jobs for the military

b.      Congress passed a bonus bill in 1922, but Harding vetoed it

c.       Congress passed another bonus bill, called the Adjusted Compensation Act of 1924, but Coolidge vetoed it.  However, Congress overrode it and had to pay $3.5 billion

IV.              America Seeks Benefits Without Burdens

a.       Harding and the Treaty of Versailles

                                                               i.      Treaty rejected; were technically still at war with the Central Powers

                                                             ii.      July 1921 – Congress passed a joint resolution that declared the war to be ended

                                                            iii.      Many still considered the League of Nations to be bad, however, unofficial observers were sent to record their proceedings

b.      Britain, the U.S., and Oil

                                                               i.      Rivalry developed between the two countries over Europe in the Middle East

                                                             ii.      Oil helped the U.S. to victory in WWI

                                                            iii.      Experts recognized that oil could be very important in the future

c.       Naval Build Up

                                                               i.      Businesspeople became increasingly unwilling to pay for the naval build up that started during the war

                                                             ii.      Britain and Japan began to build up their own navies for fear that the American navy would dominate

d.      Disarmament Conference

                                                               i.      Occurred in Washington, D.C. in 1921-22

                                                             ii.      All major powers were invited, except for Bolshevik Russia, who the U.S. refused to recognize

1.      Five-Power Naval Treaty –

a.       Harding seized the initiative for naval disarmament

b.      Secretary Hughes submitted a plan for a 10-year “holiday” on the construction of battleships and for scrapping some of them.  He believed that Britain and America should have the same number of ships, with Japan having less – a ratio of 5:5:3

c.       Japan didn’t like the deal they were getting.  They were compensated by the British and Americans agreeing that they would refrain from fortifying their Pacific possessions (including the Philippines).  Japan, on the other hand, was not subjected to these restraints

d.      The Five-Power Naval Treaty (U.S., Britain, Japan, France, and Italy) was signed in 1922

2.      Four-Power Treaty

a.       Bound Britain, Japan, France, and the U.S. to preserve equality in the Pacific (status quo)

3.      Nine-Power Treaty

a.       China, an economically underprivileged country, was given a boost by 9 nations agreeing to the Open Door policy

e.       End of the Disarmament Conference

                                                               i.      Harding had achieved some victories

                                                             ii.      No restrictions had been placed on cruisers, destroyers, and submarines, which countries created at a frantic pace

                                                            iii.      Five-Power Treaty in essence gave Japan naval superiority in the Pacific

                                                           iv.      Congress declared that it would not be bound militarily be the Four-Powers Treaty, making the treaty nearly dead

                                                             v.      Americans seemed content to rely for their security on words and wishful thinking rather than on weapons and realism

f.        Kellogg-Briand Pact (Pact of Paris)

                                                               i.      Created by:

1.      Frank B. Kellogg – Calvin Coolidge’s Secretary of State (he who the Nobel Peace Prize for this treaty)

2.      Briand – French foreign minister

                                                             ii.      Signed by 62 nations in 1928

                                                            iii.      Provisions of the treaty:

1.      Agreed that all conflicts should be settled by peaceful means and that war was to be renounced

2.      Any war started has to be done in self-defense

g.       Results of the Treaty

                                                               i.      What scheming aggressor could not cook up an excuse of self-defense?

                                                             ii.      The pact lacked effectiveness as it failed to provide enforcement measures

                                                            iii.      It reflected the false sense of security that Americans had

V.                 Hiking the Tariff Higher

a.       Why High Tariffs?

                                                               i.      Businesspeople wanted to keep the profits of the 1920s high having high tariffs

                                                             ii.      A recession from 1921-1922 helped heighten their fears of cheap goods being imported from Europe

b.      Fordney-McCumber Tarriff of 1922

                                                               i.      Tariff went from 27% to 38.5%

                                                             ii.      Duties on farm produce were increased to equalize American and foreign production

                                                            iii.      The president was authorized to increase or reduce the tariff by 50%

                                                           iv.      In 6 years, Harding and Coolidge authorized 32 upward changes, while only 5 reductions

c.       Results of Higher Tariffs

                                                               i.      European countries were bankrupt and needed to sell their products to the U.S. to recover

                                                             ii.      America didn’t give foreign nations a change to make a profit so they could buy their manufactured items and repay debts they owed to the U.S.

