THE GREAT
DEPRESSION (1920–1940)
The Politics of
Conservatism: 1920–1928
Events
1920 Nineteenth
Amendment is ratified Congress Passes the Esch-Cummins Transportation Act
Warren G. Harding is elected president
1922 Five-Power,
Nine-Power, and Four-Power treaties signed Congress passes Fordney-McCumber
Tariff
1923 Teapot Dome
scandal Adkins v. Children’s Hospital Harding dies in office;
Calvin Coolidge becomes president
1924 Calvin Coolidge
is elected president Dawes Plan
1926 Coolidge sends
American forces to Nicaragua
1928 Kellogg-Briand
Pact is signed Herbert Hoover is elected president
Key People
Warren G. Harding - 29th U.S.
president; was involved in Teapot Dome scandal but died before being implicated
Calvin Coolidge - 30th U.S.
president; took office upon Harding’s death in 1923; advocated conservative policies
Harding and the
Election of 1920
After the end of World War I,
President Woodrow Wilson, unable to convince Republicans in the
Senate to ratify the Treaty of Versailles, stated emphatically that
the American people should settle the issue of the League of Nations in
the presidential election of 1920. Democrats and Republicans both nominated
Ohioans, James Cox on the Democratic, pro-League platform and
Senator Warren G. Harding on the Republican ticket. Harding
hoped to attract both conservative and liberal votes by skirting the
troublesome issue of the League of Nations on a platform neither for the League
nor against it. Imprisoned labor leader Eugene V. Debs also
ran on the Socialist Party ticket and did surprisingly well
considering his imprisonment and the anticommunist sentiment of the day.
Harding’s noncommittal stance paid off on
Election Day, as he defeated Cox by a margin of more than 7 million
popular votes and won 404 electoral votes to Cox’s 127. As a result of the 1920 ratification
of theNineteenth Amendment, the election was the first time women had
voted in a national election in American history.
Pro-Business Policies
Harding’s election meant big bucks for big
business. The anti-trust gains made by Wilsonian progressives went
out the door as a new age dawned for fat-cat tycoons and good old boys in the
Republican Party. Ironically, though, many of Harding’s pro-business policies
hurt the American economy in the long run. First, the sudden free-for-all in
the market led to speculation and corruption. Speculators began using future
earnings on the stocks they owned—money they did not even have yet—to
buy new stocks, a process known as “buying on margin.” This
overspeculation, along with widespread corruption and faulty international
finances, eventually led to the stock market crash of 1929 .
Moreover, the steep Fordney-McCumber
Tariff prevented Europe from exporting goods to the United States to
boost its economy after the war. Europe was deeply in debt and needed to sell
goods to American consumers to pay off loans owed to the U.S. government.
Harding’s new tariff sparked an international tariff war that brought
international trade to a virtual standstill.
Harding’s Conservatism
Conservatism flourished under Harding as the
president distributed rewards to big business and limited benefits for average
American workers. In 1923, for example, the Supreme Court ruled in Adkins
v. Children’s Hospital that women workers did not merit special
labor protection from the government, because they were now enfranchised and
could theoretically protect themselves. This decision effectively reversed the
previous 1908 Muller
v. Oregon ruling.
Meanwhile, Congress passed the Esch-Cummins
Transportation Act in 1920,which deregulated railroads, putting their
control back into the hands of plutocratic owners. In 1922, Harding and
Congress also passed the Fordney-McCumber Tariff, which drove taxes
on foreign goods up to almost 40 percent to protect American industry. Such
conservative measures, combined with the federal government’s new willingness
to break strikes using force, caused a drastic drop in labor
unionmembership throughout the country.
International
Disarmament
Harding’s foreign policy was likewise
dominated by conservatism. Although Secretary of State Charles Evans
Hughes opened negotiations for American rights to oil in the Middle
East, the president focused mainly on maintaining the status quo and reducing
American involvement abroad.
In 1922, the United States convinced Britain and
Japan to sign the Five-Power Naval Treaty, which would reduce the
number of battleships each country had in the Pacific to a ratio of 5:5:3, respectively.
The United States and Britain promised not to fortify their Pacific bases but
allowed Japan to fortify its bases to counter the battleship imbalance. The
United States also signed the Four-Power Treaty with Britain,
Japan, and France, which forbade the countries from acquiring new possessions
in the Pacific, while the Nine-Power Treaty upheld John Hay’s
oldOpen Door policy in China.
