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THE STOCK MARKET CRASH OF 1929

On Black Tuesday (1929) in October 1929, the stock market crashed. Stocks kept sliding until they reached a point in 1932 when they were down 89 percent, lower than they'd been since the 1800s. Prudent investors who bought slowly over their lifetime would have been protected from the worst market fluctuations by the law of averages. However, anyone who bought stocks only at the highest and therefore worst time in mid-1929 and held on to them saw most of his adult life pass by before finally breaking even in 1954.

The Smoot-Hawley Tariff

Responding to business pressure, Hoover did exactly the wrong thing by signing the dangerous Smoot-Hawley Tariff (1930). A world economy teetering on the brink of economic collapse certainly didn't need the highest peacetime tariff in U.S. history . The rest of the world viewed the tariff as a sign that they had to protect themselves too. Economic walls went up all over the world.

Tariffs certainly didn't help the United States get over the crisis that started with the Wall Street meltdown in 1929. Unemployment was at 9 percent in 1930 when the Smoot-Hawley tariff passed, but it jumped to 16 percent the next year and 25 percent two years after that.

The millionaires' dole

As people's jobs evaporated and families started to go hungry, Hoover's response was to assist businesses so that their wealth would trickle down to the poor.

After the Depression had gone on for three years, Congress finally passed the Reconstruction Finance Corporation (RFC) Act (1932). The RFC lent money to businesses, agricultural organizations, and local governments. Many called it the millionaires' dole.

Actually, Hoover had come a long way from the take-care-of-yourself position of earlier 1920s Republicans, including himself. Realizing that they would have to do something for worried laborers whose union membership had gone down by a third in the union-busting 1920s, Congress passed the Norris-La Guardia Anti-Injunction Act (1932), which forbade court interference in peaceful strikes and stopped management from forcing workers to sign anti-union pledges.

Example

Question: What national program did Herbert Hoover establish to help fight the Depression?

Answer: Hoover established the Reconstruction Finance Corporation (RFC) at the end of his term in 1932 to loan money to businesses, organizations, and state and local governments.

A march on Washington by 20,000 hungry veterans called the Bonus Expeditionary Force (1932) asked for the bonus ($15,000 in modern money) promised them in the Adjusted Compensation Act (1924) when they really needed it, which was immediately. General Douglas MacArthur broke up the march with force, but using force on hungry veterans didn't make Hoover any more popular.

Meanwhile, Japan chose the time of economic troubles in the U.S. to take over Manchuria. The United States did nothing but shake its finger.

While his own country was in trouble, Hoover did manage to make some conciliatory gestures in Latin America that later formed the basis of the Good Neighbor Policy (1933) under Franklin Roosevelt. At home under Hoover, the situation just kept getting worse.

Example

Question: What did the government do when the Bonus Expeditionary Force marched on Washington during the Great Depression?

Answer: The government used the army to break up the march and send the marchers home.

The height of the Depression: 1932

By 1932, one in four Americans — more than 11 million people — had no job. Most people didn't want to hear any more Republican philosophy about how it was good for the poor to have to struggle on their own. As opponents pointed out, Hoover's RFC could pay to feed a pig but not a human child.

Shantytowns of displaced people called Hoovervilles sprung up near big cities. The Depression was cause for a great internal migration of transient people traveling from town to town looking for work; 2,000 applicants would show up for a single job interview.

Example

Question: What was the impact of the Depression on where people lived?

Answer: Transient people travelled from town to town in a great internal migration around the United States looking for work.

 
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