Crash, Depression & Response
KEY THEMES & ISSUES
1. Causes of the Crash & Depression
fiscal problems
structural problems
international factors
2. Symptoms of the Depression
3. Hoover’s response
The Wall Street Crash
Black Tuesday, 29 October 1929
End of the Speculation “Boom”
Roots of Crash in 1920s ‘Boom,’ 1
Fiscal Problems
Uneven distribution of 1920s’ ‘prosperity’
Andrew Mellon’s tax cuts for rich
Over-reliance on Credit
Inadequate regulation of banks & stock exchange
Federal Reserve Board
Irresponsible, illegal, & unregulated speculators
Florida land boom & bust
Roots of Crash in 1920s ‘Boom’, 2
Structural Problems
Overproduction
Agricultural Distress
Transitional Moment in US Economy
Relative Decline of Old Heavy Industries
New consumer industries relatively underdeveloped
International Factors
1920s: US is creditor nation, but Europe can’t repay debt
Trade with Europe is precarious
Crash ruins European Economies
Dawes Plan, 1924
Young Plan, 1929
US Restrictive Tariffs/Protectionism
Fordney-McCumber Tariff, 1922
Hawley-Smoot Tariff, 1928
Signs of the Depression
Bank failures
Deeper agriculture crisis
Suicides
Migration to find work
Songs of the Depression
Woodie Guthrie, “Washington Talkin’ Blues”
“The dust came on, & the price went down, so I didn’t have the money when the bank came around…”
“Good land, you can grow anything you plant if you can get the moisture.”
“Went looking for a job, but the man said ‘no’ so I hit the skids on the old skid row”
“Been to Arizona, been to California too, found the people was plenty but the jobs are few…ain’t no money changing hands, just people changing places.”
Herbert Hoover
Herbert Hoover
“The Great Engineer”
Progressive Credentials
1915: Belgian Relief Operation
1920s: Urges FRB to tighten up fiscal/stock market regulations
Post-1927 Mississippi Flood: Agricultural Relief Program; Federal Farm Board
Hoover’s Response, 1
Hoover is traditionally vilified for a ‘do-nothing’ attitude in the face of hardship of depression
The Bonus Marchers, 1932
Initially reluctant to intervene because:
Believed depression would be short
Believed economy would correct itself
Preferred industry “agreements” to govt. regulations
Reluctant to abandon conventional laissez-faire wisdoms on the economy. Republican power had rested on leaving business alone
Hoover’s Response, 2
1930-2: Hoover increases government intervention
Govt. buys wheat & cotton to raise farm prices
1931: National Credit Corporation to bolster banks
1932: Reconstruction Finance Corporation to help firms in trouble
1930-2: Spends $3bn on public works to create employment
FDR criticized this ‘deficit spending’ in 1932 campaign
Conclusions
1. The seeds of the Crash and the depression which followed were sown in the years of ‘boom’.
2. A mixture of immediate local causes, international factors & deeper structural problems in the US economy combined to create the depression.
3. Herbert Hoover may have been unjustly treated by many historians for his handling of the crisis.
4 Hoover did manage to break – albeit tentatively and reluctantly – with the laissez-faire tradition of non-intervention and thereby set some of the precedents associated with Roosevelt’s New Deal.