Hoover’s Response to the Great

1. Hoover’s Response to the Great

2. Herbert Hoover speaking in New York City 1920s 2.1I

3. He had a reputation for being a “wonder” worker – “wonder boy” - and for his efficiency – organized the Belgian food drive during WWI….as Secretary of Commerce…. • But when faced with problems he had never before encountered… “he didn’t have the foresight to cope with them” (Bailey and Kennedy) • (defeated Al Smith in 1928 – remember his policies, what he stood for / advocated

4. 1. Encouraged Public Optimism, Self-Reliance • Encouraged people to remain optimistic, keep up their hopes and spirits. • In May 1930 he told Americans that "we have now passed the worst and shall rapidly recover", prosperity is just around the corner. • He told Americans that the US had been built on rugged individualism, log cabin individualism, self-reliance, free enterprise….and that’s what they needed to rely on now

5. Said he believed that the US industrial / economic system would right itself, would self-recover. The Economy would bottom out and then would regulate itself in the cycle of boom and bust …. So the gov. did not need to become involved • Insisted that the Depression was international in origin and that any attempt to combat it must be international as well….so there wasn’t much the US gov. could do anyway • He would not, as was being suggested, introduce dole (monetary assistance to the unemployed) payments – they would destroy “the national make up” – take away incentive and initiative • Basically, Hoover continued to rely on the principles that had always governed his public and political life (and his Republican Party) - economic individualism, laissez faire, voluntary cooperation…. “a prisoner of his philosophy”

6. 2. Encouraged Voluntary Cooperation • Put his faith in voluntary cooperation between business and union leaders • Called a meeting of business leaders and asked them to pledge not to cut wages or production of goods. • He talked to labor leaders about forgoing demands for higher wages • For a few brief months, his efforts seemed to be having some effect; but by mid 1931, economic conditions had deteriorated so much that the structure of voluntary cooperation he had erected collapsed.

7. Frightened industrialists soon began cutting production, laying off workers, and slashing wages. Hoover was powerless to stop them.

8. 3. Reliance on Charities and Help Societies • He urged the Red Cross and other charities to step up their help for the poor and the unemployed….but it soon ran out of money and supplies • He set up the Presidents Organization of Unemployment Relief (POUR) to solicit private contributions for relief of the destitute, but it proved ineffective – unable to raise very much money

9. 4. Encouraged City and State Govt.’s to step up • He put the responsibility on State and City Govt.’s, urging them to stimulate their local economies by funding public works projects to provide new jobs • When their resources were depleted, Hoover made $423m available to them from Federal Funds, but still left them with the responsibility for the projects • This money soon ran out – he was reluctant to provide more – he was concerned with balancing the federal budget in 1932….and keeping Fed Gov involvement to a minimum

10. 5. Limited Federal Govt. Assistance • In 1930 he introduced a major Federally Funded program - the Hoover Dam on the Colorado River, begun in 1930 and ended in 1936 • A huge man made lake for irrigation, flood control and electricity production…..created thousands of jobs • But he opposed any other proposed federally funded public works schemes….regarded this as socialistic – rejected the power plant proposed by the Muscle Shoals Bill, designed to produce electricity from the Tennessee River

11. He said he didn’t want the Fed. Govt. to be in competition with private sector businesses (producing and selling electricity) • He also refused to consider ending prohibition / repealing the 18th Amend, when encouraged to do so, (the hope was that alcohol industry would provide jobs, govt. income through taxation) (finally repealed by FDR in 1933 – 21st repealed 18th , only Amend ever repealed)

12. In 1930 he reluctantly agreed to introduce the Agricultural Marketing Act to help farmers…but it had little impact / effect • Under the Act a Farm Board, with funds of $500,000 was set up to loan money to famers, but only for them to start producers and marketing cooperative associations • Was not what famers needed. They needed help in paying their mortgages, which they did not get. They also needed encouragement / organization to help them limit production (subsidies). Cooperatives would not be of any help at a time when people could not afford to buy food.

13. Farmers would have benefited from increased exports, but exports were hurt by foreign reaction to the US tariff increases under Hawley-Smoot (60%) – farm exports declined • And tariff increases raised the prices of many goods that farmers had to buy • The Farm Board was authorized to create both the Grain Stabilization Corporation and the Cotton Stabilization Corporation. The prime goal was to bolster sagging prices by buying up surpluses, then storing them and selling them to the public later on

14. But the two agencies were soon suffocated by an avalanche of farm produce, as wheat dropped to 57c a bushel and cotton to 5c a pound • The Boards soon ran out of money, and its warehouses were full with food that could not be sold….they soon ceased to operate

15. Public Impatience with Hoover Admin. • Hoover was heavily criticized and ridiculed by the suffering public who directed their anger and frustration towards him. • His critics sneered at the "Great Humanitarian" who helped Belgium and Europe but not the US in time of need. • A whole new popular slang developed around his name. Shanty towns were called Hoovervilles, rickety cars were called Hoover Wagons, cardboard covers which served as bedding were called Hoover Blankets. Empty pockets were called Hoover Flags

16. Humorous but significant in expressing their resentment at what they felt was the Presidents inaction. Called the Depression the “Hoover Depression”….He was being personally blamed for the crisis. • In addition Democrats had made significant gains in the Congressional elections of 1930. Progressive reformers both inside and outside the govt. urged more vigorous programs of relief and public spending

17. Depression Deepens • Between 1929 - 1933, 100,000 more businesses failed, corporate profits fell from $10b to $1b, and the GNP was cut in half. • Banks collapsed by the thousands • 1929 – 659 • 1930 – 1,350 • 1931 – 2,293 • 1932 – 1,452 • Unemployment reached 14 million / 25%, millions more were only working part-time.