                                                            iii.      It turned into a cycle, where the U.S. would raise their tariffs and Europe would do the same

VI.              Scandals

a.       Colonel Charles R. Forbes

                                                               i.      Was the head of the Veterans Bureau and appointed by Harding

                                                             ii.      Took $200 million from the government; he was supposed to be using the money to build hospitals

                                                            iii.      Was sentenced to two years in prison

b.      Teapot Dome Scandal

                                                               i.      Involved naval oil reserves at Teapot Dome, Wyoming and Elk Hill, California

                                                             ii.      1921 –

1.      Secretary of the Interior Albert B. Fall convinced the Secretary of the Navy to transfer those two properties to the Interior Department

2.      Harding signed them over to the Interior

3.      Fall leased the lands to oil tycoons Harry Sinclair and Edward Doheny for $100,00 and $300,000 respectively (this was a bribe paid directly to Fall)

                                                            iii.      1923 –

1.      News began to leak out in March

                                                           iv.      1924 –

1.      Fall, Sinclair, and Doheny were indicted

                                                             v.      1929 –

1.      Courts found Fall guilty of taking a bribe and sentenced to one year in jail (was first cabinet member to go to jail)

2.      Sinclair and Doheny were acquitted

c.       Results of the Teapot Dome Scandal

                                                               i.      Lowered the prestige of the Washington government

                                                             ii.      Acquittal of Sinclair and Doheny:

1.      Undermined faith in the courts

2.      Solidified the belief that you can’t put a millionaire in jail

d.      Attorney General Daugherty

                                                               i.      Senate investigated him in 1924 over the illegal sale of pardons and liquor permits

                                                             ii.      Forced to resign

                                                            iii.      Was released after a jury twice failed to agree on guilt or innocence

e.       President Harding

                                                               i.      Went on a speechmaking tour across the country, even to AL

                                                             ii.      Died of pneumonia and thrombosis (a blood clot, usually in an artery to heart or vessel to brain) on his way back

                                                            iii.      His death may have been hastened by a broken hear resulting from the disloyalty of scheming friends

                                                           iv.      Harding, admittedly, was not a strong enough man for the presidency

VII.            Calvin Coolidge

a.       Characteristics of Coolidge

                                                               i.      Embodied virtues of honesty, morality, industry, and frugality

                                                             ii.      Was shy and had only mediocre powers of leadership

                                                            iii.      Had the same “hands off” policy as his predecessor

b.      Restoring Prestige to the Government

                                                               i.      Increased the moral dignity of the government

                                                             ii.      The public, though at first shocked by the scandals, quickly simmered down, perhaps in part due to the economic prosperity of the times

VIII.         Frustrated Farmers

a.       Prosperity During Wartime

                                                               i.      Much of the food was shipped to the Allied soldiers from the U.S. and other nations

                                                             ii.      Europe couldn’t support themselves with food during the war because:

1.      Men were fighting in the war

2.      The war was being fought where they’d grow crops

                                                            iii.      Government guaranteed prices

                                                           iv.      Now that the war was over, foreign production reentered world commerce

b.      Machines Threaten Farmers

                                                               i.      The gasoline-engine tractor helped cultivate many crops than they could with a horse-drawn plow.  Farmers owned 10 times as many in 1930 as they did in 1920

                                                             ii.      The wartime boom had encouraged farmers to bring vast new tracts under cultivation, especially in the “wheat belt” of the upper Midwest

                                                            iii.      Improved efficiency and expanded agricultural acreage helped to pile up more surpluses

