Showing posts with label Herbert Hoover. Show all posts
Showing posts with label Herbert Hoover. Show all posts

Monday, June 8, 2020

The Adjustment Compensation Act of 1924, the Bonus Army, and a Hurricane

Five years after the Treaty of Versailles, Congress approved the Adjustment Compensation Act of 1924, in which World War 1 veterans would get a financial bonus for their service. This was a far-too-late effort by the government to thank the American Expeditionary Force, seeing as how the government did almost nothing to support returning veterans. World War I killed more people than all European wars from 1790-1914 combined. This bonus for veterans was years in the making. Congress had attempted to give veterans a bonus in 1922, but President Warren G. Harding vetoed it, saying a balanced budget took precedence over compensating veterans. This capped off a year that saw Harding's administration rocked by the Teapot Dome Scandal, the creation of the Federal Narcotics Control Board - a forerunner to the DEA - and the United Mine Workers v. Colorado Coal Co. Supreme Court case that held striking workers liable for damage inflicted (an effort to get labor unions under control). Anyway, Harding was a terrible president, and a worse husband.

Harding died of a heart attack just over two years into his term, succeeded by his vice president Calvin Coolidge. Coolidge came to national prominence in 1919 when, as governor of Massachusetts, he stamped out a police strike as they tried to unionize. "Silent Cal" was sworn in to the office of the presidency in the middle of the night by his father, a justice of the peace, and then went back to bed. This is the most Calvin Coolidge thing ever. He then proceeded to try to say and do as little as possible to get in the way of the growing post-WW1 recession economy. His most famous quote is "the business of America is business," but the actual wording isn't quite right, though the sentiment is probably spot-on.

The bill to compensate WW1 veterans with a bonus was introduced by Rep. Wright Patman (D-TX, who represented an area just southwest of Texarkana), himself a WW1 veteran. With Harding out of the way, millions of people signed a petition to compensate the WW1 veterans - since their regular wages were far less than military wages, if they were able to get their jobs back - for their service. Even Congressmen who supported the bonus dismissed the petition. Rep. Walter Lineberger (R-CA) said the petition was "pageant" to "commercialize or politicize patriotism," and would require a sales tax to pay it. Coolidge vetoed it, saying, "Patriotism which is bought and paid for is not patriotism." The Republican-controlled House of Representatives overrode Silent Cal's veto.

The bonus, $1 for each day of domestic service in the military and $1.25 for each day of overseas service (on average it would be about $500 - maybe half of the average annual income), was scheduled to be payable in 1945. If the total owed was less than $50, the bonus was to be paid immediately. Veterans referred to this as the "Tombstone Bonus," as the easiest way to collect the reward for "shell-shock" (the 1920s definition of PTSD) was to simply die and let your family reap the benefits.

Fast forward five more years to October 1929 and the stock market crash. Herbert Hoover had been in office for not even eight months yet. Unfortunately for Hoover, he gave a campaign speech in which he declared:
We in America today are nearer to the final triumph over poverty than ever before in the history of any land. We shall soon, with the help of God, be in sight of the day when poverty will be banished from this nation.

That quote aged...poorly. The unemployment rate in 1929 was about 3.2%, then the stock market crashed. In 1930 it was 8.7%. By 1931 it was 15.9%. In 1932 it was 23.6%, and would peak in 1933 at an astonishing 24.9%. Part of Hoover's issue was that he was orphaned by Age 9 and had grown up in poverty, but overcame those obstacles to graduate from the newly-established Stanford University. Hoover became a geologist, earning a fortune in mining and consulting. He proposed by telegraph (his wife, the only female geology major at Stanford, accepted in a return cable). In World War I, Hoover oversaw the evacuation of 120,000 Americans in Europe and privately helped raise millions of dollars for Belgium. He ran the U.S. Food Administration, convincing millions of Americans to ration for the war effort. Hoover was a contender for the Republican nomination for President in 1920, but was blocked because of his support for Wilson's League of Nations. Instead he became Harding - and Coolidge's - Secretary of Commerce.

Hoover believed in what he referred to as "Rugged Individualism." In a 1928 campaign speech, Hoover:
When [WW1] closed, the most vital issues both in our country and around the world was whether government should continue their wartime ownership and operation of many [instruments] of production and distribution. We were challenged with a...choice between the American system of rugged individualism and a European philosophy of a diametrically opposed doctrines - doctrines of paternalism and state socialism. The acceptance of these ideas would have meant the destruction of self-government through centralization...[and] the undermining of the individual initiative and enterprise through which our people have grown to unparalleled greatness.

Essentially, the more the government is involved, the worse it is. Rugged Individualism, or a fancy way of saying "self-reliance" was what Hoover knew. What separated Europe from America, according to Hoover, was that Americans weren't coddled by their government. Relying on government programs to get by was one thing in a war, but anything else? That's a conversation-ender, for Hoover.

So when the stock market crashed, ushering in the Great Depression, and then the double-whammy of the Dust Bowl, Hoover wasn't psychologically prepared to lead a government response worthy of the crisis. If the government intervened too much, so Hoover's philosophy went, it would impede capitalism and the will of the people to incentivize work. As banks foreclosed on homes, American citizens built make-shift homes out of scrap metal and cardboard and called their neighborhoods "Hoovervilles," quite a departure from just 10 years earlier when to "Hooverize" something meant a valiant, patriotic effort to conserve goods for the greater national interest.

In his 1930 State of the Union address, given in December - a full 14 months after the stock market crash - Hoover doubled-down:
No matter how devised, an increase in taxes in the end falls upon the workers and farmers, or alternately deprives industry of that much ability to give employment and defeats the very purpose of these schemes...Prosperity cannot be restored by raids upon the Public Treasury...Many of these measures are being promoted by organizations and agencies outside of Congress and being pushed upon Members of Congress. Some of them are mistaken as to the results they will accomplish and they are all mistaken as to the ability of the Federal Government to undertake such burdens. Some of these outside agencies are also engaged in promoting political purposes. The American people will not be misled by such tactics. 

Hoover believed that most of the relief should come from volunteer efforts of churches and other charitable organizations, and anyone who still might be rich. But what he wanted in regards was far too voluntary.

