History That Doesn’t Suck: Episode 172 Summary

Title: Breadlines, Bank Failures, & the Bonus Army: Hoover & the Early Great Depression
Host: Prof. Greg Jackson
Release Date: December 16, 2024

Introduction

In Episode 172 of History That Doesn’t Suck, Professor Greg Jackson delves into the tumultuous early years of the Great Depression, focusing on President Herbert Hoover’s responses to the economic crisis. This episode meticulously explores Hoover’s strategies, the mounting economic despair, and pivotal events that would define his presidency.

Early Hoover Efforts to Combat the Depression

November 19, 1929 – Just weeks after the infamous Black Tuesday stock market crash, President Herbert Hoover convenes a meeting with leading railroad industry magnates in the White House Cabinet Room. Contrary to typical cabinet meetings, Hoover brings together industry titans to seek voluntary cooperation in mitigating the economic downturn.

Hoover, often referred to as the "Master of Emergencies," pressures the railroad leaders to invest $1 billion in construction projects to spur job creation. Professor Jackson notes, “We don’t have a play by play, but Burke gets after these railway men” (13:45).

Voluntary Agreements with Businesses

Hoover’s strategy hinges on voluntaryism, encouraging businesses to avoid layoffs and wage cuts. On November 20, 1929, key figures like Henry Ford and Julius Rosenwald agree to Hoover’s terms, contingent on labor cooperation. Jackson highlights Ford’s enthusiasm: “He’ll even give raises” (17:30).

State of the Union Address – December 3, 1929

In the State of the Union address, read by congressional clerk William Tyler Page, Hoover outlines his approach to the economic crisis. He emphasizes:

• Economic Solutions: “Determine the facts, develop the relative importance to be assigned to such facts, to formulate a common judgment upon them” (25:10).
• Tax Cuts: Proposes lowering income and corporate taxes by 1%, despite a $160 million shortfall.

Hoover assures Congress of his confidence in the Federal Reserve and the success of voluntary measures, positioning the downturn as a manageable depression rather than a catastrophic panic.

Worsening Economic Conditions in 1930

Despite Hoover’s initiatives, economic conditions deteriorate. Unemployment rises, and breadlines become a stark symbol of widespread despair.

Breadlines and Charitable Efforts

Marion Spohr, known as the "Lady Bountiful of the Bowery," exemplifies grassroots responses to hunger. On February 24, 1930, Spohr distributes thousands of breadline vouchers in New York City, illustrating the growing need for public assistance. Jackson recounts Spohr’s dedication: “The breadline will go on just the same” (38:50).

Other charitable leaders, including Reverend Randolph Ray and the Salvation Army, expand their efforts, yet the scale of need grows exponentially.

Smoot-Hawley Tariff

In June 1930, Hoover signs the Smoot-Hawley Tariff Act, aiming to protect American farmers and industries by raising tariffs on 2,000 imported goods. Despite overwhelming opposition from economists—over 1,028 signed an open letter urging Hoover to veto the bill—Hoover persists, believing it necessary for economic stabilization. Jackson explains, “The Tariff Act of 1930... will number among those aspects of the Great Depression that future historians and economists will long debate” (48:20).

The tariff prompts retaliatory actions from international trading partners, exacerbating the global economic decline.

Bank Failures and Increasing Panic

December 10, 1930 – The Bank of the United States in the Bronx becomes a focal point of panic banking. A merchant’s refusal to cash out leads to a massive bank run, with 20,000 people attempting to withdraw their savings. Jackson narrates the chaos: “Bodies choke off the entrances as unmanageable lines pour inside” (53:15).

The failure of Bank of the United States marks a turning point, signaling the onset of widespread bank collapses. By the end of 1930, over 1,300 banks have failed, leading to significant loss of public confidence and further economic deterioration.

Impact on the American Public

The human cost of these failures is illustrated by George Jealous, who loses his life savings and tragically ends his life. Jackson poignantly states, “George's heartbreaking tale is but one glimpse into the damage wrought upon its 400,000 account holders” (60:50).

International Impact and the Gold Standard Crisis

The Great Depression's reach extends beyond America’s borders, triggering a domino effect across global economies.

