How Hoover and America Handled the Onset of the Great Depression
Summary
TLDRIn September 1929, the US stock market crash marked the beginning of the Great Depression. President Hoover's initial inaction and subsequent policies, such as high-wage mandates and the Smoot-Hawley Tariff Act, worsened the crisis. Unemployment soared, banks failed, and farmers suffered. Despite creating agencies like the RFC and public works projects, Hoover's refusal for direct federal relief and blaming external factors for the depression led to his policies being widely criticized and contributed to the severity of the economic downturn.
Takeaways
- 📉 In September 1929, the U.S. stock market began a sharp decline, leading to the Great Depression after October's crash.
- 🌐 The Great Depression had a global impact, with economies worldwide collapsing and causing severe economic conditions.
- 🏦 Banks failed, and many Americans lost their life savings as a result of the economic downturn.
- 🤔 President Herbert Hoover hesitated to take action to combat the worsening economic conditions.
- 🎓 The hardest hit by unemployment were first-time job seekers and those over the age of 45.
- 🌾 Farmers suffered due to declining crop prices, surpluses, and bad weather, leading to loan defaults and foreclosures.
- 🏗️ The construction industry came to a halt, exacerbating unemployment issues.
- 🏦 The banking crisis was worsened by unregulated banking practices and a lack of consumer confidence.
- 📉 The stock market crash of 1929 led to the loss of over $30 billion, exceeding WWI expenses by a factor of 10.
- 📈 President Hoover's policies, including high-wage policy and Smoot-Hawley Tariff Act, worsened the depression.
- 🏛️ The public and press criticized Hoover for his response to the crisis, and his policies led to a significant political shift.
Q & A
When did the stock market crash that marked the beginning of the Great Depression occur?
-The stock market crash that marked the beginning of the Great Depression occurred in late October 1929, with 'Black Tuesday' on October 29th being particularly infamous.
What was the role of President Herbert Hoover's response in exacerbating the Great Depression?
-President Herbert Hoover's response, which included a reluctance to intervene directly in the economy, maintaining high-wage policies, and implementing the Smoot-Hawley Tariff Act, likely worsened the Great Depression by increasing unemployment, reducing consumer spending, and contributing to a global trade contraction.
How did the Great Depression affect the banking industry in the United States?
-The Great Depression led to the failure of thousands of banks due to runs by panicked customers trying to withdraw their uninsured savings. By early 1933, over 9,000 banks had closed, causing a significant loss of confidence in the banking system.
What was the impact of the Smoot-Hawley Tariff Act on the American economy during the Great Depression?
-The Smoot-Hawley Tariff Act, signed by President Hoover in June 1930, led to a significant increase in the prices of imported goods and a decrease in American exports by over 60 percent, contributing to the severity and length of the Great Depression.
How did the Great Depression affect employment rates in the United States?
-The Great Depression led to skyrocketing unemployment rates, with estimates reaching as high as 24.5% in early 1933. The hardest hit were those seeking their first job and those over the age of 45.
What was the 'Bonus Army' incident, and how did it reflect on President Hoover's administration?
-The 'Bonus Army' was a mass gathering of World War I veterans and their families in Washington D.C. in 1932, demanding early payment of their service certificates due to the economic hardships of the Depression. President Hoover's order to disperse them with force, led by General Douglas MacArthur, resulted in violence and deaths, reflecting negatively on his administration.
How did the agricultural sector fare during the first three years of the Great Depression?
-The agricultural sector was severely impacted during the first three years of the Great Depression, with farmers defaulting on loans, banks foreclosing on properties, and a series of droughts exacerbating the 'Dust Bowl' conditions in the Great Plains.
What was the role of the Federal Reserve in the banking crisis during the Great Depression?
-The Federal Reserve's decentralization and weak leadership contributed to the national panic during the banking crisis. Its ineffectiveness in intervening and lack of regulation over state-chartered banks worsened the banking collapse.
What was President Hoover's stance on direct federal assistance to the unemployed?
-President Hoover believed that direct assistance to the unemployed should be provided by charities, churches, and local communities rather than the federal government, reflecting a limited federal role in addressing widespread unemployment.
