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I. A Return to Laissez-Faire a. The Harding Administration: “Wobbly Warren” i. Following on the eve of World War I, the U.S. wanted a return to normalcy, elected Republican Warren G. Harding 1. First election in which women participated 2. Rumored that he was elected largely due to his good looks 3. During his presidency, he participated in two lurid affairs: one with the wife of a friend, two with a girl thirty years his junior ii. Harding’s presidency most noted for personal mediocrity, but hiring great talent 1. Charles Evans Hughes (Sec. of State)—long tradition of statescraft 2. Herbert Hoover (Sec. of Commerce) 3. Andrew Mellon (Sec. of Treasury)—financier and industrial iii. Harding also hired several smart but incredibly devious individuals 1. Albert Fall (Sec. of Interior)—anti-conservationist 2. Harry Daugherty (Attorney General) iv. Public Scandal 1. Teapot Dome Scandal—Albert Fall sold public lands to oil interests for a private “donation”—became the most onerous scandal of the Harding administration 2. Harry Daugherty—sold illegal liquor licenses and pardoned criminals 3. Charles Forbes—Stole money from the Veteran’s Bureau v. Post war manufacturing shift 1. Following WWI, domestic production forced to change from munitions/military production to domestic productions 2. Because of innovations within the factory system (mass production, assembly line, electricity, etc.,) business prospered as it did during the height of American industrialism 1880s 3. President and Cabinet allow business and normalcy to return 4. Supreme Court reverses important labor law in Adkins v. Children’s Hospital which invalidated a minimum wage law for women 5. Generally facilitated by Andrew Mellon’s hands-off approach and tax breaks 6. Resulted in overproduction of consumer goods, falling prices and recession, particularly in the early and late 1920s vi. Soundbyte: “I am a man of limited talents from a small town; I don’t seem to grasp that I am a president” b. The Coolidge Administration: “Silent Cal” i. Coolidge assumed presidency after Harding died from a heart attack in San Francisco—completed the second have of Harding’s term 1. Was re-elected because of his neutral policy, but pro-business leanings—anti-unions/antistrike ii. Domestic Policy 1. Always considered terse, Coolidge’s chief political weapon was the veto 2. Attempted to eradicate the corruption from with Harding’s administration 3. Endorsed giant tax cuts/incentives to the wealthy, creating a deeper rift between rich and poor 4. Remained silent on most social issues: Prohibition, Mafia, Speakeasies, nightclubs, the rising popularity of the New KKK, the increased urban violence toward Italians, Germans, Blacks, Communists, Radicals, malcontents, anarchists, etc. iii. Soundbyte: “When a great many people are unable to find work, unemployment results.” “The business of America is business.” c. General political attributes about the 1920s i. President’s claimed a fear of big government, limited (if any) regulation, and limited gov’t participation in economic and social affairs ii. Despite deep political scandal during Harding’s administration, much 1920s politics were quiet and subdued 1. Avoided big issues: Liquor, tax breaks, economic disparity, social problems, urban gangsterism 2. Supported the creative energy of the 1920s by allowing it to progress naturally 3. Big business prosperity and the availability of credit and consumer goods lent a veneer of success to the 1920s II. The Birth of the Modern Age a. Defining Characteristics of the 1920s i. Availability of cheap, reliable credit—banks issued credit to Americans at all social levels (with appropriate changes in interest rates) ii. Availability of cheap, mass produced commercial goods iii. Creation of advertising industry, targeting women, men, children: EVERYONE iv. Mechanization and modernism in all aspects of industrial production: factory system (the assembly line and mass production) and agriculture (mechanical/automated reaper, combine, forced irrigation), resulting in overproduction v. Increased leisure time (for a percentage of society), allowing for greater participation in leisure activities: watching sports, playing sports, punting, listening to the radio, shopping, partying/drinking, dancing vi. Nativism and racist tensions b. Mass consumption society i. Despite the recession of 1920-21, and aided by the tax breaks of Andrew Mellon, capital investments increased 1. More people purchased stock—Wall Street became democratized (approx. 1/20) 2. Wealthy minority continued to invest heavily in the market 3. Buying on margin/over-speculation—resulted in a rapid growth of market investment a. “speculator” would borrow money to buy stocks b. Speculator would broker/sell stocks to purchaser on credit/with some money down, at high interest rate c. Speculator and investor would bet that the stock would go up, allowing for payback and profit d. Problems i. Based upon credit purchase, with high interest rate—people would be unable to pay back if stock tanked ii. Based upon confidence and betting—faith in the market, and faith in continued growth of the market ii. Henry Ford and the Transportation Revolution 1. Although not the first automobile inventor, Ford developed a system to produce the first cheap car for the masses—the Model T a. Cost $850 (1908)--$290 (1926) b. Emphasis on quantity—if Ford sold more units, he would make more money than if he sold fewer at higher price 2. Designed according to the principles of Fordism a. Interchangeable parts b. Assembly line produced c. Production time reduced from 14 hrs—6 hrs d. Efficiency and labor specialization 3. Throughout the 1920s and ‘30s, jobs at a Ford plant were prized a. Continued production b. Ford provided $5/day wage, more money than most other manufacturing jobs c. Ford provided housing, education, after work activities—a complete Ford community 4. Spurred production in related industries: gasoline/petroleum/oil, rubber, glass, steel, asphalt/road construction contracts, cement, etc. a. It took 13 days to reach California from NYC b. Paved road 387,000 miles by 1920 5. By 1929, 26 million cars were registered, approx. 