Herbert Hoover and the Great Depression

There were six factors that came together in 1929 to cause the Great Depression. Remind me of one of them.

The Depression that began in 1929 is the worst economic collapse in the nation’s history. However…

1. ½ to ¾ of all Americans were okay 1. ½ to ¾ of all Americans were okay! They still had jobs, they still had money, they went about their normal lives. 2. While many banks had collapsed, the vast majority of them were still open and were doing just fine. 3. There were still incredibly wealthy people throughout the nation, and for most of them, life went on just as before.

Having said that… 23-25% of Americans did not have a job. Over 5,000 banks had closed and 9 Million Americans had lost all of their savings. Over ½ million homes and farms had been foreclosed on.

Perhaps most importantly, all Americans, whether they had a job or not, were all afraid of what might happen next.

Americans didn’t know when things were ever going to get any better: 1. Banks were still unstable. 2. The stock market was still a mess. 3. Industry was weak, and unemployment was growing. 4. Farmers were still losing land.

As the Depression began, and then worsened, the job of solving the nation’s problems fell to President Herbert Hoover.

Hoover was elected in 1928 on the promise of continuing the unprecedented economic prosperity and success of the 1920’s.

Who was he? - A Republican, who supported laissez faire and big business. - Believed in the idea of the “self made man.” - It wasn’t the job of the government to provide help to those in need. - America would get through this economic crisis just as the nation had done before.

As such, his initial response to the Depression was to do…. nothing.

But, by late 1930, things were not getting any better. - Unemployment was still high. - A sense of fear still gripped America. - Hoover reluctantly realized he had to do something.

The one thing he refused to do was to give “direct relief” or handouts to those who needed assistance. Why?

Hoover first called on state governments, charities, and church organizations to provide immediate help in the form of soup kitchens and homeless shelters.

When this proved to not be enough, he called upon the U. S When this proved to not be enough, he called upon the U.S. government to begin to help, but help in ways that would fit his core beliefs.

How was this supposed to help the average unemployed American worker? He convinced Congress to approve $2.25 Billion in government funded public works projects like roads, dams, government buildings, etc… How was this supposed to help the average unemployed American worker?

Cut income taxes for most American families. - How did he hope this would help? The problem was that income tax rates were so low that this only gave most families an extra $5-$10 per year.

Federal Home Loan Bank Act (1932) - Lowered mortgage rates. - Allowed farmers to refinance farm loans. - This lowered monthly mortgage payments and allowed people to keep their farms and homes.

Hawley Smoot Tariff (1932) - Raised taxes on imported goods to 60%. - How did he hope this would help? - As the U.S. raised tariff rates on foreign goods, other nations, hurt by their own economic depressions did the same.

Reconstruction Finance Corp. - Govt loan program for banks, insurance companies, and other large industries - Resulted in $1/2 billion in loans to businesses so that they would put people back to work. - Why was Hoover okay with this given his commitment to the idea of the self-made man?

The problem for Hoover, was that this was too little, too late The problem for Hoover, was that this was too little, too late. The $3 billion total he made available seemed like a lot, but it wasn’t close to being enough.

Not only that, Hoover was unable to effectively provide relief to American farmers whose problems grew on a daily basis.

Due to rock bottom prices many farms had been foreclosed on, kicking thousands of farmers out of their homes and off of their lands.

Agricultural Marketing Act Passed by Congress in June 1929 Made huge sums of govt. $ available to buy and store surplus crops. Chief goal was to purchase excess crops, lowering supply, and hopefully driving up prices. Like the RFC, it was too little, too late.

To make matters worse, a terrible drought hit large sections of the Great Plains.

Unsound farming practices wore out the topsoil which, due to the drought, turned to dust and was literally carried away by the wind.

Farmers who had not previously lost their land could grow nothing on it.

Many had no choice but to pack up and move out.

Most headed west to the supposed fertile fields of California and Washington.

Hoover had yet another problem to solve when the Bonus Army marched into Washington in the summer of 1932.

In 1924 Congress had approved a “bonus” payment for WWI Veterans In 1924 Congress had approved a “bonus” payment for WWI Veterans. That money was to be paid to the vets in 1945.

Those veterans marched into Washington in the summer of 1932 demanding the money be paid immediately.

The veterans set up a camp and refused to leave the nation’s capital until their demands were met.

Hoover ordered the army to drive them out of town, which they did resulting in the deaths of two veterans.

As the election of 1932 approached, Hoover’s administration was in trouble.

Despite some of the rather revolutionary things he had done, many in America blamed him for the continuing suffering of the nation.

Republican Party “The worst has past.” Praised anti-depression policies as sweeping and revolutionary. Predicted failure and collapse if the Democrats won control of the Congress and White House.

Democratic Party Nominated Franklin Delano Roosevelt. “Happy days are here again.” Pledged a “new deal” for the “forgotten man.” Promised government work programs and direct assistance to the poor. Promised a balanced budget. Promised to repeal prohibition.

Did Hoover really even have a chance of winning?

While the popular vote was somewhat close, it was an electoral runaway for FDR and the Democrats.

The task of solving America’s problems, and getting the nation out of the Great Depression fell to Roosevelt and the Democrats.

Fin.