The Hoover Years

What defined it

People lost not only money, but sense of self-respect, hopes and dreams

Hoover blames business shut down due to fear of Democrats taking over gov’t.

1 in 4 people who had been working in 1929 were out of a jobSome who were working were working for as little as 5 cents/hr

($1.00 today)Relief payments were $2.39 for family of four/week ($40.00)GNP fell from $104 billion to $59 billion in 1932Average income fell from $790 to $200/year5,000 banks failed between 1929-1932

as banks close, some were lucky to get 31 cents on the dollar

Average stock price drops from $310 in 1929 to $34 in 1932

What people thoughtFailure was own fault (represents culture of time)

Farmers upset in Iowa, Nebraska, and DakotasCost more to feed milk cows then they were getting for milkDumped milk out on road in protest

‘Bonus Army’ marched on D.C. – vets of WWI who were expecting a ‘bonus’ in 1945 wanted it now – camp outside the White House

Hoover orders the army to drive them out of D.C.

Minorities African Americans had not participated fully in the prosperity of the ‘20s

They did not work in jobs that offered much job security – or jobs were replaced by whites

unemployment rate for African Americans was 33-50%

Women who had been working were expected to give up jobs for men

Mexican Americans suffer as Okies move to California – move in country for repatriation – immigrants and naturalized children are not wanted and pushed to move back to Mexico

Rely on emotional resources of family and religion

The Business Cycle

Reasons

Division of prosperity in ‘20s was uneven

As businesses make more product in an attempt to make more profit, there is no one left to buy

As economy plummets and unemployment rises, even fewer people may buy goods – giving businesses a large surplus

Businesses can re-invest profits to keep money circulating; gov’t can borrow money and people relief to those needing it or get money in form of taxes to keep money circulating (think stimulus package)

In ‘20s – money was gambled in stocks and when market crashed, money circulation came to a stand still

The Economists1) Overproduction2) Under consumption3) Stock market crash and lack of confidence4) Problems elsewhere in the world5) More was produced than people could buy – people either had no

money or were using what they had to buy stocks

Friedman: Contraction in the money supply – stock market crash plus run on banks left too little money in circulation

Keynes: Lack of government interference; problems in money supply, distribution of wealth, stock speculation, consumer spending, productivity, employment should have been controlled

-governments should spend more money to keep people employed

Von Mises and von Hayek: criticized centralized economic planning and management

Hoover’s Answers

Hoover was probably the most qualified – during WWI ran relief agency helping the suffering people in Belgium and came back to head up the Food Administration and then Secretary of Commerce under Harding and Coolidge

Followed the, what appeared to be successful, Republican policies of the ‘20s

Had said poverty would be eliminated in the country

When stock market crashed he was only seven months into presidency

The Philosophy

Believed in trickle down and opponent of gov’t coercion; business should be free to pursue their self-interest; gov’t should have small role in people’s lives – pull self up, don’t look to gov’t for handouts (Social Darwinist with Gospel of Wealth philosophy)

Gov’t interference would do more harm than good, compromising liberties

Relied on people’s goodwill to help others (volunteerism)asked businesses to keep up production and not lay off workers;

asked neighbors to help one another; have a positive outlook, restoring confidence in economy

Business

As things did not seem to improve, Hoover decided to actAsks Congress to save major economic institutions of the land,

the banks, insurance companies, railroads, etc (GM buy out)

Congress establishes Reconstruction Finance Corporation (RFC)Still not willing to spend gov’t money on direct relief – if gov’t

helps, others (volunteerism) will not feel necessary to help anymore

spends $45 million to save cattle, but opposes $25 million to save farmers; vetoes bill that would have provided jobs throughout the country

Budgets

Hoover believed in balancing the budget and the gov’t not going in to debt

debt would lead to more taxes and bond issuesnot fair to leave debt to future generationsif gov’t kept borrowing it would be harder for businesses to

borrow and grow

Helping business helps everyone (trickle down); job of gov’t ‘was to bring about a condition of affairs favorable to the beneficial development of enterprise’

Hoovervilles

http://www.youtube.com/watch?v=ISniZI_H7mE

Homeless people gather in areas (vacant lots and public areas), living in makeshift shanties and tents – small ‘towns’ develop, people start calling them Hoovervilles

Terms prior to this had been ‘crisis’ or ‘panic’ – depression gave a feeling of despondency and long term problem

Birthrates fall lower than ever – sign of bad times

Farmers

New farming methods made drought conditions worse. Intensive farming allowed farmers to move to the plains and plow under the natural grasses to plant winter wheat

1932 – combinations of drought, loose topsoil, and high winds resulted in disaster on the Great Plains

Becomes known as the Dust Bowl – Okies migrate to California with promises of better life, farming conditions (800,000 migrated from Missouri, Arkansas, Oklahoma and Texas)

Some farmers were able to buy repossessed farms cheap, becoming large commercial farms

Government is motivated to finance projects to help in the future – such as dams for irrigation

The Reaction

Anger leads to violence – as men don’t know how they will feed their families, riots often break out

Many did volunteer in soup kitchens and at bread lines – the less we have, the more we give

Movies provide a great escape and hope – Shirley Temple, Little Orphan Annie, Marx Brothers, Three Stooges

What else might be a popular form of entertainment of the time?