Chapter 24: From Good Times to Hard Times, 1920-1932

1. The Diplomacy of Prosperity
   1. Diplomacy in the 1920s
      1. Two realities shaped American foreign policy in the 1920s:
         1. The rejection of Woodrow Wilson’s internationalism following World War I.
         2. The continuing quest for economic expansion by American business.
      2. President Harding dismissed any U.S. role in the League of Nations and refused theTreaty of Versailles.
         1. Secretary of State Charles Evans Hughes concluded separate peace treaties to end the U.S. role in World War I.
      3. Hughes supported efforts by American banks and corporations to expand as a result of international economic changes caused by World War I.
         1. American businesses had become the world’s major producers.
         2. American business shaped the global economy by lending money.
      4. Neither President Harding nor President Coolidge had any expertise or interest in foreign affairs and deferred making and implementing policy to their secretaries of state.
         1. Their secretaries supported "independent internationalism": avoiding political and international responsibilities while expanding economic opportunities overseas.
         2. Secretary of Commerce Herbert Hoover also promoted American business abroad.
         3. While successes in Asia and the Middle East were limited, efforts in Latin America and Europe were quite successful.
   2. The United States and Latin America
      1. The U.S. role in Latin America, especially Central America and the Caribbean, was influenced by the Monroe Doctrine, direct American investments, and control of the Panama Canal.
      2. When necessary, the United States used direct armed intervention in the region.
         1. In 1921, the U.S. had troops in Panama, Haiti, the Dominican Republic, and Nicaragua to ensure continued U.S. influence and order.
         2. The U.S. maintained control over the nation’s finances and installed American-trained national guards as police forces.
         3. U.S. troops left the Dominican Republic in 1924 and Haiti in 1934, leaving better roads, improved sanitary systems, governments favorable to the U.S., and well-equipped national guards.
         4. U.S. forces had not advanced the educational systems, national economies, or standards of living for most people.
      3. In Nicaragua, the U.S. Marines had protected a conservative pro-American government since 1911, and, as they left, political turmoil and civil war broke out.
         1. By mid-1926, Coolidge had reintroduced U.S. forces to protect the government and sent special envoy Stimson to negotiate a truce.
         2. Nicaraguan leader Augusto Sandino rejected the treaty and carried on a guerrilla war against government and American forces.
         3. Between 1932 and 1934, the U.S. withdrew, leaving a U.S.-trained national guard.
         4. Somoza, the U.S.-supported leader, had Sandino murdered and remained in power until 1979, when the Sandinistas drove Somoza out of Nicaragua.
      4. Elsewhere in Latin America, the 1920s saw U.S. commercial intervention in the region.
         1. U.S. firms like the United Fruit Company purchased land in Central America.
         2. U.S. oil companies obtained drilling rights in Venezuela and Colombia.
      5. Oil also played a key role in U.S. relations with Mexico, since the 1917 Mexican Constitution nationalized Mexico’s subsurface resources.
         1. Coolidge sent Dwight W. Morrow as U.S. ambassador "to keep us out of war" since Morrow understood Mexican nationalism and pride.
         2. Morrow reached a compromise with the Mexican government that reduced tensions and delayed nationalization.
   3. America and the European Economy
      1. World War I shattered most of Europe physically and economically, and the U.S. had become the world’s leading creditor nation.
         1. The U.S. sought to expand its exports and reduce its imports.
         2. High tariffs inched higher throughout the 1920s, including the 1922 Fordney-McCumber Tariff, which set high protective rates for industrial goods.
         3. Through the Dawes Plan, U.S. bankers loaned $2.5 million to Germany so that it could repay the other European nations and they could repay the U.S.
      2. The Washington Conference on Naval Disarmament was an attempt to control naval buildups.
      3. The Kellogg-Briand Pact (1929) renounced war "as an instrument of national policy."
      4. U.S. independent internationalism seemed to be a flourishing success.
         1. Business investments and loans were fueling the world economy and American prosperity.
         2. The U.S. was avoiding entangling alliances and protecting its presence in the Pacific.
         3. The U.S. was promoting the idealism of world disarmament and peace, and in Latin America, it was moderating its interventionist image.
2. The Failure of Prosperity
   1. The 1928 Election
      1. Coolidge’s announcement not to run surprised many, while Hoover’s candidacy sounded the theme of American prosperity.
         1. The Democrats nominated Al Smith, and the Republicans made him the main issue of the campaign by attacking his religion and his big-city connections.
