American Experiment (239 page)

Here the Republicans reaped one of the unintended fruits of their failure to ratify the Treaty of Versailles. In Paris, Wilson and Lloyd George had agreed to leave unspecified the amount to be paid by Germany, as they expected that later the British and American representatives on the reparations committee would work out a fairly moderate sum. When America rejected the treaty, however, the French were left as the dominant power on the committee, and in 1921 they presented Germany with a bill for the astronomical sum of $32 billion. After the Germans refused to pay, the specter of international debts unsettled efforts to stabilize European currencies and economies.

Mellon’s banking instincts urged him toward a moderate solution to the growing debt/reparation crisis. “If we insist on too difficult terms,” we
would “receive nothing,” he noted. But he was unwilling to have the American government simply write off $10 billion in supposed assets which would then have to be replaced out of the pockets of bondholders and taxpayers. His solution was to renegotiate the loans, granting the Europeans lower interest rates and longer terms of repayment. Using the leverage provided by Treasury Department oversight of private loans to foreign powers—the bankers seldom risked a loan not approved by Mellon and Hoover—the Republican banker-in-chief brought country after country to the bargaining table. Slowly the loan tangle was resolved, in the finance ministries and the banking houses. For the press and the public, however, the issue remained an acrimonious one; Coolidge’s bland and perhaps apocryphal “they hired the money, didn’t they,” rather than Mellon’s strategy of enlightened self-interest, seemed to define the American position on the debts.

Sound American business sense was also needed to help defuse the explosive question of German reparations. France’s attempt to bludgeon the Germans into paying by occupying the Ruhr in 1923 only helped wreck the German economy, unleash wild inflation that pauperized the country’s middle class, and encourage political extremists on both the left and the right. Two Americans, the Chicago banker Charles Dawes and General Electric chairman Owen Young, helped shape a solution under which Germany’s reparation payments were fixed at a reasonable yearly sum. Meanwhile private American capital flowed into Germany, helping restore prosperity to that country and indeed to much of Europe.

The cycle of private loans, reparation payments, and rescheduled war debts seemed to some a “financial merry-go-round,” as the United States collected in debt payments approximately the same amount the bankers lent to Germany. But in fact the cycle of payments seemed to be fulfilling the Republicans’ goals. With the structure of international credit restored, prosperity returned to both sides of the Atlantic. Urged on by the American banks, Britain and other European powers went back onto the gold standard. Stable prices, sound currencies, steadily growing trade—the Republican millennium appeared to be at hand as Hoover moved from the Commerce Department to the White House in 1929.

The real source of the international recovery, however, was the expansion of trade, and here the Republicans’ business sense would eventually play them false. But, for a time, Hoover’s efforts to promote American sales and investment abroad gleaned tremendous dividends. Yankee investment in Latin America tripled, and commerce with the region grew by 87 percent. Even while Congress—over Hoover’s objections—offended Japan with exclusionary immigration laws, trade with the island kingdom
swelled. In revolution-torn China, where the United States government maintained a brigade of Marines from 1927 on, Model T Fords shared streets with rickshaws, and the Standard Oil refinery was one of the largest employers in Tientsin.

It was dollar diplomacy—but with a difference. Throughout the decade, the Republicans worked steadily to placate anti-American feelings triggered by previous heavy-handedness. In 1924 Coolidge withdrew the Marines from the Dominican Republic; in 1925 the occupation of Nicaragua ended, although a year later American troops returned to that country to battle the guerrilla forces of the legendary General Sandino.

The most dramatic improvement came in relations with Mexico. The Mexican government had aroused both American Catholics by its anticlerical policies and American oil companies—which controlled 70 percent of Mexico’s oil—by its nationalization of foreign oil holdings. Talk of war even bubbled up on both sides of the Rio Grande until Coolidge moved to head off the building crisis by appointing his old friend Dwight Morrow, of the House of Morgan, as envoy to Mexico City. Morrow’s tact and infectious good nature won him the friendship of Mexican officials, and he sponsored a visit to Mexico by the aviation hero Charles Lindbergh (soon to be his son-in-law) that helped turn public attitudes toward the United States around. Morrow helped negotiate a reconciliation between the government and the church in the Latin republic and he worked out a businesslike compromise on the question of oil. In the next year, Hoover put the presidential seal of approval on the tenuous new friendship with Latin America by undertaking a seven-week goodwill tour of the region just before his inauguration.

