Key ID’s 

Chapter 25: Brother, Can You Spare a Dime? The Great Depression, 1929-1932

1. Presidential Election of 1928  

• The Democrats nominated New York Governor Al Smith, a Catholic and an opponent of Prohibition. Smith’s religion and his New York accent hurt him with rural and conservative voters.

• The Republicans nominated Commerce Secretary Herbert Hoover, a skilled administrator who attacked socialism and praised rugged individualism. Hoover won easily.

2. Hoover before the presidency 

• The root of Hoover’s “rugged individualism” outlook was largely because he brought himself “up by the bootstraps.” By age nine, both of his parents had died and he was living with uncle in Newberg, Oregon. Although he never graduated from high school, he ended up being in the first class at Stanford University. 

• As a mining engineer, he had worked in Australia and China. After starting a successful Burmese silver mine, Hoover wrote the leading textbook on mining engineering. During the Boxer Rebellion, Hoover helped defend a city near the uprising. 

• As his wealth grew, Hoover began to firmly believe in the power of the individual, the importance of freedom, and the value of charity (“conscientious work”). This was evident when he was asked to head the Committee for the Relief of Belgium. Without direct US support, Hoover raised millions to support the Belgians. In 1917, Wilson asked Hoover to head the US Food Administration. After the war, Hoover led the European Relief and Rehabilitation Administration. 

• Under President Coolidge’s administration, Hoover was asked to be Secretary of Commerce. Through this role he gained national prominence. 

• The reason I wanted to explain Hoover’s past is because he often gets blamed for the Great Depression. Although Hoover did not do enough as the Depression started, he did more than any president had done in any depression/recession. By 1932, it was too late for his administration. Regardless, Hoover’s prescribed “rugged individualism” was not only historical precedent but it was also personal precedence.  

3. The Agricultural Marketing Act—1929 => Federal Farm Board 

• This established the Federal Farm Board to help farmers help themselves, Hoover supported the Agricultural Marketing Act. It lent money to help farm cooperatives buy, sell, and store surplus crops when prices sank below a certain level. It proved inadequate for dealing with the farm problems of the Depression.

4. Bull & Bear Market

• A bull market is one with rising prices; a bear market, the opposite. Through the 1920’s, a strong bull market led to a quadrupling of stock prices.

5. Black Tuesday—Oct. 29, 1929

• In late October, stocks began a precipitous plunge. By mid-November, stocks had lost two-thirds of their value. Fortunes disappeared overnight.

• The stock market collapse did not cause the Depression. But it did shake the confidence of the country and lead people to spend less, reducing demand and deepening the Depression.

6. Ponzi Schemes

• Charles Ponzi was a 1920s businessman who used the investments of later investors to pay early investors. His yearlong scheme cost his investors $20 million. And yes, “Ponzi scheme” owes its namesake to him. 

7. Speculation 

• Speculation is the purchasing of an asset to hopefully sell in the future to make a profit. Land speculation from the early 1800s is similar; however, by the 1920s it has been reduced in scale to commodities, goods, and real estate. 

• In the 1920s, financial speculation increased exponentially. 

8. Causes of the Great Depression

• OpenStax simplifies the causes of the Great Depression into three things: International economic woes, poor income distribution, and the psychology of public confidence. The Great Depression is not that simple… See below:

• Unbalanced foreign trade—The Hawley-Smoot Tariff made it harder to sell goods to Europe since Europeans could not sell goods to the US and earn the dollars needed to buy American products.

• Overcapacity—Industry could produce more goods than people wanted or could afford.

• Mechanization—Technological developments meant more goods could be produced with fewer workers. Productivity per worker rose 30% during the 1920’s. This led to layoffs; unemployed workers could not buy goods to stimulate the economy.

• Easy credit—Consumers accumulated huge debts during the 1920’s, often using stocks as collateral. With the collapse of the stock market, the collateral was insufficient, leading banks to collapse.

• Unequal distribution of income—In 1929, the richest 5% of the country received 33% of the nation’s income. Seventy-one percent of farmers lived below the poverty level before the Depression started. Those who wanted to buy goods could not afford to do so.

• No social safety net— There was no federal welfare system in the 1920’s, no unemployment insurance, no Social Security. American society was dominated by a philosophy of rugged individualism which said people should take care of themselves during hard times, get along without government assistance, and pull themselves up by their own bootstraps.   

9. War Debts and the Dawes Plan—1924 (NOT explicitly mentioned in OpenStax)

• The Allies owed the US huge debts from the war. Britain owed $4 billion and France $3.5 billion. Germany owed Britain and France $32 billion in reparations. With German economy in tatters, the Allies weren’t receiving their reparations and were having trouble paying their own debts.

• The Dawes Plan had US banks lend money to Germany. Germany then paid reparations to the Allies who made payments on their war debts to the US Treasury. 

• When the Depression struck, US bankers could afford no more loans to Germany. The Allies, except for Finland, defaulted on their loans.

10. President Hoover’s approach to the Depression:  

• Hoover tried to restore confidence in the economy by asking business not to cut payrolls and labor not to ask for higher wages. Most of them initially agreed, at least until 1931. He cut taxes and pressed the Federal Reserve Board to cut interest rates to make borrowing easier. He procured $2 billion for public works projects. He established the Reconstruction Finance Corporation and the Home Loan Bank Act to assist businesses and head off some foreclosures. 