Anyhow, back to the wave of veterans marching towards Washington in May 1932 wanting their Congressionally-approved bonus to be paid in the middle of the Great Depression: "This country is not broke," said Will Rogers of the Tombstone Bonus, "If we owed it to some Foreign Nation you would talk about honor and then pay it."

Rep. Patman's bill caught the attention of former U.S. Army sergeant Walter W. Waters of Portland, Oregon, who found himself unemployed. As Patman's bill didn't...really gain any traction in Congress, Waters got frustrated with the realization that various special interests were getting taken care of financially, while WW1 veterans and pretty much every other group of Regular People languished.

To be fair, Hoover tried to do a few things, but it was literally too little and way too late. In early 1932 - an election year - Hoover signed into effect the Reconstruction Finance Corporation "to provide emergency financing facilities for financial institutions, to aid in financing agriculture, commerce, and industry," as well as the Banking Act of 1932 "to improve the facilities of the Federal Reserve system for the service of commerce, industry, and agriculture, to provide means for meeting the needs of member banks in exceptional circumstances."

Waters met with other unemployed Portland veterans and started to discuss the idea of meeting in person with Congress. When Patman's bill got shelved around May 11, Waters' mind was already made up. He started giving speeches in support of the early payment of the bonus, transcripts of those speeches made their way into the West Coast newspapers. On May 17, 1932 the Bonus Expeditionary Force (a nod to the American Expeditionary Force) - counting members from all over the west coast, the majority of them wearing their old khaki shirts - departed from Portland on a train bound for Washington. Rail officials loaned a freight train to the "Bonus Army." People met the trains with foodArriving in Iowa the following day, the Bonus Army hitched rides or walked the rest of the way to Washington. By June 1, there were over 1,500 men (and some families) were in Washington.

World War I veteran and novelist John Dos Passos said, "The March was a spontaneous movement of protest, arising in virtually every one of the forty-eight states."

The Bonus Army set up Hoovervilles in three major places in and around Washington: 12th Street & B Street NW (less than a mile from the White House), 3rd Street & Pennsylvania Avenue NW (less than half a mile from the U.S. Capitol building), and the largest camp was in the Anacostia Flats, and called their new home "Camp Bartlett" in honor of the former assistant postmaster general and former governor of New Hampshire John H. Bartlett, who let them stay there.

Hoover's press secretary, Theodore Joslin, said "The marchers have rapidly turned from bonus seekers to communists or bums." Over at the Bureau of Investigation, a young J. Edgar Hoover began efforts to coordinate evidence of communist activity within the Bonus Army.

Brigadier General Pelham D. Glassford was the police superintendent for Washington, D.C. He asked Congress for $75,000 to provide food for the Bonus Army. Congress said no. On June 15, the day after Rep. Edward Eslick (D-TN) died of a heart attack while speaking on the floor of the House of Representatives in favor of the bill, with the Bonus Army's numbers in Washington numbering 20,000, the Democratic-led House of Representatives voted to approve immediate payment of the bonus. The Republican-controlled Senate rejected it on June 17 (by a 62-18 vote, and the majority wasn't *that* large) and Hoover had already said he would veto the bill were it to have passed the Senate.

Glassford provided almost $800 of his own money for supplies. The camp quickly became a local attraction. Washingtonians brought sleeping bags, food, and cigarettes to the veterans. Evalyn Walsh McLean, a Washington socialite and the wife of Washington Post owner Edward McLean (and the last private owner of the Hope Diamond), went with Glassford to a diner in the middle of the night and ordered one thousand sandwiches and a thousand packs of cigarettes to give to the Bonus Army. The camp was led by Waters, who ran it like a military outpost. They had named streets, a post office, a library, a barber shop. There were educational classes for the children, a newspaper for the residents, as well as Vaudeville acts and boxing matches. Alcohol was prohibited, as were weapons, fighting, and begging. Communists weren't allowed to join in at all, so their motives couldn't be misconstrued by Congress, or Hoover, or anyone who was following along with the newspapers that their goal was simply a handout. The camps were integrated, as well, with one black Bonus Army member saying it was "the first massive integrated effort I can remember." Civil rights activist Roy Wilkins wrote, "There was one absentee [in the Bonus Army]: James Crow."

By July 1932, the Reconstruction Finance Corporation was approved to loan money to state and local governments for infrastructure projects which would look remarkably like Franklin D. Roosevelt's New Deal legislation. Vice President Charles Curtis was reportedly "unnerved" at the sight of the Bonus Army near his office on July 14 - the anniversary of the storming of the Bastille. Later that month, as the temperature soared, so did the tensions. On July 28, 1932 Hoover sent in the troops to clear out the Bonus Army from Washington. You may wonder about the recently-referred to 1878 Posse Comitatus Act, which prevents the military from enforcing the law. Washington DC was exempt from this law, as DC was under direct Congressional control.

Among those getting a taste of military action were George O. Patton and Douglas MacArthur. The Army used tear gas and bayonets to clear out the camps. Tanks with machine guns attempted to clear out the 3rd Street camp. Patton beat the piss out of a veteran named Joe Angelo, who had actually saved Patton's life when he was but a Colonel in World War I. Asked about this, Patton said, "Undoubtedly this man saved my life, but his several accounts of the incident vary from the true facts." Fire from detonating grenades set shanties on fire, tear gas mixing with black smoke.

Active duty military tasked with clearing the vets out said, "We hate this more than they do, but they brought it on themselves." Two veterans were killed by gunfire. Douglas MacArthur burned the camp at Anacostia Flats. A 16-year old named Fred Blancher said:
Those guys got in there and they start waving their sabers, chasing these veterans out, and they sart shooting tear gas. There was just so much noise and confusion, hollering and there was smoke and haze. People couldn't breathe. 

A bystander yelled at Douglas MacArthur, "The American flag means nothing to me after this!" and only piped down when MacArthur threatened him with arrest. Hoover gave a statement that read, "An examination of a large number of names discloses the fact that a considerable part of those remaining are not veterans, many are Communists and persons with criminal records." This, obviously, flew in the face of Waters' rules, regulations, and efforts to legitimize the Bonus Army from the jump. Future Supreme Commander of Allied Forces, and president, Dwight D. Eisenhower told Stephen Ambrose of MacArthur, "I told that dumb son-of-a-bitch he had no business going down there."