As the decade closed, the earlier rifts in the GOP seemed to have yielded to the party’s general pro-business consensus. With Hughes heading for the Supreme Court and Lodge dead, the League a political cipher, and the drama of disarmament drained by the very success of the Washington Conference, the way was at last clear for a moderate foreign economic policy. Then the GOP took another leap—backwards—as it turned in 1929 to write into law the last facet of Mellon’s economic program: a high, across-the-board protective tariff. President Hoover viewed with misgivings his party’s rally around upward tariff revision. Few men recognized better than Hoover the importance of international trade to America’s continuing prosperity, or more feared tariff retaliation by other nations.

“Break this chain” of trade, Hoover declared during the 1928 campaign, “and the whole machine is thrown out of order…. Cease exporting automobiles to South America or Europe, and automobile workers are thrown out of work in Michigan. The suffering does not stop there.... The
steel mills slacken in Pennsylvania and Indiana. The mines employ fewer workers at Lake Superior. And every farmer in the United States suffers from diminished purchasing power.”

Thus Hoover had serious private doubts about the Smoot-Hawley bill that the Republicans in Congress enacted in early 1930. In public, however, the President emphasized the handful of concessions the legislative leaders had granted him. The fusillade of antitariff protests from academics and from Democrats—although many of the latter had joined in the orgy of log-rolling as Smoot-Hawley took final form—also apparently stiffened Hoover’s resolve to follow his party and accept the bill. In June 1930 the President signed the tariff into law, hailing it as the fulfillment of “the repeated demands of statesmen and industrial and agricultural leaders over the past twenty-five years.”

The ghosts of John Sherman, Mark Hanna, and Nelson Aldrich no doubt smiled down in approval.

Smoot-Hawley towered as a party achievement, the culmination of a century of Whig and Republican economic nationalism, the climactic act of the 1920s’ “compact majority.” At the end of that decade of conservative business rule, as at the start, the party had its way, despite the misgivings of Herbert Hoover and the fears of internationalists in both parties. James Madison’s old checks and balances, designed to delay and fragment “naked majority rule,” still seemed to be suspended. By 1931, the Republicans had achieved what no liberal or progressive leadership had brought about at least since Reconstruction—ten solid years of party government. The voices of protest were shrill and scattered, minority opposition weak and divided.

If the Framers’ anti-majoritarian Constitution could not protect minority interests, what could? The American people had supplied their own answer within a dozen years of adopting the 1787 charter, by establishing a Jeffersonian party opposition to challenge the Federalist incumbents. That opposition went on to take office in 1800. The flowering of the party system had nurtured a “loyal opposition” ready to critique, challenge, and balance the party in power. As parliamentary systems grew in Europe during the nineteenth century, the idea of the militant but loyal opposition grew with them. By 1930, the labor movement in Britain, for example, and German socialists, had long since been challenging the established parties.

Emboldened by their midterm gains of 1922 and the “Ohio gang” scandals the next year, the Democrats marched into 1924 with high hopes of
ousting the GOP. With a host of promising leaders, including such veterans as Oscar Underwood and former Treasury Secretary McAdoo and rising young figures like Governor Alfred E. Smith of New York, the Democracy’s prospects looked good, as they assembled in Manhattan for the quadrennial conclave. But everything fell apart in their convention hall, “Tex” Rickard’s old Madison Square Garden. Even the place was wrong—a red-brick edifice used to host circuses and six-day bike races and adorned by a ten-story tower (in which the architect Stanford White had been murdered), and located in the middle of Al Smith territory—urban, polyglot, and very “wet.” McAdoo arrived breathing fire against the city itself—“the city of privilege,” he called it, “reactionary, sinister, unscrupulous, mercenary, and sordid,” rooted in corruption and dominated by greed. At the convention, when the keynote speaker declaimed that what this country “needs is Paul Revere,” he was greeted with a round of boos because the delegates thought he said what the country needed was “real beer.” During a demonstration by the Georgia delegation, the convention band struck up with “Marching Through Georgia,” thinking it was a beloved Southern song, instead of Sherman’s victory march.

