The first four years
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The First Four Years. 1929-1933. The Stock Market. By the end of 1929, stock prices were down 50%. By 1932, stock prices had dropped another 30%. In three years, $74 billion of the nation’s wealth simply vanished. Business and Bank Failures. Industrial production fell by 50%.

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The stock market
The Stock Market

  • By the end of 1929, stock prices were down 50%.

  • By 1932, stock prices had dropped another 30%.

  • In three years, $74 billion of the nation’s wealth simply vanished.

Business and bank failures
Business and Bank Failures

  • Industrial production fell by 50%.

  • More than 100,000 businesses went bankrupt.

  • More than 2000 banks closed in 1931 alone.

  • American exports fell $1.5 billion between 1929 and 1933.

  • The GNP fell by $12 billion.


  • Unemployment reached 25% by 1932 and rarely dropped below 17% until World War II.

  • Nearly 14 million people lost their jobs, leaving 40 million people without income

  • By 1933, millions of people were on the brink of starvation

Job Bureau

Herbert hoover
Herbert Hoover

  • Headed Commission for Relief in Belgium during World War I

    • Fed more than 9 million people for over 5 years

  • U.S. Food Administrator

  • Headed American Relief Administration

  • Secretary of Commerce under Harding and Coolidge

  • Elected President in 1928

Hoover s response to the economic crisis

Hoover’s Response toThe Economic Crisis

Taken by surprise
Taken by Surprise

  • “We in America today are nearer to the final triumph over poverty than ever before in the history of any land. The poorhouse is vanishing from among us.”

    • Herbert Hoover, accepting Republican Party nomination, 1928

Laissez faire

  • “Laissez-faire le nature”

    • let nature take its course

    • Free market economic philosophy that dominated U.S. economic thought and policy

  • Jean Baptiste Say: “Supply and demand will come together to create an equilibrium.”

    • The economy will right itself

    • Supply and demand levels have to adjust themselves

    • The worst thing the government can do is to interfere

Hoover s economic views
Hoover’s Economic Views

  • Hoover believed in traditional laissez-faire economics

    • Believed the economy would self-correct

    • Believed that the government MUST NOT ACT

  • “The fundamental business of this country, that is production and distribution of commodities, is on a sound and prosperous basis.”

    • Herbert Hoover on October 25, 1929, the day after the first market nose dive

  • Hoover believed in associationism

    • Call like-minded people together to solve a problem

  • He looked to business leaders to solve the problems that a business crisis had created

    • Conference at Washington’s Gridiron Club

    • Urged businessmen to continue to invest and not to slash wages

      • Henry Ford promised to raise wages

  • Hoover predicted economic recovery by 1930

    • Market upturn in December 1929 seemed positive

  • Business and bank failures continued

    • Fall 1931, U.S. Steel cut wages 10%

    • Other major manufacturers, including Ford, quickly followed

  • State and local charitable resources were quickly exhausted

    • No federal social security system

    • State systems quickly collapsed

Unpopular politics
Unpopular Politics

  • Hoover believed in providing people with a means to make a living, but dismissed proposals of direct relief as creators of “dependency”

  • Drought of 1930

    • Approved a grant of $45 million to feed livestock

    • Rejected a proposed grant of $25 million to feed farm families

Reconstruction finance corporation
Reconstruction Finance Corporation

  • Made $500 million in government credit available to banks, building and loan associations, farm mortgage associations, and railroads

    • Within six months, added another $1.2 billion in loans to 5000 organizations

    • Later loaned $1.5 billion to states for public works projects

Smoot hawley tariff
Smoot-Hawley Tariff

  • June 1931—raised tariffs on foreign farm products from 38% to 49%

  • Designed to help American farmers compete with foreign agriculture

  • Created a global trade war which decreased government tariff revenues

    • In 1931, Henry Ford closed his plant in Barcelona

    • Response to increased Spanish tariffs on imported car parts

    • Spanish tariff increase was itself a response to the Smoot-Hawley Tariff

The revenue act of 1932
The Revenue Act of 1932

  • High unemployment led to a tax revenue shortfall

  • Hoover wanted to raise revenue through a sales tax

  • The sales tax was the highest peace time tax hike in history

    • Placed on manufacturers who passed it along to consumers

  • Resulted in lowered consumption


  • In urban areas, many who lost their homes constructed shantytowns they called “Hoovervilles” mocking President Hoover’s unwillingness to create government relief programs

Hooverville—Central Park, NYC


  • Millions of men “rode the rails,” living in hobo camps, looking for work.

