History That Doesn't Suck - 172: Breadlines, Bank Failures, & the Bonus Army: Hoover & the Early Great Depression
Episode Date: December 16, 2024"Too much praise cannot be given to the President for the prompt and resolute and skillful way in which he has set about reassuring the country after the financial collapse.” This is the story of... Herbert Hoover’s facing the early years of the Great Depression. Just after the stock market crash of 1929, people aren’t expecting the worst. Most, including the experts, believe that this little downturn will blow over with time, just like past economic troubles. Avoiding the word “panic,” President Herbert Hoover comes up with a new term meant to describe how minor this downturn will be. He calls it a “depression.” He also pushes volunteerism. Congress cuts taxes. The Fed cuts the discount rate. Americans feel they are in good hands. But national productivity keeps going down. Unemployment keeps going up. Breadlines are getting longer and a drought has hit the heartland. Then major banks start going under, both in the US and abroad. Britain goes off the gold standard. As “Hoovervilles” spread and Great War vets march to DC, Bert Hoover—the famous “Master of Emergencies”—finds himself facing an economic challenge unlike any ever faced by a president. ____ Connect with us on HTDSpodcast.com and go deep into episode bibliographies and book recommendations join discussions in our Facebook community get news and discounts from The HTDS Gazette come see a live show get HTDS merch or become an HTDS premium member for bonus episodes and other perks. HTDS is part of the Airwave Media Network. Interested in advertising on the History That Doesn't Suck? Email us at advertising@airwavemedia.com Learn more about your ad choices. Visit megaphone.fm/adchoices
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The Civil War and Reconstruction was a pivotal era in American history.
When a war was fought to save the Union and to free the slaves.
And when the work to rebuild the nation after that war was over
turned into a struggle to guarantee liberty and justice for all Americans.
I'm Tracy. And I'm Rich.
And we want to invite you to join us as we take an in-depth look at this pivotal era in American history.
Look for the Civil War and Reconstruction wherever you find your podcasts.
Welcome to History That Doesn't Suck. I'm your professor Greg Jackson and as in the classroom, my goal here is to make rigorously researched history come to life as your storyteller.
Each episode is the result of laborious research with no agenda other than making the past
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It's Tuesday, November 19, 1929, exactly three weeks since the New York Stock Exchange's
crash known as Black Tuesday, and President Herbert Hoover is entering the
cabinet room at the White House.
He takes his seat at the head of a long table as others follow.
But the gents gathering here aren't Burt's presidential cabinet.
They're titans of the nation's railroad industry here at the behest of the president.
Let me explain as they get seated and situated.
While the stock market has continued to go down since its recent crash, no one realizes
what economic miseries lie ahead.
Most assume it's just the usual bust and boom, an unfortunate but normal economic panic.
This includes Treasury Secretary Andrew Mellon, who advises the president to keep government
out of the picture and let things run its course. To quote Andrew, liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate.
It will purge the rottenness out of the system. High costs of living and high living will come
down. People will work harder, live a more moral life. Values will be adjusted, and enterprising
people will pick up the wrecks from less competent people." Now, the president will know in his
later writings that Andrew Mellon is not heartless. Rather, this entirely hands-off
thinking reflects his age as the Septuagenarian secretary goes on to
explain that this is how previous presidents have acted, or not acted, in
what he's personally seen since his early adulthood
in the 1870s.
But while this might have worked for Ulysses S. Grant in Grover, Cleveland, Burt, who spent
the last two weeks studying previous panics, believes that won't fly in the modern nation's
more complex, interconnected, and no longer majority agricultural economy.
As such, Burt's holding meetings, or conferences as he
calls them, with movers and shakers in various industries to ask them to step
up to the plate and voluntarily do right. Ah, and this process starts with these
railway leaders. So, back to this conference. We don't have a play-by-play,
but Burt gets after these railwaymen.
He hounds them, to borrow a phrase from the Stout president's future biographer, Kenneth
White, getting them to agree to spend $1 billion on upgrading construction projects over the
next year.
Wow, talk about job creation.
The New York Times calls this heartening information as it sings Bert's praise.
And Bert Hoover, or the master of emergencies as he's also known, isn't done.
Later that afternoon, he meets with members of the Federal Reserve's Board of Governors.
They hear the President's concerns and like the New York Reserve Bank, which lowered its
discount rate from 5 to 4.5 percent last week, the other Reserve
Banks will lower their rates to make credit flow.
The next day, November 20th, Burt meets with the nation's most influential business leaders.
Car manufacturer Henry Ford, Sears Roebuck's Julius Rosenwald, General Electric's Owen
Young and others.
Burt urges them to remember the people that this is a quote-unquote human problem, and
offers a deal.
If they'll avoid layoffs and wage cuts, he'll get Labour not to strike.
They aren't all as enthusiastic as Henry Ford, who proclaims that he'll even give
raises, but they agree, contingent on Labour going for it.
No problem.
The following day, November 21st, Burt gets William Green of the American Federation of
Labor and other union leaders to say yes.
So no layoffs, no cut wages, and no strikes.
Meanwhile, Burt's creating the Volunteerism Assisting National Business Survey Conference,
getting the newly created Federal Farm Board to maintain crop prices, coaxing
state and municipal leaders to tackle relief efforts and increase public works programs,
and convincing the National Electric Light Association to spend $100 million on projects.
That's our great humanitarian.
The president's also trying to keep things calm by avoiding the word panic.
Instead, he's calling this economic downturn
a simple depression. Huh. We'll see how that term ages. But right now, it seems Burt's
on a roll. And as the month ends, he has the opportunity to show leadership with the State
of the Union Address. Let's see how it goes.
It's the afternoon of December 3rd, 1929.
We're in the U.S. Capitol's House chamber, and Congressional Clerk William Tyler Page
is approaching the dais.
Yes, a clerk.