How did the Great Depression affect the construction industry in the United States?
-The construction industry was severely impacted by the Great Depression, with housing starts dropping 80 percent by 1932, leading to massive job losses and a significant increase in unemployment.
What was the Reconstruction Finance Corporation (RFC), and what was its role during the Great Depression?
-The Reconstruction Finance Corporation (RFC) was a federally owned entity created by President Hoover in 1932 to lend money to corporations and states in danger of default. While it provided some stabilization to certain industries and state governments, it failed to significantly reduce unemployment or increase consumer spending.
Outlines
📉 The Stock Market Crash and the Onset of the Great Depression
In September 1929, the US stock market began a sharp decline leading to a crash in October, ending six years of economic growth and triggering the Great Depression. The federal government, led by President Herbert Hoover, was slow to act against the worsening conditions. Unemployment rates soared, construction came to a halt, and farmers faced economic hardships exacerbated by drought. Banks failed, and many Americans lost their life savings. By early 1933, over 9,000 banks had closed, and the lack of confidence in the government contributed to panic conditions. Hoover, a successful mining engineer and businessman, tried to address the economic downturn by announcing it was temporary, but instead, the situation continued to deteriorate.
🏛️ The Federal Response and Economic Collapse
The US government did not initially monitor employment numbers during the early years of the depression, and the hardest hit were those seeking their first job or over the age of 45. Hoover encouraged urban governments to create public works projects, but declining tax revenues made financing difficult. The economic downturn grew worse from late 1929 to late spring 1933, with joblessness visibly impacting cities and towns. Hoover sought to stimulate the economy through other means, believing direct assistance to the unemployed was the responsibility of charities and local communities. Farmers were among those hardest hit, with crop prices declining in the 1920s and more failures due to weather and competition from imports. The stock market collapse and bank failures added to their troubles, leading to loan defaults and foreclosures.
🏦 Unregulated Banking and the Great Depression
During the 1920s, banks invested heavily in the stock market, leading to a speculative bubble. When the bubble burst in 1929, it resulted in the loss of $14 billion by Friday of that week, with over $30 billion disappearing. Banks that had invested in the stock market were forced to close, causing runs on other banks and further closures. Hoover initiated steps to shore up banks and financial institutions with little effect. The collapse of the banking system worsened the depression nationwide, with money vanishing from circulation and the Federal Reserve's ineffectiveness contributing to the crisis. Hoover's policies, including a high-wage policy and job sharing, were later found to have worsened the depression.
📉 The Smoot-Hawley Tariff Act and Its Economic Impact
Herbert Hoover signed the Smoot-Hawley Tariff Act in June 1930, ignoring advice from economists and financial leaders. The act raised tariffs on imported goods, which led to a jump in their prices and a drop in American exports by over 60%. Unemployment doubled from an estimated 8% to over 24% in 1932. While not the sole cause of the Great Depression, the act worsened financial distress and likely contributed to its length. Hoover's support for the act was aimed at helping farmers, but it ended up harming the agricultural industry and the economy as a whole.
🏗️ The Effects of Depression on Housing and Construction
Between 1929 and 1932, housing starts in the United States dropped by 80%, forcing many construction workers to seek other work with little success. By 1932, 34 million Americans lived in homes without a full-time wage earner. Many were forced into temporary housing and shantytowns, which were dubbed 'Hoovervilles.' The failure of Hoover's economic stimulus efforts, along with a growing deficit, led to increased criticism. Hoover compared the depression to a war and asked Americans to rally around him, but his policies, including a moratorium on war reparations and increased taxes, did little to alleviate the suffering.
🗳️ The 1932 Election and the Bonus Army Incident
In 1932, Hoover ran for re-election, touting his support for businesses and promising a quick return to prosperity. However, his opponents criticized his spending and tariffs. The 'Bonus Army,' a group of World War I veterans seeking early payment of their service certificates, gathered in Washington D.C., but were met with force when Hoover ordered the U.S. Army to disperse them. The attack, led by Douglas MacArthur, resulted in deaths and injuries and was widely condemned, except by the conservative wing of the Republican Party. Hoover's response to the economic downturn initially earned him praise, but as the depression worsened, he was increasingly viewed as callous and ineffective.
