When Herbert Clark Hoover took over the office of the president he expected the prosperity of the nation to continue. In his inaugural address he said” ours is a land rich in resources”. “In no nation are the fruits of accomplishment secure”. In the final days of the 1928 campaign Hoover made a speech explaining his idea of the proper relation of government to business, and his belief in what he called “the American system of rugged individualism”. The great prosperity of America, he said, was based on three factors: self-government as far as possible through local agencies; individual freedom to encourage initiative, and equality of opportunity.
The true role of government, Hoover argued, was that of “an umpire instead of a player in the economic game”. He felt that once the federal government invaded the business field, democracy would be threatened, since it depended on decentralization, and personal liberty would be endangered, because it depended on economic freedom.
Hoover mentioned conservation of natural resources, flood control, and scientific research as legitimate activities of government . Occasionally it might sell power or commodities as a by-product. But if the government went further than that, it would undermine ‘the very instincts which carry our people forward in progress.
When he entered the White House in March 1929, Herbert Hoover radiated optimism. In his inaugural address the new president predicted that, “given a chance to go forward with the policies of the last eight years,” The United States would soon “be in sight of the day when poverty will be banished from the nation.” Unlike Coolidge, Hoover did not propose to sit back and let matters take their course. As he had said during the recent campaign, he believed that the federal government should help people to help themselves.
As engineer, a thorough and competent administrator, Hoover wanted facts as a basis for action. To get the facts he appointed commissions to investigate problems as diverse as better housing, old-age pensions, unemployment insurance, child-welfare, and conservation.
One problem that could not wait for the slow process of a committee investigation but demanded immediate action was the plight of agriculture. In their 1928 campaign platforms both Democrats and Republicans had promised farm relief. Hoover therefore called Congress into special session in April 1929 to pass legislation on behalf of agriculture. The Farm Bloc again demand legislation that would enlist the federal government in buying surplus farm products and selling them abroad. Hoover opposed this on the ground that “no government agency should engage in buying and selling and price-fixing of products”. The president proposed instead that the government help farmers set up their own organizations to market produce more efficiently and adjust supply to demand. Following this recommendation Congress passed the Agricultural Market Act of 1929, this law created an eight man Federal Farm Board which was furnished with 500 million dollars to help existing farm organizations and to create new ones. Under the terms of the law, the Farm Board established great national cooperatives such as the National Livestock Marketing Association and the American Cotton Cooperative Association. The Farm Board loaned the Cooperatives money to keep prices stable by buying and selling in the open market. In spite of the efforts American farmers were soon worse off than ever because the country plunged into the worst depression in history.
The collapse of the stock market was only a prelude to a catastrophic economic decline. The direct and indirect effects of World War I was also a contributing factor.
The First World War not only destroyed productive capacity but had built up a great load of government debts, both domestic and international. These debts not only put heavy tax burdens on people everywhere, but also clogged the channels of international trade. Each debtor nation, attempting to sell as much and buy as little as possible, raised tariffs and set up limits on imports. For a time American investors
kept the machinery of international trade going by lending abroad with great freedom. But when the borrowers reached the end of the their capacity to pay, American loans ceased. And when lending stopped, United States foreign trade dwindled rapidly.
The prolonged slump in agriculture was like a cancer sapping the economic life of the entire country. The shrinkage of farmer’s purchasing power cut down the market for manufactured goods and so kept factories from producing to capacity and workers from finding employment. The declining value of farms made it harder for farmers to get credit and imperiled banks that had invested in farm mortgages.
The rapid introduction of labor-saving machinery greatly increased the productive capacity of American industry so that it produced more goods than a market could absorb. For a time this was concealed by a wide-spread practice of installment buying, whereby the purchaser made a down payment and promised to pay the rest in installments spread over months or years. Carried to extremes, as it was in the late 1920’s, installment buying was dangerous because it created a heavy load of private debt and dried up future purchasing power.
While in itself stock gambling was not one of the primary causes of the depression, it made it more severe. Billions of dollars that, according the Mellon theory of wealth, should have gone into new products were diverted into speculation. The fantastic demand for securities encouraged unsound and even dishonest practices. When the market finally broke, the demand of investors for money to cover their losses was so great that it caused a credit squeeze throughout the entire country. Above all, the suddenness and violence of the stock market crash helped to change the mood of the country from one of optimism to one of fear.
The economic policies of the federal government during the 1920’s, while perhaps not a primary cause of the depression, surely contributed to it. Failure to curb or discourage the stock market boom made the ultimate crash more severe. Antipathy to government regulation of private enterprise meant failure to halt business abuses or to institute needed reforms in the financial system of the country.
