Transcript 431 Hoover and Depression

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 MacArthur 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 20th
century, due to no immigration restrictions, WWI
– Over 500,000 return to Mexico during 1930s
– 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