While Woodrow Wilson restored the tradition of the president personally delivering an
annual address to Congress, shy Herbert Hoover prefers the old method of a clerk reading
it.
With another in the Senate chamber reading to that august body, William now faces the
71st Congress's representatives.
He reads,
The problems with which we are confronted are the problems of growth and of progress.
In their solution, we have to determine the facts, to develop the relative importance
to be assigned to such facts, to formulate a common judgment upon them, and to realize
solutions in a spirit of conciliation.
Nice positive framing, Bert.
William reads the President's thoughts on foreign affairs.
His recommendation to trim the military's budget then comes to a subject that the newspapers
will really pick up on.
A tax cut.
The president wants Congress to lower income and corporate taxes by 1% each,
even though it will cost the federal government $160 million.
Coming to what he calls the general economic situation,
Burt addresses the wave of uncontrolled speculation that led to the stock market crash, but assures
Congress that this economic downturn will be a smoother ride than previous ones.
Burt has full confidence in the Federal Reserve system and the voluntary deals he's been
putting together.
Our faithful clerk reads out the President's words,
The sudden threat of unemployment and especially the recollection of the economic consequences
of previous crashes under a much less secured financial system, created unwarranted pessimism
and fear.
I have, therefore, instituted systematic voluntary measures of cooperation with the business
institutions and with state and municipal authorities to make certain that fundamental
businesses of the country
shall continue as usual, that wages and therefore consuming power shall not be reduced, and
that a special effort shall be made to expand construction work in order to assist in equalizing
other deficits in employment."
Yes, the President is confident in the strength of these voluntary measures.
If at moments like this, the Republican representatives applaud, the Democrats don't.
Stronger enforcement of prohibition, the post office budget, the development of highways,
Burt's address tackles these and more, including a reiteration of his interest in a tariff
that he expects will protect American farmers.
But will these endeavors, particularly these voluntary measures for which he's currently
receiving so much praise, lift the nation from this depression?
Only time will tell. Welcome to History That Doesn't Suck.
I'm your professor, Greg Jackson, and I'd like to tell you a story. I know, it sounds like Herbert the Master of Emergencies Hoover has this economic downturn,
this depression, in the bag.
Yet, as I trust you know, but spoiler alert if not, the Depression will only get worse
and come to define Burt's one-term presidency.
That tragic path is today's story.
We'll start where we just left off, late 1929, with the hopeful nation looking to their
famous for disaster relief president.
Entering 1930, we'll find B Burke continues to encourage volunteerism along the lines
of what we heard about in this episode's opening and see him face a nasty flood as
well as sign the protective Smoot-Hawley tariff into law.
Meanwhile, the bread lines keep growing and before the year's end, a major bank collapses,
the not-a-government institution despite its name, Bank of the United States.
Entering 1931, we'll find that Americans and President Herbert Hoover are all starting
to realize that this isn't a typical economic downturn.
We'll listen to Bert continue encouraging the nation's volunteerism with an inspiring
speech at Valley Forge, but also see the Great Depression take a nasty turn on the global
level as banks fall like dominoes in Europe.
As these failures lead Great Britain to give up the gold standard, Bert will follow the
conventional wisdom of the day and do what he must to protect America's gold standard
and gold supply.
By 1932, we'll find that Bert is trying new programs, even some that require making space
for the federal government in the everyday American's life, like the Reconstruction
Finance Corporation.
But with unemployment through the roof, Americans living in shanty towns dubbed Hooverfills,
and Great War veterans marching and camping in Washington D.C. to demand their long promise
but still not-do bonuses be paid now, can Burt keep the confidence of the American people?
Or will his use of General Douglas MacArthur and the US Army to disperse these veterans prove a death blow to the out of step on prohibition
president's chances of reelection? So very much to find out.
Oh, and one final note. This episode uses a number of economic terms defined in episode
170, like the Federal Reserve System, discount rate, securities, and more. So if you haven't heard that episode, you might want to start there.
And with that, let's continue the tale of Herbert the Great Humanitarian Hoover's presidency
at the start of the Great Depression.
Here we go.
Quick, decisive, hitting the books to understand previous panics, or depressions to use the
new term, and how to confront them.
Yes, President Herbert Hoover, the man who fed the Belgians during the war, the Russians
after and handled the great Mississippi flood of 1927, sure seems to be living up to his
nicknames as the great engineer, the great humanitarian, and the master of emergencies
in the immediate aftermath of the stock market crash of October 1929.
As Will Rogers once said,
When a man is sick he calls a doctor, but when the United States of America is sick, they call for Herbert Hoover.
Or better still, it's as the New York Times puts it on December 1st, 1929, just two days before the State of the Union that we just attended.
Quote, too much praise cannot be given to the president for the prompt and resolute and skillful
way in which he has set about reassuring the country after the financial collapse. No one in
his place could have done more. Very few of his predecessors could have done as much. Close quote.
Now, this same New York Times article also points out that no one should expect this
downward economic turn to reverse overnight.
To quote it again, Hoover himself would be the first to say that it should not create
false hopes.
It will be some time before the projected outlays by great corporations can be made
concrete in actual employment." Close quote.
Sure.
I mean, all the greatest minds know this is merely a run-of-the-mill panic, but even those
have to run their course.
But as December passes and 1929 fades into 1930, unemployment isn't leveling off.
It's going up.
And in New York City, one charitable woman is noticing an uptick in those seeking her
assistance. It's a chilly winter afternoon just before 4 30 on February 24th, 1930. 51-year-old
Michigan-born Miss Marion Spore pushes aside her wealth of brown curls as she steps out of her
chauffeured car and onto the snow and slush of First Street between Second Avenue and the Bowery in New York City.
She walks toward her usual locale, a small cul-de-sac called Extra Place, and in doing
so passes hundreds of men in a line that wraps up and down the street and much of the block,
even parting for traffic near the corner of 1st Street and 2nd Avenue.
Some of these men, jobless, homeless, perhaps disabled but invariably hungry, have been
standing here, shivering in the cold winter's wind for more than six hours.