                                                           iv.      In the 1920s, 1 in 4 farms was sold for debt or taxes

c.       Relief For Farmers

                                                               i.      A bipartisan (two parties working together) “farm bloc” from the agricultural State formed in Congress in 1921 and helped drive some laws through that would help farmers

                                                             ii.      Capper-Volstead Act – exempted farmers’ marketing cooperatives from antitrust prosecution

                                                            iii.      McNary-Haugen Bill – sought to keep agricultural prices high by authorizing the government to buy up surpluses and sell them abroad (however, Coolidge vetoed it)

                                                           iv.      Farms prices stayed down

IX.              A Three-Way Race for the White House in 1924

a.       Republican Nomination

                                                               i.      Easily nominated Coolidge

                                                             ii.      Believed in leading through inactivity

                                                            iii.      Stated, “The chief business of the American people is business”

b.      Democratic Nomination

                                                               i.      Party was split between:

1.      “wets” and “drys”

2.      Urbanites and farmers

3.      Fundamentalists and Modernists

4.      Northern liberals and southern conservatives

5.      Immigrants and old-stock Americans

                                                             ii.      Deadlocked on 102 ballots, but eventually nominated John W. Davis

                                                            iii.      He was a wealthy corporation lawyer connected with the Wall Street banking house of J.P. Morgan and Company (he was as conservative as Coolidge)

c.       Progressive Nomination

                                                               i.      Nominated Senator LaFollette (WI)

                                                             ii.      Gained endorsement of the AFL and Socialist party

                                                            iii.      Platform called for:

1.      Government ownership of railroads and relief for farmers (which was its base)

2.      Break-up of monopolies

3.      Against antilabor injunctions (court orders that forced strikers to work)

4.      Urged a constitutional amendment to limit the Supreme Court’s power to invalidate laws passed by Congress

                                                           iv.      Times were too good for many people to listen to his reform proposals

d.      Election of 1924

                                                               i.      Coolidge won:

1.      15.7 million-8.4 million-5 million

2.      382-136-13

X.                 Foreign Policy Floundering

a.       League of Nations and the U.S.

                                                               i.      Was considered an unclean thing

                                                             ii.      Refused at first to support their world health program

                                                            iii.      Was unwilling to adhere to the World Court, the judicial arm of the League of Nations

b.      Intervention In the Caribbean and Central America

                                                               i.      Dominican Republic

1.      Troops were withdrawn after 8 years from the island in 1924

                                                             ii.      Haiti

1.      Troops remained here from 1914-1934

                                                            iii.      Nicaragua

1.      Coolidge briefly removed troops in 1925, but sent them back in 1926 until 1933

                                                           iv.      Mexico

1.      Oil companies clamored for military action in Mexico in 1926, when the Mexican government began to take over oil reserves

2.      Coolidge defused the crisis, but Mexicans didn’t like his hard-nosed tactics

c.       International Debts

                                                               i.      1914 – America had been in debt $4 billion

                                                             ii.      1922 – America was owed $16 billion

                                                            iii.      American investors loaned some $10 billion to foreigners in the 1920s.  However, even this didn’t help the world economy

                                                           iv.      Americans invested more in their profitable domestic economy, rather than invest overseas

d.      Money Loaned To the Allies

                                                               i.      Key problem was the $10 billion that the U.S. government had loaned to the Allies during and after the war

                                                             ii.      The U.S. wanted to be paid

                                                            iii.      The Allies protested that the demand for repayment was unfair:

1.      The French and British argued that they fought against a common foe until America finally entered the fray.  America should write off the loans because Britain and France had paid dearly with the death of millions

2.      The debtors complained that their dollars had fueled the wartime boom in America, so they should be happy

3.      America’s postwar tariff walls made it almost impossible for them to sell the goods to earn the money to pay their debts

XI.              Unraveling the Debt Knot

a.       Reparation Payments

                                                               i.      Because the Americans were demanding repayment, the French and British demanded that the Germans make reparations payments equaling $32 billion

