i. Why was it called The Great Depression? • Herbert Hoover
• An a,empt to raise morale. Sounded be,er than “panic” or “crisis”
• “Depression” had been previously used to describe economic slumps
ii. Herbert Hoover and Attempts to Raise Morale • Basic Idea: Use the Government to encourage voluntary cooperaBve acBon in the private sector
• A,empts to make Volunteerism work: • Federal Farm Board • NaBonal Business Survey Conference -‐ OpBmism • NaBonal Credit CorporaBon – Oct 1931, the last test.
• OpBmisBc Policy: Adopted from the Roaring 20’s • PECE – President’s Emergency Commi,ee for Employment
• Fall 1930-‐ August 1931 • Colonel Arthur Woods • Confidence Campaign
• POUR – President’s OrganizaBon for Unemployment Relief • Walter S. Gifford • Focus: AdverBsing
• Wage Maintenance Plan: Hoover held conferences with companies, where companies agreed not to lower wages
• While trying to keep wages the same, businesses only decreased payroll • Spending power lowered: Directly/Indirectly • Fell apart in 1831
• Sept. 10-‐ U.S. Steel announced 10% wage reducBon • Everyone else quickly followed
Focused on OpBmism, not staBsBcs
iii. Other ideas on How to Deal with the Depression • Grover Cleveland's “proven” policy
• Sit back and wait for natural forces to bring recovery • “Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate” -‐Andrew Mellon, Treasury Secretary
• LiquidaBonists • Ideas of the Well-‐to-‐do
• Business was the cure for this problem among business • There is no depression
• There is not five percent of the poverty, distress, and general unemployment that many of your enemies would have us believe” –Hoover, 1931
• There is a depression, but it would be best if we ignored it • “I am sold on America. I won’t talk depression”-‐Bu,ons of CincinnaB residents
• The depression is beneficial • It is a “good thing that the recovery is prolonged. Otherwise people wouldn’t profit by the illness.” –Andrew Mellon, 1930
iv. No Federal Relief Here!
• Hoover and his commi,ees insisted that local & state governments had the situaBon under control
• Based on governors’ reports • 1932: Only 8 states provided unemployment compensaBon • MisconcepBons in high places
• “No one is actually starving”-‐Herbert Hoover • Hoover didn’t want to provide federal relief because he believed it would be demoralizing
v. Hawley-Smoot Tariff Act
• June 17, 1930 (Conceived in 1929) • Raised taxes on imports in an a,empt to protect American businesses and farmers.
• Senator Reed Smoot of Utah, and RepresentaBve Willis Hawley of Oregon • Raised the average tariff by about 20%
" US IsolaBonism (InternaBonal conflict) " Worsened the world economy, Reduced global trade " Loss of confidence on Wall Street
• Economists pleaded that the Act should not pass • Last Bme we see the New Era’s “every man for himself” principle
h,ps://www.youtube.com/watch?v=uhiCFdWeQfA
vi. Revenue Act of 1932
• Fiscal Policy: Increased Tax rates • An a,empt to balance the federal budget, in order to maintain naBonal credit
• Originally was going to include intense sales tax, which most affects the poor, but protests and le,ers caused burden not to fall directly on consumers.
• Increased rates, Bghtened the enforcement of income tax, increased postal rates, and taxes on: gasoline, cars, beer, and bank checks (hidden sales taxes).
• Only further discouraged spending, but most secBons of the Act were very reasonable.
vii. Glass-Stegall Act • AKA: The Banking Act of 1933 • The Act was a reacBon to:
• The failure of nearly 5,000 banks • The resulBng low public confidence in banking pracBces.
• What did the Act do? • Forced a separaBon between investment and commercial banks
• Commercial banks couldn't underwrite securiBes, investment banks couldn’t receive deposits.
• Result: • Restored confidence in banks • Some argue that the act was never even necessary, and that the effect of the previous pracBces on the already devastated economy did not really worsen the depression.
i. Tariff War
• 1927 in Geneva: Tariff truce • Countries agreed not to enact anymore treaBes
• 1929-‐ Hoover calls special session of congress to create the Hawley-‐Smoot Tariff Act.
