How Hoover and America Handled the Onset of the Great Depression

Summary

In 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.