                                                             ii.      The French, hoping to increase lagging reparation payments, sent troops into Germany’s industrialized Ruhr Valley in 1923.  In response, Berlin allowed their currency to inflate astronomically.  At one point in October 1923, a loaf of bread cost 480 million marks, or about $120 million

                                                            iii.      Coolidge turned aside suggestions of debt cancellation; they insisted there was no connection between debts and reparations

b.      Dawes Plan of 1924

                                                               i.      Charles Dawes was about to be nominated as Coolidge’s running mate

                                                             ii.      It created a cycle:

1.      U.S. banks loaned money to Germany

2.      Germany paid reparations to France and Britain

3.      France and Britain paid war debts to the U.S.

                                                            iii.      The plan would play a part in the development of the Great Depression, because when America had financial problems, it caused financial problems with the entire world due to this cycle

c.       Results of the Dawes Plan

                                                               i.      The U.S. never was fully repaid its money

                                                             ii.      The U.S. caused European countries to be resentful of them

                                                            iii.      The whole episode contributed to the U.S. wanting to remain neutral during the 1930s

XII.            The Triumph of Herbert Hoover

a.       Republican Nomination

                                                               i.      Coolidge choose not to run

                                                             ii.      His successor was Herbert Hoover, who was admired by the masses

                                                            iii.      His platform emphasized:

1.      Prosperity that the Republicans had established

2.      Prohibition

b.      Democratic Nomination

                                                               i.      Nominated Alfred E. Smith, a 4-time governor of New York

                                                             ii.      These were his problems:

1.      He was against prohibition, when the country as a whole was still devoted to the “noble experiment”

2.      To a nation that had only recently moved to the city, the native New Yorker seemed too urban

3.      He was a Roman Catholic in an overwhelmingly Protestant and prejudiced land

4.      Was a descendant of Irish grandparents

                                                            iii.      If he would have been a Catholic, wet, urbanite, from New York, Irish, or liberal separately, he may have been more widely accepted, but since he was all combined, it seemed un-American, so he wasn’t well accepted (especially in the Democratically dominated (and KKK majority) South)

                                                           iv.      Was mudslinging at the lower-level; Smith’s Catholicism was put into the open – “A Vote for Al Smith Is a Vote for the Pope”

c.       Radio and the Campaign

                                                               i.      Radio figured prominently in this campaign for the first time

                                                             ii.      Smith was more personality, but didn’t project it through the radio.  He had a Lower East Side twang, while Hoover sounded very statesmanlike

d.      Herbert Hoover’s Characteristics

                                                               i.      Was a poor orphan boy who worked his way through Stanford University

                                                             ii.      Raised by Quakers

                                                            iii.      Was a successful mining engineer and brilliant businessman

                                                           iv.      Worked abroad, which strengthened his faith in American isolationism, individualism, free enterprise, and small government

                                                             v.      Was shy, standoffish, and stiff – he was use to giving orders to workers, not getting votes in public

                                                           vi.      His biggest strength was his integrity and humanitarianism

                                                          vii.      Was a self-made millionaire, so he didn’t like socialism, paternalism, or government interference in the economy.  However, as secretary of commerce, he exhibited some progressive instincts by endorsing labor unions and supporting federal regulation of the new radio broadcasting industry

e.       Election of 1928

                                                               i.      Hoover won:

1.      21.4 million-15 million

2.      444-87

                                                             ii.      Republican majority in the House of Representatives

                                                            iii.      First Republican to get the most votes from Southern and border States since the South had succeeded

XIII.         President Hoover’s First Moves

a.       Disorganized Farmers

                                                               i.      Two large groups of citizens were not getting their share of the riches: wage earners and farmers