• US IsolaBonism, less InternaBonal Trade • Many people thought the depression was caused by events in Europe, and thought cuong ourselves off from them would be a way out. This only made the depression worse.
ii. Herbert Hoover contended, un6l the day he died, that: The United States was almost recovered in the spring of 1931, un6l the Interna6onal Crisis hit and the economy plunged.
Here Lies Herbert Hoover
The depression is
not his fault, it should be blamed
on the International Crisis of 1931
iii. The International Crisis of 1931 • Began in Austria-‐ a major bank-‐ The Kreditanstalt-‐ had lost an amount equal to their capital reserves in the previous year. They remained open, but…
• This caused a banking crisis in Germany: • Mid-‐July: All of the banks temporarily shut down • Why did the US care?
• Chase bank and the Guaranty Trust Company had invested almost half of their capital in German SecuriBes
• Hoover issued a one year moratorium on all intergovernmental payments, to create “breathing space”
• Failed • People thought that freeing Germans of their payments would allow them to put more money into arms (Context: Pre-‐World War 2)
• SupernaBonalsim
iv. The International Crisis of 1931 cont.
• The Final Blow-‐ September of 1831 • Britain abandons their gold standard
• Because the Pound was over-‐valued • Causes:
• Everyone tried to convert dollars to gold • Fall in prices, imports, and producBon conBnues
v. Herbert Hoover cannot say that the Interna6onal Crisis prevented our Depression from ending in 1831. However, the Crisis did add to our woes.
i. Background
• The ReconstrucBon Finance CorporaBon • Government agency established on January 22, 1932 • Hoover’s boldest move • Based on the belief that credit was essenBal for confidence which was essenBal for recovery.
ii. What did the RFC do? • Made government credit available to banks and financial insBtuBons
• Hope: this would loosen credit and bring about recovery • However, this enlarged supply of credit didn’t create it’s own demand
• Given the state of businesses/banks during the depression, neither were looking to take loans • Held off the collapse of banks unBl the final weeks of Hoover’s presidency. • The Infamous $90 million dollar loan to the Central Republic Bank of Chicago
• A few weeks before this loan, the RFC denied a loan to the city of Chicago to pay teachers/municipal workers
• To the public: the RFC gave a huge loan to a bank while denying a smaller loan to a city to pay its workers.
• DemocraBc Propaganda • June 1932
• July 1932: Emergency Relief Act: expanded powers of RFC to aid agriculture and state/local public works.
iii. Impact of the RFC
• It saved the American banking system • Held off the banking collapse unBl FDR became president.
• It would be fully uBlized during FDR’s presidency
i. President Hoover
Hoover Flags
Hoover Blankets
Hoover Wagons
Hooverville
• These things were named aser President Hoover, the man that the impoverished blamed for their condiBon.
ii. Hoovervilles • Where homeless families found refuge in shelters made of salvaged wood, Bn, bricks, and cardboard.
• Osen located near soup kitchens or rivers • SomeBmes, police were ordered to raid and burn down Hoovervilles, but the people always returned.
• The Bonus Army’s Hooverville • 1932, Veterans and their families marched to Washington D.C to demand their military bonus
• They set up a Hooverville of 15,000 residents on AnacosBa Flats
• The US Army drove them out. Two demonstrators were shot and many were wounded.
iii. Psychological Strain
• On the American Male-‐ the “Breadwinner” • NaBonal Work Ethic: ideas of self-‐reliance, the dignity of earning a living.
• At first, the vicBms blamed themselves • Egoism
• Many began to develop ideas that the current system is unfair, not moral, and unequal.
iv. OPCVL
• Origin: 1934, by O,o Soglow • Purpose: To bring to light a problem in a humorous way. To say that people are so impoverished that they would be happy to see someone robbing them.
• Value: Shows the mindset of people during the depression. It was a great thing to know that someone was worse off than you.
• LimitaBon: The cartoon is exaggeraBng and over-‐simplifying a situaBon. No one would be happy that they were robbed. Paints the people in Hoovervilles as “dummies” (depicBon of the character).
i. Digging Our Own Grave • The economy couldn’t improve with businesses liquidaBng assets and “playing it safe”
• Businesses doing what was right for them individually was detrimental to them in the long run.