African american experience
African-American Experience

  • The Depression fell hardest on African-Americans

  • Almost all were pushed out of work by whites seeking jobs

  • Unemployment reached 50% by 1932

Bonus expeditionary force
Bonus Expeditionary Force

  • 1924 World War Adjustment Act

    • Bonus due to World War I vets

    • Designed to pay difference between army pay and wages received by war industry workers

      • $1 per day of service with an additional 25 cents for each day overseas

    • Bonus due in 1945

      • Veterans were allowed to borrow against a portion of the bonus

  • Spring 1932—veterans (some accompanied by wives and children) converged on Washington

    • By early June there were 20,000

    • Set up a Hooverville across the Potomac in Anacosta, Virginia, called Camp Marks, another shantytown on the Mall between the Capitol building and the Washington and Lincoln monuments, and moved into empty government buildings

  • Assisted by D.C. Chief of Police Pelham D. Glassford children) converged on Washington

    • West Point graduate and the youngest general in the AEF. Had retired from the army in 1931.

    • Sympathized with the veterans and was concerned about public order

    • Encouraged them to organize as the BEF

    • Helped them settle on park land in Anacostia

    • Helped them obtain relief supplies

Sign reads “We done a good job in France. children) converged on Washington

Now you do a good job in America.”

Camp Marks, Anacostia, Virginia children) converged on Washington

  • Wanted immediate payment of their bonus children) converged on Washington

    • House approved a bonus bill on June 15

      • $2.4 billion for immediate payment of bonus funds

    • Senate voted it down on June 17

  • Hoover convinced Congress to pay veterans’ railroad tickets home.

    • 5,000 left, but more came. (Estimates vary from 2,000 to 10,000.)

  • Raised fears of revolution.

  • In late July, Hoover ordered government buildings cleared. children) converged on Washington

  • July 28

    • In the morning, D.C. police assisted by a few military personnel moved to clear the buildings.

    • Two veterans and two policemen were killed.

    • Vets remained on the Mall and in Anacostia

    • City commissioners panicked and asked Hoover for military reinforcements

  • July 28 children) converged on Washington

    • In the afternoon, 600-700 soldiers under Army Chief of Staff Douglas McArthur, and junior officers Dwight Eisenhower and George Patton arrived. Included at least

      • 200 cavalry

      • 300 infantry

      • 5 tanks

Battle of washington
“Battle of Washington” children) converged on Washington

  • The military drove veterans and their families from the Mall, then moved on the Anacostia encampment.

  • They met no resistance, but used tear gas and set fire to the huts and shacks

  • An eleven-week old boy was killed and an eight-year-old boy was blinded by the tear gas.

Burning Camp Marks children) converged on Washington

  • MacArthur called the veterans a “mob” that was motivated by “the essence of revolution.”

  • The veterans regarded themselves as heroes trying to collect what was due them.

  • Malcolm Cowley wrote in The New Republic:

    • “…if any revolution results from the plight of the Bonus Army, it will come…from the government itself. The army, in time of peace, at the national capital, has been used against unarmed citizens. This…is a revolution itself.”

  • It was a fatal blow to the Hoover administration.

Scenes from a nightmare
Scenes From a Nightmare by “the essence of revolution.”

  • FDR told Rexford Tugwell that the newspaper photos of veterans being driven from the capital were like “scenes from a nightmare.”

  • From that point on, FDR felt assured of his election.

  • Like Hoover, FDR opposed payment of the bonus, but claimed he would have handled things “differently.”

  • In May 1933, a smaller but more radical group of veterans came to Washington.

    • FDR had them billeted at underused military facilities outside the district

    • Sent Eleanor to meet with them

    • Changed the rules of the CCC to allow veterans to enroll in “veterans’ units”

Legacy he would have handled things “differently.”

  • In 1936, Congress voted immediate payment of the veto

  • FDR vetoed the bill

  • Congress overrode the veto and the bonus was paid

  • The bonus experience motivated planning for future vets and contributed to the eventual G.I. Bill of Rights for the veterans of World War II

Governor franklin d roosevelt

Governor Franklin D. Roosevelt he would have handled things “differently.”