                                                             ii.      Hoover’s administration promoted self-help

                                                            iii.      Agricultural Marketing Act of 1929

1.      Designed to help farmers help themselves, largely through producers’ cooperatives

2.      Federal Farm Board – had $500 million at is disposal and was lent to farm organizations seeking to buy, sell, and store agricultural surpluses

a.       Created the following two corporations in 1930

b.      Grain Stabilization Corporation and the Cotton Stabilization Corporation – the goal was to bolster sagging prices by buying up surpluses

c.       However, wheat and cotton continued to drop in price, as surpluses mounted up

b.      Hawley-Smoot Tariff of 1930

                                                               i.      Farmers hoped that a higher tariff would help them

                                                             ii.      Started in the House as a fairly reasonable measure, but like most tariff bills, it acquired many riders

                                                            iii.      Raised the tariff from 38.5% to 60%

                                                           iv.      It turned out to be the highest protective tariff in the nation’s peacetime history

c.       Reaction to the Tariff

                                                               i.      To foreigners, it seemed like a declaration of economic warfare on the entire outside world

                                                             ii.      Reversed a promising worldwide trend toward reasonable tariffs

                                                            iii.      Created a decline in exports

                                                           iv.      Plunged both America and other nations deeper into the depression

                                                             v.      Increased international financial chaos

                                                           vi.      The U.S. went further into economic isolation, which played in the hands of Adolf Hitler

XIV.         The Great Crash Ends the Golden Twenties

a.       Why Didn’t People Foresee the Depression?

                                                               i.      Stock value had risen from $27 billion in 1925 to $87 billion in 1929.  The stock market was widely regarded as the nation’s economic weathervane, things were looking up

                                                             ii.      Unemployment was below 4%, even with industries increasingly using the assembly line

                                                            iii.      Wages had risen 40% since WWI

b.      The Last Straw Before Depression

                                                               i.      Caused by British, raised interest rates so that people who spent money on American investments would save their money and no longer invest in American businesses/stocks

                                                             ii.      Businesses/stocks might start to decline and not make as much of a profit as before because the British are no longer investing in them, so people started selling as quickly as possible in order to not lose all their profits

                                                            iii.      Black Thursday - After reaching a peak of 381, stock prices began to slowly fall.  On Wednesday, October 23rd, the Dow Jones average dropped 21 points in 1 hour.  The following day, called Black Thursday, investors began to sell, causing stock prices to fall.  Investors who had bought a share at $400 were now selling at $283

                                                           iv.      Black Tuesday - On October 29th, called Black Tuesday, a record 16.4 million shares were sold, compared to the usual average of 4-8 million that were bought and sold each day earlier in the year

                                                             v.      Great Crash - The collapse of the stock market.  By Nov. 13th, the Dow Jones had gone from 381 to 199.  Loses totaled $30 billion

c.       What Were the Results of the Great Depression?

                                                               i.      Workers –

1.      Thousands of workers lost their jobs or had their pay cut.  By 1932, the US had more than 12 million people unemployed

2.      There was no program for unemployment insurance

                                                             ii.      Families –

1.      Felt helpless to control the depression; it wasn’t like other physical problems they had to endure (like moving out west)

2.      Many lost their homes and farms

3.      Initiative and self-respect were stifled.  People:

a.       Begged for food or stood in long lines for hand outs

b.      Fought over the contents of garbage cans

c.       Lived in tin and paper houses called “Hoovervilles”

                                                            iii.      Business –

1.      Businesses closed and prices dropped

2.      Farm prices, already low, fell even more.  Cotton dropped from 17 cents to 6.5 cents a pound

                                                           iv.      Gross National Product (GNP) –

1.      The total value of goods and services a country produces annually.  In 1929, it was $103 billion, by 1933, it was $56 billion

                                                             v.      Banks –

1.      By 1932, more than 5,500 banks failed

XV.           Causes of the Great Depression

a.       What Were the Economic Danger Signs?

