Politics and Prosperity

Ch. 20

12/22/2011

Post World War I

– Key Concepts Demobilization Red Scare Isolationism

Demobilization

Transition from wartime to peace time effected employment production changed to consumer goods

Demobilization

Farmers:• credit

• overproduction

• lack of conservation

Types of Economic Systems(review)

Capitalism - Private ownership of property - Profit motive

Socialism - Collective ownership of property

- Peaceful means to achieveobjective

- Motive is “to each as needed”

Communism- Collective ownership through violence if necessary

- Motive is “to each as needed”

o Lenin and his communist followers led the ________________

o USA secretly sent 10,000 troops to aid the ________________

o (1924) The Bolsheviks “__________” took power

Russian Revolution

Communism Under Lenin

1. The government would own all land and property

2. A single political party controlled the government

3. The needs of the country always took priority over the rights of individuals

Lenin changed the name of the country from Russia to the Union of Soviet Socialist Republics (USSR)

The Soviet Union was the largest country in the world in terms of land

It was near the largest in terms of population

Russian Revolution

The Palmer Raids 1919 – (_____) Bombs found in post offices

addressed to prominent Americans, including Oliver Wendal Holmes, John D. Rockefeller.

Bomb damaged A. Mitchell Palmer’s house. 1 in TN detonated, blowing the hands off a

housekeeper and injuring another women Bombs blamed on ___________________

and _____________________.

The Palmer Raids• Attorney General A. Mitchell Palmer

• Nov, 1919 to May 1920

• Interrogated and arrested thousands of poor people, mostly immigrants

• Deported over 500 without _____________.

• After months of raids, they netted ______• By summer 1920 hysteria died down and most Americans

failed to support the witch-hunts.

Sacco & Vanzetti Italian immigrants arrested for murder/burglary of a

shoe factory near Boston Railroaded by Judge Thayer who allowed their trial to

be about their political views and lack of service in WWI

Judge Thayer - "This man, although he may not have actually committed the crime attributed to him, is nevertheless morally culpable, because he is the enemy of our existing institutions."

The foreman of the jury, a retired policeman, when asked if they could be innocent - "Damn them. They ought to hang anyway."

Sacco & Vanzetti

Convicted not from evidence but for political views, in clear violation of the Constitution

Protests in many major cities here and abroad– Requests for new trials denied by Judge Thayer– Requests for pardons denied by governor and president

*Unsolved History

Ku Klux Klan

Established during _______________ for whites to reassert their rights

Included town officials Died off after federal troops were

withdrawn (1877) Resurgence with ____________ after WWI

– Now hated all non-white, non-_____________

Immigration Policy– 1921 – _____________established.

• _% of population in USA in ______ census would be admitted from each country.

– 1924 - National Origins Act• Quotas adjusted to _% of ______ census• does not apply to Asians - they are still subject to

the _________________Act• does not apply to Mexicans - they are encouraged

to work on southwestern farms

Labor Strikes During WWI strikes outlawed for important

industries

AFL agreed not to strike during the war

Afterward, inflation hit 100% increase but wages dropped or were stagnant in many areas

1919 alone saw over 3,000 strikes

Most peaceful

Most unproductive– New tool used by business owners – calling strikers ______________

Labor Strikes

The ______________________(1919)

police commissioner fired 19 officers for joining the union and asking for raises

____% of the police force walked out in protest

state militia was called in by Governor Coolidge after 2 nights of violence

police force was replaced by unemployed veterans

Labor StrikesThe ___________(1919)

________________workers in western PA & Midwest walked out

lasted from Sept. 1919 to Jan. 1920 owners hired private police – governor

supported owners 18 strikers were killed, many beaten, jailed recruited African Americans & immigrants

for replacement workers (scabs) returned to work with no gains

Labor StrikesThe ______________________________(1919)

Wages set by government in 1917; could not strike during war

John L. Lewis is newly elected, called for strike

Attorney General Palmer got an_____________; Lewis officially ended the strike but unofficially encouraged workers not to return to work

After about a month, Wilson compromised and arbitrated a 27%(?) increase in wages

*After 1920 labor strikes sharply declined

* Unions did not have the support of the public

*Higher wages after the recession led to less desire for strikes

A Republican Decade

Election of 1920– Warren G. Harding called for a “return to ”– Americans were tired of European problems

and feared their spread to the USA– Harding was elected

Republican Leadership

All three branches were dominated by Republicans (1920-1932)

Presidents

Majority in Congress

Supreme Court Chief Justice - Former Republican President,

All 3 branches were considered _______________, meaning that they denounced progressive changes.– Little or no assistance for social ills (poverty,

epidemics, etc.)– Promotion of business interests

• tariffs

• few safety or labor regulations

• lower taxes for upper income brackets and corporations

Republican Leadership

Foreign Policy

______________ - no involvement in European, Asian, or African conflicts (does not apply to Latin America)

_______________- 1921– USA, Great Britain, France, and Japan

agree to destroy some of their navy force and limit the amounts and types of new ships

Foreign Policy

Fordney-McCumber Tariff - 1922–High duties on many products to

discourage imports –Highest to date in history

• As much as ___% in some cases

Foreign Policy

______________- 1924–Restructured Germany’s reparation

payments and gave them loans–Germany paid UK & France its

reparations–UK & France repaid America for its

WWI debts

Teapot Dome Scandal

As investigations of various members of the Harding Administration begins, the president dies naturally on Aug. 2, 1923

The scandals that erupt after his death taint his time in office, although he was not directly involved

Teapot Dome Scandal

___________________illegally granted drilling rights to private industries in Elk Hills, CA and Teapot Dome, WY. He then accepted $300,000 in kickbacks

Director of Veterans Bureau – Charles Forbes pocketed millions

Attorney General Harry Daugherty was convicted of accepting bribes

Coolidge Presidency

VP Coolidge became president when Pres. Harding died. He was elected in 1924.