  • Became governor of New York in 1928 he would have handled things “differently.”

    • Politically ambitious, socially progressive

      • Proposed state old-age pensions

  • Did not believe Hoover’s optimistic reports

    • Had Frances Perkins compile unemployment figures

    • Created state mechanisms to deal with unemployment crisis

    • Endorsed unemployment insurance

Temporary emergency relief administration
Temporary Emergency Relief Administration he would have handled things “differently.”

  • FDR saw aid to the unemployed as a matter of social duty

  • TERA created in the winter of 1930

    • First state to begin unemployment relief

    • Agency headed by Harry Hopkins who would later head FERA

Fdr agenda
FDR Agenda he would have handled things “differently.”

  • Public power, work creation, conservation, social reform

  • When Republican legislature balked, FDR took his message straight to the people via the radio

  • November 1930—reelected as governor

    • Already had sights on the White House

Election of 1932

Election of 1932 he would have handled things “differently.”

Promise of a “New Deal”

Organizing a campaign
Organizing a Campaign he would have handled things “differently.”

  • Eleanor Roosevelt and Molly Dewson (Consumers League) organized the women’s vote

  • Policy developed by the “Brains Trust”

    • Group of Columbia University academics

    • Raymond Moley, political science, probably coined the term “New Deal”

    • Rexford Tugwell, agricultural economics

    • Adolf Berle, corporate economics

Democratic platform
Democratic Platform he would have handled things “differently.”

  • Balanced budget

    • Cut government spending through retrenchment

  • Repeal of Prohibition

    • Government was losing millions of dollars annually

      • Cost of enforcement

      • Lost revenue from liquor taxes

Politics of action
Politics of Action he would have handled things “differently.”

  • FDR promised action as opposed to Hoover’s seeming inaction

    • “The country demands bold, persistent experimentation. It is common sense to take a method and try it. If it fails, admit it frankly and try another. But above all try something.”

  • Emphasized the importance of

    • Planning, public power, and public works

    • Public works only until prosperity returned

Franklin delano roosevelt and the first new deal
Franklin Delano Roosevelt and the First New Deal he would have handled things “differently.”

  • Elected in 1932

  • Initially tried government programs to help banks and businesses

First new deal
First New Deal he would have handled things “differently.”

  • Strengthen the Monetary System

    • 4 day banking holiday

    • Emergency Banking Relief Act

      • Permitted sound banks to reopen

      • Provided managers for unsound banks

    • Fireside chats

  • Reorganized federal government to save money

  • Beer-Wine Revenue Act

    • Sale of 3.2% beverages

First hundred days
First Hundred Days he would have handled things “differently.”

  • Economy Act

  • Civilian Conservation Corps

  • Abandoned the gold standard

  • Federal Emergency Relief Act

  • Agricultural Adjustment Act

  • Emergency Farm Mortgage Act

  • Tennessee Valley Authority

  • Federal Securities Act

  • National Industrial Recovery Act

The second new deal
The Second New Deal he would have handled things “differently.”

  • 1933—began to create programs to aid individual citizens.

  • The “alphabet agencies” like CCC, WPA, etc.

The dust bowl
The Dust Bowl he would have handled things “differently.”

  • Parts of Oklahoma, Texas, Kansas, Colorado, New Mexico

  • Millions of acres of prairie grasslands had been plowed under to grow wheat

The mid 1930s drought years
The Mid-1930s Drought Years he would have handled things “differently.”

  • Years of drought caused the topsoil to dry up.

  • High winds created dust storms that could stretch 1000 miles.

Okies he would have handled things “differently.”

  • 60% of the regions farmers were forced to leave the area.

  • Many went to California seeking new land.

Impact of the great depression
Impact of the Great Depression he would have handled things “differently.”

  • Global economic catastrophe among capitalist nations.

  • Only the Soviet Union, with a state directed economy, was immune to the collapse of the capitalist economies.

  • Capitalist nations all moved toward greater government intervention in their economies.

Impact in the united states
Impact in the United States he would have handled things “differently.”

  • Government regulation of the stock exchange and banking.

  • Creation of the SEC and FDIC

Ida Mae Fuller, 1940

The faces of the great depression
The Faces of the Great Depression organize and bargain collectively.