Lesson 1: Harding and Coolidge

Question 1

Bull Market Definition

Answer 1

a period of increased stock trading and rising stock prices

Question 2

Communism Definition

Answer 2

an economic system in which all wealth and property are owned by the state

Question 3

Disarmament Definition

Answer 3

a reduction of armed forces and weapons of war

Question 4

Installment Buying Definition

Answer 4

buying on credit, with regular payments to cover the full price plus interest

Question 5

Interest Definition

Answer 5

a fee charged for a loan, usually a percentage of the loan, to be paid monthly along with part of the original loan, until the loan is repaid

Question 6

Kellog-Briand Pact Definition

Answer 6

a 1928 treaty outlawing war

Question 7

Margin Definition

Answer 7

a strip along the edge; in stock trading, a fraction of the stock price given as a down payment to gain ownership of stock

Question 8

Recession Definition

Answer 8

an economic slump that is milder than a depression

Question 9

Stock Definition

Answer 9

share of ownership in a corporation

Question 10

Teapot Dome Scandal Definition

Answer 10

a political scandal during President Harding’s administration involving the secret lease of government land to oil companies

Question 11

True or False (Review): World War I had helped the economy. Europeans ordered vast amounts of supplies from American factories. After the United States entered the war in 1917, American factories expanded rapidly to meet the demand for military supplies.

Answer 11

True

Question 12

When soldiers came back from World War I, what were they looking for? What other factor contributed to the economic recession after the war?

Answer 12

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.

Question 13

How did the recession after the war help Republican Warren Harding win?

Answer 13

The recession fed voter discontent with the Democrats, who had held power for eight years. In the 1920 election, Warren Harding swamped his Democratic opponent James M. Cox.

Question 14

Who did President Warren Harding choose to serve in the top cabinet posts, in the Secretary of Treasury and Secretary of Commerce positions? Why? What did they do?

Answer 14

For the top Cabinet posts, Harding chose able men who strongly followed pro-business policies. Andrew Mellon, a wealthy banker, became secretary of the treasury. Mellon balanced the budget and lowered taxes. Herbert Hoover became the new secretary of commerce. During World War I, Hoover had earned the world’s admiration by organizing efforts to supply food to millions of starving Belgians. As secretary of commerce, he worked to help American businesses expand overseas.

Question 15

To fill most cabinet posts, who did President Warren Harding choose? What was the Ohio Gang? What characteristics did Harding have? How about the “Ohio Gang”? What was Charles Forbes’s scandal? Why did Harding view this as betrayal? How did President Warren Harding pass away in August 1923? What do many think contributed to his death?

Answer 15

To fill most other Cabinet posts, however, Harding brought in his old friends. They became known as the “Ohio Gang.” Harding himself was honest and hard-working, but the Ohio Gang saw government service as a way to enrich themselves. A series of scandals resulted. For example, Harding made Charles Forbes head of the Veterans Bureau. Forbes was later convicted of stealing millions of dollars from the bureau. Harding looked upon Forbes’s crime as a betrayal. When rumors of new scandals surfaced, he grew even more distressed. In August 1923, Harding died of a heart attack. Many believed that the scandals contributed to his sudden death.

Question 16

What was the Teapot Dome Scandal that came to light after President Warren Harding’s death? What role did Secretary of the Interior Albert Fall play in the Scandal? Due to this, Fall became the first cabinet member to go where?

Answer 16

After Harding died, new scandals came to light. The most serious involved Secretary of the Interior Albert Fall. Two oil executives had bribed Fall. In return, he secretly leased them government land in California and at Teapot Dome, Wyoming. As a result of the Teapot Dome Scandal, Fall became the first Cabinet official ever sent to prison.

Question 17

Where was Vice President Calvin Coolidge when he learned that he would become President?

Answer 17

On the day Harding died, Vice President Calvin Coolidge was visiting his father’s farm in Vermont. Coolidge recalled, “I was awakened by my father. … I noticed that his voice trembled.” Coolidge’s father, a justice of the peace, used the family Bible to swear his son in as President.

Question 18

How was President Coolidge different from President Harding?

Answer 18

“Silent Cal” Coolidge was very different from Harding. Harding loved throwing parties and making long speeches. Coolidge was tight with both money and words. A woman reportedly told Coolidge she had bet that she could get him to say more than two words. “You lose,” Coolidge replied.

Question 19

How did Coolidge move to repair the damage caused by the scandals? In 1924, who did Coolidge run up against? What motto won him the Presidency?

Answer 19

Coolidge set out to repair the damage caused by the scandals. He forced the officials involved in scandals to resign. In 1924, Coolidge ran against Democrat John Davis and Progressive Robert La Follette. Voters chose to “Keep Cool With Coolidge” and returned the cautious New Englander to office.

Question 20

How did Coolidge share similar business ideals as Harding?

Answer 20

Like Harding, Coolidge believed that prosperity for all Americans depended on business prosperity. Coolidge cut regulations on business. He also named business leaders to head government agencies.

Question 21

How did Coolidge’s pro-business policies contribute to a period of rapid economic growth? What was “Coolidge Prosperity”? What happened to the quantity of goods in the period from 1923 to 1929?

Answer 21

Coolidge’s pro-business policies contributed to a period of rapid economic growth. People referred to this boom as “Coolidge prosperity.” As factories switched to consumer goods, the postwar recession ended. From 1923 to 1929, the quantity of goods made by industry almost doubled.

