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Greg Jackson (1:01)
History that Doesn't Suck I'm your professor, Greg Jackson, and as in the classroom, my goal here is to make rigorously researched history come to life. As your storyteller, each episode is the result of laborious research with no agenda other than making the past come to life as you learn. If you'd like to help support this work, receive ad free episodes, bonus content and other exclusive perks. I invite you to join the HTDS membership program. Sign up for a seven day free trial today at hts podcast.com membership or click the link in the episode notes. It's Tuesday, November 19, 1929, exactly three weeks since the New York Stock Exchange's crash known as Black Tuesday, and President Herbert Hoover is entering the Cabinet Room at the White House. He takes his seat at the head of a long table as others follow. But the gents gathering here aren't Bert's presidential Cabinet. They're titans of the nation's railroad industry here at the behest of the President. Let me explain as they get seated and situated. While the stock market has continued to go down since its recent crash, no one realizes what economic miseries lie ahead. Most assume it's just the usual bust and boom, an unfortunate but normal economic panic. This includes Treasury Secretary Andrew Mellon, who advises the President to keep government out of the picture and let things run its course. To quote Andrew liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate it will purge the rottenness out of the system. High costs of living and high living will come down, people will work harder, live a more moral life, values will be adjusted, and enterprising people will pick up the wrecks from less competent people. Now, the President will note in his later writings that Andrew Mellon is not heartless. Rather, this entirely hands off thinking reflects his age, as the septuagenarian secretary goes on to explain that this is how previous presidents have acted or not acted and what he's personally seen since his early adulthood in the 1870s. But while this might have worked for Ulysses S. Grant in Grover Cleveland, Burt, who spent the last two weeks studying previous panics, believes that won't fly in the modern nation's more complex, interconnected and no longer majority agricultural economy. As such, Bert's holding meetings or conferences, as he calls them, with movers and shakers in various industries to ask them to step up to the plate and voluntarily do right. Ah, and this process starts with these railway leaders. So back to this conference. We don't have a play by play, but Burke gets after these railway men. He hounds them, to borrow a phrase from the stout president's future biographer, Kenneth White, getting them to agree to spend $1 billion on upgrading construction projects over the next year. Wow, talk about job creation. The New York Times calls this heartening information, and it sings Bert's praise. And Bert Hoover, or the master of emergencies, as he's also known, isn't done. Later that afternoon, he meets with members of the Federal Reserve's Board of Governors. They hear the President's concerns, and like the New York Reserve bank, which lowered its discount rate from 5 to 4.5% last week, the other Reserve banks will lower their rates to make credit flow. The next day, November 20, Burt meets with the nation's most influential business car manufacturer, Henry Ford, Sears Roebuck's Julius Rosenwald, General Electric's Owen Young and others. Burt urges them to remember the people that this is a quote unquote human problem and offers a if they'll avoid layoffs and wage cuts, he'll get labor not to strike. They aren't all as enthusiastic as Henry Ford, who proclaims that he'll even give raises. But they agree, contingent on labor going for it, no problem. The following day, November 21, Bert gets William Green of the American Federation of Labor and other union leaders to say yes. So no layoffs, no cut wages and no strikes. Meanwhile, Bert's creating the Volunteerism Assisting National Business Survey Conference, getting the newly created Federal Farm Board to maintain crop prices, coaxing state and municipal leaders to tackle relief efforts and increase public works programs, and convincing the National Electric Light association to spend $100 million on projects. That's our great humanitarian. The president's also trying to keep things calm by avoiding the word panic. Instead, he's calling this economic downturn a simple depression. Huh. We'll see how that term ages. But right now, it seems Bert's on a roll. And as the month ends, he has the opportunity to show leadership with the State of the Union address. Let's see how it goes. It's the afternoon of December 3, 1929. We're in the U.S. capitol's House Chamber, and congressional clerk William Tyler Page is approaching the daisy. Yes, a clerk. While Woodrow Wilson restored the tradition of the president personally delivering an annual address to Congress shy Herbert Hoover prefers the old method of a clerk reading it with another in the Senate chamber. Reading to that august body, William now faces the 71st Congress's representatives. He reads. The problems with which we are confronted are the problems of growth and of progress. In their solution, we have to determine the facts, to develop the relative importance to be assigned to such facts, to formulate a common judgment upon them, and to realize solutions in a spirit of conciliation. Nice positive framing, Bert. William reads the President's thoughts on foreign affairs. His recommendation to trim the military's budget. Then comes to a subject that the newspapers will really pick up on. Attacks. Cut. The President wants Congress to lower income and corporate taxes by 1% each, even though it will cost the federal government $160 million. Coming to what he calls the general economic situation, Bert addresses the wave of uncontrolled speculation that led to the stock market crash, but assures Congress that this economic downturn will be a smoother