They're here to see Marion, or as they and the rest of New York call her, the Lady Bountiful
of the Bowery.
Once situated in her usual spot, Sergeant David Garrity and nine patrolmen help Marion distribute
tickets. Each one is redeemable for a bowl of stew, a slice of bread, and a cup of coffee
at the YMCA at 22 East 3rd Street. These tickets are valued at about a nickel apiece and Marion,
a former dentist turned artist,-artist, famous for
supposedly channeling dead artists in her own surrealist works, is handing out roughly
$700 worth of these breadline vouchers.
She also distributes colored tickets for anyone in need of shoes or medical attention.
But as the men come forward, the curly-haired brunette artist is likely noticing some faces
she hasn't previously seen
in her three years of distributing these tickets twice a week.
In the weeks ahead, the New York Times will report that bread lines, like Marion's, are
increasingly filled with men not only dressed in Army overcoats and ADP jackets, but suits,
ties, and white collars.
Don't bother asking anyone what brings them here today.
They'll all tell you the
same thing. I'm out of work. The needs of this crowd aren't just food though. For these extra
cases, as Marion calls them, she uses her office at 24 East 3rd Street. One is a French woman who
has only a quarter to her name but must pay $30 in rent due today.
Marion sends her away with $50. She then pays the bus fare for a man, his wife, and two children to get to Atlantic City where he has a job lined up. Marion also pays the full $75 for a man to
replace his crude wooden leg with a proper prosthetic. When asked by a New York Times reporter about her future plans, she states simply, the bread line will go on just the same.
Our Lady Bountiful of the Bowery, Marion Spore, is not the only one working to help the ever-growing
and even necktie-wearing jobless population of New York City. The following month, March
1930, Reverend Dr. Randolph Ray, director of the Church of
the Transfiguration, announces a bread line to feed 1,000 mouths daily.
It's the third time his church has done this, the last being the Panic of 1907 and
before that, during the Civil War.
Lieutenant Colonel Wallace Winchell of the Salvation Army reports that they're not
only busy with meals, but have filled all 611 rooms of the Bowery Hotel with destitute people.
In fact, there are times when they even pack the corridors and lounging rooms with 400
more who need to escape the cold winter's night.
The same is true for Ms. Grace Swan of the St. Barnabas House on Mulberry Street.
Though normally intended strictly for destitute women and children, Ms. Grace has found herself
in recent months opening her doors to families of the unemployed.
And of course, William Randolph Hearst, who's never wanted to miss the chance to get his
name in his own newspapers, also operates a charity breadline.
He has two trucks in the middle of Times Square distributing soup out of cauldrons from morning
until night under massive cleed lights illuminating the charity.
Nor are the bread lines in Needy just a big apple thing.
It's like this across the nation.
For instance, an opportunity for the unemployed to chop wood in exchange
for groceries in Boston draws a crowd of 600.
Yet despite these and other concerning developments across the nation,
it's important for us to remember that at this point, most of the nation's supposedly informed, as historian
John Garrity puts it, remain convinced that this is a typical panic.
Indeed, that same March, 36 states report unemployment at either normal rates, moderately
up or even descending.
That June, President Herbert Hoover tells a group of clergymen asking him to expand
public works projects that, quote, you have come 60 days too late.
The depression is over, close quote.
Meanwhile, Congress has one of Burt's pre-stock market crash economic goals ready for a signature,
the Smoot-Hawley Tariff. Sponsored by Senator Reed Smoot and Representative Willis Hawley, this tariff isn't actually
what the president had in mind.
See, Burt wants to help the American farmer.
He pushed for last year's Agricultural Marketing Act, which created the federal farm board
to help stabilize agriculture markets by purchasing surplus grain and cotton.
And in that same spirit, he's pushed for an agricultural tariff that, in theory, will
protect American farmers from foreign imports.
But after all the horse trading required to make the Smoot-Hawley tariff happen, it's
now raising rates on 2,000 items, including a slew of manufactured goods.
A lot of economists oppose the tariff.
At least 1,028 to be precise, and they sign an open letter to the president calling for
him to veto it.
They note that tariffs are already high and fear this will only anger international trading
partners.
Hmm, that wouldn't be great considering how important international trade is now that
the United States produces 40% of the world's manufactured goods.
House of Morgan's senior partner, Thomas W. Lamont, whose office we visited amid the
crash in episode 170, later recalls,
I almost went down on my knees to beg Herbert Hoover to veto the asinine Holly Smoot Tariff.
But Burt's blown so much political capital to make this tariff happen,
and it has the flexibility provision that he requested.
So, on June 17th, Burt signs the Smoot-Hawley Tariff,
or more properly, the Tariff Act of 1930.
And just as the economists feared,
trading partners retaliate with tariffs on American goods.
The Smoot-Hawley Tariff's actual damage
will number among those aspects of the Great Depression
that future historians and economists will long debate.
That said, few if any will call it helpful.
But whatever one might think about the Smoot-Hawley Tariff,
Bert has another problem on his hands in the summer of 1930.
A drought has struck America's heartland.
Hold up, an emergency devastating millions of families
as crops and livestock die?
Well, now we're in the master of emergencies, Wheelhouse.
Assembling the governors of the several afflicted states,
Burt calls for establishing
the National Drought Relief Committee,
which will work with state committees,
which will work with county committees as charities like the Red Cross do the heavy lifting.
Ah, the Red Cross, not the White House.
See, Burr earnestly believes that it is not the federal government's role to heavily
intervene in such emergencies, and that's keeping him from applying his natural gift
for handling a crisis to this drought.
Now that he's president, he expects others to carry America's proud tradition of volunteerism.
It's with this limited government thinking that he tells the more relief-minded Congress
not to send more than $25 million in aid and only as loans for drought-stricken farms not
a government dole to feed the hungry.
But the starving are not interested in ideological technicalities.