18. Hoover decided to try a new approach, with new policies / agencies

19. RFC / Trickle Down Economics • In Feb. 1932 he set up a new federal relief agency called the Reconstruction Finance Corporation (RFC). • It was the largest program of Federal economic aid that any president had ever proposed….but gave assistance only to industrialists / businessmen • The Corporation was at first given half a billion dollars, eventually reaching $2b, to pass on as loans to faltering banks, insurance companies, credit corporations, and railroads • Hoover hoped that the RFC would inspire confidence in business, banking..

20. The theory was that funding such institutions would stimulate industry and eventually create more jobs. • The RFC was his compromise between the hands off Laissez Faire policy of the past and the “soul destroying” direct dole payment scheme. • He was willing to intervene in the Economy, but only at the top.. This was Indirect Relief, Not Direct Relief…Trickle Down Economics (“he was still a prisoner of his philosophy”?) • But the "trickle down” measure, however, could not relieve the immediate suffering of the unemployed. It was a long term not a short measure.

21. In July 1932 he passed the Emergency Relief Act, giving the RFC an additional $300m to loan to state governments for unemployment relief through Public Works Projects. • However, for a State to qualify, it had to show it was on the verge of bankruptcy…. too restricting…states had little money, but were not bankrupt • By the end of the year, the RFC had distributed only 20% of this available money to states, not many qualified

22. Huge public criticism - Corporations who benefitted from the RFC were referred to as receiving the “millionaires dole”, the RFC was referred to as the “millionaire’s soup kitchen.” • Ineffective and much criticized – but some say it paved the way for FDR’s policy of Govt. intervention / FDR’s New Deal, a huge Fed Gov commitment to economic recovery…Hoover initiated Fed Govt. involvement, though in a small way…created a bridge to FDR’s New Deal. • Hoover may not have been quite as “heartless” as the public perceived him to be…half traveled the road to Govt. intervention, a road which FDR would travel all the way.

23. He inaugurated a new policy of big Fed govt. involvement: FDR would take this to a higher level. • Or maybe his value was that: “If nothing else he prepared the way for massive federal activity by giving private enterprise the opportunity to solve the depression – and to fail in the attempt” – showed FDR what not to do / how not to proceed

24. Claimed he was hindered by Conservative Republicans, and then by Democratic controlled Congress (both houses) in his last year, who delayed the passing of the RFC • Accused Democrats of “playing politics with human misery” by opposing his plans / policies to make him look back so he would not be re-elected

25. Added a Home Loan Banks to loan money to financial institutions whose mortgages were not being paid – to hold them over until Economy recovered…criticized for doing nothing for the homeowner • Hoped to provide some relief for labor with the Norris-La Guardia Anti Injunction Act of 1932, which outlawed yellow dog contracts and forbade the federal courts to issue injunctions to restrain strikes, boycotts, and peaceful picketing. • But Labor argued…..they didn’t have jobs to go on strike from..

26. Resentment against his ineffective policies continued to grow • His treatment of the Bonus Army in 1932 was the final straw for many…he now had no chance of being re-elected over the Democratic candidate FDR • Bonus Army – WWI veterans, pleading for early payment of the bonus promised to them in 1945 ($3.5B) (Bonus Bill, passed in 1924 – compensation for falling behind)

27. Marchers set out from Portland, Oregon, traveling across country by train / truck, grew from 1,000 to 20,000, to Washington DC to request early payment – 1945 would be too late • Led by Walter Waters; imposed strict discipline on this “Bonus Army” – camped in empty buildings along the Anacostia river in DC – the nation’s largest Hooverville • They staged marches outside Congress to support the Bill, but in July the House voted twice against early payment of their Bonus • Majority of veterans then left Washington to return home…Hoover decided to use force to remove the remaining 2,000

28. Bonus Army Bonus Army The sign in front of the "Bonus Dugout" reads, "We have come to collect the gratitude that was promised us for participating in the World War." They received neither gratitude nor the bonus. Instead, Hoover commented: "Thank God we still have a government that knows how to deal with a mob."

29. Dispatched Army Chief of Staff, Douglas MacArthur and his aides Dwight D Eisenhower, and Patton, to assist the police to clear the vets from their camps – some had thrown stones at police. • MacArthur called up cavalry units, 6 tanks, infantry with machine guns – descended on Veterans (unarmed) camp, forcing them to flee • MacArthur ordered the use of tear gas, and torched the camp. More than 100 people were injured, 2 veterans died, and also a baby, from the tear gas

30. On hearing the news of the attack on the Bonus Army, FDR, campaigning in NY, is said to have turned to his friend Felix Frankfurter and said; “Well, Felix, this will elect me”……would have won anyway, just “nail in Hoover coffin” • FDR would easily win the Presidential Election of 1932….promised a New Deal • Also…..add what we studied earlier • Increased taxes • Increased interest rate by the Fed • Cut back in Gov. Spending – no Deficit Spending (Keynes) • Increased Tariff; Hawley Smoot…..60%

31. Franklin D. Roosevelt and Herbert Hoover on the way to FDR's inauguration, March 4, 1933 With little in common but their top hats, Herbert Hoover and Franklin D. Roosevelt ride to Roosevelt's inauguration on March 4, 1933.

32. Present a defense of Hoover’s response to the Great Depression………work with a partner…..