ride than previous ones. Bert has full confidence in the Federal Reserve system and the voluntary deals he's been putting together. Our faithful clerk reads out the President's. The sudden threat of unemployment and especially the recollection of the economic consequences of previous crashes under a much less secured financial system created unwarranted pessimism and fear. I have therefore instituted systematic voluntary measures of cooperation with the business institutions and with state and municipal authorities to make certain that fundamental businesses of the country shall continue as usual, that wages and therefore consuming power shall not be reduced and that a special effort shall be made to expand construction work in order to assist in equalizing other deficits in employment. Yes, the President is confident in the strength of these voluntary measures. If at moments like this that the Republican Representatives applaud, the Democrats don't. Stronger enforcement of prohibition, the post Office budget, the development of highways. Burt's address tackles these and more, including a reiteration of his interest in a tariff that he expects will protect American farmers. But will these endeavors, particularly these voluntary measures for which he's currently receiving so much praise, lift the nation from this depression? Only time will tell. Welcome to history that doesn't suck. I'm your professor Greg Jackson and I'd like to tell you a story. I know it sounds like Herbert the master of emergencies Hoover has this economic downturn, this depression in the bag yet as I trust you know, but spoiler alert, if not, the depression will only get worse and come to define Bert's one term presidency. That tragic path is today's story. We'll start where we just Left off, late 1929 with the hopeful nation looking to their famous for disaster relief press president entering 1930 we'll find Burke continues to encourage volunteerism along the lines of what we heard about in this episode's opening and see him face a nasty flood as well as sign the protective Smoot Hawley Tariff into law. Meanwhile, the breadlines keep growing and before the year's end a major bank collapses the not a government institution despite its name bank of the United States entering 1931, we'll find that Americans and President Herbert Hoover are all starting to realize that this isn't a typical economic downturn. We'll listen to Burke continue encouraging the nation's volunteerism with an inspiring speech at Valley Forge, but also see the Great Depression take a nasty turn on the global level as banks fall like dominoes in Europe. As these failures lead Great Britain to give up the gold standard, Bert will follow the conventional wisdom of the day and do what he must to protect America's gold standard and gold supply by 1932. We'll find that Burr is trying new programs, even some that require making space for the federal government in the everyday American's life. Like the Reconstruction Finance Corporation, but with unemployment through the roof, Americans living in shanty towns dubbed Hoovervilles and Great War veterans marching and camping in Washington D.C. to demand their long promise but still not due bonuses be paid. Now can Burke keep the confidence of the American people or will his use of General Douglas MacArthur and the US army to disperse these veterans prove a death blow to the out of step on Prohibition President's chances of re election? So very much to find out. Oh, and one final note. This episode uses a number of economic terms defined in episode 170, like the federal Reserve System, discount rate securities and more. So if you haven't heard that episode, you might want to start there. And with that, let's continue the tale of Herbert the Great Humanitarian, Hoover's presidency at the start of the Great Depression. Here we go. Quick, decisive, hitting the books to understand previous panics or depressions, to use the new term, and how to confront them. Yes, President Herbert Hoover, the man who fed the Belgians during the war, the Russians after, and handled the great Mississippi flood of 1927, sure seems to be living up to his nicknames as the Great Engineer, the great humanitarian and the master of emergencies in the immediate aftermath of the stock market crash of October 1929. As Will Rogers once said, when a man is sick, he calls a doctor. But when the United States of America is sick, they call for Herbert Hoover. Or better still, it's as the New York Times puts it on December 1, 1929, just two days before the state of the Union that we just attended. Quote, too much praise cannot be given to the President for the prompt and resolute and skillful way in which he has set about reassuring the country after the financial collapse. No one in his place could have done more. Very few of his predecessors could have done as much. Now, this same New York Times article also points out that no one should expect this downward economic turn to reverse overnight. To quote it again, Hoover himself would be the first to say that it should not create false hopes. It will be some time before the projected outlays by great corporations can be made concrete in actual employment. Sure. I mean, all the greatest minds know this is merely a run of the mill panic. But even those have to run their course. But as December passes and 1929 fades into 1930, unemployment isn't leveling off, it's going up. And in New York City, one charitable woman is noticing an uptick in those seeking her assistance. It's a chilly winter afternoon just before 4:30 on February 24, 1930. 