• But he was a fiscal conservative who said we couldn’t “squander our way to prosperity,” and so he opposed further spending plans.

11. Hoover’s Rugged Individualism

• Hoover was considered a humanitarian, always wanting to help others. He first became prominent as the WWI head of the Belgian Relief Commission. Believing in rugged individualism, he thought that individuals and local government agencies were the ones to care for children, sick, old, and disabled. Direct handouts would decrease a person’s self-respect. He believed the depression could come to an end with individual initiative and private charity.   

• Hoover did more than any previous president had to end a depression. He lent money to the states and millions to corporations to help them resume productivity; it wasn’t enough. 

12. Reconstruction Finance Corporation—1932

• The RFC was started by Hoover to make loans to industries such as banks, life insurance companies, and railroads in hopes of getting them back on their feet.  

• The RFC was criticized as a trickle-down or “horse and sparrow” approach because it gave money not to the poor but to businesses in hopes that the benefits would trickle down to the jobless. However, it was a limited success in sustaining some businesses.

13. Hoovervilles

• The unemployed and homeless didn’t understand why federal money was not directed to help them and blamed President Hoover. The Democratic National Committee began to damage Hoover’s image more. Groups of shacks in which the homeless lived became known as Hoovervilles. Old newspapers used for warmth were called Hoover blankets, and empty pockets turned inside out were called Hoover flags. Jackrabbits were Hoover steers.  

14.  Norris-La Guardia Act—1932 (NOT in OpenStax)

• This pro-labor bill outlawed yellow-dog contracts and forbade injunctions banning strikes, boycotts, and peaceful picketing. Hoover signed it.

15. The American Legion—1919 (NOT in OpenStax)

• The American Legion was in part a social club, but it was more significant as a lobbying organization pressuring Congress for benefits for veterans.

• The American Legion was also noted as a force opposed to what it saw as radical or socialist groups such as the IWW.

16. Bonus Army—1932

• In 1924 Congress voted to pay WWI veterans a cash bonus in 1945 to make up for the amount of money the men lost while fighting in the war. At the start of the Depression, they were permitted to take out some of their bonus money. The next year they asked for full payment. The marchers of the Bonus Army began in Oregon and headed for Washington, D.C., hoping to gain the support of others on the Patman Bill, which would provide full payment. By early June, there were 17,000 veterans and their families in Washington D.C.

• The Senate voted down the bill on June 17. The veterans were offered money for a ride home, which would be taken out of their bonus. Two thousand remained and were driven out on July 28.

• Army Chief of Staff Douglas MacArthur and Major Dwight D. Eisenhower led US troops against the Bonus Marchers. Two Bonus Marchers died in the fight, one thousand people were attacked with tear gas, killing a baby.

• The Hoover administration published reports that most of the Bonus Marchers were communists or criminals, but investigations did not support those charges. The administration appeared callous and blundering in its handling of the Marchers.

17.  The Scottsboro Boys 

• This was one of the most misguided and racist trials in US history. Nine African American young men were accused of gang rape when two white women accused them of rape to avoid charges of vagrancy and illegal sexual activity (interracial sex). 

• On April 9, 1931, eight of the nine young men were convicted and sentenced to death (the trial was held in Scottsboro, Alabama…). After protests in the North, the case went to the Supreme Court, where in 1932, Powell v. State of Alabama overturned the conviction and demanded a retrial. 

• A series of retrials and convictions resulted in the nine young men eventually serving over 100 years collectively. 

• The national conversation over the Scottsboro Boys trials resulted in two groundbreaking Supreme Court cases: Patterson v. State of Alabama and Norris v. State of Alabama. The events also loosely provided the literary inspiration for Harper Lee’s To Kill a Mockingbird. 

18. Dust Bowl

• A severe drought combined with high temperatures and poor farming practices led to severe erosion in the Midwest. Hundreds of thousands of farmers lost their land and migrated west.

19. John Steinbeck – The Grapes of Wrath 

•  If Fitzgerald, Hemingway, and the Lost Generation represented the “Roaring Twenties,” Steinbeck represented America’s changing identities in the 1930s and 40s. 

• The Grapes of Wrath is considered to be one of Steinbeck’s best novels. It demonstrated the hardships families faced during the Dust Bowl, specifically those who migrated westward to California. None of you should hate reading it in Honors Lit! 

• California actually tried to stem the “Okies” and “Arkies” flooding into the state. During this time, Okies and Arkies were disliked more than Mexican migrants and African Americans…

20. Hoover and Latin America

• Hoover sought to make US policy in Latin America less interventionist. He withdrew US marines from Haiti and Nicaragua and did not intervene in several rebellions.

• Franklin Roosevelt is generally credited with implementing the Good Neighbor policy. But Hoover began the policy four years earlier.

21. Clark Memorandum 

• This refuted the Roosevelt Corollary, declaring the right to intervene in Latin America affairs, thus restating the original Monroe Doctrine. This laid the framework for FDR’s “Good Neighbor Policy” of non-intervention in Latin America. 

22. Hawley-Smoot Tariff—1930

• This was the highest protective tariff in America’s peacetime history, raising rates to 60%. It reduced trade with Europe as European nations retaliated.