At 11pm that night (July 28) MacArthur gave a press conference:
Had the President not acted today, had he permitted this thing to go on for twenty-four hours more, he would have been faced with a grave situation which would have caused a real battle. Had he let it go on another week, I believe the institutions of our Government would have been severely threatened. 

Hecklers disrupted Vice President Curtis' speech in Las Vegas the next day, to which Curtis replied, "You cowards! I'm not afraid of any of you!" These were the optics they chose. The Associated Press released a list of editorial reactions and found that 21 out of 30 newspapers generally supported the government's response. The Chicago Herald and Examiner dissented, referring to Hoover's actions as "Sheer stupidity...without parallel in American annals." Hoover biographer David Burner:
In the minds of most analysts, whatever doubt had remained about the outcome of the presidential election was now gone: Hoover was going to lose. The Bonus Army was his final failure, his symbolic end.

The 1932 election was a rout. Combining Hoover's lack of response to the Great Depression with that summer's tear-gassing and bayoneting of veterans that was showing in newsreels across the country, Franklin D. Roosevelt (D-NY) handily won the Electoral College 472-59.

Now what was left of the Bonus Army - about 3,000 - was FDR's issue. Eleanor Roosevelt went out to a camp that FDR had repurposed to house them, and participated in a sing-along, in the mud and rain. FDR's New Deal legislation was hiring people to go to work. Almost 2,600 Bonus Army members accepted an offer to join the Civilian Conservation Corps for $1 a day plus room & board. A number were sent to Florida, where they were put to work in the Upper Keys building bridges for a highway from Miami to Key West.

On September 2, 1935 a hurricane slammed into the Upper Keys, a direct hit on the camp, with estimated winds of 200mph. The barometer near the eye of the storm fell to almost 26.00. September 2 was Labor Day Weekend, and so trucks that could have been used to evacuate the area were locked up. The government sent a train to rescue the veterans. At first the train was delayed. The storm surge then derailed the train when it was just a couple of miles from the camp. At least 256 Bonus Army members plus a number of locals were killed for a death toll of at least 408. Key West resident Ernest Hemingway wrote, "the veterans in those camps were practically murdered."

In 1936, the House and Senate finally passed a bill to pay World War I veterans early. President Roosevelt vetoed it, twice. Roosevelt said, of the Bonus Army:
The veteran who is disabled owes his condition to the war. The healthy veteran who is unemployed owes his troubles to the Depression.

Congress overrode FDR's vetoes and the payments were distributed. $2 billion was eventually given to three million World War I veterans. By this time Walter W. Waters of Oregon had become inspired by the images of the fascist black- and brown-shirt movements in Europe, and tried to become the head of a "Khaki Shirt Movement" to deal with the emergency of the Great Depression. The newspaper published by the Bonus Army had this to say:
Inevitably such an organization brings up comparisons with the Facisti (sic) of Italy and the NAZI (sic) of Germany...for five years Hitler was lampooned and derided, but today he controls Germany. Mussolini, before the war was a tramp printer driven from Italy because of his political views. But today he is a world figure. The Khaki Shirts, however, would be essentially American.

You do not, under any circumstances, gotta hand it to Hitler and Mussolini. Waters, referred to as "Hot Waters" and rejected by various veterans groups, enlisted in the Navy in World War 2 and died in 1959.

Determined to take better care of veterans, Congress passed (and FDR signed) the Servicemen's Readjustment Act of 1944, better known as the GI Bill. Almost eight million veterans of World War II took advantage of the GI Bill to go to school, begin paid on-the-job training, buy a house or a farm, or start a business. This program did more to fuel the rise of the postwar American economy than any other.

Wednesday, June 13, 2018

Reed Smoot, Willis Hawley, Retaliatory Tariffs, and 1930

It is generally regarded as fact that there were four MAIN causes of World War I. Handily, they spell out "main:"

Militarism
Alliances
Imperialism
Nationalism

As the world escaped the War To End All Wars (for about 20 years), the United States grew to be one of the more dominant - if not the world's most dominant - economies of the world. Post-War giddiness gave way to the Roaring '20s, a stretch of unbridled economic advancement that, in a lot of ways, was fake. More and more Americans were investing in the stock market, which just kept going up. Regard, the Dow Jones as of September of the respective year:

1921: 1017.65
1922: 1465.83
1923: 1281.46
1924: 1511.50
1925: 2203.23 (October value - September 1925 wasn't available for some reason)
1926: 2264.81
1927: 2616.73 (again, October)
1928: 3437.74
1929: 4973.84

With the exception of a minor blip in 1923 the Dow Jones increased from September-to-September of every year. As Herbert Hoover accepted the Republican nomination for the presidency during the campaign in August 1928, he famously (and short-sightedly) declared:
Unemployment in the sense of distress is widely disappearing...We in America today are nearer to the final triumph over poverty than ever before in the history of any land. The poor-house is vanishing from among us. We have not yet reached the goal, but given a change to go forward with the policies of the last eight years, and we shall soon with the help of God be in sight of the day when poverty will be banished from this nation.

Cool prediction, Herb. Hoover's election over New York Governor Al Smith (who suffered politically from being Catholic, being anti-Prohibition, and his connections to Tammany Hall) in 1928 accelerated the growth of the stock market.

As more of the United States plugged in, a new Industrial Revolution occurred. But things weren't all aces. As this history professor describes, the October 1929 stock market crash and the resulting Great Depression was a perfect storm of economic calamities. Among them:

-The Immigration Act of 1924 put a quota on the number of immigrants allowed into the United States. The unintended result was that immigrants tend to need a place to live once they arrive, and once that market slowed to a trickle, it created a housing bubble. That bubble burst in Florida in 1925 with the Florida Land Boom, foreshadowing a growing economic crisis. Construction slowed in 1928.
-Goods were too durable. You didn't need to buy a radio every year if the radio never broke. Same with your car, vacuum cleaner, iron, etc. This slowed down purchasing in America.
-Wages for workers rose, but not as quickly as productivity, so the demand wasn't meeting the output of the goods.
-What goods most Americans did buy was on credit. Installment plans, which had been around for almost 100 years by that point, were decidedly becoming A Thing. This included investment in the stock market, a process known as buying on margin.