Mindmap
Keywords
💡Great Depression
💡Herbert Hoover
💡Unemployment
💡Bank Failures
💡Dust Bowl
💡Stock Market Crash of 1929
💡Hoovervilles
💡Smoot-Hawley Tariff Act
💡Bonus Army
💡Federal Response
💡Economic Collapse
Highlights
Stock prices in the United States began a steady decline in September 1929, leading to a crash in October and the start of the Great Depression.
The Great Depression led to six years of economic growth ending and a decade of crippling economic conditions in the United States.
President Herbert Hoover hesitated to take action to combat the worsening economic conditions.
Unemployment rates skyrocketed, construction industry halted, and farmers suffered due to economic conditions and widespread drought.
Banks failed, and many Americans lost their life savings as lenders foreclosed on homes and farms.
Millions of Americans attempted to withdraw their uninsured savings from banks, forcing thousands to close or suspend operations.
By early 1933, over 9,000 banks across the United States had closed due to lack of confidence and panic conditions.
President Hoover believed that direct assistance to the unemployed was the responsibility of charities, churches, and local communities.
The federal government did not monitor employment numbers during the early years of the depression.
The hardest hit during the depression were those seeking their first job and those over the age of 45.
Farmers were among the hardest hit during the first three years of the depression due to declining crop prices and surpluses.
The collapse of the stock market and bank failures worsened the farmers' conditions.
The Smoot-Hawley Tariff Act, signed by President Hoover in June 1930, led to a drop in American exports and increased unemployment.
Hoover's high-wage policy and job sharing are believed to have worsened the depression.
Hoover's administration raised taxes in 1931, increasing the cost of using checks and further pressuring financial institutions.
The Davis-Bacon Act of 1931, requiring government contractors to pay locally prevailing wages, proved unworkable and divisive.
Hoover's policies led to a budget surplus turning into a deficit, and he compared the depression to a war, asking Americans to rally around him.
Hoover publicly blamed America's depression on Europe's economy and refused to remove the United States from the gold standard.
Hoover opposed federal intervention via direct aid to individuals, instead favoring volunteer groups and public works projects.
Franklin D. Roosevelt's aggressive action against the economic downturn in New York contrasted with Hoover's national policy.
Hoover's support for Prohibition and his reluctance to provide direct relief payments to the unemployed were sources of criticism.
The Bonus Army, a group of World War I veterans seeking early payment of their service certificates, were dispersed by U.S. Army under Hoover's orders, causing public outrage.
Transcripts
in the first week of september 1929
stock prices in the united states began
a steady and steep decline the downward
slide resulted in a crash near the end
of october ending six years of economic
growth and ushering in the era known as
the great depression for the following
decade the united states experienced
crippling economic conditions
exacerbated by the collapse of economies
across the globe the federal government
of the united states led by president
herbert hoover hesitated to take action
to combat increasingly bad conditions
unemployment skyrocketed
the construction industry ground to a
halt farmers and food producers suffered
from economic conditions made worse by
widespread drought
banks failed and family saw their life
savings wiped out as lenders foreclosed
on homes and farms
millions of americans raced to withdraw
their uninsured savings from banks
forcing thousands to close or suspend
operations
by early 1933 over 9 000 banks across
the country had closed lack of
confidence in the federal government of
jobs a money into food created panic
conditions
president hoover a highly successful
mining engineer and businessman tried to
address economic conditions by
announcing the downturn was temporary
and would quickly improve instead they
continued to grow worse
here is the story of the first three
years of the great depression in america
and the federal response which likely
made it much worse
no one knows the true level of
unemployment during the first three
years
estimates of the numbers of unemployed
across the united states during the
first three years are based on figures
created by analysts and economists in
the nineteen fifties during the early
years of the depression the united
