D2y1pz2y630308.cloudfront.net



Topic 13 – Prosperity and Depression (1919-1939)

Lesson 13.1 – Harding and Coolidge (Vocabulary& Notes)

Key Terms (Vocabulary)

1. recession - economic slump that is milder than a

depression

2. Teapot Dome Scandal - political scandal during President

Harding’s administration

3. installment buying - buying on credit

4. stock - share of ownership in a corporation

5. bull market - period of increased stock trading and

rising stock prices

6. communism - economic system in which all wealth

and property are owned by the state

7. disarmament - reduction of armed forces and

weapons of war

8. Kellogg-Briand Pact - a 1928 treaty outlawing war

9. interest - a percentage of the price charged as

a fee for a loan

10. on margin - practice that allows people to buy

stock with a down payment of a portion of the full value

Lesson 13.1 – Harding and Coolidge

Obj: to describe how corruption hurt Harding’s presidency; to explain why the economy grew under Coolidge; to identify the role the US played in international politics during the 1920s

World War I had helped the economy.

Europeans ordered vast amounts of supplies from American factories.

After the US entered the war in 1917, American factories expanded rapidly to meet the demand for military supplies.

REPUBLICANS REGAIN THE WHITE HOUSE

When the war ended, more than 2 million soldiers came home and began to look for jobs. At the same time, factories stopped turning out war materials.

The result was a sharp recession, or economic slump.

A Landslide Victory

The recession did not help the Democratic White House.

After eight years, the voters voiced their discontent by overwhelmingly electing Warren G. Harding as the 29th President of the United States.

For the top Cabinet posts:

• Harding chose able men who strongly followed pro-business policies

o Andrew Mellon:

▪ Wealthy banker

▪ Became secretary of the treasury

• Balanced budget

• Lowered t axes

o Herbert Hoover

▪ New secretary of commerce

• Worked to help American businesses expand overseas

• Earned world admiration by organizing efforts to supply food to millions of starving Belgians

The Ohio Gang

Other Cabinet posts:

• Harding brought in his old friends

o They became known as the “Ohio Gang”

• Harding was honest and hard-working

• Ohio Gang

o Saw government service as a way to enrich themselves

o A series of scandals resulted

o Charles Forbes

▪ Head of the Veterans Bureau

▪ Later convicted of stealing millions of dollars from the bureau

▪ Harding saw this as a betrayal

• Rumors of new scandals surfaced

o Harding grew even more distressed

o August 1923 –

▪ Harding died of a heart attack

• many believed the scandals contributed to his sudden death

o after Harding’s death new scandals came to light

o most serious:

▪ Albert Fall

• Secretary of the Interior

• He was bribed by two oil executives

• In return, he secretly leased them government land in California and at Teapot Dome, Wyoming

o The Teapot Dome Scandal

• He became the first Cabinet official ever sent to prison

Coolidge Becomes President

Coolidge was at his father’s farm in Vermont when he heard the news.

“Silent Cal” was very different from Harding

• Harding:

o Loved throwing parties

o Loved making long speeches

• Coolidge:

o Tight with both money and words

Coolidge set out to repair the damage caused by the scandals.

• He forced scandalous officials to resign

1924 Election:

• Republican – Coolidge

• Democrat – John Davis

• Progressive – Robert La Follette

o Voters elected “Keep Cool With Coolidge” and returned the cautious New Englander to office.

ECONOMIC GROWTH UNDER PRESIDENT COOLIDGE

Like Harding, Coolidge believed that prosperity for all Americans depended on business prosperity.

Coolidge cut regulations on business.

He also named business leaders to heard government agencies.

Production Increases

Coolidge’s pro-business policies contributed to a period of rapid economic growth

• Referred to as “Coolidge Prosperity”

As factories switched to consumer goods, the postwar recession ended.

1923 – 1929 –

• quantity of goods made by industry almost doubled

• for most Americans, incomes rose

o resulting in their consuming of a flood of new products

▪ electric refrigerators

▪ radios

▪ phonographs

▪ vacuum cleaners

▪ many other appliances for their homes

• businesses used advertising to boost sales of consumer goods

o advertisements encouraged people to think that their happiness depended on owning a wealth of shiny, new products

• faced with so many goods, people often wanted to buy things they could not afford.

o Installment buying

▪ Payments made each month until product was paid in full

▪ Interest was added to cost

o A new policy of “buy now, pay later” increased the demand for goods

o At the same time, consumer debt increased.

▪ By the end of the decade, consumers owed more than the amount of the federal budget

• Around $3 million

The Stock Market Soars

1920s –

• Economic boom

o Stock market soars

▪ Corporations sold stocks

• Investors could make or lose money depending on if the price of shares go up or down

Late 1920s –

• More people investing in the stock market than ever before

o Stock prices rose so fast

o Some people made fortunes overnight

▪ Such stories drew in more people to invest

o A period of increased stock trading and rising stock prices is known as a bull market

• Many people bought stocks on margin

o An investor could buy a stock for as little as a 10% down payment (margin)

▪ Buyer would hold the stock until the price rose and then sold it for a profit

▪ The margin worked as long as stock prices kept going up

1928 – 1929 –

• Prices of many stocks rose faster than the value of the companies themselves

o A few experts warned that the bull market could not last forever

o Most investors ignored the warnings

(pg 703 in TB)

A RETURN TO ISOLATIONISM

After World War I:

• US was the world’s leading economic power

• Europeans expected the US to take a major role in world affairs

• Presidents Harding and Coolidge wanted to keep the hard-won peace in Europe.

o They did not, however, want to commit the US to the job of keeping world peace

o US sent observers to the League of Nations but refused to join

o Most Americans supported a return to isolationism

Latin American Investments

During World War I:

• Latin American nations cut off from Europe due to wartime threats to shipping

• Result:

o US trade and investment in Latin American increased

o This continued after the war

o US limited its role abroad for feat that more involvement might push the country into another war

• At times, the US intervened in Latin America

o 1926 – Nicaragua

▪ Revolution broke out

▪ Americans owned plantations and railroads

▪ Coolidge sent marines to oversea new elections

o 1927 – Mexico

▪ Announced plans to take over foreign-=owned oil and mining companies

▪ American investors called on Coolidge to send in troops

• Coolidge sent in a diplomat instead

o Dwight Morrow

▪ He worked out a compromise with the Mexican government

(pg 704 in TB)

The First Communist State

Russia becomes the Soviet Union (USSR - Union of Soviet Socialist Republics)

• The world’s first communist state

o Communism

• The US refused to recognize Lenin’s government

• Most Americans disliked communism

o Shocked when the Soviet government did away with:

▪ Private property

▪ Attacked religion

• 1921 – still Congress voted to provide $20 million in aid when Famine threatened the Soviet Union

o This American aid may have saved as many as 10 million Soviet lives

Pursuing Peace

An arms race in Europe had helped cause World War I.

For this reason, many people in the 1920s favored the reduction of armed forces and weapons of war.

• Disarmament

Pacifist groups led the call for disarmament in the US and Europe

• Women’s International League for Peace and Freedom

o Jane Addams

• Harding and Coolidge also backed peace efforts

o 1921 – Washington Conference

▪ US, Britain and Japan

• Agreed to limit the size of their navies

o 1928 – the Kellogg-Briand Pact

▪ The US and 61 other nations signed this treaty outlawing war

▪ The Treaty had one fatal flaw

• It did not set up any means for keeping the peace

• One nation could still use force against another without fear of punishment

• Still many thought of the “Pact” as the beginning of a new age of peace.

................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download