51 year old Michigan born Miss Marion Spohr pushes aside her wealth of brown curls as she steps out of her chauffeured car and onto the snow and slush of first street between Second Avenue and the Bowery in New York City. She walks toward her usual locale, a small cul de sac called Extra Place, and in doing so passes hundreds of men in a line that wraps up and down the street and much of the block even parting for traffic near the corner of first street and Second Avenue. Some of these men jobless, homeless, perhaps disabled but invariably hungry have been standing here shivering in the cold winter's wind for more than six hours. And they're here to see Marion, or as they and the rest of New York call her, the Lady Bountiful of the Bowery. Once situated in her usual spot, Sergeant David Geraghty and nine patrolmen help Marion distribute tickets. Each one is redeemable for a bowl of stew, a slice of bread and a cup of coffee at the YMCA at 22 E. 3rd St. These tickets are valued at about a nickel a piece, and Marion, a former dentist turned artist famous for supposedly channeling dead artists in her own surrealist works, is handing out roughly $700 worth of these breadline vouchers. She also distributes colored tickets for anyone in need of shoes or medical attention. But as the men come forward, the curly haired brunette artist is likely noticing some faces she hasn't previously seen in her three years of distributing these tickets twice a week. In the weeks ahead, the New York Times will report that breadlines like Marion's are increasingly filled with men not only dressed in army overcoats and navy pea jackets, but suits, ties and white collars. Don't bother asking anyone what brings them here today. They'll all tell you the same thing. I'm out of work. The needs of this crowd aren't just food, though. For these extra cases, as Marion calls them, she uses her office at 24 E. 3rd St. 1 is a French woman who has only a quarter to her name but must pay $30 in rent due today. Marion sends her away with 50 bucks. She then pays the bus fare for a man, his wife and two children to get to Atlantic City, where he has a job lined up. Marion also pays the full $75 for a man to replace his crude wooden leg with a proper prosthetic. When asked by a New York Times reporter about her future plans, she states simply, the breadline will go on just the same. Our Lady Bountiful of the Bowery. Marion Spohr is not the only one working to help the ever growing and even necktie wearing jobless population of New York City. The following month, March 1930, Reverend Dr. Randolph Ray, the rector of the Church of the Transfiguration, announces a breadline to feed 1,000 mouths daily. It's the third time his church has done this, the last being the panic of 1907 and before that during the Civil War. Lt. Col. Wallace Winchell of the Salvation army reports that they're not only busy with meals, but have filled all 611 rooms of the Bowery hotel with destitute people. In fact, there are times when they even pack the corridors and lounging rooms with 400 more who need to escape the cold winter's night. The same is true for Ms. Grace Swan of the St. Barnabas House on Mulberry street. Though normally intended strictly for destitute women and children, Ms. Grace has found herself in recent months opening her doors to families of the unemployed. And of course, William Randolph Hearst, who's never one to miss the chance to get his name in his own newspapers, also operates a charity, breadline. He has two trucks in the middle of Times square distributing soup out of cauldrons from morning until night under massive klieg lights, illuminating the charity. Nor are the breadlines in needy just a big apple thing. It's like this across the nation. For instance, an opportunity for the unemployed to chop wood in exchange for groceries in Boston draws a crowd of 600. Yet despite these and other concerning developments across the nation, it's important for us to remember that at this point, most of the nations supposedly informed, as historian John Garrity puts it, remain convinced that this is a typical panic. Indeed, that same March, 36 states report unemployment at either normal rates, moderately up or even descending. That June, president Herbert Hoover tells a group of clergymen asking him to expand public works projects that you have come 60 days too late. The depression is over. Meanwhile, congress has one of Bert's pre stock market crash economic goals ready for his signature. The Smoot Hawley tariff. Sponsored by senator Reed Smoot and representative Willis Hawley, this tariff isn't actually what the president had in mind. See, Bert wants to help the American farmer. He pushed for last year's agricultural marketing act, which created the federal farm board to help stabilize agriculture markets by purchasing surplus grain and cotton. And in that same spirit, he's pushed for an agricultural tariff that in theory will protect American farmers from foreign imports. But after all the horse trading required to make the Smoot Hawley tariff happen, it's now raising rates on 2,000 items, including a slew of manufactured goods. A lot of economists oppose the tariff, at least 1028 to be precise. And they sign an open letter to the president calling for him to veto it. They note that tariffs are already high and fear this will only anger international trading partners. Hmm, that wouldn't be great considering how important international trade is now that the United States produces 40% of the world's manufactured goods. House of Morgan's senior partner, Thomas W. Lamont, whose office we visited amid the crash in episode 170 later recalls, I almost went down on my knees to beg Herbert Hoover to veto the asinine Hawley Smoot Tariff. But Bert's blown so much political capital to make this tariff happen, and it has the flexibility provision that he requested. So on June 17, Burt signs the Smoot Hawley Tariff, or more properly, the Tariff act of 1930. And just as the economists feared, trading partners retaliate with tariffs on American goods. The Smoot Hawley Tariff's actual damage will number among those aspects of the Great Depression that future historians and economists will long debate. That said, few, if any, will call it helpful. But whatever one might think about the Smoot Hawley Tariff, Bert has another problem on his hands. In the summer of 1930, a drought has struck America's heartland. Hold up. An emergency devastating millions of families as crops and livestock die. Well, now we're in the master of