states government did not monitor
employment numbers the hardest hit
during the depression were those seeking
their first job entering the pool of
workers for the first time
next were those over the age of 45 who
found getting hired virtually impossible
if they lost an earlier job
president hoover prodded urban
governments to create public works
projects and jobs but declining tax
revenues made financing such projects
impossible
from fall 1929 to late spring 1933 the
economic downturn grew progressively
worse though its impact on the jobs
market remained unmeasured in official
terms
joblessness clearly visible in america's
cities and towns
was not part of the agenda of the
federal government hoover sought to
stimulate the economy through other
means and programs the president
believed direct assistance to those out
of work was the purview of charities
churches and local communities in his
view and the view of republicans in
congress the federal government's role
regarding widespread unemployment which
reached an estimated 24.5 in early 1933
was limited
farmers were among the hardest hit
during the first three years of the
depression
during the first world war america's
farmers responded to government urging
and produced record crops the following
decade of the roaring twenties found
prices for their crops declining
steadily due to the results of their
success creating surpluses throughout
the 1920s farmers encountered declining
prices as well as several years of
failed crops due to weather competition
from imports took their toll by the end
of the decade farmers were struggling
the collapse of the stock market and the
ensuing bank failures added to their
miseries
beginning in the fall of 1930 after
another bad year for crops across much
of the american plains farmers began to
default on their loans
banks unable to carry them foreclosed in
previously unforeseen numbers other
farmers managed to hold onto their
properties for a time but like the
wherewithal to plant crops when drought
conditions arrived the unplanted fields
added to the dust bowl conditions which
devastated the great plains in waves
during the 1930s
some small farmers managed to survive
the depression and series of droughts
which accompanied it through
diversification of labor and the sale of
some property to pay taxes and loans
thousands did not during the early years
of the depression
towns based on agricultural support
suffered heavy losses of jobs
dubuque iowa community with an
industrial base reliant on agricultural
products in 1929
already felt depression conditions
before that year's stock market collapse
falling prices for farm produce led to
job losses in dubuque and similar
communities across america in the mid to
late 1920s between 1927 and the end of
1933 2200 workers lost their jobs due to
business closures in dubuque during the
same period only 13 new companies opened
creating 300 jobs a net loss of 1 900
railroad jobs and dubuque numbered over
600 when the 1930s began
at the beginning of 1933 there were only
a couple dozens still employed by the
railroads
despite the failures of farms and the
means to ship their produce to market
most large urban areas did not suffer
from food shortages they did however
suffer from hunger not from lack of food
but from lack of money with which to
purchase it low food costs continued
throughout the great depression after
having been one of its major causes in
rural communities hoover did not support
federal government intervention to
directly aid farmers the food supply
chained nor consumers during the first
three years of the depression and the
situation worsened with each succeeding
year until 1933
unregulated banking practices worsened
the depression during the hoover
administration
throughout the roaring 20s which began
following the post-world war one
recession around 1923 investment in the
stock market soared among the
participants in widespread speculation
were the banks across america which used
the deposits from their customers to
invest in the markets banks also lent
money to investors to purchase more
stock by 1928 stock prices were wildly
over their actual value and several
investors withdrew from the speculative
bubble anticipating its bursting the
stock market created great wealth on
paper during the 1920s shared by a
relatively few
in 1929 the market that gabath took away
the collapse on what became known as
black tuesday october 29th 1929 and
raised 14 billion dollars in speculated
wealth by friday of that grim financial
week over 30 billion dollars vanished
like smoke in the air
the losses exceeded american
expenditures during world war one by a
factor of 10.
