Herbert Hoover and the Great Depression. Disaster in the making. As early as 1. 92. Secretary of Commerce Herbert Hoover had warned President Coolidge that stock market speculation was getting out of hand. Yet in his final State of the Union Address, Coolidge saw no reason for alarm. In an article entitled “Everybody Ought to be Rich” Raskob declared, “Prosperity is in the nature of an endless chain and we can break it only by refusing to see what it is.” President- elect Hoover disagreed. Even before his inauguration he urged the Federal Reserve to halt “crazy and dangerous” gambling on Wall Street by increasing the discount rate the Fed charged banks for speculative loans. He asked magazines and newspapers to run stories warning of the dangers of rampant speculation. Once in the office, the new president ordered a reluctant Andrew Mellon, his holdover secretary of the treasury, to promote the purchase of bonds instead of stocks. He sent his friend Henry Robinson, a Los Angeles banker, to convey a cautionary message to the financiers of Wall Street — and received in return a long, scoffing memorandum from Thomas W. When the Federal Reserve Board that August did take steps to check the flow of speculative credit, New York bankers defied Washington, the National City Bank alone promising $1. An angry Hoover let the president of the New York Stock Exchange know that he was thinking of regulatory steps to curb stock manipulation and other excesses. Yet he undercut his own threat by placing ultimate responsibility for such measures on New York State’s new governor, Franklin D. Roosevelt. Presidents in 1. Wall Street, or even talk about the gyrating market for fear of inadvertently setting off a panic. Hoover had his own reasons for keeping quiet. His conscience was pained after a friend took his advice to buy an issue that later nosedived. In eighteen months, General Electric had tripled in value, reaching $3. Other blue chips, fueled by more than $8 billion in brokers’ loans, enjoyed similar rises. The last week of October, however, brought a terrible reckoning. On October 2. 4 alone, radio stocks lost 4. Montgomery Ward surrendered thirty- three points. Big bankers tried and failed to stem the dizzying decline in U. John Maynard Keynes, Economic Possibilities for our Grandchildren (1930)* I We are suffering just now from a bad attack of economic pessimism. 1.4 Herbert Hoover and the Great Depression. Provided by the Herbert Hoover National Library and Museum. The Great Depression of the 1930s is on peoples' minds these days. If you have family members who lived through it, you may hear their stories at the. The Great Depression was a severe worldwide economic depression that took place during the 1930s. The timing of the Great Depression varied across nations; however. S. Steel, a bellwether stock. A day of reckoning. On Black Tuesday, the twenty- ninth, the market collapsed. In the words of a gray haired Stock Exchange guard, “They roared like a lot of lions and tigers. They hollered and screamed, they clawed at one another collars. It was like a bunch of crazy men. Every once in a while, when Radio or Steel or Auburn would take another tumble, you’d see some poor devil collapse and fall to the floor.”In a single day, sixteen million shares were traded — a record — and thirty billion dollars vanished into thin air. Westinghouse lost two thirds of its September value. Du. Pont dropped seventy points. The “Era of Get Rich Quick” was over. Jack Dempsey, America’s first millionaire athlete, lost $3 million. Cynical New York hotel clerks asked incoming guests, “You want a room for sleeping or jumping?”Refusing to accept the “natural” economic cycle in which a market crash was followed by cuts in business investment, production and wages, Hoover summoned industrialists to the White House on November 2. Henry Ford even agreed to increase workers’ daily pay from six to seven dollars.
From the nation’s utilities, Hoover won commitments of $1. Railroad executives made a similar pledge. Organized labor agreed to withdraw its latest wage demands. The president ordered federal departments to speed up construction projects. He contacted all forty- eight state governors to make a similar appeal for expanded public works. He went to Congress with a $1. In December of 1. Hoover’s friend Julius Barnes of the U. S. Chamber of Commerce presided over the first meeting of the National Business Survey Conference, a task force of four hundred leading businessmen designated to enforce the voluntary agreements. Looking back at the year, the New York Times judged Commander Richard Byrd’s expedition to the South Pole — not the Wall Street crash — the biggest news story of 1. Praise for the President’s intervention was widespread. In June, a delegation of bishops and bankers called at the White House to warn of spreading joblessness. Hoover reminded them of his successful conferences with business and labor, and the explosion of government activity and public works designed to alleviate suffering. When the economy got overheated and speculation ran rampant, a crash was unavoidable. In den Entstehungszusammenhang der Weltwirtschaftskrise geh Under such circumstances the best government could do was to do nothing that might make a bad thing worse. Then, in 1. 92. 1, a post war slump led President Warren Harding to name Hoover as chairman of a special conference to deal with unemployment. It simply cannot be if our moral and economic system is to survive. This view explains President Hoover’s vigorous counterattack in the wake of Wall Street’s initial tumble. Not all of his advisers were so willing to abandon Boom and Bust theories. As late as 1. 93. Secretary of the Treasury Andrew Mellon held that a panic might not be such a bad thing. People will work harder, live a moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people.” Mellon lost out, however, and was packed off to the Court of Saint James. Why the “Great” Depression? Economists are still divided about what caused the Great Depression, and what turned a relatively mild downturn into a decade long nightmare. Hoover himself emphasized the dislocations brought on by World War I, the rickety structure of American banking, excessive stock speculation and Congress’ refusal to act on many of his proposals. The president’s critics argued that in approving the Smoot- Hawley Tariff in the spring of 1. U. S. In truth Hoover’s celebration of technology failed to anticipate the end of a postwar building boom, or a glut of 2. Agriculture, mired in depression for much of the 1. At the same time, the average worker’s wages of $1,5. By 1. 92. 9 production was outstripping demand. The United States had too many banks, and too many of them played the stock market with depositors’ funds, or speculated in their own stocks. Only a third or so belonged to the Federal Reserve System on which Hoover placed such reliance. In addition, government had yet to devise insurance for the jobless or income maintenance for the destitute. When unemployment resulted, buying power vanished overnight. Since most people were carrying a heavy debt load even before the crash, the onset of recession in the spring of 1. Together government and business actually spent more in the first half of 1. Yet frightened consumers cut back their expenditures by ten percent. A severe drought ravaged the agricultural heartland beginning in the summer of 1. Foreign banks went under, draining U. S. The combination of these factors caused a downward spiral, as earning fell, domestic banks collapsed, and mortgages were called in. Hoover’s hold the line policy in wages lasted little more than a year. Unemployment soared from five million in 1. A sharp recession had become the Great Depression.
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