emergencies wheelhouse. Assembling the governors of the several afflicted states, Burt calls for establishing the National Drought Relief Committee, which will work with state committees, which will work with county committees as charities like the Red Cross do the heavy lifting. Ah, the Red Cross, not the White House. See, Burr earnestly believes that it is not the federal government's role to heavily intervene in such emergencies. And that's keeping him from applying his natural gift for handling a crisis to this drought. Now that he's president, he expects others to carry America's proud tradition of volunteerism. It's with this limited government thinking that he tells the more relief minded Congress not to send more than $25 million in aid and only as loans for drought stricken farms. Not a government government dole to feed the hungry. But the starving are not interested in ideological technicalities. Neither are all in Congress. And one representative from the devastated state of Arkansas can't help but question why the president, quote, would feed jackasses, but wouldn't feed starving babies. Ooh, not a good look for the man famous for feeding starving Europe. Meanwhile, as we enter late 1930, the depression isn't letting up. With over 4 million Americans out of work, unemployment will average 8.7% for the year. In October, Berk creates the President's Emergency Committee for Employment. Ah, but like the drought committee, it offers no direct assistance to the average American. Instead coordinating with state and local programs. America takes a big step toward the Democrats in November's midterm election. But this is hardly a full repudiation of Herbert Hoover. Republicans still hold a majority in both houses. There's still every reason to expect this slump. This Depression is no worse than the panic of 1920-21 and will soon work itself out. But then the banks start failing. Now, bank failures are not unusual in this era. Even in the Roaring Twenties, hundreds shut their doors every year. The best year was 1922, when only 367 banks went under. But as unemployment rises and productivity drops, bank closures skyrocket. A major culprit is the ethically questionable Caldwell and Company, which has been struggling ever since the crash of 29. When its bank of Tennessee goes down on November 7, it unleashes a cascade of bank closures in the south. The last two months of 1930 alone see 608 banks suspend operations. While this is a national figure, most of these banks are in the drought region, which it seems not only dried up farmland, but bank liquidity. Now, Bert Hoover still has hope. If you ask him, he'd be quick to point out that a full third of these banks reopen before long. And on December 2, his state of the Union address reassures that, quote, the fundamental strength of the nation's economy is unimpaired. But it's hard to quell fear. Amid rumors and failing banks, they create panic and bank runs. It's the afternoon of December 10, 1930. We're at the corner of Southern Boulevard and Freeman street in the Bronx, New York City, where a massive crowd has gathered outside the bank of the United States. The reason is that earlier today a small time merchant came to this bank that despite its name, is not connected to the US Government and found the publicly traded institution unwilling to cash out his stock in it. Or so some say. Others claim that the bank merely advised the merchant not to sell because their stock is such a good investment. But whatever the truth, it doesn't matter right now because these terrified account holders converging on the bank are all set on one thing. Getting their money out before this bank fails and they lose everything. Mounted police patrol as some 20,000 people, mostly spectators, but including thousands of account holders, crowd the bank's doors. Bodies choke off the entrances as unmanageable lines pour inside, where bank tellers do their best to reassure customers who more often than not nonetheless choose to withdraw. The accounts come in all sizes, including one man who waited two hours just to withdraw $2 from a savings account. By the end of the day, the panic has led to bank runs on the institution's other branches, like those in Brownsville and Brooklyn. Bank of The United States VP Herman Gottlieb estimates that some 2,500 customers have withdrawn $2 million from this location in the Bronx alone. That evening, a group of financiers meets at the Federal Reserve bank of New York to discuss how they might save the bank of the United States from closing its doors. But come morning, they have to admit that they can't. The bank runs have it hemorrhaging. It's failed in this era before Federal bank insurance. A bank's failure means its customers simply lose their money. Period. That's why, as the bank of the United States shuts its doors for good on December 11, 1930, George Jealous is so desperate. The 61 year old's $1,000 life savings from his 40 years of work as a janitor was all in that bank. And he was only able to withdraw 200 before it folded. Utterly despondent, he hangs himself from a steam pipe in his apartment, leaving behind a simple note to his son reading, let my wife have all the money if she gets any. Goodbye, George. Be a good boy. While the bank of the United States does manage to pay out a significant percentage of deposits, George's heartbreaking tale is but one glimpse into the damage wrought upon its 400,000 account holders as a great deal of their combined $202,972,469 in deposits evaporate. For some, this bank failure, the first big bank failure, is the moment that the Depression becomes the Great Depression. By the end of 1930, the year has seen over 1,300 banks fail. And as 1931 begins, there isn't an end of this in sight. Increasingly, Americans are recognizing that this temporary economic downturn isn't so temporary after all. And as this reality sinks in, the nation continues to hope that their organizationally gifted president, the master of emergencies himself, the great humanitarian Herbert Hoover, can right the ship.