banks invested in the stock market were
forced to close their doors creating
runs on other banks by a panicked public
leading to further closures
in early 1930 hoover initiated steps to
shore up banks and other financial
institutions with little effect on the
growing crisis it was one of many
efforts he made to help the business
community believing it would in turn
help the workers in essence hoover
believed in a trickle-down effect
the collapse of the banking system
worsened the depression nationwide
the near total collapse of the banking
system in 1930 which continued in waves
across the country for another three
years created many of the circumstances
associated with the great depression
money vanished from circulation the
unregulated lending practices of the
1920s and the ineffectiveness of the
federal reserve combined to the
banks americans distrusted the banks
withdrawing their funds whenever
possible banks chartered by states were
not required to be members of the
federal reserve which limited its
ability to intervene
weak leadership at the federal reserve
as well as decentralization of its 12
banks contributed further to the
national panic
herbert hoover continued to promote the
idea that the economic downturn in the
fall of 1929 and the early winter of
1930 would be mild the belief
contributed to the recession caused by
the stock market crash becoming a great
depression
by the time the need for positive action
by the federal government was obvious
the economy sat in shambles the collapse
of the banking industry induced by a
lack of consumer confidence in the
system and the government finally drew
hoover's attention in 1931. he took
several actions which steadily worsened
the financial situation the following
year 1932 is widely regarded as the
worst of the great depression for most
americans
the president's high-wage policy
worsened the depression
herbert hoover as noted was a successful
businessman in private life a self-made
wealthy man well respected by industry
leaders as more and more americans lost
their jobs particularly in the
manufacturing industries the president
adopted two policies which he believed
would bolster consumer spending and
restart the economy one proposed the
sharing of jobs reducing the hours of
work of individuals but retaining the
hours of production the other was an
incentive to pay relatively high wages
during the early months of the downturn
which he still believed would be short
and mild he summoned industry leaders to
washington
general motors ford the steel industry
dupont the railroads and many other
major industries attempted to implement
the president's plan to no avail by the
end of the summer 1931 ours logged in
factories decreased by 20
and there were 35 percent fewer workers
in 2009 a study conducted at ucla
concluded the president's high-wage
policy and job sharing caused at least
two-thirds of the drop in gross domestic
product gdp during the worst years of
the great depression the study's author
claimed hoover's policies led to the
recession being at least three times
worse than it otherwise would have been
had he done nothing by mid
1932 nearly all american employers
dropped the high-wage policy and cut
payroll substantially
the smoot hawley tariff act
history often describes herbert hoover
as a president who subscribed to the
laissez-faire idea of economics
unwilling to intervene to stimulate the
financial system to restore prosperity
the description is untrue hoover tried
several initiatives to strengthen the
economy during the first three years of
the depression especially during the
second half of 1931 and during the
election year of 1932. it's just that
most of them didn't have any measurable
impact other than those which worsened
conditions in the united states one of
the latter was the smoot-hawley tariff
act signed by the president in june 1930
over a thousand economists and financial
leaders urged the president not to sign
the new tariff he ignored them believing
the tariffs would ease unemployment in
the united states
the price of imported goods and
materials jumped
american exports dropped by over 60
percent unemployment went from an
estimated 8 percent when the tariffs
were enacted to double that a year later
to over 24 in 1932
the smoot-hawley act was not in itself a
cause of the great depression but it did
nothing to ease the financial distress
and likely contributed to its length
between 1929 and 1934 worldwide trade
decreased by over 60 percent in part due
to tariffs imposed by competing
countries nearly all of the economists
who urged the president not to sign the
act predicted its detrimental impact
though hoover believed he had to sign
the bill
hoover signed smoot-hawley to help the
agricultural industry
hoover's support of the smoot-hawley
tariff act centered on his desire to
provide relief to america's farmers
after the disastrous 1920s left them
reeling during the election campaign of
1928 hoover announced his intention to
provide relief to farmers through
raising agricultural tariffs and
increasing funding for the federal farm
board which both subsidized loans to
farmers and purchased goods hoover
strongly believed the president should
not be involved in congressional debates
and the creation of bills and thus did
not argue for his agricultural tariffs
during the legislative process
as congressional supporters failed to
get a clean agricultural tariff bill
through either house
as it so often does congress tied the
agricultural tariffs into a broad
package of additional legislation which
raised tariffs for hundreds of goods and
products when it passed and appeared on
his desk hoover believed he had no
choice but to sign it still believing
the economic downturn at the time would
be short and relatively mild
the bill was almost universally
unpopular among progressive republicans
and severed the president's relations
with that wing of the party the
resulting contraction of global trade
had an adverse effect across virtually
all of the american economy including
the agricultural interests hoover had
hoped to aid it was proposed with good
intentions but congressional sausage
making rendered it an additional
disaster
hoover's administration raised taxes in
1931.