Europe’s Financial Troubles

Hoover’s earlier efforts, including the Dawes Plan and the Young Plan, had intertwined the U.S. economy with Europe’s. However, Austrian and German bank failures in 1931 amplify financial instability, prompting fears of communist and fascist uprisings in Germany.

Britain Abandons the Gold Standard

On September 21, 1931, Britain exits the gold standard, followed by 25 other nations. This undermines global financial stability and forces the U.S. Federal Reserve to tighten credit by raising discount rates from 1.5% to 3.5%, as Hoover remains steadfast in protecting the gold standard. Jackson observes, “Tightening credit is the exact opposite of what a nation’s central banking system should do in the midst of a depression” (67:30).

Hoover’s Continued Policies and Responses

Despite mounting crises, Hoover clings to his philosophy of limited government intervention.

Reorganization into the Reconstruction Finance Corporation (RFC)

In January 1932, Hoover establishes the RFC, providing loans to financial institutions. Historian Charles Rapalai describes the RFC as Hoover’s “complete capitulation,” yet it signifies a shift from his initial reliance on volunteerism (75:40). The RFC later plays a foundational role in Franklin D. Roosevelt’s New Deal programs.

Increased Taxation and Public Works

To balance the budget, Hoover signs the Banking Act of 1932 (First Glass-Steagall Act) and raises taxes, further stifling economic recovery. Public works projects begin, such as the Colorado River dam, but these efforts are too limited to counteract the widespread unemployment and economic decline.

The Bonus Army March

Origins of the Bonus Act

The 1924 World War Adjusted Compensation Act promised veterans bonuses set for 1945. Facing dire economic conditions, veterans seek early payment, leading to the formation of the Bonus Expeditionary Force.

The March and Eviction

In 1932, thousands of veterans march to Washington, D.C., demanding immediate bonus payments. Hoover, unwilling to fulfill the promises due to budget constraints, orders the military to forcibly remove the veterans.

On July 28, 1932, General Douglas MacArthur leads troops to evict the Bonus Army. Jackson recounts the violent clash: “Soldiers hurl gas grenades… tanks roll forward and shacks are set ablaze” (62:50). The brutal suppression, resulting in hospitalizations and deaths, severely damages Hoover’s public image.

Impact on Hoover’s Reputation

The Bonus Army incident is a public relations catastrophe. Newspapers like the Washington Daily News condemn the government’s actions: “What a pitiful spectacle is that of the great American government… chasing unarmed men, women and children with army tanks” (65:00). This event significantly erodes Hoover’s support, contributing to his landslide loss in the 1932 election.

Conclusion and Hoover's Legacy

By the end of 1931, the Great Depression has deepened, with over 8 million unemployed and widespread economic hardship. Hoover’s adherence to voluntaryism, feeing percentage tax increases, and reluctance to embrace direct federal intervention are widely criticized.

Historian David M. Kennedy asserts, “Hoover was no mossback conservative… he had supported labor, urged closer business-government cooperation, and proposed a multi-billion dollar federal public works fund.” However, these efforts are overshadowed by the relentless economic downturn and Hoover’s inability to effectively mobilize comprehensive federal relief.

As the nation turns to Franklin D. Roosevelt, who promises a new approach through the New Deal, Hoover’s legacy is a complex blend of early activism and missed opportunities. Jackson emphasizes, “While historian William Lichtenberg is quick to remind us that Bert was quite loath to give up on volunteerism… Hoover intervened in the economy to an unprecedented degree for a president up to his time.”

Ultimately, Hoover’s presidency serves as a cautionary tale of leadership under crisis, highlighting the limitations of voluntaryism and the imperative for decisive government action in the face of widespread economic catastrophe.

Notable Quotes

• Andrew Mellon: “Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate it will purge the rottenness out of the system.” (05:30)

• William Doak: “[…] instructing agents to incentivize immigrants to leave the country on their own.” (58:20)

• General Douglas MacArthur: “This command has been called upon to clear those properties. You will use such force as is necessary to accomplish your mission.” (65:50)

Final Thoughts

Episode 172 provides a comprehensive exploration of Herbert Hoover’s early responses to the Great Depression, illustrating the complexities and challenges faced by his administration. Through detailed narratives and poignant quotes, Professor Greg Jackson paints a vivid picture of a presidency struggling to navigate unprecedented economic turmoil, setting the stage for the transformative policies of the New Deal era.