Neither are all in Congress, and one representative from the devastated state of Arkansas
can't help but question why the President, quote, would feed jackasses but wouldn't feed starving
babies. Ooh, not a good look for the man famous for feeding starving Europe.
Meanwhile, as we enter late 1930,
the Depression isn't letting up.
With over 4 million Americans out of work,
unemployment will average 8.7% for the year.
In October, Burt creates
the President's Emergency Committee for Employment.
Ah, but like the Drought Committee,
it offers no direct assistance to the average American,
instead coordinating with state and local programs.
America takes a big step toward the Democrats in November's midterm election, but this
is hardly a full repudiation of Herbert Hoover.
Republicans still hold a majority in both houses.
There's still every reason to expect this slump.
This depression is no worse than the panic of 1920-21 and
will soon work itself out.
But then the banks start failing.
Now, bank failures are not unusual in this era.
Even in the roaring 20s, hundreds shut their doors every year.
The best year was 1922 when only 367 banks went under.
But as unemployment rises and productivity drops, bank closures skyrocket.
A major culprit is the ethically questionable Caldwell & Company, which has been struggling
ever since the crash of 29.
When its Bank of Tennessee goes down on November 7th, it unleashes a cascade of bank closures
in the south. The last two months of 1930 alone see 608 banks suspend operations. While this is a national figure,
most of these banks are in the drought region, which it seems not only dried up farmland,
but bank liquidity. Now, Bert Hoover still has hope. If you ask him, he'd be quick to point out that
a full third of these banks reopened
before long, and on December 2nd, his State of the Union address reassures that, quote,
the fundamental strength of the nation's economy is unimpaired, close quote.
But it's hard to quell fear amid rumors and failing banks.
They create panic and bank runs.
It's the afternoon of December 10, 1930. We're at the corner of Southern Boulevard and Freeman Street in the Bronx, New York City, where a massive crowd has gathered outside the Bank of
the United States. The reason is that, earlier today, a small-time merchant came to this bank
that, despite its name, is not
connected to the US government and found the publicly traded institution unwilling to cash
out his stock in it.
Or so some say.
Others claim that the bank merely advised the merchant not to sell because their stock
is such a good investment.
But whatever the truth, it doesn't matter right now because these terrified account
holders converging on the bank are all set on one thing.
Getting their money out before this bank fails and they lose everything.
Mounted police patrol as some 20,000 people, mostly spectators but including thousands
of account holders, crowd the bank's doors.
Bodies choke off the entrances as unmanageable lines pour inside where bank
tellers do their best to reassure customers who, more often than not, nonetheless choose
to withdraw. The accounts come in all sizes, including one man who waited two hours just
to withdraw $2 from a savings account. By the end of the day, the panic has led to bank
runs on the institution's other branches, like those in Brownsville and Brooklyn. Bank of the United States VP Herman Gottlieb estimates that some
2,500 customers have withdrawn $2 million from this location in the Bronx alone. That
evening, a group of financiers meets at the Federal Reserve Bank of New York to discuss
how they might save the Bank of the United States from closing its doors.
But come morning, they have to admit that they can't.
The bank runs, have it hemorrhaging.
It's failed.
In this era before federal bank insurance, a bank's failure means its customers simply lose their money.
Period.
That's why, as the Bank of the United States shuts its doors for good on December 11, 1930,
George Jealous is so desperate.
The 61-year-old's $1,000 life savings from his 40 years of work as a janitor was all
in that bank, and he was only able to withdraw $200 before it folded.
Utterly despondent, he hangs himself from a steam pipe in his apartment, leaving behind
a simple note to his son, reading,
Let my wife have all the money, if she gets any.
Goodbye, George.
Be a good boy.
While the Bank of the United States does manage to pay out a significant percentage of deposits,
George's heartbreaking tale is but one glimpse into the damage wrought upon its 400,000
account holders as a great deal of their combined $202,972,469 in deposits evaporate.
For some, this bank failure, the first big bank failure, is the moment that the depression
becomes the Great
Depression.
By the end of 1930, the year has seen over 1,300 banks fail.
And as 1931 begins, there isn't an end of this in sight.
Increasingly, Americans are recognizing that this temporary economic downturn isn't so
temporary after all.
And as this reality sinks in, the nation continues to hope
that their organizationally gifted president,
the master of emergencies himself,
the great humanitarian Herbert Hoover, can right the ship.
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Historians and economists will forever debate why this economic panic, or this depression,
to again use President Herbert Hoover's new term, still isn't self-correcting by the
start of 1931.
But regardless of those debates, the fact is that productivity is down.
For instance, the private sector has spent about 33% less on construction over the past
year, a difference of about $3 billion, than it did in the year previous.
Unemployment is creeping into the double digits.
With the American people still looking to Burt that January, his new secretary of labor,
William Doak, points the finger at foreigners.
Burt gets on board.
As the president will later state in his memoirs, he restricts immigration because, quote,
"'Directly or indirectly, all immigrants were a public charge at the moment.
Either they themselves went on relief as soon as they landed, or, if they did get jobs,
they forced others onto relief as soon as they landed, or if they did get jobs, they forced others onto relief."
This deportation effort, soon dubbed repatriation, starts with the Department of Labor's Bureau
of Immigration sending agents to work with local law enforcement in raids of city centers
like La Placita in Los Angeles in February 1931, where more than 400 people are searched
by agents looking
for what the later government-appointed Wickersham Commission will call, quote,
supposed aliens, close quote, without papers.
Americans of both major parties find these rates disturbing.
Pivoting from those bad optics, then, William Doak's agents go more low-key, trying to
incentivize those they approach to leave the country on their own.
These tactics include denying food relief and medical care, or providing a free train
ticket out of the United States.
In this way, thousands are deported, many of whom are native-born U.S. citizens, going
to countries where they have no homes or families.