                                                               i.      Few people sensed that prosperity might end because of overproduction

                                                             ii.      Mainly the rich got richer- .01% of the population held 34% of the country’s savings; 200 companies controlled 49% of American industry

                                                            iii.      Buying on credit- People began to buy items whether they could afford them or not, resulting in an increase in personal debt

                                                           iv.      “Get rich quick” attitude- The rising stock prices encouraged speculation, the practice of making high-risk investments in hopes of getting a high return.  Before WWI, only the wealthy played the stock market.  Now, more and more ordinary people were risking their money on the stock market

                                                             v.      Buying on margin- Allowed investors to purchase a stock for part of its price and borrow the rest until they could pay it off.  Investors hoped that the stock price went up so that they could both pay off the loan and still make money

                                                           vi.      Too many products, too little demand- Industries were producing goods much faster than people could buy them.  The automobile and related industries began to slump as early as 1925 because of overproduction

                                                          vii.      Trouble for farmers- Farm prices were high during and just after WWI.  This allowed farmers to buy more land and machinery that was becoming available.  When farm prices plummeted, farmers were unable to repay their debts.  Many farms and banks, who loaned farmers money, went out of business

                                                        viii.      Trouble for workers- While companies grew, most laborers still worked long hours for low wages.  In one town, women worked a 56 hour week, earning 16 to 18 cents an hour – about $10 a week

                                                           ix.      Tariffs- Dried up international trade

                                                             x.      World Interdependence- By the 1930s, international banking, manufacturing, and trade had made nations interdependent.  When the US economy, which was the world’s leading economy, fell, the global economic system began to fall apart.  Germany suspended reparation payments and the Allies in turn stopped paying their debts to the U.S.

XVI.         Bad Times

a.       Hoover’s Reaction to the Great Depression

                                                               i.      Getting the U.S. out of it was a task that was over his head

                                                             ii.      Convinced that industry, thrift, and self-reliance were the virtues that had made America great, President Hoover feared that a government handout would weaken, perhaps destroy, the national fiber

                                                            iii.      Eventually, as things worsened, Hoover was forced to turn from his doctrine of self-help and accept the fact that the government needed to intervene to help the welfare of the people

b.      Trickle-Down Policy

                                                               i.      He decided to compromise between the hands-off and hands-on policy by assisting the hard-pressed railroads and banks in the hope that if financial health were restored at the top of the economic pyramid, unemployment would be relieved at the bottom on a trickle-down basis

c.       Critics of the President

                                                               i.      He fed the faraway Belgians, but wouldn’t feed his own people

                                                             ii.      He helped the rich, but wouldn’t help the people who really needed it

                                                            iii.      He would lend money to agricultural organizations to feed the pigs, but not the people

d.      Results of Hoover’s Measures

                                                               i.      Proved that non-government interference wouldn’t help the economy.  Most presidents before Hoover had a policy of “sweating it out” when it came to economic woes

                                                             ii.      His efforts, when he intervened in the economy, probably prevented a more serious collapse than what happened

                                                            iii.      His expenditures for relief were revolutionary for that day and paved the way for FDR’s New Deal

XVII.      Hoover Battles the Great Depression

a.       Public Works Projects

                                                               i.      Got $2.25 billion for public works projects from Congress:

                                                             ii.      Hoover Dam –

1.      Constructed from 1930-1936

2.      Created a huge man-made lake for purposes of irrigation, flood control, and electric power

                                                            iii.      Muscle Shoals Bill –

1.      Designed to dam the Tennessee River so that the government could sell electricity to the region

2.      Hoover vetoed this measure, mostly because he opposed the government’s selling electricity in competition with its own citizens in private companies

3.      Was ultimately embraced by Roosevelt’s Tennessee Valley Authority (TVA)

b.      Reconstruction Finance Corporation (RFC)

                                                               i.      Created in 1932

                                                             ii.      Established to loan money (had $1/2 billion) to insurance companies, banks, agricultural organizations, railroads, and State and local governments

                                                            iii.      Problems –

1.      No loans to individuals

2.      Projects made just enough money to pay for themselves

3.      The government profited from being a banker

4.      Accused to giving assistance to the wealthy

c.       Benefits For Labor

                                                               i.      Norris-LaGuardia Anti-Injunction Act of 1932

1.      Outlawed antiunion contracts and forbade the federal courts to issue injunctions to restrain strikes, boycotts, and peaceful picketing

d.      Congress During Hoover’s Presidency

                                                               i.      Even though there was a Republican majority in Congress, they were uncooperative