Once launched the depression had a sort of momentum of its own that helped to create a vicious downward spiral. As the depression spread, millions of people lost their jobs. By 1932, twelve million U.S. workers were unemployed, this was almost one fourth of the U.S. working force.
Unemployed and homeless millions of people walked city streets looking for work. Thousands more rode railroad boxcars from state to state trying to find a job. Others simply walked from town to town. Few found work. By the early 1930’s one million New Yorkers were without jobs. In Cleveland, Ohio half of all workers could not find work.
After they lost their jobs, many people lost their homes. Soon, settlements of shacks made by the homeless appeared in U.S. cities. These shacks were built of cardboard, scrap metal, packing boxes and tar paper. People bitterly called these settlements Hoovervilles, after President Herbert Hoover. Americans were angry that the presidents attempts to fight the depression were failing. The largest Hooverville was reported to be in St. Louis Missouri. Over 1,000 people lived there.
In other cities people lived wherever they could find shelter. They even lived in unused sewer
pipes, under some bridges, on subways, in public parks, and even in caves. During the winter some people asked to sleep in jail cells. By 1932, between one and two million American people were homeless.
Hunger was even more widespread than homelessness. Millions barely had enough to buy food and feed themselves, and those who did not have money turned to charities. And churches and other charities opened up some soup kitchens in the cities to feed the hungry. Each day millions of people stood on breadlines to get whatever scraps of food they could. However the relief was not enough. Many grew sick from the lack of food, and children suffered the most. In New York alone, one child in every five was hungry, and in other parts of the country the situation was even worse.
The depression began to weaken the confidence of the American people. Fathers who could no longer care and provide for their families blamed themselves. Many who could not face their families left home. Children also left their homes so as not to be a burden on their parents. Yet many families managed to stick together. All members found whatever work they could in order to help the family. Those with property took in borders to help with expenses, some planted food, others earned money by making and selling hand made goods. Millions learned to get along with what they had.
African Americans suffered even more than most Americans. To begin with, they were even more poor than most. As the poet Langston Hughes wrote, “The Depression brought everyone down a peg or two, And the Negroes had but a few pegs to fall.”
During the 1920’s many African Americans, over 800,000 left their homes in the South and moved North. Many were unskilled laborers and they took jobs others did not want. They were low paying jobs as they demand few skills. However many of them lost their jobs when the depression hit. As they were the last hired, they were the first to be fired. The few jobs that were available almost always went to whites. Discrimination made chances of finding work slim, and by 1932 the jobless rate was fifty percent. Those who did manage to keep their jobs also suffered. Wages were cut, in some cases almost in half, many took jobs in private homes as domestics.
Many still lived in the South, as tenant farmers paying shares to their landlords. Their crops or harvest paid their rent, or failed to do so leaving them deeper in debt.
President Hoover did not want to interfere with the economy because he called the depression a “temporary halt in the prosperity of a great people”. The president depended on business companies and industries to take part in national stabilization efforts. In 1932 Congress passed several laws enabling the government to help business. One of the laws set up the Reconstruction Finance Corporation. That corporation loaned money to banks and other firms to keep them from going bankrupt. The president also believed that the states and local communities should provide relief for jobless workers, but it became clear that the unemployed needed much more than the state and local communities could afford. The Reconstruction Finance Corporation loaned up to three million dollars to the states for relief. Some of the other laws provided credit for some homeowners, farmers and improved court practices and bankruptcy procedures. President Hoover supported several public works and conservation programs that were designed to help provide jobs.
The government worked to develop inland waterways for navigation. Flood control, added three million acres to national parks, monuments and enlarged forests. It also built more than eight hundred buildings and helped states build approximately thirty seven miles of major highways. Unemployment was still at a high level.
Also, it should be noted that in the 1920’s over one million Mexicans came to the United States. Their plight was much worse. Most of them worked on farms as laborers, they were already earning low wages, and with the depression these jobs were cut. Some voluntarily returned to Mexico, others were sent home by force. Cities with relief programs did not want to spend money on Mexicans. Altogether about 400,000 Mexicans were repatriated. Some of them sent back were children who were born in the United States. This meaning, that the U.S. was sending back its own citizens.
I suppose hoping and believing President Hoover worked from dawn till dusk. As the depression worsened he worked even harder. In the end his well intentioned efforts accomplished little. The presidency was about leadership, not long hours. Hoover had failed the people or so they felt, and that was evidenced when they voted him out of office in 1932. In retirement Hoover became a respected president, highly intelligent, and a patriotic American who had done his best to help his country.