Causes of the Great Depression and President Hoover's Response

Causes of the Great Depression:

A time of prosperous consumerism and social, artistic, and cultural dynamism– the “Roaring Twenties”– all came crashing down to concoct disaster. An amalgam of domestic and worldwide mishaps soon paved the road the deepest and longest-lasting economic downturn in the history of the Western industrialized world– the Great Depression.

Surrounded by a deceiving appearance of prosperity, the people of the United States blindly continued their practice of ruthless spending. While uneven distribution of wealth prevailed throughout the United States, people heavily trusted investing in stocks, and with the introduction of credits, Americans carried on the risky practice of buying on the margin, or buying stocks with loans from stockbrokers. This over-reliance backfired when a huge sell-off of stocks began with very few buyers, eventually leading to the infamous Black Tuesday, which marked the collapse of the stock market. 

This collapse in economy immediately created a financial panic all around the nation. Individual investors were greatly affected– margin buyers especially hit hard. Loaners unable to pay back their debt led to foreclosures of homes and farms. Several banks could not continue business with the prevalence of bank-runs and without their loans paid back, and thus were forced to close down, counting as many as 2294 banks failing by the end of 1931.

With the crash of the stock market, banks and investors were no longer capable of supporting industries with money to grow. People, many in the face of poverty, drastically cut back in their consumption of goods. And with this major drop in business, companies began laying off  their workers, causing a striking increase in the number of people unemployed and thrown into poverty-stricken “Hoovervilles” as hoboes.

The difficult times farmers had to endure during the 1920s only worsened with the rise of the Great Depression. The increase in number of unemployed and in poverty significantly reduced the Americans’ ability to buy food, many forced to simply go hungry. With very few people buying food products, overproduction thus sank farm prices. Soon, farms also began going bankrupt and suffering foreclosure.

The Great Depression seemed to sink into further chaos with the devastation of a long, severe drought lasting for years in the Great Plains region. Careless agricultural practices caused great dust storms to occur with stripped-away topsoil blowing across the land. People in the Dust Bowl– areas hardest hit by dust storms– were forced to flee the Plains. Without money, jobs, and now even their homes, as many as 2.5 million people had to leave the Great Plains, many heading West. 

---------------------------------------------------------------------------------------------------------

President Hoover's Response to the Great Depression:

Herbert Hoover, in office during the devastating times of the Great Depression, held his presidency with strong beliefs of the federal government’s minimal intervention in aiding the American citizens directly. Despite for several calls for more government assistance as the economy struck its low and people suffered from poverty, Hoover refused to fund welfare programs for the people. He believed that such aid would reduce the people’s incentives to work and thus destroy the American individuality and self-reliance, the key parts of his philosophy of “rugged individualism”.

President Hoover advocated his idea of the associative state, the voluntary partnership between business associations and the government. He believed that these voluntary actions of companies would make the American economy fairer and more efficient. He also greatly supported the formation of cooperatives in which organizations could work together for a common goal, and thus successfully increase their outcomes. 

Finding difficulties in a completely “hands-off” government, Hoover authorized the Reconstruction Finance Corporation (RFC), which gave a $2 billion loan to struggling banks, insurance companies, and other large institutions he saw as the foundations for rebuilding the economy. Individuals became increasingly discontented with Hoover, questioning his ideals to help banks and businesses, but not struggling individuals in need of more urgent help. The Smoot-Hawley Tariff Act, which raised tariffs on imported goods in order to urge Americans to purchase cheaper domestic goods gave way to disaster as world trade plunged. The Bonus March incident, in which violence broke out between unarmed veterans and armed soldiers also further damaged the president’s reputation.

---------------------------------------------------------------------------------------------------------

Video:

Crash Course: The Great Depression

---------------------------------------------------------------------------------------------------------

Bibliography:

Dust Bowl. Digital image. Mcclungsworld.com. N.p., n.d. Web. 10 Feb. 2014. <http://mcclungsworld.com/2010/05/20/the-dust-bowl/>.

Great Depression. Digital image. US-History.org. US History, n.d. Web. 10 Feb. 2014. <http://us-history.com/1920s-the-great-depression/>.

"The Great Depression." History.com. A&E Television Networks, 2009. Web. 09 Feb. 2014. <http://www.history.com/topics/great-depression>.

"The Great Depression." Ushistory.org. Independence Hall Association, n.d. Web. 10 Feb. 2014. <http://www.ushistory.org/us/48.asp>.

Green, John, narr. The Great Depression: Crash Course. Crash Course US History, 2013. Web. 5 Feb. 2014. <http://www.youtube.com/watch?v=GCQfMWAikyU>.

"Hoover's Efforts at Recovery." Boundless.com. Boundless, n.d. Web. 10 Feb. 2014. <https://www.boundless.com/u-s-history/from-the-new-era-to-the-great-depression-1920-1933/the-great-depression/hoover-s-efforts-at-recovery/>.

Hooverville. Digital image. Mayleengrace.com. N.p., n.d. Web. 10 Feb. 2014. <http://mayleengrace.weebly.com/hoovervilles.html>.

"Overview of the Great Depression." Digitalhistory.edu. N.p., n.d. Web. 10 Feb. 2014. <http://www.digitalhistory.uh.edu/era.cfm?eraid=14&smtid=1>.

"Table And Flow Chart Interpretation." ProProfs Quizmaker. The Gilder Lehrman Institute of American History, n.d. Web. 5 Feb. 2014. <http://www.proprofs.com/quiz-school/story.php?title=table-and-flow-chart-interpretation>.

Warren. Rail-Splitting. Digital image. Indiana.edu. The Trustees of Indiana University, n.d. Web. 10 Feb. 2014. <http://www.indiana.edu/~libsalc/cartoons/1932.html>.

Woodard, Dustin. The Great Stock Market Crash of 1929. Digital image. Globalresearch.ca. Global Research, n.d. Web. 10 Feb. 2014. <http://www.globalresearch.ca/is-another-depression-possible-a-comparison-of-the-great-depression-and-the-great-recession/26818>.