While various immigrant communities are affected, including Japanese and Chinese Americans, repatriation primarily targets Mexican Americans, especially in Southern California, and will continue into the 1940s.
Shortly after repatriation starts, in March 1931, construction begins on the largest American public works project to date.
A dam in the Colorado River's Black Canyon that will allocate water to several southwestern states and generate hydroelectricity.
Now, not to take away from this nearly $50 million dam, its $70 million power plant and
generators are the ultimate employment of more than 20,000 men to build them, but we
should note that this is not Burt directly responding to the ongoing depression.
This project has roots going back to his days as Commerce Secretary and will continue well
after he leaves the White House.
Oh, and is it filled with drama?
Yeah, we'll save this story for another day.
And so, as the early months of 1931 pass, the American people increasingly want their
talented president to take direct action.
But Burt largely holds to his philosophical belief that the federal government should
not do what the American people might do through volunteerism.
In his mind, volunteerism is how he fed war-ravaged Europe.
It's how he's accomplished so many of the great deeds on his resume, and as for his
power moves as head of the U.S. Food Administration, well, that was different because the Great
War was going on.
Burtt draws that distinction while speaking at Madison Square Garden, calling Woodrow
Wilson's wartime presidency a quote unquote centralized despotism, while asserting that
quote, however justified in time of war, if continued in peacetime, it would destroy not
only our American system, but with it our progress and freedom as well."
Yes, Burt is sure that the American people can voluntarily uplift each other and thereby
overcome this depression.
They just need inspiration.
A new narrative.
And that's just what he plans to give the nation this Memorial Day. It's about 1030 in the morning, Saturday, May 30, 1931.
Exiting their flower-filled private car, the first couple, Herbert and Lou Hoover, wave
to the crowd gathered around their motorcade escort in Valley Forge, Pennsylvania.
What a crowd it is.
Cars are backed up for miles.
The Red Cross has stations set up ready to attend to any who succumb to the late morning's
heat.
There are, after all, some 20,000 people here.
Today, they've all come to this most famous and sacred of Revolutionary War winter camps
for the same reason—to listen to Bert deliver a Memorial Day address.
The first couple walks through
a lane of soldier to soldier Pennsylvania National Guardsmen, all standing, to quote
the Philadelphia Enquirer, rigid as carving statues. They form a path to the red, white,
and blue platform prepared for Burt's speech. As the presidential couple proceeds through
their well-protected column, First Lady Lou Hoover finds herself returning the salutes from what the papers call her own troops.
That is, the Girl Scouts.
Every time the First Lady raises her hand to her black straw hat, she puts an ear-to-ear
grin on the face of yet another young, uniformed girl.
The President ascends the platform.
The crowd goes wild as he does so.
You can barely hear the 21 gun
salute from the 107th Field Artillery or the horns of the 108th Field Artillery Band.
Taking a stand, Burt basks in the shadow of an ancient maple and looks at the sea of faces
before him, including, in the front row, Civil War veterans. I wonder if he notices the black
Union soldier seated next to the 80-year-old gray-clad former
Confederate.
Well, with two microphones before him, one for the radio broadcast and one for the talking
motion picture of this event, Bert begins speaking.
And it doesn't take long to see why the Great Depression president has chosen this sacred,
hollowed ground for today's remarks.
This national shrine needs no description.
The events enacted here require no recounting
to the American people.
The very name, Valley Forge,
swells within us a pride of nationality.
These peaceful fields hold a glory peculiarly their own.
The sufferings of Washington's army
and that dreadful winter of privation
have made this place famous among all men.
It was not the glory of battle for which these fields are remembered.
No great battle was fought here.
A thousand other fields marked the courage, the glory, the valor, the skill, the martial triumph of our race.
Yet it is a shrine to the themes of the spirit and of the soul. It was the transcendent fortitude and steadfastness of these men who in adversity and in suffering
through the darkest hour of our history held faithful to an ideal.
Here men endured that a nation might live.
This peculiar significance of Valley Forge and our American annals should strike us all with a special force in this particular moment of our national life.
The American people are going through another Valley Forge at this time.
To each and every one of us, it is an hour of unusual stress and trial.
You have each one your special cause of anxiety.
So too have I.
The whole nation is beset with difficulties, incident to a worldwide depression.
Valley Forge meant such a challenge to steadfastness in times and terms of war.
Our test is to meet this challenge in times and terms of peace.
We are enduring sufferings, and we are assailed by temptations. We too are writing
a new chapter in American history. If we weaken, as Washington did not, we shall be writing the
introduction to the decline of American character and the fall of American institutions. If we are
firm and farsighted, as were Washington and his men, we shall be writing the introduction
to a yet more glorious epic in our nation's progress.
God grant that we may prove worthy of George Washington
and his men of Valley Forge.
["Pomp and Circumstance March"]
It's a touching speech.
Unfortunately, these inspiring words can't stop Europe's economic meltdown nor the ramifications
it will bring to America's shores.
Now before I get into the specifics of European fiscal failures, let me remind you that post-World
War I, America's financial system is much more enmeshed in Europe's economy
than it was before.
As we know from episode 147, 1919's Treaty of Versailles required Germany to pay astronomical
reparations to Britain and France.
Germany's new Weimar Republic answered by printing money to make payments, which caused
hyperinflation.
This was fixed, however, in 1924 by the Dawes Plan.
We covered this in episode 156, but in short, then Vice President Charles Dawes' plan
created a triangular cash flow.
The U.S. loans Germany money, which enables Germany to make payments to Britain and France,
and that, in turn, helps Britain and France pay its war debts to the U.S.
Well, this plan was followed by another early in Herbert Hoover's presidency called the
Young Plan.
Led by Owen D. Young of General Electric, the Young Plan kept the same international
cash flow while laying out a plan for Germany to make its last reparations payments in 1987,
and floated the Weimar Republic another $300 million loan.
All that to say, the aftermath of World War I has a lot of money flowing between the US,
Germany, Britain, and France.
