Hoover and the Depression

IV. Hoover Hoover as President (1928-1932) Soundly defeated Al Smith in 1928 Ran on reputation as efficient and honest.

IV. Hoover Associative State: Not premised on governmental coercion or intervention. Preferred a voluntary, non-governmental approach to economic matters, the better, he reasoned, to protect the "American character.“ E.g., gov. to encourage cooperation between unions and corporations, not regulate them Not premised on governmental coercion or intervention. Preferred a voluntary, non-governmental approach to economic matters, the better, he reasoned, to protect the "American character.“ E.g., gov. to encourage cooperation between unions and corporations, not regulate them.

Herbert Hoover Hoover stated the the economy would continue to grow Suggested that poverty would “soon be banished from this earth” Oct 21, 1929, in Detroit, Hoover still hailed the stability of the economy

Problems with the economy Dependency on large industries Overexpansion of credit Agriculture and textiles were depressed industries during the 1920s Only World War I helped agriculture Republican tariffs hurt other manufacturing Easy credit -> over $7 billion in products were purchased on credit Buying on margin -> banks and brokerage firms gave out loans for stock purchases

Problems with the economy Additional note on credit expansion -> economists warned that this large debt would cripple consumers Foreign trade dilemma -> flow of American money to foreign nations slowed, and tariff barriers kept foreigners from trading with USA

Problems with the economy Purchasing power declined Cost of basic necessities = $2,500 - - - average annual income = $1,500 Maldistribution of wealth -> when the market crashed, the wealthy stopped spending Overspeculation -> too many people committed to high-stakes investments Many consumers could not afford to purchase goods

Black Thursday, Oct 24, 1929 Investors began to sell their shares upon news of rising interest rates Dumping of so much stock caused prices to drop

Black Tuesday, Oct 29, 1929 Margin Purchases Stock losses exceeded total USA expenditures during WW I Stock prices plummeted GM from $73 to $8 U.S. Steel from $262 to $22 Consumers who “bought on margin” were unable to repay loans

Post-October 1929 Voluntary cooperation Federal Farm Board Businesses should not lay off workers Industry should create part-time work Surplus crops were purchased and given to the needy

Hoovervilles

Hoover would not agree to direct relief Hawley-Smoot Tariff -> raised tariff rates to 100%, causing other nations to stop trading with the USA Reconstruction Finance Corporation -> provided $1.5 billion in loans to banks and businesses

Bread lines, food lines

Selling apples 6,000 people were selling apples for 5¢ each on the streets of New York City by 1930

Too little, too late Hoover finally admitted that private initiative had failed to stem the depression

Bonus Army fiasco 20,000 WW I Vets converged on the Capital, demanding immediate payment of a bonus due in 1945

Hoover called out the military to break up the Camps

Roosevelt and the 1932 election Promised a “New Deal” for the American people