Developments in
Germany and Japan
During this period of American isolationism,
events were unfolding around the world that would have catastrophic
consequences later on. In Germany during the1920s and during
the Great Depression, a man by the name of Adolf Hitler began
to gather a tremendous political following as he proposed solutions to
Germany’s economic problems and promised to make the Fatherland strong again.
Desperate Germans clung to Hitler’s rhetoric, as hyperinflation was
causing the German mark to fall in value literally by the minute. This
inflation in Germany became so extreme that prices of meals at restaurants
would increase significantly between the time patrons started eating and the
time they finished.
Japan, meanwhile, was capitalizing on the
Five-Power and Four-Power treaties by strengthening its presence in East Asia.
It had had its eyes on the Manchuriaregion of China for years and
was waiting for the right moment to take it.
The Teapot Dome
Scandal
At home, Harding’s deregulation of big
business led to government scandal and corruption that tainted his presidency. The
most notorious scandal during his term was the Teapot Dome scandal of 1923, which
erupted after a private company bribed the secretaries of the interior and navy
to overlook the illegal drilling of oil from government lands in Teapot Dome,
Wyoming. Harding himself was implicated in the scandal but died later that year
before anyone made any serious accusations. He was replaced by the even more
conservative Vice President Calvin Coolidge.
The Election of 1924
A year later, the American people elected Coolidge
president in yet another three-way election. Coolidge’s opponents were
Democrat John W. Davis and the recently revamped Progressive
Party’s nominee, Robert La Follette. La Follette campaigned for
more debt relief and protection from big business and a constitutional
amendment to revoke the Supreme Court’s power of judicial review. Coolidge won
a landslide victory, though La Follette did receive thirteen electoral votes.
The Dawes Plan
With business burgeoning at home, Coolidge
focused on foreign policy. At the time, Germany was suffering
from extreme hyperinflation in the aftermath of World War I due to unrealistic
French and British demands for war reparations. In 1924, Coolidge and
Vice President Charles Dawes drafted the Dawes Plan to
assist Germany by setting up a new timetable for its reparations payments.
Under the plan, U.S. banks issued long-term
loans to the German government; France and Britain then used the German
reparations to pay back the billions of dollars they themselves had borrowed from
the United States during the war. For a time, the system worked: Germany had a
little breathing room, while France and England were able to maintain their
credit by paying off war debts to Washington. Meanwhile, American bankers
reaped huge profits from the plan.
The U.S. stock market crash of 1929 (see The
Depression Begins, p. 5 ), however, changed everything. Suddenly, the United
States needed the money it was being paid as badly as the other countries
involved in the plan, and U.S. banks refused to issue any more private loans to
Germany. Germany, therefore, could not pay France and Britain, who then had to
default on their loans to the United States. Neither American investors nor the
U.S. government ever saw the money again, and the United States came away from
the Dawes Plan looking like greedy backstabbers in the eyes of Europe.
The Kellogg-Briand
Pact
In 1928, President Coolidge and Secretary of
State Frank B. Kellogg touted the signing of the
multinational Kellogg-Briand Pact, a rather naive agreement that
“outlawed” war in an attempt to ensure that World War I was the “war to end all
wars.” The pact specified virtually no means of enforcement and was thus
effectively useless. More than anything, it was a reflection of American public
sentiment during the peak of prosperity in the late 1920s: Americans
began to feel that if another world war erupted, the United States should not
have a part in it. Many Americans wanted a return to the neutrality and
isolationism that George Washington originally advocated, leaving Europe to
solve its own problems.
REFERENCE
GALBRAITH,
JOHN KENNETH. The
Great Crash: 1929 .
Boston: Mariner Books,1997.
KENNEDY,
DAVID M. Freedom from
Fear: The American People in Depression and War, 1929–1945 . New York: Oxford University Press, 2001.
KINDLEBERGER,
CHARLES P. The
World in Depression, 1929–1939 .
Berkeley: University of California Press, 1986.
LEUCHTENBURG,
WILLIAM E. Franklin
D. Roosevelt and the New Deal. New York: Perennial, 1963.
SCHLESINGER,
ARTHUR M., JR. The
Age of Roosevelt, Volume I: The Crisis of the Old Order, 1919–1933 .
Boston: Mariner Books, 2003 .
———. The Age of Roosevelt, Volume II:
The Coming of the New Deal, 1933–1935 . Boston: Mariner Books, 2003.
———. The Age of Roosevelt, Volume III:
The Politics of Upheaval, 1935–1936 . Boston: Mariner Books, 2003.
WORSTER,
DONALD. Dust Bowl:
The Southern Plains in the 1930s. New York: Oxford University Press, 1982.
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