And this means that, if one fails, it could have a disastrous domino effect.
And with all of these nations, apart from France, feeling a financial pinch over the
last year or so, it's less a question of if this happens
than when.
A little less than three weeks before Burt's Valley Forge speech, in other words, on May
11, 1931, the first international domino fell.
Austria's great bank, perhaps the biggest bank in Central Europe, Kreditanstalt, failed.
Now, Austria may not be a part of the DAS or Young Plan trade triangle, but as a major trading
partner with neighboring Germany and no stranger to trade with the US, Kreditanstalt's closure
contributes to more US banks failing.
167 failed that June alone, and Germany's seen enough bank closures and destabilization for its President,
Paul von Hindenburg, to fear a communist or fascist coup.
Yikes.
On June 5, House of Morgan's senior partner Thomas W. Lamont calls President Herbert
Hoover, suggesting a bank holiday on war debts and reparations.
Treasury Secretary Andrew Mellon hates the idea, but Bert's on board. On
June 20th, the President officially calls for this one-year moratorium on war payments.
Come July 6th, all nations and parties required to agree to it have, and the Hoover moratorium,
as it's known, goes into effect. It really is a great idea, but it's too late. Later that same month, July 13th, one of Germany's largest banks, the Donut Bank, goes under.
That's right, the second domino.
Wall Street panics.
US institutions are heavily invested in German securities.
In fact, investors the world over panic as their gaze shifts across the English Channel.
After all, Germany and Britain are so enmeshed financially.
What ramifications will this German failure have in London?
Not waiting to find out, investors start dumping the already troubled British pound sterling,
sending the gold-backed currency reeling.
Between July 6th and July 30th, the Bank of England's gold fund falls from an equivalent
of $807 million US to only $158 million. It's all too much. On September 21st,
Britain abandons the gold standard. 25 other nations follow suit.
While John Maynard Keynes celebrates his and his fellow Britons quote, breaking of our
gold fetters, close quote, Britain's relief is a third domino that slams into the United
States.
Why?
Because the US is still holding to the gold standard and to prevent its gold holdings
from being drained internationally in the wake of Britain's move, the Federal Reserve
has to tighten credit.
Now tightening credit is the exact opposite
of what a nation's central banking system should do
in the midst of a depression.
In the 21st century,
most would call this throwing gasoline on a fire,
but there's no way Burt, or indeed most experts in 1931,
would risk a path that might take the United States
off the gold standard like Britain.
Protecting it is a given. So to
that end, the Federal Reserve banks begin tightening credit by raising discount
rates. The New York Fed's discount rate climbs from a historically low 1.5% in
May to 3.5% by October. Britain's departure from the gold standard
further convinces Burt that he can't keep
cutting taxes and running deficits.
Both radical experiments that he's done over the protests of Treasury Secretary Andrew
Mellon.
The president's sure that next year he has to balance the budget and that means raising
taxes.
Again, doing this during a depression might sound crazy to our 21st century ears, but
that's not understood yet.
Congress hardly flinches at the ask.
Meanwhile, the President is still trying with his volunteerism policies.
In August 1931, Burt reorganizes his earlier President's Emergency Committee for Employment
into the President's Organization for Unemployment
Relief. The intent is to remake this effectively toothless relief coordinating committee into one
with more direct control. But newspapers across the country view this largely as just a name
change. And well, that's a fair assessment. In October, BERT announces the creation of a
voluntary association of banks that, with a pool of
$500 million, will serve as a lender of last resort to banks.
A supplement to the Fed, if you will.
Unfortunately, the banks involved are hyper-conservative with these funds.
The NCC does, as historian William Luxtonburg puts it, and I quote, next to nothing.
The 1930 drought, the Smoot-Hawley Tariff,
failing domestic banks, Bert's strong preference for volunteerism over direct
federal assistance, the chain of international fiscal disasters,
the rising of discount rates and taxes.
Historians and economists will likely never stop debating the weight of each
and how they did or didn't interact with each other to extend or exacerbate
the financial woes first made palpable by 1929's stock market crash.
But whatever the exact recipe is, it's a powerful cocktail.
One that's knocking Prohibition feigning Uncle Sam out and forcing even the famously
well-paying Henry Ford to cut wages.
By the end of 1931, 2,300 banks have failed that year alone. With over
8 million out of work, unemployment is over 15% and it's more struggle to even put a
roof over their heads. Many Great War veterans decide they've had enough. Hi, I'm Matt Albers, host of the Pirate History Podcast.
The men and women of the Golden Age of Piracy are some of the most infamous and often misunderstood
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You know their names.
Captain Morgan, Anne Bonny, Henry Avery, Mary Reed, Captain Kidd, Blackbeard.
But do you know their stories? Their real stories. Every week over on the Pirate History Podcast,
we explore the real lives of these pirates. We examine what made these pirates sail the
high seas in search of plunder and adventure and revenge.
The real stories are a lot more complex and a lot more interesting than the stories most
of us have been told.
If you'd like to hear the stories of the real men and women who went on the account
and sailed under the black flag, join us on the Pirate History Podcast.
I'm Doctor Samuel Hume, and I'm here to tell you about my new podcast, Winds of Change. podcast. in 1947. If you love learning about the past and discovering why the world is the way it is, then listen to Winds of Change. You can listen to Winds of
Change on Apple podcasts, Spotify and everywhere you find great podcasts.
Entering 1932, President Herbert Hoover signs some milestone legislation, some of which
show that the old man of volunteerism is learning some new tricks.
Perhaps no piece of legislation more embodies that than the creation of the Reconstruction
Finance Corporation, or the RFC, that January.
Effectively, the RFC gives loans to various financial institutions, including
traditional banks, federal land banks, insurance firms, railroads, and more. As author Charles
Rapeli puts it, the RFC represents a quote-unquote complete capitulation from Burt, who himself
says of it, quote, Certainly, the public will not blame the administration if, upon inability of private enterprise to
save the situation, the government should do it."