• The majority of government officials did not understand the depression, and therefore didn’t take sufficient acBon.
• Not providing federal aid • Not addressing the correct problems
ii. Herbert Hoover and his Administration
• What did Hoover to wrong? • He was right that confidence is important, but did a terrible job of insBlling it.
• Hawley-‐Smoot Tariff • Didn’t provide federal aid.
• What did he do right? • The RFC held off a crisis unBl FDR was president.
iii. By the Election of 1932, this was a Republican Depression • Congressional elecBon of 1930-‐ Republicans lost seats, and their dominance in the houses became paper thin/ nonexistent.
• 72nd Congress Convened in 1931, Hoover considered leong the Democrats organize both houses
• To share the blame • Republicans wouldn’t give up seats, Democrats wouldn’t take the bait.
• By 1932, rebellion seemed to be brewing • Ba,le at River Rouge, The Bonus Army
Works Cited-‐ Sources
"Glass-‐Steagall Act (1933)." The New York Times. Web. 4 Jan. 2016. <h,p://topics.nyBmes.com/top/reference/Bmestopics/subjects/g/glass_ste agall_act_1933/index.html>. "Great Depression." Britannica School. Encyclopædia Britannica, Inc., 2015. Web.
23 Dec. 2015. <h,p://school.eb.com/levels/high/arBcle/37849#234446.toc>. McElvaine, Robert. "Nature Takes Its Course: The First Years of The Depression." The Great
Depression. 25th Anniversary ed. Three Rivers, 1984. 73-‐94. Print. "ReconstrucBon Finance CorporaBon (RFC)." Britannica School. Encyclopædia Britannica,
Inc., 2015. Web. 26 Dec. 2015. <h,p://school.eb.com/levels/high/arBcle/62909>. Roy G. Blakey and Gladys C. Blakey The American Economic Review Vol. 22, No. 4 (Dec.,
1932), pp. 620-‐640 "Smoot-‐Hawley Tariff Act." Britannica School. Encyclopædia Britannica, Inc., 2015. Web. 20
Dec. 2015. <h,p://school.eb.com/levels/high/arBcle/396766>. "Suffering America (Overview)." American History. ABC-‐CLIO, 2016. Web. 4 Jan. 2016.
Works Cited-‐ Photographs CARTOON: HOOVERVILLE, 1933. -‐ 'An unfortunate wait.' Cartoon depicNon of the wait for President-‐elect Franklin Delano Roosevelt to
replace the lame duck Herbert Hoover. Drawing, January 1933.. Fine Art. Encyclopædia Britannica ImageQuest. Web. 26 Dec 2015. h,p://quest.eb.com/search/140_1696833/1/140_1696833/cite
Franklin D. Roosevelt . Fine Art. Encyclopædia Britannica ImageQuest. Web. 26 Dec 2015. h,p://quest.eb.com/search/108_268256/1/108_268256/cite
Herbert Hoover. Photograph. Encyclopædia Britannica ImageQuest. Web. 28 Nov 2015. h,p://quest.eb.com/search/139_1899583/1/139_1899583/cite
HOOVERVILLE, 1932. -‐ Shacks put up by the Bonus Army marchers along Pennsylvania Avenue and the AnacosNa flats in Washington, D.C., are burned by the U.S. Army. Photograph, June 1932.. Fine Art. Encyclopædia Britannica ImageQuest. Web. 4 Jan 2016. h,p://quest.eb.com/search/140_1704249/1/140_1704249/cite
Hooverville Kids. Photographer. Encyclopædia Britannica ImageQuest. Web. 4 Jan 2016. h,p://quest.eb.com/search/115_2729255/1/115_2729255/cite
The American Depression 1930s: Thousands of jobless lived in shanty towns nicknamed 'Hoovervilles', earning a few cents a day sorNng bo^les and cans. This 'Hooverville' was located near the waterfront in Sea^le.. Photography. Encyclopædia Britannica ImageQuest. Web. 2 Jan 2016. h,p://quest.eb.com/search/300_2292044/1/300_2292044/cite
Woman digging in soil with a garden spade. Photo. Encyclopædia Britannica ImageQuest. Web. 28 Nov 2015. h,p://quest.eb.com/search/167_4053176/1/167_4053176/cite