But the main trouble in the convention was the old Democratic party divisions between the congressional leadership and the presidential, between the South and the North, between the wets and the drys, between the country and the city—plus the two-thirds requirement for nomination. The convention was so divided that it failed even to censure the Ku Klux Klan. In the early-summer heat, roll call followed roll call as the Smith and McAdoo forces checked each other. Days dragged by. On the 99th ballot McAdoo led Smith by half a vote. The exhausted leadership finally worked a compromise on the 103rd ballot, by nominating for President John W. Davis, a conservative corporation lawyer in the Cleveland tradition, and for Vice-President Charles W. Bryan, brother of the Commoner, part populist and part socialist. This ticket was not balanced but, in David Burner’s term, “schizoid.”

The nation’s labor and progressive leaders had long before recognized the feebleness of the divided Democracy. Throughout the early twenties, AFL and rail labor leaders, farm-laborites, old and new Progressives, and socialists had been planning independent action for 1924. Out of these activities had grown the Conference for Progressive Political Action, which sponsored a Progressive party convention in 1924. Robert La Follette, older, wearier, was both the unifier and the hero of the CPPA. At its convention in Chicago, he won the united support of 1,200 delegates embracing labor, farmers, students, a few women, and virtually no blacks. La Follette gained the plaudits of both liberals and socialists with a demand
that monopolies be “crushed.” Senator Burton K. Wheeler of Montana, declaring that when “the Democratic party goes to Wall Street for a candidate” like Davis, he must refuse to go with it, accepted the nomination for Vice-President.

Once again La Follette found that launching a third party is one of the most difficult ventures in American politics. It was hard enough to foster unity among the fragmented elements of the left. The Socialist party fell in line, formally endorsing La Follette, while the Communists and other radical parties castigated the La Follette Progressives as even more reactionary than the two major parties. But the strategic problem lay deeper. The La Follette leadership hoped that the Progressive thrust in 1924 would break through existing party alignments and clear the way for a true split by 1928 between a right and a left party. In the meantime, though, La Follette did not want to jeopardize the reelection of Borah, Norris, and other Progressives. Many socialists, on the other hand, wanted a third party that would push for its own Senate and state candidates, even against liberal Democrats and Republicans, if need be, in order to build a labor-left party that could some day take over the whole sprawling governmental system. La Follette insisted on running solo. As it turned out, the Idaho Progressive party endorsed Borah, who later backed Coolidge; Norris ran as a Republican but renounced Coolidge.

The Republicans held probably the dullest convention in the nation’s history. Hiram Johnson, who opposed the Administration’s tax reduction program and many of its foreign policies, might have enlivened the proceedings, but he lost out early against Coolidge’s party organization and patronage. In any event, the GOP leadership wanted a bland convention and a quiet campaign. It publicized slogans such as “Keep Cool with Coolidge” and “Coolidge or Chaos.” The myth of cautious Cal, of silent Cal, was building. Middle-class Americans liked him for his nutshell philosophy, “Work and save.” They liked him for his honesty and simplicity, for his willingness to put on Indian headdresses out west, all the while looking as though he had been weaned on a pickle, as Alice Roosevelt Longworth would claim she had not said.

Americans liked him in 1924, giving him a huge vote of endorsement, 15.7 million votes to Davis’s 8.4 million and La Follette’s 4.8 million. La Follette carried only his own Wisconsin, though he ran second to Coolidge in half the mountain and all three Pacific states. The GOP carried the congressional elections, and Borah and Norris retained their seats and returned to Washington to carry on the fight within the party. Progressivism seemed to be stalled as a national movement. The 1912 progressives had split with the Taft party and met defeat at the hands of a united
Democracy. The 1924 progressives had failed to unite with the Democrats, and both parties had been shellacked by a united GOP.