Chapter 25 Section 1 Politics and Prosperity Main

Chapter 25, Section 1: Politics and Prosperity Main Idea: As the Republican party returned to power in the 1920 s, the economy boomed.

A. Republicans in Office n Warren Harding won the 1920 election using the campaign slogan “Back to Normalcy, ” which meant a return to a simpler time (pre-WWI). Harding Takes Office n For his top cabinet posts, Harding chose capable men u u Andrew Mellon – Secretary of the Treasury Herbert Hoover – Secretary of Commerce Corruption & Scandals n For other posts, he chose his friends from home, known as the “Ohio Gang. ” While Harding was honest, many of them were not, resulting in many scandals. u n Charles Forbes, head of the Veterans Bureau, was convicted of stealing millions from it. After, many other scandals came to the surface, leading to Harding’s death from a heart attack. Tea Pot Dome Scandal- Secretary of Interior Albert Fall secretly leased government land in California & Wyoming to private oil companies in exchange for bribes; he was tried and found guilty (1 st cabinet member sent to prison) Coolidge Takes Office n “Silent Cal” – response to woman’s bet … “You lose. ”

The 1920 Election

The oil reserves of Teapot Dome, Wyoming, and Elk Hills, California shall be for US Naval use only. Teapot Dome, Wyoming Property of U. S. NAVY Elk Hills, California OIL U. S. NAVY 1912 President William H. Taft

I appoint Albert Fall to be the Secretary of the Interior. Psssssst. Albert, Ooh lathis. you Why thank Take la! A hundred very much Harry thousand dollars! Sinclair of the Mammoth Oil Corp and Edward Doheny of Pan American Petroleum. President Warren G. Harding

Sssssweet Ed! Hey, the bribe Ma Our. Elk Hills, worked, Harry. mmoth buddy Albert let Corp Oil us California lease Naval reserves and drill for oil. Teapot Dome, Oil reserved for U. S. NAVY Pan American Petroleum OIL U. S. NAVY 1921

Except I’m in jail! 1927

Why didn’t you But that’s Naval so, Ed? say property! You can’t drill You’ve got a there! deal! Secretary of the Interior Albert Fall Harry Sinclair (Mammoth Oil Corp. ) Yo, Albert buddy! How Maybe $100, 000 about letting Edward woulddrill for oil change and I help you in Elk your mind! Hills and Teapot Dome! Edward L. Doheny (Pan. American Petroleum)

B. Coolidge Prosperity n Like Harding, Coolidge was very pro-business. Industry Booms n n “The business of America is n business. ” “Perhaps one of n the more important accomplishments of my administration has been minding my own business. ” “Coolidge Prosperity” refers to the economic boom of the mid- to late- 1920 s, while Coolidge was President. Factory production increased, which meant more jobs were created, which meant incomes rose, which meant spending increased, which meant more economic growth, which meant …… Advertising boosted sales by convincing people they’d be happier if they bought certain products Buy now, pay later- installment buying (buying on credit) encouraged people to buy things they really couldn’t afford. This increased both the demand for goods, as well as consumer debt (people owed more than they had).

A Booming Economy: The 1920’s Income increases Companies expand hire more people People purchase more goods Companies earn higher profits

A Soaring Stock Market As the economy boomed, the stock market soared. Stock values skyrocketed & many investors got rich (called a bull market). n People getting rich from the stock market encouraged others to invest. n Buying on margin is like buying stocks on credit. This can be dangerous because stock values don’t always rise. n By 1928, stock values rose faster than company values. Some experts warned that the “Great Bull Market” would not last forever, but most investors ignored the warnings.

How does the stock market work? You buy 100 shares of stock of How much money x $5. 00 per share have you invested? $500. 00 Scenario #1 stock increases to $20 per share How much are your 100 shares of stock now worth? 100 shares of stock x $20. 00 per share $2, 000. 00 How much profit have you made? $2, 000. 00 stock value - $500. 00 initial investment $1, 500. 00 net profit

How does the stock market work? You buy 100 shares of stock of How much money x $5. 00 per share have you invested? $500. 00 Scenario #2 stock decreases to $1 per share How much are your 100 shares of stock now worth? 100 shares of stock x $1 per share $100. 00 How much money have you lost? $100. 00 stock value - $500. 00 initial investment $400. 00 net loss

C. A Limited Role in World Affairs n After WWI , the U. S. was now the world’s leading power, but most Americans wanted to stay out of European affairs & keep to ourselves (isolationism). u The U. S. signed a separate peace treaty with the losers of the war and would not join the League of Nations. Latin America n Trade between US & Latin America increased. At times, we intervened to protect our interests there. u u Nicaragua – US Marines were sent to protect American plantations & RRS during a revolution there Mexico – A US diplomat worked out a compromise The Soviet Union n n Russia became the Soviet Union after V. I. Lenin (Bolshevik Revolution) installed a communist gov’t. U. S. refused to recognize the new government due to anti-communist feelings (no private property or religion). u We still sent $20 million in aid to starving Russians in 1921.

Pursuing Peace n Because militarism was one of the main causes of WWI, many people in the 1920 s favored disarmament. u n Disarmament- reducing armed forces and weapons By the end of the decade, the US & 61 other nations signed the Kellogg-Briand Pact, which “outlawed” war u u It’s one fatal flaw, however, was that it didn’t say how it would keep the peace. What would happen to aggressive nations?