Buying on margin meant that Americans were buying stock with borrowed money. As long as the price of the stock increased (and it had for much of the previous decade heading into that fateful October 1929), then you could sell and cover your loan. But if the bottom dropped out of the stock market, not only did you lose your investment but you also had to pay the money you no longer had back to the bank. And then that's exactly what happened. The price of the stock wasn't equal to the actual value of the stock - their P/E (price-to-earnings) ratio was out of whack. And we haven't even gotten into what happens when the stock is manipulated - buy enough stock to raise the price, short it, and then buy it back after it falls in order to make money at every stage of the manipulation.

But that's not why we're here. We're here to talk about tariffs, which are simply taxes on imported goods. A protective tariff is one in which you drive up the price of foreign goods, which generally makes the buyer go with the cheaper, home-made option. Why by an avocado from Mexico for $1.25 when you can buy one from California for $1? This is where there is overlap.

Whenever there's some sort of economic downturn, the rallying cry is to Buy American! Spend money on American goods and it will help the American economy. Everybody wins, right? Enter Reed Smoot (R-Utah) and Willis Hawley (R-Oregon).

Reed Smoot had an interesting political history, winning Utah's senate seat in 1903. However, given that Smoot was an Apostle in the Church of Jesus Christ of Latter Day Saints, Utah's history with Mormonism and the condition that the Mormon Church renounce the practice of polygamy as a criteria for Utah's admittance to the Union. The result was the 1890 Manifesto, a document that officially "advised against" Mormons practicing polygamy. Utah was admitted as the 45th state in the Union. Smoot was not the first Mormon to be elected to Congress - that distinction belongs to B.H. Roberts, elected to the House of Representatives in 1898. The House of Representatives refused to seat Roberts on account of his three wives. Smoot had only one wife, but that didn't stop the Senate from debating - for four years - Smoot's viability. The Salt Lake Tribune reported that Mormon leaders (one of which Smoot certainly was) secretly approved of polygamy following the adoption of the 1890 Manifesto. Senators opposed to Smoot's seating argued that Smoot could not take the oath of office if he subscribed to a religion that approved of breaking the law. Finally, in 1907, Smoot prevailed. Though the majority of the investigative committee recommended that Smoot be expelled, there weren't enough of the 2/3 majority required to actually get rid of Smoot. Re-elected in 1908, Smoot stayed in the Senate he was defeated in the 1932 election, when a Democratic wave rebelled against the Republicans - whom the public felt hadn't done enough to stop, or at least slow, the Great Depression.

Willis Hawley had a much less dramatic political history than his partner in legislative history. He was born in Oregon in 1864 and was the president of Willamette University from 1891-1902 and was a professor of history and economics from 1891-1907, a position he resigned when he was elected to the House of Representatives. Hawley was elected every two years until the Democratic wave got him, too.

Anyhow, Smoot became Chairman of the Senate Finance Committee in 1923. Hawley was the Chairman of the House Ways and Means Committee from 1927-1931. Together they would come up with a plan that almost nobody who knew anything about politics approved of, yet was passed anyway.

A drought hit the Plains in the late 1920s (which would peak in the Dust Bowl). In an effort to cover their losses, farmers over-extended themselves to plant more crops, which meant buying equipment to plant them. There had been a robust worldwide market for American wheat, particularly in European countries which had been jacked up during World War I. By the end of the 1920s those countries started to get back on their feet, decreasing the demand for American crops. Still they planted, trying to cover their losses. This was of course made worse by the stock market crash, in which bank runs led to bank closures. Even if you hadn't invested a penny in the stock market, you could get wiped out.

In the late 1910s/early 1920s the "Protectionists" (Republicans who wanted to, well, protect the American economy at all costs) argued that the United States' economy had grown because Europe wasn't exporting anything and had to import all their goods from...somewhere, and it just happened to be the United States. With the War over, exports would increase and imports would naturally decrease. Thus, the Protectionists argued, Congress - because Congress could make this call back then - should raise the tariffs on imported goods. Protectionism worked hand-in-hand with Isolationism as the Republicans voted against joining the League of Nations.

Democrats were against a protective tariff. That little recession in the early 1920s? Protectionists argued that it would end with higher tariffs by protecting American factories and workers. Thus the Fordney-McCumber Tariff was passed in 1923, which raised the average tariff on taxable imports to 38.5%. That tariff really marked the end of prosperity for the American farmer. As a result, foreign nations issued their own retaliatory tariffs, placing higher duties on American exports. The League of Nations got involved in an effort to draw a truce between the United States (who was not a member of the League of Nations) and the rest of the world, but no agreement could be achieved. Both domestic and international economies were weakened.

Despite campaigning through 1928 to revise the tariff, President Herbert Hoover kept on keeping on. Smoot and Hawley went to work. Hawley's version in the House raised tariff rates on 845 imported goods and cut the rates on 82. By the time Smoot got done with it in the Senate, it had increased tariff rates on an additional 177 and cut rates on 254. The final bill from the Senate, after compromising with the House, raised tariff rates on 890 dutiable imports. It was deeply unpopular.

Senator Robert LaFollette (R-Wisconsin) was a weird guy. He was a Republican isolationist who supported FDR's New Deal and formed the new Progressive Party advocating for workers' rights and would be a co-founder of the America First Committee. Still, the isolationist LaFollette railed against the Smoot-Hawley Tariff, calling it:
The product of a series of deals, conceived in secret, but executed in public with a brazen effrontery that is without parallel in the annals of the Senate. 

Plot twist: It wasn't unparalleled in the annals of the Senate (see: Abominations, Tariff of) but that's neither here nor there.

