Hoover wins in a landslide with 444 electoral votes compared to 87 for Smith.
Herbert Hoover: The Great Humanitarian
Policy Reversal:
Reversed prior American intervention in Latin America via the Clark Memorandum
Inaugural Remarks (1929):
“I have no fears for the future of our country. It is bright with hope.”
Agricultural Marketing Act of 1929:
Created a Federal Farm Board aimed at supporting voluntary farm cooperatives.
Impending Challenges:
The Great Depression would undermine these agricultural objectives.
Core Objectives
Hawley-Smoot Tariff
Economic Issues in the United States
Economists’ View vs. Monetarists’ View
Overall Consensus: Identify the Major Causes of the Great Depression
Distressing Economic Signals in 1929
New Construction:
Slowed down significantly
Wages vs. Productivity:
Wages of industrial workers did not keep pace with productivity and corporate profits
Family Income Statistics:
Two-thirds of American families lived on less than $2,000 per year.
Corporate Actions:
Companies began laying off workers
Bank Failures:
Between 1921 and 1928, five thousand banks failed.
Hawley-Smoot Tariff
Purpose of the Tariff:
Intended to aid farmers by decreasing imports of farm products into the United States.
Legislative Actions:
Lobbyists convinced Congress to raise duties on hundreds of imported items to an unprecedented high.
Flaws of the Bill:
Raised prices on many raw materials and consumer products, negatively impacting the economy.
Hawley-Smoot Tariff Continued
Response from Economists:
1,028 economists petitioned Hoover to veto the bill.
International Reactions:
Other countries retaliated in two ways:
By reducing the flow of products to the United States
By imposing tariffs on U.S. products entering their markets
Impact on U.S. Exports:
U.S. exports plummeted after the passage of the Tariff.
Black Tuesday - October 29, 1929
Stock Market Crash Headlines:
Wall Street panic as stocks crash; significant losses reported.
Crisis Indicators:
Attempt on the life of Italy's Crown Prince.
Other incidents reported: Hollywood fire, missing ferry, and natural disasters.
Reasons Behind the Stock Market Crash
Buying on Margin Concept:
Margin refers to the small down payment for purchasing stock.
Profits were used to pay off margin loans, mainly during rising stock prices in 1927, 1928, and most of 1929.
If stock prices dropped, brokers could liquidate shares at a loss to cover the margin.
Lending Practices:
By August 1929, brokers were lending investors over two-thirds of the face value of stocks.
Economic Indicators Ignored:
Investors neglected signs of an economic slowdown preceding the crash.
The Stock Market Crash Itself
Black Tuesday Description:
Marked as the worst day in stock market history with prices plummeting.
Investor Panic:
Flooding of unsellable stocks forced investors who borrowed heavily to sell at significant losses.
Panic spread from Wall Street to the broader economy.
Market Value Losses:
From October 23, 1929, to November 13, 1929, market value lost nearly 40%.
In 1930, more than 25,000 businesses shut down with even more failures in subsequent years.
Depressive Implications:
The stock market collapse did not cause the Great Depression but exposed the instability of the 1920s prosperity and led to mass withdrawals from banks and the market.
Causes of the Great Depression
Defining the Great Depression:
Characterized as the worst economic downturn in U.S. history, triggered by the stock market crash of 1929 and lasting until World War II.
Economists’ Perspective:
Structural Issues:
Depressed agricultural markets.
Wages lagged behind production levels.
Industries like textiles and automobiles became overextended.
Monetarists’ View:
Asserts that changes in the money supply caused economic changes.
Criticism of the Federal Reserve for insufficient money circulation, which contributed to the depression.
Causes of the Great Depression Continued
Overall Analytical Consensus:
Analysts link the depression to global consequences stemming from World War I.
European economies suffered severe debt from war reparations, adversely affecting U.S. exports.
Impact Statistics:
Agricultural prices fell by 60%.
By 1932, approximately nine thousand banks shut down.
Unemployment rates soared to around 25%.
Core Objective
Impact of the Great Depression on American People
Human Element of the Great Depression
JOBLESS MEN:
Reflects the dire situation that people found themselves in.
Streets filled with men struggling to find work.
Public Sentiment:
Statements such as "WE CAN'T TAKE CARE OF OUR OWN" highlight the overwhelming feelings of helplessness and despair.
Rural Effects of the Great Depression
Panorama of Adverse Changes:
Significant ramifications faced by rural communities during this economic turmoil.
Reactions to the Catastrophe
Government and People Response:
Examination of how government actions and public reactions evolved during the depression.
Federal Assistance?
Relief Amounts in Major Cities:
Philadelphia: $5.50 per week
New York City: $2.39 per week
Detroit: $0.60 per week
Hoover's Response:
Advocated for businesses to take responsibility through wage increases.
Created the Reconstruction Finance Corporation to facilitate loans to banks.
Bonus Expeditionary Force
Background:
Approximately 20,000 veterans marched to Washington seeking immediate payment of bonuses promised in 1924.
Congressional Action:
The House passed the bill; however, it was voted down by the Senate.
Veteran Responses:
Some veterans returned home while about one-quarter remained, near the Capitol.
Government's Decision:
Hoover convinced Congress to subsidize return travel for these veterans, although not all departed.
Bonus Expeditionary Force Continued
Government Reaction to Protests:
Buildings were cleared forcefully, resulting in the death of two veterans.
Military leaders, including Douglas MacArthur, Dwight Eisenhower, and George Patton, were involved in dispersing the camps using tear gas and military force.
Social Perception:
Veterans protesting were labeled communists and criminals, despite the lack of evidence supporting these accusations.