Question 22

During “Coolidge Prosperity”, how did an increase in income affect products in American homes?

Answer 22

For most Americans, incomes rose. As a result, they were able to buy a flood of new consumer products. Electric refrigerators, radios, phonographs, vacuum cleaners, and many other appliances took their places in American homes.

Question 23

How did businesses use advertisements to encourage consumers?

Answer 23

Businesses used advertising to boost sales of consumer goods. Advertisements encouraged people to think that their happiness depended on owning a wealth of shiny, new products.

Question 24

Why were people buying things they could not afford? What did businesses do in response? What is installment buying? How does it work? What is interest? How did the new policy “buy now, pay later” influence the amount of buyers and debt?

Answer 24

Faced with so many goods, people often wanted to buy things they could not afford. In response, businesses allowed installment buying, or buying on credit. For example, buyers could take home a new refrigerator by putting down just a few dollars. Each month, they paid an installment until they had paid the full price, plus interest, or a percentage of the price charged as a fee for the loan. The new policy of “buy now, pay later” increased the demand for goods. At the same time, however, consumer debt jumped. By the end of the decade, consumers owed more than the amount of the federal budget.

Question 25

How did the economic boom of the 1920s influence stock markets? What is stock? What determines if stock is profitable?

Answer 25

The economic boom of the 1920s gave the stock market a giant boost. Corporations sold stocks, or shares of ownership, to investors. Investors made or lost money depending upon whether the price of the shares went up or down.

Question 26

By the late 1920s, why were many investing in stock? How did the rapid increase in stock prices make some fortunes almost overnight? How did stories of people becoming rich draw in more participation? What is a bull market?

Answer 26

By the late 1920s, more people were investing in the stock market than ever before. Stock prices rose so fast that some people made fortunes almost overnight. Stories of ordinary people becoming rich drew others into the stock market. Such a period of increased stock trading and rising stock prices is known as a bull market.

Question 27

How did people buy stocks on margin? What is margin? How does this process work?

Answer 27

Many people bought stocks on margin. Under this system, an investor bought a stock for as little as a 10 percent downpayment, or margin. The buyer held the stock until the price rose and then sold it at a profit. Margin buying worked as long as stock prices kept going up.

Question 28

What did many experts warn about the bull market in 1928 and 1929? Did anyone listen?

Answer 28

In 1928 and 1929, however, the prices of many stocks rose faster than the value of the companies themselves. A few experts warned that the bull market could not last forever. Still, most investors ignored the warnings.

Question 29

After World War I, who became the leading economic power? What did Europeans expect of the United States? How did America return back to prewar isolationism?

Answer 29

After World War I, the United States was the world’s leading economic power. Europeans expected the United States to take a major role in world affairs. Presidents Harding and Coolidge wanted to keep the hard-won peace in Europe. However, they did not want to commit the United States to the job of keeping world peace. The United States sent observers to the League of Nations but refused to join. Most Americans supported this return to prewar isolationism.

Question 30

How did World War I increase American trade and investment in Latin America? What fear made America limit its involvement and role abroad?

Answer 30

During the war, Latin American nations had been cut off from Europe because of wartime threats to shipping. As a result, United States trade and investment in Latin America increased. This trend continued after the war. However, the United States limited its role abroad for fear that more involvement might push the country into another war.

Question 31

Despite the policy of isolationism after WWI, how did America intervene in Nicaragua in 1926?

Answer 31

At times, the United States intervened in Latin America. In 1926, for example, a revolution broke out in Nicaragua, where Americans owned plantations and railroads. Coolidge sent marines to oversee new elections.

Question 32

How did the United States intervene in Mexico in 1927?

Answer 32

In 1927, Mexico announced plans to take over foreign-owned oil and mining companies. American investors called on President Coolidge to send in troops. Instead, Coolidge sent a diplomat, Dwight Morrow, to Mexico. After much hard bargaining, Morrow was able to work out a compromise with the Mexican government.

Question 33

The Soviet Union was the world’s first what? What is communism?

Answer 33

Meanwhile, the Soviet Union became the world’s first communist state. Communism, as practiced in the Soviet Union, was an economic system in which all wealth and property were owned by the government.

Question 34

Why did the United States refuse to recognize Lenin’s government in the Soviet Union? Why did many Americans hate communism? Despite this, how did America help the Soviet Union in 1921?

Answer 34

The United States refused to recognize Lenin’s government. Most Americans disliked communism. It shocked them when the Soviet government did away with private property and attacked religion. Still, Congress voted to provide $20 million in aid when famine threatened the Soviet Union in 1921. American aid may have saved as many as 10 million Soviet lives.

Question 35

Why did many in the 1920s favor disarmament, after looking at the causes of World War I? Who founded the Women’s International League for Peace and Freedom, which led the call for disarmament?

Answer 35

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, or disarmament. Pacifist groups such as the Women’s International League for Peace and Freedom, founded by Jane Addams, led the call for disarmament in the United States and Europe.

Question 36

What was the Kellog-Briand Pact?

Answer 36

Presidents Harding and Coolidge also backed peace efforts. At the Washington Conference of 1921, the United States, Britain, and Japan agreed to limit the size of their navies. Seven years later, the United States and 61 other nations signed the Kellogg-Briand Pact. This treaty outlawed war.

Question 37

What was the fatal flaw of the Kellog-Briand Pact?

Answer 37

The treaty, however, had a 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 hailed the Kellogg-Briand Pact as the beginning of a new age of peace.