                                                             ii.      Because of the depression, in the 1930 congressional elections, the Democrats gained a majority in the House and almost controlled the Senate

                                                            iii.      Some Republicans joined with Democrats to harass Hoover

XVIII.    Routing the Bonus Army In Washington

a.       Veterans and Their Bonus

                                                               i.      Veterans thought they had saved democracy in WWI

                                                             ii.      They wanted a bonus promised to be given by Congress by 1945 paid in 1932 because of the depression

                                                            iii.      Bonus Expeditionary Force (BEF) – 20,000 veterans gathered in Washington to draw attention to their cause until they got their bonus (also called the “Bonus Army”)

                                                           iv.      They erected giant, unsanitary “Hoovervilles” on empty plots (the name mocked Hoover)

                                                             v.      When the Bonus Bill failed in Congress, half the veterans took the offer of transporation home.  He felt that the Bonus Army was led by hooligans and reds, although few were actually of those types

                                                           vi.      The remainder refused to disperse, although they were ordered to do so.  Riots followed that cost two lives and injured more

                                                          vii.      Hoover ordered the army to clear out the Bonus Army.  General Douglas MacArthur did so with bayonets and tear gas; it was with far more severity than Hoover had planned

                                                        viii.      Some former soldiers were injured and their shanties were torched

b.      Public Reaction To Hoover

                                                               i.      Hoover was now the most unpopular man in the country

                                                             ii.      His force in putting down the Bonus Army made it appear that he didn’t care about the plight of the poor

                                                            iii.      Democrats  devised smear tactics to capitalize on Hoover’s mistakes in office

                                                           iv.      The Democratic party was cashing in on the Republicans’ failures

XIX.         Japanese Militarists Attack China

a.       The Japanese In Manchuria

                                                               i.      September 1931 – Japan, claiming that they were provoked, took an important province from China called Manchuria

                                                             ii.      This violated many agreements that Japan had signed

                                                            iii.      America had more economic ties with Japan than they did with China

b.      American Reaction

                                                               i.      The Western world was in a depression and didn’t want to deal with this problem

                                                             ii.      A few Americans believed that Japan should be boycotted or blockaded (with the help of the League of Nations).  However, the U.S. was not a member of the organization

                                                            iii.      The League members had the economic and naval power to halt Japan, but lacked the courage to act.  One reason was that they could not count on America’s support

c.       Hoover-Stimson Doctrine

                                                               i.      In 1932, Secretary of State Henry L. Stimson and Hoover decided to declare that the U.S. would not recognize:

1.      Any treaty or agreement that would impair China’s territory

2.      Impair U.S. rights in China

3.      Impair the political situation in China

4.      Impair the Open-Door Policy

                                                             ii.      Righteous indignation – or a preach-and-run policy – would substitute for solid initiatives (with troops or blockading)

d.      Japan’s Reaction

                                                               i.      Ignored America’s doctrine and bombed Shanghai in 1932 in response to a Chinese boycott

                                                             ii.      Outraged Americans launched informal boycotts of Japanese goods, but there was no real sentiment for armed intervention among a depression ridden, isolationist America

XX.           The Good Neighbor Policy

a.       The U.S. and Latin America

                                                               i.      Hoover wanted to have better relations with Latin America, so he took a goodwill tour in 1928

                                                             ii.      Following the stock-market collapse of 1929, Americans had less money to invest abroad.  As many of these businesses went bankrupt, many in America felt like they were preying on those countries and started to invest less

b.      Laying the Foundation of the Good Neighbor Policy

                                                               i.      In 1932, Hoover negotiated a treaty with Haiti that provided for a complete withdrawal of American troops by 1934

                                                             ii.      He also withdrew the remainder of troops in Nicaragua after 20 years

                                                            iii.      These actions laid the foundation of the “Good Neighbor Policy” of Franklin Roosevelt, his successor