Check the New York Times from May 1930:


1,028 economists from across the country signed a petition asking Hoover to veto the bill, which had only passed 44-42 in the Senate, nowhere near the votes needed to override Hoover's veto. Thomas Lamont, a partner at J.P. Morgan, related that he "almost went down on my knees to beg Herbert Hoover to veto the asinine Hawley-Smoot Tariff. That Act intensified nationalism all over the world." Henry Ford told Hoover that the tariff was "an economic stupidity." About sixty nations sent formal protests to Hoover and the government begging him not to sign it.

Hoover signed it anyway, though in private he called it "vicious, extortionate, and obnoxious." Immediately the New York Stock Exchange lost $1 billion in value - the second crash in eight months. By making it more difficult for foreign nations (mainly Europe) to sell their goods to the United States, it made it harder for them, specifically Germany, to repay their war reparations. Pretty much everyone in American government was betting on the punished countries remaining passive. They didn't.

Spain enacted the Wais Tariff a month after the Smoot-Hawley Tariff was signed, which raised the tariff on American automobiles in Spain. Three months after Hoover signed the Tariff, Canada - long an extensive trading partner with the United States - raised tariffs on textiles, agricultural tools, electrical apparatuses, meat, gasoline, shoes, jewelry, and fertilizer. In 1932 Great Britain signed the Ottawa Agreements which placed high tariffs on American goods.

These retaliatory tariffs were part of a tactic known as the Beggar-Thy-Neighbor policy, in which countries attempt to address its own economic problems by worsening the economic issues in other countries. U.S. exports in 1929 stood at about $7 billion. By the end of 1932 U.S. exports were about $2.4 billion. With the U.S. engaging aggressively in protectionist and isolationist economic policies, the rest of the world followed suit, deepening the economic crisis. World trade fell by about two-thirds from 1929 to 1934.

Economists generally agree that the Smoot-Hawley Tariff did not cause the Great Depression - that was undertaken by the aforementioned perfect storm of factors, of which the Fordney-McCumber Tariff was one. But I think we can safely assume that the Smoot-Hawley Tariff did not prop up American industry or agriculture and, by extension, worsened European economies, which were already in bad shape.

Germany's exports (which they would use to repay their WW1 debt) fell by 20% from 1930 to 1931. So in 1933, after years of depression and hyper-inflation that saw Germany's currency become "utterly worthless,"

To be fair, it's not like the Smoot-Hawley Tariff created Germany's economic problems. It just deepened them and pushed Germany to a breaking point. Germany's unemployment in the early 1930s was 30%. Economic uncertainty - of which there was plenty in Germany in the early 1930s - meant that there wasn't a majority party in the Reichstag. The National Socialist German Workers' Party used the crisis to their advantage and allied with other right-leaning parties to build a coalition that eventually led President Paul von Hindenburg to name Adolf Hitler chancellor in an effort to keep the Communists out of power. When the Reichstag burned down, Hitler blamed the Communists and used that to consolidate his power over Germany. Again, is the Smoot-Hawley Tariff responsible? Not directly, but it did help create an economic climate that led to Hitler's ascension to power. Like Thomas Lamont said, the Tariff intensified nationalism around the world.

So when President Trump says that "Trade wars aren't so bad," he might want to ask a historian or an economist. Already we're seeing reaction to the (since suspended) rise in tariffs on aluminum and steel on Canada, Mexico, and Europe. China has announced tariff increases on American pork, wine, and nuts. Mexico has delivered the most pointed tariff rates against the Trump Administration, raising tariffs on goods exported from Republican leaders' home bases - steel from Indiana (VP Mike Pence) and bourbon from Kentucky (Senate Majority Leader Mitch McConnell). Speaker of the House of Representatives Paul Ryan's home state of Wisconsin exports 90% of its cheese outside of the United States, exports which have recently been targeted for tariff increases by Canada and Mexico, and by tariff increases on Harley-Davidson motorcycles, also headquartered in Wisconsin.

A Tariff War which leads to retaliation against the United States, could have broader consequences than the economic impact of the Smoot-Hawley Tariff. Back in 1920, exports accounted for 5% of the U.S.'s Gross Domestic Product. Today's exports account for about 13% of our GDP. Again, was the Smoot-Hawley Tariff responsible for the Great Depression and World War II? Not directly. There were plenty of reasons that had to come together for both to occur. Still, we currently see this administration embracing protectionism and isolationism, when most economists explain that it doesn't really work. Ultimately the Smoot-Hawley Tariff was an unnecessary flame, the match that over a thousand economists begged not be struck, near the tinderbox of a rough generation in world history.

Friday, February 23, 2018

When did the political parties shift platforms?

If you spend too long on the cursed website Facebook.com I'm sure you will find someone who gently, and with no ill-motive for sure, reminds The World that the Democrats once supported slavery and ran the KKK. Or maybe your Man-Bun Liberal slides into your DMs and whispers "Oh hey did you know that Republicans were once the party of a large central government that would happily go to war to protect the size and power of the federal government?" Well, gentle reader, you know what? They're absolutely correct. Both are 100% true. Here are the key moments in the history of each side eating the other side's political platform.

Prior to 1854: American politics was fractured, and the once-strong two-party system that George Washington advised against in his Farewell Address was starting to bubble up:
In contemplating the causes which may disturb our Union, it occurs as matter of serious concern that any ground should have been furnished for characterizing parties by geographical discriminations, Northern and Southern, Atlantic and Western; whence designing men may endeavor to excite a belief that there is a real difference of local interests and views. One of the expedients of party to acquire influence within particular districts is to misrepresent the opinions and aims of other districts. You cannot shield yourselves too much against the jealousies and heartburnings which spring from these misrepresentations; they tend to render alien to each other those who ought to be bound together by fraternal affection. 

Washington had seen first-hand the rise of the two-party system and tried to combat it by inviting Alexander Hamilton, a Federalist, as his Secretary of the Treasury and Thomas Jefferson, an Anti-Federalist (a term that is oppositional by its very definition), as his Secretary of State. It, uh, didn't work. 

