Warren G. Harding’s administration suffered from corruption and scandals. This damaged Americans’ faith in their government. Harding’s successor, Calvin Coolidge, worked to restore confidence, to promote a healthy U.S. economy, and to facilitate peace and restore economic stability abroad.

The Harding Administration

How was Harding’s effort to return to “normalcy” prevented by political scandals?

Born in 1865 in Corsica, Ohio, Warren G. Harding began his career in Ohio state politics. In 1898 voters elected Harding to the Ohio General Assembly, where he fit in comfortably with the powerful Ohio Republican political machine. In 1903 he was elected lieutenant governor. He became a U.S. senator in 1914. After serving one term, Harding ran for and won the presidency in 1920.

In his campaign, Harding promised “a return to normalcy” following the war. For Harding and his administration, a "return to normalcy" meant an end to progressive experimentation, an end to high taxes on the wealthy, and an end to government intervention in the economy. In particular, it meant an end to the economic controls imposed during World War I. The Harding administration committed itself to restoring economic growth and prosperity by getting the government out of the economy. Harding's genial manner endeared him to the nation. People applauded the easygoing atmosphere of the Harding administration replacing the reform and war fervor of President Wilson’s last years.

Teapot Dome and Other Scandals

Harding made several notable appointments to the cabinet. These included former Supreme Court justice Charles Evans Hughes as secretary of state, former Food Administrator Herbert Hoover as secretary of commerce, and business tycoon Andrew Mellon as secretary of the treasury. Many of his other appointments, however, were disastrous. He gave cabinet posts and other high-level jobs to friends and political allies from Ohio. Harding felt comfortable among his old friends, known as the Ohio Gang. Alice Roosevelt Longworth, daughter of President Theodore Roosevelt, described a typical evening in Harding’s White House study:

"The air [would be] heavy with tobacco smoke, trays with bottles containing every imaginable brand of whiskey . . . cards and poker chips at hand—a general atmosphere of waistcoat unbuttoned, feet on desk, and spittoons alongside."

—from Crowded Hours, 1933

Several of these men used their influential posts for their own gain. Colonel Charles R. Forbes, an Ohio acquaintance of Harding’s, sold scarce medical supplies from veterans’ hospitals and kept the money for himself. He cost the public about $250 million.

In June 1923, while traveling from Alaska to California, Harding became ill with what was probably a heart attack. He died in San Francisco on August 2, shortly before the news of the Forbes scandal broke. Early the next morning, the vice president, Calvin Coolidge, took the oath of office and became president.

The most famous scandal, known as Teapot Dome, began in early 1922. Harding’s secretary of the interior, Albert B. Fall, secretly allowed private interests to lease lands containing U.S. Navy oil reserves at Teapot Dome, Wyoming, and Elk Hills, California. In return, Fall received bribes from these private interests totaling more than $300,000. After the Wall Street Journal broke the story, the Senate launched an investigation that took most of the 1920s to complete. In 1929 Secretary Fall became the first cabinet secretary to go to prison.

Attorney General Harry Daugherty was investigated for accepting bribes from a German agent seeking to buy a German-owned company that had been seized by the U.S. government during World War I. Daugherty refused to open Justice Department files to a congressional committee. He also refused to testify under oath, claiming immunity, or freedom from prosecution, on the grounds that he had had confidential dealings with President Harding. Daugherty was later dismissed by President Coolidge.

Teapot Dome and the other scandals of the Harding administration increased Americans' distrust of the federal government and political leaders. This distrust added to the growing frustration with progressive policies caused by World War I. Many progressive ideas depended on efficient honest government to be effective. If the government was corrupt, it helped make the case for reducing the role of government in the economy.

“Silent Cal” Takes Over

Calvin Coolidge was very different from Harding. A critic joked that Coolidge could be “silent in five languages.” Coolidge quickly distanced himself from the Harding administration. However, he asked the most capable cabinet members—Hughes, Mellon, and Hoover—to remain.

Coolidge believed that prosperity rested on business leadership and that government should interfere with business and industry as little as possible.

In the year following Harding’s death and the revelations of the scandals, Coolidge avoided crises and adopted policies intended to keep the nation prosperous. He easily won the Republican nomination for president in 1924. The Republicans promised the American people that the policies that had brought prosperity would continue. Coolidge won the election easily.