Coolidge is known more for what he did not do than for what he did

Coolidge Presidency

___________________ economics

– reduced inheritance and income taxes

– refused to regulate the stock market

– refused to give flood assistance to Mississippi River victims

Mississippi Flood of 1927

Loss of Life - 246 Displaced People - 700,000 – 900,000 Financial Loss - $347,000,000 Flooded Area - 27,000 square miles

– (roughly the area of Connecticut, Massachusetts, Vermont & New Hampshire combined)

River Volume 2,500,000 cubic feet of water per second

Water did not recede for 2 months

Mississippi River Flood of 1927

American Red Cross sheltered 300,000 people in tents

They assisted another 600,000 that were displaced by giving them food and clothing

Herbert Hoover (Sec. of the Commerce) directed the Red Cross relief effort

Coolidge Presidency

Foreign Policy

–___________________(1927)

–15 countries agreed not to declare war on each other (60 eventually sign)

A Business Boom

Recession from early part of the decade gradually declined

Industry successfully changed to a consumer economy

People bought consumer goods, creating demand

Factories fulfilled that demand by hiring employees

Manufacturers introduced installment plans to consumers to keep demand high

People were naïve about the so-called prosperity

By 1929, 60% of cars and 70-90% of household goods were bought on credit

Interest rates varied from __________%

A Business Boom

Electric Power– during 1920s General Electric supplied

many new household appliances– demand for electricity increased

dramatically Advertising

– new methods and mass media contributed to a huge impact by advertisements

Gross National Product rose by 6% annually

A Business Boom

Ford & The Automobile

Automobiles invented in 1880s Henry Ford used innovative techniques

to increase production and profit Between 1896-1908 Ford developed his

first original cars. He sold 30,000 Model T’s

In 1908 he built his 1st modern factory

Ford & The Automobile Principles of Mass Production

– assembly line means people stay stationary and the car moves to them

– means faster performances by workers

– also means– also begins new management class– limited choices in color and options – Model T’s were churned out every ___

_____________

Ford & The Automobile Increased production leads to economies

of scale (it’s cheaper per car to produce 10,000 than 50)

Ford dropped prices on Model T to $390, making it affordable to middle class America

Ford & The Automobile

Ford raised wages for his workers but strictly enforced his rules

Hired immigrants but insisted on their going to school to learn English and he had investigators inspect their homes

By 1936 he declined to 3rd place in the auto industry partly due to resistance to change

Industrial Growth

Automobile related industries led the boom

Other industries, like movie theaters, oil refineries, airplane manufacturers, grew by leaps and bounds

The top 200 American companies total worth grew from 43 billion to 81 billion (1919-1929)

Bypassed by the Boom

African Americans and Immigrants did not fare as well in the job market

Farmers continued to struggle with low prices, overproduction, and high debt

These groups will be among the most vulnerable when the ‘boom times’ end

The Economy in the Late 1920s

The economy in the 1920s appeared to be in good shape on the surface

Underneath, there were warning signs of impending disaster

Economy Appears Healthy The stock market was taken as an

indicator of the general economy

If stock prices went up, the whole economy must be alright

Stock value increased from $___ billion in 1927 to $___ billion in 1929

Average Americans invested in the stock market

Economy Appears Healthy

Stock prices are subject to supply and demand

The more people that invest in the market, the higher the demand, and consequently the price of stocks

Two ways to make money from the stock market - ______________ and ________ ___________

Economy Appears Healthy Welfare capitalism

– employers gave workers better wages and benefits

–organized labor membership declined in the 1920s

Economy Appears Healthy

Booming

Stock

Market

Labor Stability

ConsumerConfidence

Available

Credit

Economic Danger Signs

Rich were getting richer

1929 - wealthiest families controlled 34% of the savings

Average families earned $_______ a year and had no savings

Many families had accumulated large consumer debt

Economic Danger Signs

Stock market was being pushed by speculation

Speculation - high risk investments in hopes of making quick profits

______________- Paying only a fraction of the cost and borrowing the rest

Economic Danger Signs

“Too many goods, too little demand”

Assembly lines were producing more products than people were able to buy

Auto industry and housing starts had already slumped before 1929

Economic Danger Signs Trouble for Farmers & Workers

– Many could not meet their mortgages, forcing 6000 rural banks to fail in the 1920s

– Congress passed relief bills in 1927 & 1928 but President Coolidge vetoed them

– Many industry workers continued to work in dangerous jobs for small wages

– Textile workers in Tennessee - 56 hour week for $10 a week

Summary

Clear signals of trouble in the economy

Uneven wealth

Rising debt

Stock speculation

Over-production

Hardships of farmers

and workers

The End!