Anyhow, as you well know, tribalism is very real in politics and it didn't take long for political observers to join in with like-minded people about how the country should be run. The War of 1812 saw the end of the Federalist party and the rise of the Democratic-Republicans. James Monroe ran as the incumbent in 1820 and won 231 of 232 electoral votes, losing one vote to John Quincy Adams, who ran as an Independent. Four different Democratic-Republicans received electoral votes in the Corrupt Bargain election of 1824. From 1828-1856 the following political parties were represented by candidates who earned electoral votes (parties in bold were the winning party in that election):

1828: Democratic, National Republican
1832: Democratic, National Republican, Independent, Anti-Masonic
1836: Democratic, Whig, Independent
1840: Whig, Democrat
1844: Democratic, Whig
1848: Whig, Democratic
1852: Democratic, Whig
1856: Democratic, Republican, American (aka Know-Nothings, who simply opposed immigration).

The National Republicans gave way to the Whigs, who went back and forth in winning from 1836-1852. The Whigs promoted federal funding of internal improvements (railroads, canals, bridges, and other infrastructure), which chafed the Democrats. Andrew Jackson shaped this era of the Democrats' policy: the supreme power of the president who can check Congress and body up the Supreme Court; Oh, and if Ohio wants a canal built, Ohio can pay for it, not the federal government. The Whig platform appealed to the growing western population who needed to be connected to the larger markets back east. Abraham Lincoln got into politics as a Whig, and was a Whig longer than he was a Republican.

The Whigs fell apart thanks to the internal debate over what to do about the westward expansion of slavery and the rise of the Free Soil Party, whose sole political platform was the banning of slavery in western territories. The Free Soil Party (slogan: Free Soil, Free Speech, Free Labor, Free Men) never won an electoral vote but were enough of a third-party presence to shift the conversation about slavery). The 1852 election was the last for the Whigs, who tried to thread the needle of internal improvements while also embracing slavery in an effort to get more votes.

Democrats, for their part, were deeply divided in the 1852 election. The four main Democratic hopefuls faced strong opposition from another faction of the party, and a consensus could not be reached during the nominating convention. A nominee needed 2/3 of the delegates to secure the nomination. After 34 attempts, it was clear the Democrats needed to start over. But whoever emerged had to satisfy both the pro-slavery Southern Democrats and the anti-Slavery Northern Democrats. Franklin Pierce secured the nomination and won the election of 1852 running the "most ludicrous, ridiculous, and uninteresting campaign" ever. Pierce was low-drama, and won.

Out of the ashes of the Whig Party came the Republican Party for the 1854 mid-term elections, who absorbed some Whigs, Free Soilers, and anti-slavery Democrats angered by the Kansas-Nebraska Act. Months prior to the 1854 election, Congress passed the Kansas-Nebraska Act, which - in another attempt to avoid civil war - told the people to decide if they wanted slavery in their states (rather than Congress, you know, taking a stand on something). Violence between abolitionists and the pro-slavery crowd arguing for their side brought some foreshadowing to what would go down between 1861-1865.

The early Republican Party focused on stopping the expansion of slavery (not the abolition of slavery where it already existed). The Whigs they absorbed also brought into the party an unhealthy distrust of Irish Catholic immigrants, but at least everyone could agree (in one party, anyway) that the spread of slavery needed to stop. John C. Fremont - the first Republican nominee for president - kept it close. James Buchanan won the electoral vote 174-114, but the popular vote edge was only 500,000 out of about four million votes cast. Millard Fillmore's anti-immigrant Know-Nothing party got almost 900,000 votes

Then came 1860. Because the Democratic Party was fractured between Northern and Southern Democrats, they each nominated their own candidate, splitting their vote. While the two Democratic candidates (John C. Breckinridge and Stephen Douglas) received enough votes to out-gain Lincoln, the Republicans rallied around Lincoln and he won the election despite not winning a single Southern state. South Carolina would secede from the Union soon after and then this fair country would spend the next four years trying to kill each other.

Meanwhile the Homestead Act of 1862 (for populating and developing the West) and the Morrill Land-Grant Act (establishing universities on the frontier) were supported by Republicans and opposed by Democrats. After the Civil War's end the Radical Republicans, whose aims were to empower African-Americans via the 14th Amendment and a proposed Civil Rights Bill (both opposed by Democrats), oversaw the Reconstruction of the South following the Civil War until 1877. Those efforts came to an end with the Election of 1876. How? 

Democrat Samuel Tilden got about 250,000 more votes than Republican Rutherford B. Hayes. But the Electoral College was much closer. It was an election rife with corruption. Tilden led in the electoral vote 184-165, a nineteen-vote difference. Democrats and Republicans in each of Florida, Louisiana, and South Carolina reported that their guy won each state and heylookathat, combined they totaled 20 electoral votes. After a prolonged legal battle that involved a special commission of 15 Congressmen and Supreme Court justices, Hayes was awarded all 20 votes (in an 8-7 decision along party lines), giving him a 185-184 edge. Historians generally agree that a deal was made: Give Republican Hayes the victory in the election and the Republicans will pull out of the South, thus ending Reconstruction.

With the Compromise of 1877, Republicans sold out the newly-freed African-American population for the next 90 years in exchange for four years of the presidency. The next major turning point in this gradual platform change came with American politics' version of the Buffalo Bills: William Jennings Bryan. 

Over the course of the 1870s-1880s a populist movement had grown. It started with The Patrons of Husbandry aka The Grange - farmers who organized into a political force - in 1867. They gained in strength after the Panic of 1873 that saw the railroads squeeze the farmers over shipping rates, the Republican-controlled Congress reducing the supply of paper money in favor of the Gold/Silver Standard (negatively impacting farmers and westerners who relied on paper money to go about their everyday lives).

The Populist Party was officially organized on the 116th anniversary of the Declaration of Independence. The Omaha Platform - their call to arms - challenged the two-party system for failing the people who fed America. They called on the unlimited coinage of silver, direct election of senators (who - to that point - were chosen by state legislatures), public ownership of railroads, more power to voters - they wanted power to shift from the elite to the people. And William Jennings Bryan was their showman.