It must be humbling for Burt, and yet the RFC was his idea.
Congress passes it with bipartisan support.
In the months ahead, the RFC will expand its game, lending to state relief programs and
public works projects as well.
That will start with the passage of the Emergency Relief Construction Act.
In February, BERT signs the Banking Act of 1932, or the First Glass Steagall Act,
as it will come to be known. This expands the type of assets upon which Federal Reserve Banks may
rely to make loans to its member banks, albeit at a higher interest rate, and Federal Reserve Banks may rely to make loans to its member banks, albeit
at a higher interest rate, and allows Reserve Banks to use government securities, not just
gold to issue Federal Reserve Bank notes.
That is, cash money.
So basically, Uncle Sam's sticking with his gold standard diet, but now has a cheat day
once a week.
And as alluded to earlier, Bert signs his Tax Raising Revenue Act of 1932 that summer.
But he also tries to help home ownership through the Federal Home Loan Bank Act.
It's a good call.
The struggle to maintain or get a home is evident as the number of Americans counting
themselves among the nation's hobo population rises.
No one can say where the term originated, but hobos are very much a class and culture unto themselves.
They're typically migrant workers,
usually restless white males aged 20 to 50,
who get around by riding the rails.
While the glory days of hobo life are past,
that era ran roughly from 1870 to 1920, the
Great Depression is giving the life a resurgence.
These days, hobos are often catching rail cars out west with hopes of finding work in
mines, lumber camps, or harvesting fields.
A willingness to work is important.
To quote one unnamed hobo, bums, loaves and sits.
Tramps, los and walks, but a hobo moves
and works, and he's clean.
Close quote.
But a willingness to work doesn't mean the hobo won't, shall we say, bend the rules
when needed, especially when work isn't to be found.
They'll beg, borrow, or steal, if required required to make a mulligan stew. That's why hobo camps, or jungles as they're also called, aren't popular with locals.
Such jungles are popping up in city parks and vacant lots all over the country, but
perhaps none are more noteworthy than the hobo camp at Chicago's Grant Park.
Its occupants have a sense of humor.
Their tents and scrap wood houses are set up like a city unto itself, with roads like
Easy Street and Hard Times Avenue.
They even have their own unofficial mayor, Mr. Mike Donovan.
And naturally, if you're going to have a mayor, the unofficial town should have a name.
They call it by a new term that the Democratic National Committee's publicity pro, Charles
Michelson, has coined for their camps.
Hooverville.
Oh, and does it catch on?
In the South, the Tipton Times reports that, quote,
Hobos in St. Louis created a new addition to that city, known as Hooverville.
Close quote.
In Oregon, the Klamath News tells its readers about, quote,
Hooverville, the hobo town beyond the viaduct, close quote.
Yes, a decade in change removed from the war years when to hooverize was a positive expression
for saving and economizing.
Charles Michelson has successfully made Burt's last name a negative term for the shanty towns
so rapidly spreading across the country.
But ubiquitous as these Hoovervilles are becoming, no camp of the downtrodden will gain more
attention or reflect more poorly on the President than the one filled with Great War veterans
and their families in Washington, D.C.
Now we don't expect you to remember this. It was brief, but back in episode 156, I mentioned that in 1924, Congress overrode President
Calvin Coolidge's veto to pass the World War Adjusted Compensation Act, also known as the
Bonus Act, which promised Great War of Veterans, excluding most commissioned officers, a bonus
for their time in the service. In short, it entitled doughboys serving between April 1917 and July 1919 to $1 per day of
state-side service and $1.25 per day of overseas service, with the stipulation that,
quote, the amount of the credit of a veteran who performed no overseas service shall not
exceed $500, and the amount of the credit of a veteran who performed no overseas service shall not exceed $500, and the amount of the credit
of a veteran who performed any overseas service shall not exceed $625."
But payday wasn't immediate. It wasn't intended to come until 1945. No wonder some
doughboys call it a tombstone bonus. And yes, if they've passed, their estate will get paid.
stone bonus. And yes, if they've passed, their estate will get paid. That said, the Bonus Act did allow the vets to take out loans against this promised payment
starting in 1927. Well, as you can imagine, banks aren't terribly interested in giving
such loans in 1932. And yet, many of these veterans desperately need the money.
At a meeting of the National Veterans Association in Portland, Oregon, former Sergeant Walter
Waters tells the assembled vets his story.
He lost his job and still needs to provide for two children.
He tells his fellow doughboy vets that a letter writing campaign just won't cut it.
It's high time for them to demand their bonus in person, to march like the soldiers
they are to Washington D.C. and demand their payments now when they need it most.
Walter is so incensed, he says he'll lead the march himself.
Soon, 300 vets are following him across the continent to the capital.
Traveling by hitchhiking thumb, train, or foot, it takes them about a month to get to
D.C. and thousands of likewise frustrated veterans swell their ranks all along the way.
Arriving in the nation's capital, the Doughboy Veterans set up camps, and the best known is
in the city's southeast area called the Anacostia Flats. The vets named this one Camp Bartlett in
honor of the landowner allowing them to stay here. Now you will be hard pressed to find anyone calling this camp a Hooverville, since its
inhabitants are vets here for a specific purpose, as opposed to migrant working hobos or other
classes of the homeless.
But the site of these former doughboys' tents and shacks are close enough for some, like
the Miami News, to describe Hoovervilles as, quote, "...somewhat after the manner of the
Anacostia settlement
of the bonus army, close quote.
But President Herbert Hoover isn't having it.
Paying out these veterans will cost the already running
a deficit federal government a fortune.
That won't help balance the budget,
which as we know, Burt believes is what needs to happen
for the nation to recover financially.
With some of his closest advisors suggesting they meet the bonus army with bayonets, Burt
answers, that would almost certainly end in bloodshed.