1:5 Americans 6. Personal effects of the Automobile Age a. Cars overtook trains as the major form of private transportation b. Increased population movement—easier for people to move their families to more desirable locations c. Increased population growth—the ‘rumble seat’ and the drive in the theatre d. Increased death rate—by 1951, over 1 million Americans died in automobile accidents, more than all previous American casualties in wars. iii. The Wright Brothers and the Other Transportation Revolution 1. The Wright Brothers, Orville and Wilbur, were bike specialists who tinkered with aerodynamics 2. First air flight attributed to the Wright Bros, largely because they created a publicity stunt— experiments of flight were already successful. 3. Quickly became a staple in transportation, first for novelty (for the rich), then for mail, finally for freight c. The Novelty of the Twenties i. Immigration Restrictions and Nativism 1. Red Scares and Palmer Raids a. Following Bolshevik Revolution in Russia and the flood of immigrants, Attorney General attempts to check the threat of Communist revolt in U.S b. 2. 3. 4. 5. Based in an attempt to return to normalcy, create and support standards of American-ness c. Mitchell Palmer, Attorney General, imprisoned 6000+ suspected Communists i. Known for raiding houses, offices, business ii. Considered a limit to First, Fourth, Sixth and Seventh Amendments, but forgiven for “national security” –similar to 1950s d. Sacco and Vanzetti Trial—illustrates the success of federal agenda e. Targeted all liberals, radicals, and activists, including labor unions Immigration Quotas a. Emergency Quota Act of 1921—restricted immigration 3% of nationalized immigrants b. Immigration Act of 1924—restricted immigration to 2% c. Slammed door on Asian, Eastern Europeans, Russian d. Results: i. Stemmed the flood of immigrants ii. Encouraged the outflow of Americans abroad iii. Created labor shortages in Northern industry 1. Allowing for blacks to have access to northern jobs 2. Started internal demographic shift—The Great Migration to New York (Harlem), Chicago, Detroit, Minneapolis 3. Caused deep racial tensions a. “Red Summer” 1919 race riots throughout the North b. Noted race riot in Chicago when a black man was stoned to death for swimming too far into white section of Lake Michigan The New Ku Klux Klan a. Reborn after the WWI, the KKK found support in pervasive national atmosphere: anti-foreign, anti-black, anti-everything b. Claimed over 4 million members, with tacit support from within the communities of the South (area of greatest support) c. Finally criticized (like Al Capone) for money fraud and laundering, not for lynching, terrorism and such Prohibition a. 18th Amendment prohibited the sale of alcohol, but not the consumption of alcohol b. Never consistently enforced, resulting in bootlegging, speakeasies, and inherent corruption of law enforcement c. Created a niche for organized crime/mafia, who specialized in activities of “ill repute” i. By 1930, Mafioso registered approx $12-18 billion ii. Untaxed revenue provided the federal government with the reason for prosecution, largely under the new FBI iii. Tax evasion, not murder, was the reason for successful prosecution of Alfonse Capone iv. Mafia specialized in prostitution, alcohol, gambling, drugs, and “protecting” neighborhoods Secularism a. Scopes Monkey Trial i. Clarence Darrow, in defense of Scopes, argued for the teaching of evolution as an alternative to creationism ii. William Jennings Bryan argued for prosecution, died five days later iii. Although considered guilty, Scopes Monkey Trial is considered to be a defining moment in education—a paradigm shift b. Margaret Sanger—the “Birth Control Revolution” i. In a large sense, Sanger started the Feminist Revolution—women not being shackled by pregnancy ii. Allowed for “sexual liberation”, the opportunity to have sex without the risk of having children iii. Sanger was rapidly vilified c. Freud and the birth of Psychology i. Scientific explanation of human behavior, rather than supernatural (divine) or merely genetic ii. Asserted that human behavior was rooted in psychological factors that were (according to Freud) suppressed by the id and the superego (parts of human consciousness) iii. Related most human behavior with sexual identity III. Bursting the Bubble a. Long term causes of the Great Depression i. Overabundance: Both in agriculture and in manufactured goods, resulted in a lowered cost/unit, mouldering grains in silos, and a flooded market ii. Credit Spending: Excessive purchasing, at all social levels, resulting in excessive debt to banks 1. Greatest impact when homes and business went into foreclosure, unable to satisfy loans 2. Loss of “liquid capital” to purchase the necessities 3. Coinciding with a run on the banks, the banks were unable to provide cash to back savings accounts iii. Foreign Debt: Unable to pay stiff reparations or pay back war loans (with interest), European countries owed U.S. huge amount of money, nor could they effectively trade on the open market iv. Buying on Margin: Purchasing stocks on margin resulted in inflated/watered stock, the value of which was unrepresentative of its actual value 1. Coinciding with a run on the stock market, resulted