Bryan ("The Boy Orator of the Platte") won election to Congress as a 30-year old Democrat in 1890, mainly by challenging his opponent to a series of debates, which he won handily. He ran for Senate in 1894 but the Panic of 1893 led to a backlash against Democrats, and the Nebraska State Legislature chose the Republican candidate (something about which the Populists weren't thrilled). Bryan took to the (rail)roads to spread his message. As Bryan leaned more towards the Populists, the Democrats just assumed Bryan's platform into their own for the 1896 Democratic National Convention. It was there that Bryan gave his now-famous (and required reading, if you're one of my AP students) Cross of Gold speech, called "the most famous speech in American political history." Check the closing:

If they dare to come out in the open field and defend the gold standard as a good thing, we shall fight them to the uttermost, having behind us the producing masses of the nation and the world. Having behind us the commercial interests and the laboring interests and all the toiling masses, we shall answer their demands for a gold standard by saying to them, you shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of gold. 

The speech made Bryan a star in the Democratic party. At 36, he was the youngest presidential nominee in history. The Democrats had two factions: the Bourbon Democrats (New England and Midwestern pro-business) and Bryan's Democrats (Southern and Western pro-farmer). The Republicans rallied around the gold standard and industrial growth, and outspent the Democrats 5-to-1. Republican William McKinley carried New England and the Midwest while Bryan won the South and West. McKinley took the election 271-176, though the popular vote gave McKinley just a 600,000 vote edge. In the rematch in 1900, McKinley again beat Bryan thanks to the success of the Spanish-American War and the economy's recovery from the Panic of 1893.

Republicans held the presidency until 1912, when Teddy Roosevelt ran as an independent (Bull Moose) because he was mad at Taft. Having to choose between the incumbent Taft and old favorite Teddy, the Republican vote was split, giving the presidency to Woodrow Wilson, who had only received the Democratic Party's nomination after a contentious 46 ballots, securing it after receiving William Jennings Bryan's blessing.

Roosevelt's "New Nationalism" promoted social insurance, an eight-hour workday, and strong federal oversight of the economy. Taft could see the writing on the wall and didn't campaign all that hard on "progressive conservatism." Wilson's - a Democrat, remember - "New Freedom" platform was a nod to William Jennings Bryan (whose support got him the nomination in the first place) based on limited government but also tariff reform, banking reform, and a new anti-trust law. Things got weird when, a month before the election, an assassin shot Roosevelt at close range outside a Milwaukee hotel. Roosevelt insisted on giving his 90-minute speech and opened with a sense of drama:

Friends, I shall ask you to be as quiet as possible. I don't know whether you fully understand that I have just been shot.

He finished the speech. Like a BAWSE.

Wilson won handily (435 Electoral Votes to Roosevelt's 88) and the electoral map showed a shifting nation. It was the first time since 1852 that Iowa, Maine, New Hampshire, Ohio, and Rhode Island voted for a Democrat. Wilson carried Massachusetts, a state in which a Democrat had never won on the national level.

Wilson realized he needed to appeal to Progressives. Under Wilson's presidency the Democratic Party ushered in reforms first proposed by The Grange and the Populists: A graduated income tax, the creation of the Federal Reserve Bank, and the passage of the 17th Amendment which allowed the people to directly elect their senators. The Democratic Party, with a big assist from William Jennings Bryan, was starting to shift. The Republican Party kept on keepin' on. So both parties over the rest of the 1910s and 1920s were virtually indistinguishable in what the role of government should be.

Before we pat Wilson on the back too heavily, let's also note that the Democrat didn't call for an end to lynchings across the South until 1918 and segregated federal buildings,

Then came the Great Depression. Republicans won the election of 1920 largely on the unpopularity of Wilson's League of Nations idea and the race riots which erupted in 1919. The economy was in its typical post-war recession and Wilson had suffered a stroke, leaving him out of the public eye for the better part of a year. Republicans like Warren G. Harding, Calvin "The business of America is business" Coolidge (nicknamed Silent Cal for his allowance of the rapid scaling of the American economy which would precipitate the stock market crash of 1929), and Herbert Hoover fully embraced the laissez-faire maxim of Just Let The Economy Sort Itself Out.

When Hoover received the Republican nomination for president in 1928, he proudly proclaimed:
We in America today are nearer to the final triumph over poverty than ever before in the history of any land. The poorhouse is vanishing from among us. 

Well that wasn't a very prescient prediction. Eight months after he took office the stock market crashed, but Hoover promoted his "Rugged Individualism" and "self-reliance" stances - the idea that people in trouble will get themselves out. In a 1931 address to the Gridiron Club, Hoover said:

If, by the grace of God, we have passed the worst of this storm, the future months will be easy. If we shall be called upon to endure more of this period, we must gird ourselves for even greater effort...The question is whether that history shall be written in terms of individual responsibility, and the capacity of the Nation for voluntary cooperative action, or whether it shall be written in terms of futile attempt to cure poverty by the enactment of law. 

Hoover did try to fix the economy once he realized that the stock market crash wasn't just another "passing recession", but the beginning of a 12-year economic disaster brought about by the Republicans' economic policies of the 1920s. But it was too little, too late. Hoover founded government agencies to try to reverse the economy, but still called upon the charity of the private sector to help those in need. Hoover ignored calls from the public - and from Democrats - to fully involve the government in the relief efforts out of fear that forcing fixed prices, hiring unemployed workers, increasing government spending, etc. were irreversible steps towards socialism. Republicans were anti-bailout in this instance.

His opponent in the 1932 election was Democrat Franklin D. Roosevelt who campaigned on the platform of "Relief, Recovery, Reform." Hoover got whooped, winning only a handful of New England states and losing in the Electoral College 472 to 59. FDR installed the New Deal, and the Democratic tradition of embracing large government was complete. The New Deal created strict regulation on business as well as an alphabet soup of numerous federal agencies (CCC, AAA, TVA, WPA, etc.) designed to put people to work. Of course the size of the federal government, and the federal deficit itself, exploded in an effort developed by British economist John Maynard Keynes to spend their way out of the Great Depression and the side circus of the Dust Bowl. Democrats were okay with this. Also, it was FDR and the Democrats who pushed for the repeal of Prohibition though Republicans quit trying to defend it. The switch was almost complete.

