The impact of the Great Depression on American society, Hoover's response, and the 1932 election

What this dot point is asking

NESA expects you to integrate the impact of the Depression on American society with Hoover's response and the politics of the 1932 election. Strong answers integrate the scale of the slump, the human reality of Hoovervilles and the Dust Bowl, Hoover's actual policy record (more activist than his reputation), the limits of his response, and the political collapse of his presidency.

The answer

The impact on American society

The Depression was the deepest economic contraction in American history.

Output. Real GDP fell around 30 per cent from 1929 to 1933. Industrial production fell around 46 per cent. Investment collapsed from around 16 per cent of GDP to around 4 per cent.

Employment. Unemployment rose from around 3.2 per cent (1929) to around 25 per cent (1933, around 13 million workers). Around 50 per cent of Black workers in northern cities were unemployed. Underemployment (short hours, low pay) added millions more.

Prices. Wholesale prices fell around 33 per cent. The Consumer Price Index fell around 24 per cent from 1929 to 1933. Farm prices fell around 50 per cent. Wheat fell from 1.04 dollars a bushel (1929) to 0.38 dollars (1932). Cotton fell from 16 to 5 cents a pound.

Banking. Around 9,000 banks failed between 1930 and 1933. Money supply (M2) fell around 30 per cent. Around 9 million savings accounts were wiped out.

Foreclosure. Around 1,000 home foreclosures a day were recorded by 1932. Around 250,000 families lost their homes.

Hoovervilles. Shantytowns of unemployed Americans grew on the edges of every major city. The Central Park "Hooverville" in New York had around 200 residents at its peak. "Hoover blankets" (newspapers), "Hoover wagons" (cars pulled by horses), and "Hoover flags" (empty pockets) became sardonic shorthand.

The Dust Bowl. A series of severe droughts (1931 to 1939) combined with decades of over-ploughing of the Great Plains produced massive dust storms across Oklahoma, Texas, Kansas, Colorado, and New Mexico. "Black Sunday" (14 April 1935) was the worst single storm. Around 2.5 million Okies migrated west, mostly to California, the subject of Steinbeck's "The Grapes of Wrath" (1939) and Dorothea Lange's "Migrant Mother" (1936).

Hoover's philosophy

Hoover was a self-made Quaker engineer, head of relief in occupied Belgium in the First World War, and Commerce Secretary under Harding and Coolidge. He believed in "associationalism", in which government would coordinate but not coerce business and labour, and in "rugged individualism" rather than direct federal welfare.

He was constrained by Treasury Secretary Andrew Mellon's "liquidationism" ("liquidate labour, liquidate stocks, liquidate the farmers", 1931 advice to Hoover) and by his own commitment to a balanced federal budget.

Hoover's responses

Hoover went well beyond Coolidge's hands-off approach. The record matters because contemporary criticism that he "did nothing" was unfair.

Voluntary cooperation. The White House conferences of November 1929 secured pledges from major industrialists to maintain wages and from major unions to refrain from strikes. The pledges broke down by 1931.

Public works. Federal construction expanded under the Federal Building program, the Hoover Dam (begun 1931, completed 1936), and Bureau of Public Roads grants. Federal public works rose to around 700 million dollars a year.

The Reconstruction Finance Corporation (22 January 1932). Authorised to lend up to 2 billion dollars (later expanded to 3.8 billion) to banks, railroads, insurance companies, and after July 1932 to states for relief. The RFC would survive as Roosevelt's most important institutional inheritance.

The Federal Home Loan Bank Act (22 July 1932). Established 12 regional banks to lend to mortgage lenders.

The Glass-Steagall Act of 27 February 1932. Allowed government securities as collateral for Federal Reserve notes (not the better-known 1933 Glass-Steagall, which separated commercial and investment banking).

International debt. The Hoover Moratorium on intergovernmental debts (20 June 1931) suspended reparations and war debts for one year, an attempt to break the chain reaction running from Germany to American banks.

Where Hoover failed

Tariffs. The Hawley-Smoot Tariff (17 June 1930) raised average rates to around 60 per cent. Over 1,000 economists signed a public letter against it. World trade fell around 65 per cent between 1929 and 1934. Foreign retaliation hit American exports hard.

Taxes. The Revenue Act of 1932 (6 June 1932) raised income, estate, gift, and excise taxes in the middle of the slump, an attempt to balance the budget that further depressed demand.

Federal relief. Hoover insisted that direct federal welfare would destroy individual initiative. He vetoed Senator Robert Wagner's federal employment service bill (1931) and Senator Edward Costigan's relief bill (February 1932). He insisted federal funds go to state and local agencies, not directly to families. By 1932 around 11 million Americans were on inadequate state and private relief.

The Bonus Army. Around 17,000 First World War veterans and their families marched on Washington in May 1932 to demand early payment of the 1924 service bonus payable in 1945. They camped at the Anacostia Flats. The Senate rejected the early-payment bill on 17 June. On 28 July 1932 Hoover ordered the camp cleared. General Douglas MacArthur, with Majors Dwight Eisenhower and George Patton, used cavalry, infantry, and tanks; he then exceeded orders by burning the camp. Press images of regular soldiers attacking First World War veterans ended Hoover's re-election chances.

The 1932 election

The Democratic National Convention nominated Franklin Delano Roosevelt of New York on the fourth ballot (2 July 1932). Roosevelt broke convention and flew to Chicago to accept in person, promising "a new deal for the American people". Hoover ran on the Republican platform of constitutional restraint and an eventual recovery.

The result on 8 November 1932 was a landslide: Roosevelt 472 electoral votes to Hoover's 59. Roosevelt won around 57 per cent of the popular vote to Hoover's 40 per cent. Democrats took the Senate (59 to 36) and the House (313 to 117). The Republican Party lost its Civil-War-era hold on Black voters and its Progressive-era hold on the Midwest.

The four-month interregnum (the Twentieth Amendment moved the inauguration to 20 January from 1937; in 1933 inauguration was still 4 March) was the worst phase of the banking crisis. The Detroit banking holiday (14 February 1933) spread state by state. By 4 March every state had declared a banking holiday.

Historiography

Joan Hoff Wilson (Herbert Hoover, Forgotten Progressive, 1975) is the standard rehabilitative biography.

Albert U. Romasco (The Poverty of Abundance, 1965) was the first serious study of Hoover's response.

Eric Rauchway (Winter War, 2018) defends Roosevelt against Hoover revisionists.

Robert McElvaine (The Great Depression, 1984) is the standard narrative.

David Kennedy (Freedom from Fear, 1999) is the Pulitzer-winning synthesis.

Common exam traps

Treating Hoover as a do-nothing. The RFC, the public works program, and the Federal Home Loan Bank Act were federal interventions of unprecedented scale.

Forgetting the Bonus Army date. 28 July 1932, eight months before the election.

Treating Hawley-Smoot as a minor issue. It provoked retaliation and crashed world trade by around 65 per cent.

In one sentence

Herbert Hoover responded to the Depression with more federal activism (RFC of January 1932, public works at 700 million dollars, Federal Home Loan Banks of July 1932, Hoover Moratorium of June 1931) than any previous Republican, but his hostility to direct federal relief, the disastrous Hawley-Smoot Tariff of 17 June 1930, the deflationary Revenue Act of 6 June 1932, and the assault on the Bonus Army on 28 July 1932 left him broken in the 1932 election (Roosevelt 472 to 59 electoral votes), and historians from Hoff Wilson to Rauchway have argued about whether the rehabilitation is deserved.