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Hoover’s Rugged Individualism
Mrs. Post with adaptations from Scott Masters Powerpointpalooza.com
Election 1928
Herbert Hoover – R• Secretary of Commerce• Liked for Adminstrative
Skills & efficiency• Campaign Slogan:
– “The Poor House is vanishing from among us”
• Won 58% of popular vote
Alfred Smith – D• Progressive Style Leader• Combined with
Progressive Party• Campaign Slogan:
– “The Party of Progress and Thought”
• People didn’t like him because of his Catholic Faith
1920’s Booming EconomyCredit:• Many Americans bought on
“credit” living outside means in a “roaring lifestyle”
• Buy now, payback over time• Generated “false” prosperous
economy• 1929 purchases = 7 billion on
credit (six times higher than 1915)– What were people buying?
Cars, Radios, Kitchen Appliances
• Warning: “in economic downturn, such debt could cripple”
Playing the Market• Millions “played” in Stock Market, buying & selling for profit
– due to supply & demand theory• Bull = prices in upward trend (charging up, up, up)• Bear = prices in downward trend (falling down, down, down)• Buying on the Margin = buying stocks on credit with downpayment *****
– Investors only had to pay 10% of stock’s actual value at time of purchase• Bull Market = okay because you’d make money• Bear Market = have to sell/ lose money from purchase price and still owe!
• Stock Speculation– Buy/sell quickly to make a quick buck– Inflated real value of a company’s stock– False sense of security in the market
“Sooner or later a crash is coming, and it may be terrific [immense].”Roger Babson, stock analyst 9-1929
The Crash!
Black Thursday
October 24, 1929• Rising Interest Rates + Nervous Investors• Investors sell stocks• Stock Prices PLUNGE• Everyone’s selling• “Panic gripped Wall Street”• “It came with a speed and ferocity[cruelty] that
left men dazed. The bottom simply fell out of the market…” New York Times Reporter
Black Tuesday
October 29, 1929• 16million + shares dumped in one day• Prices sank (Supply & Demand)• Brokers called customers who bought on
“Margin”• By mid-November, $30 BILLION loss by
stockholders• “We have now passed the worst and …
shall rapidly recover.” – Pres. Hoover
Banking Woes
• Impact of crash felt by banks – Why?• Customers defaulted on loans• Banks closed with little cash reserves
(your money!)• Panic – customers rushed to banks to
withdraw life savings• 1930 –1932 = 5,000 banks closed• In 1930 a large NYC bank closed wiping
out 400,000 people’s money
Business Woes
• Consumers were buying on credit
• Margin Buying + The Crash + Bank Failures = 54,285 business close by 1932
• World trading at standstill due to countries with WWI debt
• Businesses close = Unemployment skyrockets
President Hoover Responds• Rugged Individualism:
– believed that the gov't should not play an active role in the economy
• persuaded bankers/business to follow his policy of VOLUNTARY NON - COERCIVE COOPERATION – where he gave tax breaks in return for
private sector economic investment
• organized some private relief agencies for the unemployed
• worked out a system with European powers that owed U.S. money as a result of WWI debts = HOOVER MORATORIUM – put a temporary stop to war debt &
reparations payments– Euro. countries were to purchase
American goods instead to stimulate American economy
• in early 1931 these measures appeared successful, but then......the TARIFF WARS
• SMOOT HAWLEY– Democrats in Congress passed a high
tariff to protect U.S. industry • hoped to stimulate purchasing of U.S.
goods
– this turned out to be a fatal error...
• Congress did not understand that the world had become a GLOBAL ECONOMY– in retaliation
• other countries passed high tariffs • no foreign markets purchased
American goods, • so U.S. productivity decreased even
more
• also in 1931, the Soviets flooded the world market with cheap wheat (1/2 U.S. price) in an attempt to get money to pay back Austrian banks– but price was too low and they couldn't
• this resulted in the BANKERS’ PANIC• Austrian banks borrowed from
German banks and appealed to the BANK OF INT'L SETTLEMENT – French denied– Austrian banks and loaning German
banks therefore were forced into bankruptcy
• b/c German banks had borrowed from Americans, ->U.S. banks began to go bankrupt
– wiping out life savings of thousands of Americans
• Hoover was increasingly unpopular, but he continued to try...
he persuaded Congress to establish the RECONSTRUCTION FINANCE CORPORATION– had power to make emergency loans
to banks
but it was too little too late…
• Hoover wouldn't involve himself in any programs of direct gov'tal aid to individuals – didn't want to erode Americans sense
of "RUGGED INDIVIDUALISM"
Bonus ArmyBonus Army
• people were frustrated - isolated protest movements – EX: Dairy farmers frustrated w/low price of milk refuse to sell
(dump it)– EX: WW1 Veterans (pensions discontinued by Congress)
march on Washington = BONUS MARCH (by BONUS ARMY)• they reached Washington by 1931,
– set up shantytowns = HOOVERVILLES – food scraps = HOOVER-MEALS– hitchhiking journeys = HOOVER RIDES)
• after one year they were forcibly dispersed by the Army (Generals MacArthur & Eisenhower)