after supporting the president's
high-wage policy in nineteen thirty
businesses began cutting wages and jobs
in nineteen thirty one hoping to keep at
least some portions of their operations
afloat over recognize the need to
increase federal revenues though a push
to increase income taxes in the rapidly
worsening economic environment appeared
politically unwise
instead hoover turned to the banks
having his administration lobby congress
for the passage of attacks on checks
attacks of two cents on personal checks
passed in 1931 adding an additional tax
burden to anyone using checks for
purchases to pay bills rent mortgages
and even taxes equivalent to about 31
cents today
the check tax increased the cost of
using checks at a time when americans
attempted to reduce their expenses
americans responded by curtailing their
use of checks whenever and wherever
possible they turned to cash instead
withdrawing cash from the banks created
further pressure on the financial
institutions
reduced lending and further shrunk the
supply of money in circulation
banks already badly in need of cash
found themselves unable to retain
necessary funds for operation and the
federal reserve failed to increase the
cash available the check tax was another
well-intended attempt to stimulate the
economy which instead produced the
opposite effect it added to the common
distrust of banks with many americans
believing the funds from the tax went
directly to the banks themselves
the davis-bacon act of 1931
prior to the onset of the great
depression numerous states and
municipalities in the united states
passed laws which required government
contractors to pay wages on projects on
par with what prevailed in the location
at the time the laws protected local
workers from being ignored through the
use of migrant labor paid using tax
dollars in the late 1920s congress came
to realize that many projects funded
with federal dollars did not result in
employment for their constituents with
contractors turning to cheaper labor
from other communities
support grew for a bill introduced by
congressman robert bacon of new york
which forced contractors to pay the
locally prevailing wage
president hoover supported the bill
which passed in 1931 and immediately
proved unworkable subject to kickbacks
and outright fraud and unenforceable
hoover made changes to the enforcement
provisions via executive orders
convinced that the provisions of the act
supported his belief in the high-wage
policy and doctrine he later vetoed
amendments passed by congress which in
his view weakened the bill
both labor unions and contractors
opposed the bill for differing reasons
unlike other issues tied to maintaining
high wages it did little to stimulate
either jobs or spending
migrant workers continued to receive
much lower wages taking jobs from local
workers and earning their enmity
hoover gradually realized the downturn
was not a mild recession
between 1929 in the election year of
1932 housing starts in the united states
dropped 80 percent the lack of building
forced the majority of workers in the
construction industry to look for other
forms of work
most found no success by 1932 arguably
the worst year of the depression 34
million americans lived under a roof
with no full-time wage earner if they
had a roof at all many were forced into
temporary housing and shantytowns
erected on public lands with tents
lean twos and other crude shelters
while the president struggled to find
solutions to the crisis the public and
press took to calling the camp
sheltering the homeless hoovervilles
by the end of 1932 11 000 banks in the
united states had failed out of the 25
000 which existed in 1929 about 1
million farms no longer existed as
working producers of agricultural goods
homeless families and individuals
estimated to number as many as 2 million
people wander the nation seeking work
food and shelter
hoover's efforts to stimulate the
economy failed spectacularly in no small
part because of the lack of regulations
and safeguards later established still
hoover continued to pursue solutions to
the financial disaster promoting his
efforts while campaigning for reelection
before an increasingly derisive
electorate
hoover's policies changed a budget
surplus into a deficit
in 1929 the first year of herbert
hoover's administration the president
inherited a budget surplus following the
stock market crash hoover opted to
reduce income tax rates by one percent
of the 1929 rates when people filed
their taxes in 1930. there was no
federal withholding at the time people
filed their taxes and paid what they
owed income tax refunds were unknown
since no money was withheld during the
years during 1930 hoover established
federal agencies and advisory committees
intended primarily to shore up the
crumbling financial system
as he did so he increased federal
spending and the surplus of 1929 became
a deficit in 1930.