         2. Hoover won easily with 58 percent of the popular vote.
      2. Hoover planned to be an active president, and his goal was to promote economic and social growth through associationalism.
         1. He believed the government should help those in need, not solve their problems.
         2. In foreign affairs, Hoover followed the economic and noncoercive policies of the 1920s.
   2. Origins of the Depression
      1. The prosperity of the 1920s depended on a few major industries - construction, automobiles, and consumer goods - since other sectors of the economy barely made a profit.
         1. Farmers watched demand for their goods shrink while income and property values declined.
      2. Other problems included the maldistribution of wealth and the overproduction of goods.
      3. Upon assuming office, President Hoover tried to stimulate trade by lowering tariffs up to 50 percent, but most Republicans disagreed.
   3. The Stock Market Plunge
      1. The desire to invest in the stock market fed a speculative fever that pushed stock prices higher and higher.
         1. By 1929, stock prices had little relationship to a company’s worth.
         2. Finally, in 1929, the realities of wages, credit, inflated stock prices, and the slowing American economy collided.
         3. Despite a lack of public concern, events on Black Thursday affected everyone as the selling price and value of stocks plummeted.
      2. The stock market crash undermined economic confidence.
      3. The effects of the stock market crash and the declining American economy had an international impact.
3. Government and Economic Crisis
   1. Hoover’s Final Efforts
      1. Over the next two years, Hoover greatly expanded the role of government in responding to the Depression.
         1. By December 1931, Hoover promoted more direct federal involvement and asked Congress for support through banking reforms and financial support for home mortgages.
         2. Hoover also intended to pump money into the economy through the Reconstruction Finance Corporation.
         3. All this represented an unprecedented effort by the federal government to intervene directly in the nation’s economy.
      2. Hoover opposed direct federal relief, the "dole," as too burdensome for the federal budget.
         1. He believed that relief should be distributed by private organizations and local government and the "dole" would erode the work ethic.
         2. Hoover eventually agreed to create the Emergency Relief Division within the RFC.
         3. But, by the end of the summer of 1932, Americans, especially the Bonus Army, were becoming impatient with Hoover.
   2. The Diplomacy of Depression
      1. Hoover intended to follow the policies of his predecessors.
         1. The Clark Memorandum asserted that the Monroe Doctrine did not give the United States the right to intervene in Latin America, and relations improved.
         2. The Japanese violated diplomatic agreements with their invasion of Manchuria, but nothing deterred their aggression.
4. Depression America
   1. Families in the Depression
      1. The average annual income dropped 35 percent between 1929 and 1933.
         1. Although income rose after 1933, nagging fears of wage cuts or loss of work remained, and many people worried about basic survival.
         2. The vast majority clung to traditional family values, and church attendance rose, while the number of divorces and percentage of people getting married declined.
         3. Economic necessity kept families at home playing board games, reading, and listening to the radio.
      2. Not all families remained stable and united since unemployed males often felt shame for the economic problems and suicides increased.
   2. The Middle and Working Class and Hard Times
      1. The most common fear was economic insecurity.
      2. "Use it up, wear it out, make it do, or do without" was a motto adopted by nearly everybody.
      3. Working-class Americans more often faced the prospect of losing a job and eviction.
      4. Unable to find jobs or support their families, many people took to the road.
   3. Discrimination in the Depression
      1. As the 1930s began, most African Americans lived in the rural South, but many migrated north looking for better opportunities.
         1. They found, however, that jobs grew scarce even in the North.
         2. Whites used violence and intimidation to drive blacks from jobs and maintain social dominance.
      2. The Depression aggravated white hostility toward Mexican Americans and made life harder for them.
         1. Most filled menial jobs, worked in the fields, and farmed small plots of land.
         2. Many were fired so that whites could have jobs, and they were encouraged to return to Mexico.
         3. Relief programs were of little help since Latinos avoided government agencies.
   4. Women in the Depression
      1. Some women were discovering new opportunities during the Depression, but employment patterns were uneven.
         1. Public opinion was especially hostile toward married women who worked, and many companies made it a policy not to employ them.
         2. For many rural women, the Depression took away a major avenue to status: migration to the city.
         3. Among women who did enter the work force, few found that bringing home a paycheck changed their status or their role within the family.
   5. Franklin D. Roosevelt
      1. Roosevelt campaigned on concern for the "forgotten man," who was a victim of the Great Depression.
   6. The 1932 Election
      1. FDR promised a "new deal for the American people," and the election was a huge success for the Democratic party and for Roosevelt.