HERBERT HOOVER& THE DEPRESSION

THE 1930’S

Chapter 22

Coolidge chooses not to run again; opens door for Sec. of Commerce Hoover

Believes in “rugged individualism” An orphan & self-made man who worked his way through Stanford and up

Great administrator, efficient, honest & humanitarian

President Herbert Hoover, Henry Ford, Thomas Edison, and Harvey Firestone at Edison's 82nd birthday. Ft. Myers, Florida, February 11, 1929.

Herbert Hoover Alfred E. SmithRepublican Democrat“A Dry Country Quaker” “A Wet City Catholic”

ELECTION OF 1928

Represents rural (“country”) agrarian interests

Favored Prohibition (“dry”) Radio helped him

(dignified, serious) Slogan: “A chicken in every

pot & two cars in every garage!”

Wins by landslide mainly due to the Republican prosperity of the 20s

Represents urban (“city) & industrial interests

Favors Prohibition, but admits that he drinks (“wet”)

Radio hurts him (a strong NY accent & too much joking)

Hurt by Republican anti-Catholic smear tactics

The Stock Market of the 1920s: Stock Market = system for buying and

selling shares of companies Long period of rising prices (bull market)

convinced many Americans to invest in the stock market 3 to 4 million Americans involved (10%)

Speculation (buying risky stocks – to sell, not hold - hoping for a quick profit)

Buying on Margin (buying stocks on credit)

Buying on margin works like this:

You could buy stock with only a 10% down payment You borrow the remaining 90% from the stockbroker Then, you sell it & pay off broker & keep remaining

profit BUT, when stock prices start going down, everybody

tries to sell & prices keep plummeting Broker then sells off your stock, gets less than what

you owe him Now you have no stock, and still owe your loan to the

broker Broker borrowed from the banks to loan $ to you so

now the broker can’t pay the banks / banks go under

Stocks & bonds tripled in value during the last half of the 1920s but eventually crashed. STOCK MARKET CRASHED ON

OCTOBER 29, 1929 KNOWN AS “BLACK TUESDAY”

CAUSES OF THE CRASH: EASY CREDIT!!

Installment Plan Buying on margin (buying stocks on

credit) GREED & A FALSE SENSE OF PROSPERITY

Americans feel rich because they have a lot of stuff / BUT, bought it on CREDIT

GOVERNMENT’S LAISSEZ-FAIRE POLICY TOWARDS BUSINESS Leave the economy alone & it will take

care of itself

EFFECTS OF THE CRASH:

MASSIVE UNDEREMPLOYMENT (still have a job, but less hours) & UNEMPLOYMENT

FAILURE OF BANKS Government drops

Laissez-Faire policies Worst year is 1932

Hoover on Government & Business/Economy:

“Rugged Individualism”

Government should help people to help themselves

“Hand-ups” not Hand-outs

CAUSES OFTHE GREATDEPRESSION

Overproduction Too many goods, can’t

consume them all Stock Market Crash

Brokers’ loans over $850 billion

Abuse of Easy Credit “Installment Plan”

High Tariffs caused other nations to

charge U.S. high tariffs & hurt trade

Uneven Distribution of Income 1% at $100,000 – 71% at

less than $2,500

HOOVER’S RESPONSE Philosophy of “rugged

individualism” The belief that all individuals, or nearly

all individuals, can succeed on their own and that government help for people should be minimal.

Makes him seem unsympathetic/cold Hoovervilles, Hoover blankets, Hoover

flags “Too Little, Too Late”

“Two Families in Every Garage” Spends $ on public works: new

public buildings, roads, parks, dams to create jobs

PUBLIC WORKS PROJECTS Approves $2.25

billion public works program

Most famous project: Boulder Dam –

later called Hoover Dam – on CO River, 1930-36

No $ to pay rent or mortgage Evicted Or moved in with

relatives when possible

Many lived in HoovervillesHoovervilles

Boxcar population also grew (Hobos)(Hobos)

MANY UNEMPLOYED BECAME HOMELESS:

FARMERS:

Overproduction is primary problem Prices too low “Farmer’s Holidays”

Stopped food shipments Destroyed food – if scarce, price

goes up Dumped Milk - Burned corn for fuel

Milk dumped by dairy farmers

BONUS ARMY - May 1932 20,000 WWI Veterans seeking early payment of a

bonus due them in 1945 Set up Hoovervilles, demonstrated daily outside

Capitol Senate rejected their demands & Hoover asks “army”

to disperse Most go home; Hoover bought 6,000 train fares But thousands remained

Hoover orders removal “without the use of force” Gen. Douglas MacArthur – tear gas, tanks, machine

guns, bayonets, burns Hooverville Hoover takes full responsibility