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.

Outlines

00:00

📉 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.

05:03

🏛️ 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.

10:04

🏦 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.

15:06

📉 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.

20:06

🏗️ 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.

25:08

🗳️ 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.

Keywords

💡Great Depression

The Great Depression was a severe worldwide economic depression that lasted from 1929 to the late 1930s. It began in the United States after the stock market crash on October 29, 1929, also known as Black Tuesday. The video script describes how the Great Depression led to massive unemployment, bank failures, and a collapse in economic activity, affecting not just the US but also global economies.

💡Herbert Hoover

Herbert Hoover was the 31st President of the United States, serving from 1929 to 1933. As depicted in the script, his administration was marked by the onset of the Great Depression. Hoover's policies, such as his reluctance to intervene directly in the economy and his high-wage policy, are discussed as potentially exacerbating the economic crisis.

💡Unemployment

Unemployment refers to the condition of workers who are without jobs and actively seeking work. The script highlights the skyrocketing unemployment during the Great Depression, with estimates suggesting that by early 1933, unemployment reached an estimated 24.5%. The term is used to illustrate the human cost of the economic collapse.

💡Bank Failures

Bank failures occurred in large numbers during the Great Depression due to panic withdrawals and the collapse of the stock market. The script mentions that by early 1933, over 9,000 banks across the country had closed, leading to a loss of confidence in the banking system and contributing to the economic downturn.

💡Dust Bowl

The Dust Bowl was a period of severe dust storms that greatly damaged the ecology and agriculture of the American and Canadian prairies during the 1930s. The script connects the Dust Bowl to the agricultural crisis of the Great Depression, exacerbating the plight of farmers who were already struggling with falling crop prices and bank foreclosures.

💡Stock Market Crash of 1929

The Stock Market Crash of 1929 refers to the sudden and sharp drop in stock prices on October 29, 1929, which marked the beginning of the Great Depression. The video script describes the crash as a pivotal event that wiped out an estimated $30 billion in wealth and triggered a wave of bank failures and unemployment.

💡Hoovervilles

Hoovervilles were shantytowns that sprang up in the United States during the Great Depression, named in讽刺 President Hoover's perceived failure to alleviate the crisis. The script uses Hoovervilles as a symbol of the widespread poverty and homelessness during this period.

💡Smoot-Hawley Tariff Act

The Smoot-Hawley Tariff Act was a 1930 legislation that raised U.S. tariffs on over 20,000 imported goods. As mentioned in the script, the act is discussed as a policy that worsened the Great Depression by increasing the cost of imported goods, leading to a decrease in international trade and higher unemployment.

💡Bonus Army

The Bonus Army was a group of World War I veterans who marched on Washington D.C. in 1932 to demand immediate payment of bonuses that had been promised for their service. The script recounts the Bonus Army's protest and the subsequent violent dispersal by U.S. Army troops under the orders of President Hoover, which became a symbol of the government's perceived insensitivity to the plight of the veterans.

💡Federal Response

Federal Response refers to the actions taken by the U.S. federal government to address the economic crisis during the Great Depression. The script critiques the federal response under President Hoover as inadequate and sometimes counterproductive, with policies that failed to stem the tide of unemployment and bank failures.

💡Economic Collapse

Economic collapse refers to a sudden and severe decline in a nation's or region's economic activity. The script uses the term to describe the conditions of the early 1930s, characterized by widespread business failures, a halt in construction, and a collapse in agricultural prices.

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