by 1932 some conservative economists and
politicians believe the steadily
expanding deficit contributed to the
continuing and still worsening
depression hoover asked congress to
increase federal income tax rates across
the board the act produced by congress
both increased the number of people
owing taxes and the rates to determine
the amount they owed hoover compared the
act to similar actions during the first
world war calling them justified to
fight the depression the misery and
suffering from which are equally great
in fact hoover compared the depression
to a war and asked americans to rally
around him as he led them to victory
hoover publicly blamed america's
depression on europe's economy
european countries for the most part
remove themselves from the gold standard
in response to their own economic woes
hoover refused to follow suit instead he
publicly blamed much of america's
industrial and agricultural collapse on
the problems in europe and their adverse
effects on trade he proposed a
moratorium on the payment of war
reparations by germany as that nation's
economy fell into near complete collapse
in order to stabilize markets the action
did little to shore up the german
economy which nearly collapsed anyway
the german democratic government
collapsed with it as the nazis gained
strength
by 1931 hoover was the target of
considerable disdain among the americans
most affected by the depression nearly
60 percent of the population was
considered poor by government standards
cardboard inserts for shoes to cover
holes in the sole were called hoover
leather
men sleeping on park benches and city
sidewalks covered themselves with
discarded newspapers and called them
hoover blankets so the president's mind
remained close to the idea of direct
relief payments to the unemployed the
homeless and the hungry he continued to
support the idea that such relief
belonged in the hands of the state and
local governments
hoover also shifted blame for
unemployment to immigrants
as the depression worsened in 1931
unavoidable scapegoats emerged upon whom
americans vented their growing
frustrations and fears in many areas of
the country racism and xenophobia also
contributed
mexican immigrants and mexican americans
became a target across america blamed
for taking american jobs often at lower
wages a mass deportation of mexicans and
mexican americans including thousands of
american citizens began in nineteen
twenty nine it was endorsed by president
hoover as protection for american jobs
after his secretary of labor john doak
requested additional federal agents to
assist in the deportation of five
hundred thousand foreigners
several states developed their own
deportation programs in addition to the
federal effort an act applauded by
hoover following hoover's national call
for mexican deportations in 1929 the
popular magazine the saturday evening
post ran a series of articles describing
the racial inferiority of mexicans
hoover did not express racist views
declaring the deportations were
necessary to protect american jobs not
for the purposes expressed by numerous
communities in the united states
hoover's administration worked with
representatives of the mexican
government to underwrite the costs
absorbed by deportees
hoover opposed federal intervention via
direct aid to individuals
herbert hoover was a noted
philanthropist long before he was
elected president he also gained
experience in disaster relief in central
europe following world war one and in
the united states following the great
mississippi flood in 1927.
hoover recognized the need for the
federal government to come to the aid of
the states and local communities and
moved to act on that need by early 1932
but he refused to yield to the urgings
of members of both political parties and
provide financial aid directly to
americans
he argued that to do so would undermine
american morale destroy the work ethic
and encourage americans to enjoy
idleness
instead hoover favored the organization
of volunteer groups and boards to
distribute federal largesse on a local
level through the creation of public
works projects he continued throughout
his administration to urge the railroads
and utility companies to develop
infrastructure partially funded through
federal support and tax reduction
hoover argued that the 1920s economic
boom erupted when banks and individuals
spent money they did not yet have
through speculation and the federal
government doing the same thing deficit
spending would create an even worse
downturn in the economy his volunteerism
required the increase in taxes which led
to the disastrous tax increases in 1932
which placed an ever greater burden on
the common man and little in the way of
relief
hoover's policies and failures vaulted
fdr to national prominence
the same year herbert hoover became
president of the united states 1929 saw
franklin d roosevelt inaugurated as
governor of new york following the stock
market crash fdr moved for immediate and
aggressive action against the economic
downturn as hoover argued the downturn
was mild and destined to be short-lived
roosevelt proposed several state
initiatives including the first in the
united states for government provided
unemployment insurance following
re-election in 1930 fdr proposed a
comprehensive relief package in the
state which offered voters a stark
contrast between the troubled federal
response and the successes in new york
during the presidential election of 1932
which pitted fdr and hoover against each
other hoover continued to support the
national policy of prohibition it was he
who gave prohibition its moniker as the
noble experiment in 1928. fdr argued
that repeal would create jobs including
