The Great Depression How much to blame

The Great Depression

How much to blame is Hoover? • “Hoover failed as president not because he sat idly by and waited for market forces to right the economy, as many believed mistakenly, at the time - but because he aggressively pursued policies that ran in a direction counter to what the nation and its economy needed. ” - Steven Felzenberg

Some Ideas Associated with Hoover • Volunteerism and localism • Trickle down economics 1. What were some radical responses to his policies?

Hoover’s Policies • Hoover falsely believes that high wages were the cause rather than the result of American prosperity. Presses Corporate execs not to cut employees and wages. (Associationalism) • Tied to “Real Bills” financial policy of loaning. short term bank loans to be repaid by production of goods and services hence no expansion of money supply Under this theory central banks restrict credit during downturns and expand during boom times. • After all his public works programs create a large deficit he pushes through the largest tax increase in U. S. History!! - Keynes would not approve.

Hoover’s Stubborness • Famous economists like Yale’s Irving Fisher are begging Hoover to reinflate and expand the money supply and make the Fed be the lender of last resort but to no avail. • 1, 028 economists sign an open letter in the New York Times warning Hoover not to sign the Hawley-Smoot Tariff. Hoover signs the bill anyhow

Attempts to Help Farmers • 1929 - Agricultural Marketing Act created bureaucracy to help farmers with prices – Required voluntary cooperation to reduce crops, give gvt no power to limit production – Farm Board has budget of $500 million to loan to cooperatives, buy up surplus goods but lacks money to deal with the crisis • Hawley-Smoot Tariff increases rates on 75 farm products from 26% to 50% – Also raises rates on 925 manufactured goods

Hawley - Smoot Tariff of 1930 Find in Ch. 21. 1 Notes (Take Notes on This) • This was done in part to help farmers by increasing the tariff on agricultural imports. • The farmers overproduction was due in large part to Hoover’s policies during WWI. • The results of the tariff bear out economists’ warnings. • U. S. imports decline from $7. 034 billion in 1929 to $2. 402 billion by 1933 • U. S. exports fell from $5. 886 billion in 1929 to $2. 044 MILLION in 1932!!

Hoover’s Efforts: Too little, too late • 1932 - Home Loan Bank provides money to banks, insurance companies to give out low-interest mortgages • 1932 - Glass-Steagall Banking Act allows paper currency to support the Federal Reserve System – Allows major banks to pay gold to European creditors • Reconstruction Finance Corporation created to provide federal loans to banks, railroads, other businesses – Of $300 million for local relief, only gives out $30 million – Only uses 20% of $1. 5 billion for public works – Helps large corporations avoid collapse, gives no direct aid to small businesses

The Bonus Army • June 1932, 20, 000 WWI veterans camp out in DC – Want early payment of pension bonuses • When Congress rejects the Bonus Bill, 2, 000 veterans refuse to leave – Late July, Hoover orders the Army to remove the remaining veterans • Troops drive veterans out with tanks, tear gas – Three killed, including a baby

Hoover’s Place in History? (Take down in notebooks) • Hoover will do a first round of public works programs that will be modeled by FDR. It won’t make a change but it was a model. • Hoover would discretely funnel money to state and local governments but did not want people to know it was coming from government so they would not feel dependent on the federal government and stifle individual initiative. • Hoover’s RFC is the new entity that will make the government the lender of last resort but most of its policies don’t kick in until FDR’s term begins. • Hoover secretly took food and blankets to the Bonus Army protestors the night before Mac. Arthur took harsh actions.

Progress of the Depression • Stock market crash triggers economic decline • 9, 000 banks close/bankrupted in 1930 -33 – Depositors lose at least $2. 5 billion • Money supply declines by 1/3 from 1930 -33 – Federal Reserve responds by raising interest rates in 1931 • GNP falls from $104 billion in 1929 to $76 billion in 1932 • Business investment falls from $16 billion in 1929 to 1/3 of a billion in 1933 • Wholesale price index falls 32% by 1933 • Farm income falls from $12 billion to $5 billion

Unemployment during the Depression • 1929, 1. 5 million Americans unemployed – 1932 - 12 million unemployed • Cities particularly hit Cleveland has 50%, Toledo, 80% • Farm income decreases 60% from 1929 -32 – 1/3 of farmers lose land • Unemployment for black males higher than national average

Impact for African Americans • By 1932, half of all blacks in South unemployed – Unemployment in NYC up to 50% for black men • Supreme Court overturns conviction of Scottsboro boys • NAACP supports formation of the Congress of Industrial Organizations – Over 500, 000 blacks join labor movement

Hispanics and Women • Hispanic population increases dramatically in 20 th century, due to no immigration restrictions, WWI – Over 500, 000 return to Mexico during 1930 s – Excluded from most relief programs, have few educational or social facilities • Strong belief that no woman whose husband was employed should accept a job – From 1932 -37, illegal for more than one family member to have a federal civil service job – 22 states consider prohibiting women from working in paid jobs • By end of Depression, 25% more women working than at start of Depression, mostly in non-professional jobs – 24% of white women, 38% of black women

Social Issues in the Great Depression • Divorce rate declines due to cost of divorces – Marriage and birth rates both decline • Some view Depression as the fault of individuals – Others see the Depression as a societal issue, not the fault of individuals, want a collective response – Farm Security Administration documents plight of rural Americans • Many writers focus on exposing social injustice – Agee describes lives of Southern families – Steinbeck’s The Grapes of Wrath, Cannery Row • Other cultural products provide light entertainment – Movies are mostly lavish musicals, comedies

1932 Presidential Election