FDR would get re-elected in 1936, 1940, and 1944. After he died in April 1945, Republicans began working on the 22nd Amendment, limiting the number of terms a president could serve to two.

No area of the country highlights the musical-chairing of the major political parties quite like the South. In the same way that the Democrats absorbed the changing demographic of Western voters, Republicans capitalized on social issues to welcome Southerners into the fold. But it took a branch of the Democratic Party to initiate the shift: the Dixiecrats. New York Governor Thomas Dewey was the Republican nominee for president in the 1944 and 1948 elections. He supported - along with Northern Republicans and Democrats alike - sweeping civil rights legislation with which the Southern Democrats wholeheartedly disagreed. When Truman issued Executive Order 9981 in July 1948 (a few months before the presidential election) desegregating the military, dudes like Strom Thurmond of South Carolina and James Eastland of Mississippi led the charge to break away from the Democratic Party and form their own branch known as the States' Rights Democratic Party (because nothing rings those alarm bells like invoking "States Rights" 83 years after Appomattox. Platform points 4-6 were as follows:

We stand for the segregation of the races and the racial integrity of each race; the constitutional right to choose one's associates...We oppose the elimination of segregation, the repeal of miscegenation statutes, the control of private employment by Federal bureaucrats called for by the misnamed civil rights program. We favor home-rule, local self-government and a minimum interference with individual rights. 

We oppose and condemn the action of the Democratic Convention in sponsoring a civil rights program calling for the elimination of segregation, social equality by Federal fiat, regulations of private employment practices, voting, and local law enforcement.

We affirm that the effective enforcement of such a program would be utterly destructive of the social, economic and political life of the Southern people, and of other localities in which there may be differences in race, creed or national origin in appreciable numbers.

Strom Thurmond was their chosen nominee in 1948. In the election, Democrat Harry Truman won his own term, defeating Dewey 303-189 with about a two million vote edge. Thurmond won 39 electoral votes and 1.17 million votes, winning South Carolina, Mississippi, Alabama, Louisiana, and one elector from Tennessee - all states won by FDR in 1944.

Democrat Adlai Stevenson's only Electoral College wins were in the Deep South in 1952, with WW2 hero General Dwight D. Eisenhower taking the election in a landslide thanks to concerns over the emerging Cold War with the Soviet Union, and who better to face a potential conflict with the Soviet Union than the guy who commanded the entire American force against the Nazis? Two years later Brown v. Board of Education desegregated schools. Eisenhower won re-election in 1956, flipping Louisiana to the Republican Party for the first time since the aforementioned 1876 election, when their electoral votes were given to Rutherford B. Hayes. The South was starting to break with the Democratic Party.

The rematch in 1956 saw the Republican Eisenhower easily win re-election. Southern states were shifting their allegiance to the Republican party, though Eisenhower would send in the 101st Airborne to Little Rock Central High School and force its compliance with Brown. That said, here is the net gain by the Republican Party among Southern states from the 1952 to 1956 presidential elections:

Alabama: +4
Arkansas: +3
Florida: +2
Georgia: +3
Louisiana: +6
Mississippi: -15
North Carolina: +3
South Carolina: +22
Tennessee: -0.8

Kennedy's civil rights bill was based on a similar 1875 attempt at civil rights legislation. Democrat Howard Smith, a Virginia segregationist, killed it in committee. When noted political bully Lyndon B. Johnson first addressed a joint session of Congress - five days after Kennedy's assassination - he said:

No memorial oration or eulogy could more eloquently honor President Kennedy's memory than the earliest possible passage of the civil rights bill for which he fought so long.

LBJ pushed the bill through as quickly as he could. Problem is that it was referred to the Senate Judiciary Committee, chaired by James Eastland...who (if you're still awake) was one of the key Dixiecrat figures of 1948. Democrats finessed it so that it went directly to the Senate floor for debate. Upon its arrival, the Southern Democrats were joined by Republican senator Richard Russell filibustered the bill's debate. Russell:

We will resist to the bitter end any measure or any movement which would have a tendency to bring about social equality and intermingling and amalgamation of the races in our (Southern) states.

There it is. The Republicans managed to filibuster for 54 days. Strom Thurmond lost his racist mind about it:

This so-called Civil Rights Proposals, which the President has sent to Capitol Hill for enactment into law, are unconstitutional, unnecessary, unwise, and extend beyond the realm of reason. This is the worst civil-rights package ever presented to the Congress and is reminiscent of the Reconstruction proposals and actions of the radical Republican Congress.

It was part of LBJ's Great Society plan. He signed the Civil Rights Act of 1964 into law on July 2. It didn't hurt that 1964 was an election year. Here's the net Republican gain in the presidential election from 1952 to 1964, when Republican Barry Goldwater lost to Lyndon Johnson:

Alabama: +34
Arkansas: Same
Florida: -7
Georgia: +24
Louisiana: +10
Mississippi: +48
North Carolina: +10
South Carolina: +55
Tennessee: -5

Why did Arizona senator and Republican nominee Barry Goldwater make such massive gains among Southern states in 1964? Look to Goldwater's 1960 book The Conscience of a ConservativeIn it, Goldwater wrote against the "radical, or Liberal, approach" to politics.

(Interestingly enough, Goldwater and John F. Kennedy - opposite ends of the political spectrum - were very good friends and proposed a joint campaign: both sides making the same campaign stops at the same time and debating issues from a Conservative and Liberal standpoint. The CIACubansRussiansMafia, Lee Harvey Oswald ended that wonderful idea for a political experiment.)

Since 1964 there have been 13 presidential elections. The number of times the non-Democratic candidate ('sup, 1968 George Wallace) has won the Deep South, from 1968-2016:

Alabama: 11
Arkansas: 10
Florida: 9
Georgia: 9
Louisiana: 10
Mississippi: 12
North Carolina: 11
South Carolina: 12
Tennessee: 10

It took about 90 years from the 1870s-1960s, but racial tensions of post-Reconstruction America combined with the role of government in the financial sector in the 1920s-1930s, and then back to racial tensions of the mid-20th Century completed the do-si-do of the Democratic and Republican parties. I'll let you interpret the party differences of the 21st Century.