a larger market for grains and generate
badly needed tax revenues
fdr pointed out both were necessary
fighting the economic depression which
he likened to a national emergency his
successes in new york and his
enthusiastic endorsement of repeal were
two major factors in his defeat of
hoover at the polls in november 1932
hoover at first earned praise for his
response to the economic downturn
during the first 18 months of the
depression hoover steps to mitigate the
effects of the downturn focused on
completing government projects such as
dams and bridges encouraging businesses
to keep wages up and preventing general
panic in 1930 the new york times
editorialized no one in his place could
have done more
very few of his predecessors could have
done as much
both the government and major businesses
spent more in the first six months of
1930 than in all of 1929
but consumers did not follow suit
consumer spending dropped month after
month after month in late 1931 hoover
ordered the farm board to transfer
surplus agricultural products to the red
cross
the transfer of agricultural surpluses
intended to be distributed to relief
agencies across the country did not
produce much in the way of food the poor
harvest of proceeding years continued in
nineteen thirty and worsened in nineteen
thirty one in august nineteen thirty one
hoover organized the president's
organization on unemployment relief pour
intending to raise money for the
unemployed through private donations
still hoover opposed direct injection of
federal capital via unemployment
payments by the end of 1931 hoover was
roundly criticized for his actions
viewed his failures and for his inaction
viewed as callous disregard for the
nation's suffering citizens
hoover took more forceful action in the
run-up to the 1932 elections
in early 1932 the first hopeful signs
the depression was easing a period they
were short-lived as another series of
shocks to the banking industry triggered
in large part by bank failures in europe
again induced national panic in january
hoover created the reconstruction
finance corporation rfc a federally
owned entity intended to lend money to
corporations in danger of default during
the first six months the rfc lent money
primarily to railroads and agricultural
businesses in july hoover expanded the
rfc to allow loans to states and
communities for public works projects
the rfc loans stabilized some industries
and state governments with injections of
cash but it failed to accomplish its
most important goal reducing
unemployment jobs remain scarce cash
among consumers remained scarce and
consumer spending continued to drop the
blame fell most squarely on the
shoulders of the president hoover ran
for re-election touting his record in
supporting businesses especially big
businesses and promising jobs and
prosperity would quickly return his
opponents in his own party cited his
wasteful federal spending and protective
tariffs as causes for the increasing
severity of the depression
the bonus army
in 1924 congress passed over the veto of
president calvin coolidge the world war
adjusted compensation act the law
guaranteed the payment of benefits to
veterans of the first world war granting
them certificates redeemable in 1945.
a veterans beneficiaries could cash the
certificates should he pre-decease the
redeemable date which was his birthday
in 1945. the certificates were also
available as collateral for loans and by
1932 over 1.3 billion dollars in loans
to veterans were backed by certificates
that same year veteran groups led by the
veterans of foreign wars bfw began
demonstrating to have the benefits paid
to unemployed veterans as a means of
easing the strains of the depression
hoover opposed the idea the house of
representatives supported it in the
spring 1932 a massive gathering of
seventeen thousand veterans and their
families comprising forty three thousand
in all gathered in washington near the
anacostia river establishing a
hooverville
they called themselves the bonus army in
june after the house of representatives
passed a bill authorizing early payment
of the certificates a mass gathering of
the veterans appeared before the united
states capital
they demonstrated on the day the senate
was to consider and vote on the bill
the senate defeated the bill on june
17th
the veterans returned to their
encampment where they remained despite
orders from the d.c police and the
federal government to disperse
the attack on the bonus army
on july 28 tired of the negative
publicity created by the existence of
the bonus army hoover ordered his
secretary of war to use the u.s army to
disperse the veterans the job fell to
the army's chief of staff douglas
macarthur a veteran of world war one
macarthur relied on army intelligence
which indicated the bonus army was
incited by communist influencers as part
of a general uprising to take place that
summer
he violated his orders to avoid the use
of force and attack the bonus army
encampment with tanks and infantry after
hoover ordered the attack stopped
macarthur again ignored the president
and launched a second assault
george patton dwight eisenhower other
officers who gained prominence during
world war ii took part in the attack on
their fellow veterans at least two
veterans were killed and over one
thousand injured in the assaults and
panic as the veterans families fled
eisenhower wrote the official army
report which endorsed the actions taken
by macarthur his boss at the time the
public reaction was for the most part
outrage other than from the conservative
wing of the republican party hoover
retained control over the party though
its progressive wing abandoned him
completely
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