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CHAPTER 10: WAR, PROSPERITY, AND DEPRESSIONOUTLINE OF U.S. HISTORYconcessions, Wilson compromisedsomewhat on the issues of self-determination,open diplomacy, andother specifics. He successfully resistedFrench demands for the entireRhineland, and somewhat moderatedthat country’s insistence uponcharging Germany the whole costof the war. The final agreement (theTreaty of Versailles), however, providedfor French occupation of thecoal and iron rich Saar Basin, anda very heavy burden of reparationsupon Germany.In the end, there was little left ofWilson’s proposals for a generousand lasting peace but the League ofNations itself, which he had made anintegral part of the treaty. Displayingpoor judgment, however, thepresident had failed to involve leadingRepublicans in the treaty negotiations.Returning with a partisandocument, he then refused to makeconcessions necessary to satisfy Republicanconcerns about protectingAmerican sovereignty.With the treaty stalled in a Senatecommittee, Wilson began a nationaltour to appeal for support. On September25, 1919, physically ravagedby the rigors of peacemaking andthe pressures of the wartime presidency,he suffered a crippling stroke.Critically ill for weeks, he never fullyrecovered. In two separate votes— November 1919 and March 1920— the Senate once again rejectedthe Versailles Treaty and with it theLeague of Nations.The League of Nations wouldnever be capable of maintainingworld order. Wilson’s defeat showedthat the American people were notyet ready to play a commanding rolein world affairs. His utopian visionhad briefly inspired the nation, butits collision with reality quickly ledto widespread disillusion with worldaffairs. America reverted to its instinctiveisolationism.POSTWAR UNRESTThe transition from war to peacewas tumultuous. A postwar economicboom coexisted with rapidincreases in consumer prices. Laborunions that had refrained fromstriking during the war engaged inseveral major job actions. During thesummer of 1919, several race riots occurred,reflecting apprehension overthe emergence of a “New Negro”who had seen military service orgone north to work in war industry.Reaction to these events mergedwith a widespread national fear ofa new international revolutionarymovement. In 1917, the Bolshevikshad seized power in Russia; after thewar, they attempted revolutions inGermany and Hungary. By 1919, itseemed they had come to America.Excited by the Bolshevik example,large numbers of militants splitfrom the Socialist Party to foundwhat would become the CommunistParty of the United States. In April1919, the postal service interceptednearly 40 bombs addressed to prominentcitizens. Attorney GeneralA. Mitchell Palmer’s residence inWashington was bombed. Palmer,in turn, authorized federal roundupsof radicals and deported many whowere not citizens. Strikes were oftenblamed on radicals and depicted asthe opening shots of a revolution.Palmer’s dire warnings fueled a“Red Scare” that subsided by mid-1920. Even a murderous bombingin Wall Street in September failed toreawaken it. From 1919 on, however,a current of militant hostility towardrevolutionary communism wouldsimmer not far beneath the surfaceof American life.THE BOOMING 1920SWilson, distracted by the war,then laid low by his stroke, hadmishandled almost every postwarissue. The booming economy beganto collapse in mid-1920. The Republicancandidates for president andvice president, Warren G. Hardingand Calvin Coolidge, easily defeatedtheir Democratic opponents, JamesM. Cox and Franklin D. Roosevelt.Following ratification of the 19thAmendment to the Constitution,women voted in a presidential electionfor the first time.The first two years of Harding’sadministration saw a continuanceof the economic recession that hadbegun under Wilson. By 1923, however,prosperity was back. For thenext six years the country enjoyedthe strongest economy in its history,at least in urban areas. Governmentaleconomic policy during the 1920swas eminently conservative. It wasbased upon the belief that if governmentfostered private business, benefitswould radiate out to most of therest of the population.Accordingly, the Republicanstried to create the most favorableconditions for U.S. industry. TheFordney-McCumber Tariff of 1922and the Hawley-Smoot Tariff of1930 brought American trade barriersto new heights, guaranteeingU.S. manufacturers in one fieldafter another a monopoly of thedomestic market, but blocking ahealthy trade with Europe thatwould have reinvigorated the internationaleconomy. Occurring at thebeginning of the Great Depression,Hawley-Smoot triggered retaliationfrom other manufacturing nationsand contributed greatly to a collapsingcycle of world trade that intensifiedworld economic misery.The federal government also starteda program of tax cuts, reflectingTreasury Secretary Andrew Mellon’sbelief that high taxes on individualincomes and corporations discouragedinvestment in new industrialenterprises. Congress, in laws passedbetween 1921 and 1929, respondedfavorably to his proposals.“The chief business of the Americanpeople is business,” declaredCalvin Coolidge, the Vermont-bornvice president who succeeded to thepresidency in 1923 after Harding’sdeath, and was elected in his ownright in 1924. Coolidge hewed tothe conservative economic policiesof the Republican Party, but he wasa much abler administrator than thehapless Harding, whose administra-206207