in a “market free-fall” 2. The first to cash in, after a whiff of real risk, kept what they had 3. Everyone else lost their entire investment, approximately $40 million in the first two months v. Ideological Conservatism and Laissez-Faire: The pervasive belief in “less is more” resulted in a lack of political/economic infrastructure to support a financial crisis vi. Recklessness b. Immediate Causes i. Fearing a collapse of the system, investors quickly liquidated stocks on Monday 28, 1929 ii. Hoover, predicting (inaccurately) that the 1930s would be the “high-water” mark of American democracy, believed that the stock market was merely stirred, not shaken iii. As panic set in at the close of the market on Monday, investors quickly began to liquidate assets on Tuesday morning. iv. By the end of Tuesday, the market had virtually collapsed IV. America and the Great Depression a. Herbert Hoover i. Despite his genius in financial affairs, Hoover contended that any economic weakness was not structural—depression was a state of mind ii. With bank foreclosures and increasing debt, 1930 saw the beginning of desperation 1. Veterans were not being paid, although promised compensation for WWI in 1945 2. Dispossessed communities established temporary housing, made by scraps, remnants of their belongings—called Hoovervilles to criticize Hoover’s (lack of) support iii. Despite his ideological disagreement, and with the advise of his Cabinet, voted $2.25 billion in federal aid and public works projects 1. Forerunner of New Deal programs—provide jobs (relief) and services (recovery) 2. Constructed Hoover Dam on the Colorado River 3. Designed Muscle Shoals Bill, predecessor to TVA 4. Supported Congressi onal bill for Reconstruction Finance Corporation, a federally organized lending system (attempt at reform) iv. Restrained union activism and labor strikes—against morale of country v. Effects of Hoover’s policies 1. Criticized for not listening to the warning signs of the late 1920s 2. Acted slowly to provide sense of leadership—continued to host elaborate lunches and dinners at the White House 3. Took 1-2 years to pass legislation to recover American economy 4. Took extreme measure to regain social control: the Firing of the Bonus Army b. Franklin Delano Roosevelt i. Background: 1. Cousin of the great TR, married to Roosevelt cousin=full political, social, and economic security, unblemished reputation, family background of social activism and progressivism 2. Throughout nomination and campaign, FDR actively sought to distance himself from his disability a. Stricken by polio as an adult, nearly died b. Forced to rely heavily on his wife, Eleanor i. Had a political arrangement, to mutual benefit ii. Little romantic attachment iii. As a team, were essential partners in negotiating demands of presidency, diplomacy, image, relief, etc ii. The Election of 1932 1. Although FDR had little competition from Hoover, FDR ran against long-time friend Al Smith—caused a long-term political enemy 2. Ran on the platform “Happy Days Are Here Again” 3. First election in which enfranchised African-Americans voted overwhelmingly for Democratic party—a trend lasting most of the remainder of the twentieth century 4. Inauguration speech became a statement for his domestic policy: “The only thing we have to fear is fear itself.” iii. iv. v. The First Hundred Days 1. Often used synonymously with the “First New Deal” 2. Period of greatest legislation—used momentum of campaign, election, and the “spirit of the times” 3. Called for immediate “bank holidays” a. to stop the run on the banks b. to shore up lack of currency and supply banks with money c. to stabilize economy d. to prevent further closures of banks (5000 had already closed by 1932) 4. Called for optimism and the “Three Rs” a. Relief—provide for the immediate needs of American citizens b. Recovery—get U.S. back on track c. Reform—prevent problems from happening again 5. Control inflation by taking U.S. of gold standard and buying gold at higher price (supporting its higher value) 6. Institute FDIC, federally insured banking investments—still in effect today Relief Measures: Based largely on the premise of deficit spending—you have to spend money to make money 1. Employment a. Created Civilian Conservation Corp (CCC)—important program to reforest, fight fires, construct roads, dams, control floods, monitor and protect national parks, and look busy (employed over 3 million young men) b. Works Progress Administration (WPA)—paid for construction projects throughout the U.S., particularly roads, bridges, and tunnels i. Employed 9 million young men ii. Steinbeck was paid to count dogs in Salinas 2. Financial Aid a. Federal Emergency Relief Administration (FERA)—provide immediate and direct aid to applicants (stil exists) b. Agricultural Adjustment Act (AAA)—pay farmers for overabundance of crops and help pay off mortgages i. Subsidized crops ii. Paid farmers not to farm iii. Paid farmers to slaughter animals 3. A Good Stiff Drink a. Passed 21st Amendment, repealing Prohibition b. Levied a small tax on all light alcohol c. Was one of FDR’s first acts of his presidency (and fulfillment of one of his campaign promises) Recovery Measures: Based on the principle of big government and that the government should regulate and ensure the current stability of U.S. 1. Financial/Economic a. Federal Securities Act—required stock brokers to disclose all information regarding traded stocks (still in existence, in a slightly different form) b. Securities and Exchange Commission (SEC)—federal oversight commission to regulate all American economic activity (still exists) 2. Social Aid a. Social Security Act (SSA)—provide for the elderly, dependents, and disabled through employer tax