Policies of Prosperity


What government policies helped the economy recover from the postwar recession?

Andrew Mellon, a successful banker and industrialist, was secretary of the treasury under President Harding and the chief architect of economic policy. When Mellon took office, he had three major goals: to balance the budget, to reduce the government’s debt, and to cut taxes. Mellon argued that if taxes were lower, businesses and some consumers would spend and invest their extra money. This would cause the economy to grow, and Americans would earn more money. The government then would collect more in taxes. This idea is known today as supply-side economics.

At Mellon’s urging, Congress dramatically reduced tax rates. By 1928, Congress had reduced the income tax rate most Americans paid to 0.5 percent, down from 4 percent. They cut the rate for the wealthiest Americans to 25 percent, down from 73 percent. The federal budget fell from $6.4 billion to less than $3 billion in seven years.

Secretary of Commerce Herbert Hoover also sought to promote economic growth. He tried to balance government regulation with his philosophy of cooperative individualism. This idea involved encouraging businesses to form trade associations that would voluntarily share information with the federal government. Hoover believed this system would reduce costs and promote economic efficiency.

Trade and Arms Control


Do you think it is possible to abolish war?

Before World War I, the United States was a debtor nation. By the end of the war, wartime allies owed the United States more than $10 billion in war debts. By the 1920s, the United States was the dominant economic power in the world. Under Secretary of State Charles Evans Hughes, the nation tried to use its economic power to promote peace and stability.

The Myth of Isolationism

Most Americans, tired of being entangled in the politics of Europe, favored isolationism. This is the idea that the United States will be safer and more prosperous if it stays out of world affairs. To many, it appeared that the United States had become isolationist. It had not ratified the Treaty of Versailles and had not joined the League of Nations. But in fact, the United States was too powerful and too interconnected with other countries economically to be truly isolationist. Instead of relying on armed force and the collective security of the League of Nations, the United States tried to promote peace by using economic policies and arms control agreements.

The Dawes Plan

America’s former allies, Britain and France, had difficulty making the payments on their immense war debts. Meanwhile, Germany was trying to make huge cash payments to these nations as punishment for starting the war—payments that were crippling the German economy.

To address this problem, in 1924 American diplomat Charles G. Dawes negotiated an agreement with France, Britain, and Germany. American banks would make loans to Germany to help it to make reparations payments. In exchange, Britain and France would accept less in reparations and pay back more on their war debts to the United States.

The Washington Conference

Despite their debts, the major powers were involved in a costly postwar naval arms race. In 1921 the United States invited representatives from eight major countries—Britain, France, Italy, China, Japan, Belgium, the Netherlands, and Portugal—to Washington, D.C., to discuss disarmament. Secretary of State Charles Evans Hughes proposed a 10-year halt on the construction of new warships. The result was the Five-Power Naval Limitation Treaty between Britain, France, Italy, Japan, and the United States. But the conference also angered the Japanese because their navy was required to be smaller than those of the United States and Britain.

The Kellogg-Briand Pact

The Washington Conference inspired U.S. secretary of state Frank Kellogg and French foreign minister Aristide Briand to propose a treaty to outlaw war altogether. On August 27, 1928, the United States and 14 other nations signed the Kellogg-Briand Pact. All signing nations agreed to abandon war and to settle all disputes by peaceful means.

The London Naval Treaties

From January to April 1930, five nations met in London to extend the Washington Conference. The United States, Britain, France, Italy, and Japan agreed on ratios for war ships, halting the arms race through 1936. In 1934 Japan announced it would not extend the treaty past 1936, so the five nations met again in December 1935. The United States, Britain, and France again signed the treaty. Japan and Italy declined to sign the treaty.

Coolidge and Prosperity
“After all, the chief business of the American people is business. They are profoundly concerned with producing, buying, selling, investing and prospering in the world. . . . In all experience, the accumulation of wealth means the multiplication of schools, the increase of knowledge, the dissemination of intelligence, the encouragement of science, the broadening of outlook, the expansion of liberties, the widening of culture.”

—Calvin Coolidge, from a speech to newspaper editors, quoted in the New York Times, January 18, 1925

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