Instead, he sticks to his talking points, stating in a speech that, quote, the imperative
moment has come when the increase in government expenditures must be avoided, close quote. Narrowly, enough of Congress agrees.
While the House votes in favor of the bonus bill's proposal to shell out $2.4 billion
to the Doughboys immediately, the Senate does not.
It kills the bonus bill on June 17, 1932.
Much of the bonus Expeditionary Force, a name riffing off of these vets' service in the
American Expeditionary Force during the Great War, leaves at this point.
But not all of them.
After all, what's Congress compared to the whores of Bellowood, the Marne, or the Musar
Gun?
These most insistent of former Doughboys figure they've lost the battle but not the war.
They declare that they're staying until payments come, even if that's in 1945.
And that's when things escalate.
In July, President Herbert Hoover says that the veterans have to go home, even if that's by force.
It's 410 in the afternoon, July 28, 1932.
We're in the open, green space of Washington, D.C.'s ellipse, just south of the White House,
where Army Chief of Staff, General Douglas MacArthur, is surveying a several hundred
strong force from the U.S. Army, now preparing to evict bonus Army vets.
It's a tense situation.
Just this morning, the police shot and killed two while attempting to evict veterans from
buildings along Pennsylvania Avenue.
Now, Doug is tasked with driving those former Doughboys holding buildings north of the Anacostia
River back to their more southern camp in the Anacostia Flats.
With all that attention, Doug turns to Brigadier General Perry L. Miles, the direct commander
of these forces.
Perry addresses the officers.
Gentlemen, the so-called bonus marchers are occupying certain government properties in Washington
and are successfully resisting efforts by the police to evacuate them.
This command has been called upon to clear those properties.
You will use such force as is necessary to accomplish your mission.
Tear gas will be used. Women and children who may be found in the affected area will
be accorded every consideration and kindness."
With that, they prepare to move out.
Twenty minutes later, this force is moving down Pennsylvania Avenue. Two hundred carbine-bearing
cavalrymen right at the front, their sabers drawn. Behind
them rolled the trucks carrying five tanks. These are followed by 400 infantry. And finally,
two staff vehicles. Generals Douglas MacArthur and Perry Miles ride in one, while Major Dwight
D. Eisenhower and Captain Thomas Jefferson Davis are in the other. As they move, locals wonder, is this a show of force alone, or do they mean business?
Proceeding down Pennsylvania Avenue to about 3rd Street, the Army approaches several dilapidated,
half-standing 3- to 4-story buildings.
Few shacks are here too.
All of these will be raised in the near future, but right now they are filled with bonus Army vets.
Doug is shocked. He expected a small group of men. Nope, there are thousands here, and
worse is the complicated variety of people. As Captain H.W. Blakely will later describe,
the street is filled with, quote, a fantastic mixture of rioters, spectators, shoppers, street cars, baby carriages,
police, infantry, and officers in civilian clothes.
Close quote.
The forces ordered to halt.
They fixed bayonets.
A veteran sees this and shouts at the soldiers,
The last time I saw them bayonets, I was going through the barn.
But none of the soldiers laugh.
An officer at the center of Pennsylvania Avenue shouts into the shanty town.
You got three minutes to clear out.
Three minutes.
I warn you.
Soldiers start to put on their gas masks.
Then a rock flies.
And that's it.
Immediately soldiers hurl gas grenades into the crowd of veterans.
The troops then proceed to push the bonus marchers southward toward their main camp
across the Anacostia River.
But as they do, the wind ensures that innocent bystanders and spectators are soon exposed
to the gas as well.
Amid coughs, shouts, and cries, most of the veterans run, but some stand their ground.
They throw bricks and rocks at the soldiers, only to be met by cavalrymen who slap at them
with the broad sides of their sabers.
Gas mask wearing infantry continue to lob gas grenades almost carelessly as tanks roll
forward and shacks are set ablaze.
Major George S. Patton will later recall the sight from atop his horse. Bricks
flew, sabers rose and fell with a comforting smack, and the mob ran.
While the President gave the green light to evict these vets, this is not what he had
in mind. Yet, worse comes later that night as Douglas MacArthur pushes south of the Anacostia River
and into the main bonus army camp.
He does so while refusing to receive messengers from Secretary of War Patrick Hurley, trying
to tell the general not to cross the bridge and drive south of the river.
Doug does so anyway and over the protestations of Major Dwight D. Eisenhower.
Instead, Doug insists that he must quell what he dubs an insurrection and head south
over the bridge. Writing about this later, Burt says that,
I did not wish them driven from their camps. Our military officers, however, having them on the
move, pushed them outside the District of Columbia. But neither Douglas MacArthur's assurances that
his actions were completely necessary,
nor Burt Hoover's insistence that this was not his plan changed the fact that Washington
DC's hospitals are filled with wounded veterans.
While many newspapers are content with the response that communists had taken over the
bonus march, on-the-ground reporting isn't as kind.
The Washington Daily News writes, quote, What a pitiful spectacle is that of
the great American government, mightiest in the world, chasing unarmed men, women, and
children with army tanks, close quote. Yeah, that hits hard. And it's going to hit Burt
even harder politically as Americans head to the ballot box this November.
Things really aren't looking good for Burt's re-election. The gross national product is down to $60 billion from 1931's $75 billion, which is already down from 1929's $105 billion.
The Dow Jones Industrial Average has fallen from its pre-crash record high at the start of Burt's presidency,
381.2, all the way down to 41.2.
Unemployment has surpassed 20% with over 12 million out of work, which is to say nothing
of those who are employed but have seen their wages cut.
It's hard to capture the prevailing sentiment better than the Miami News does two months
before the election in a September 1932 article and I quote,
A chicken in every pot was the promise.
Hooverville is the performance.
Harsh criticism comes for Herbert Hoover, both immediately and through the decades ahead.
They include things like his almost endless faith in volunteerism, the Smoot-Hawley tariff,
his response to Britain leaving the gold standard with higher taxes and a drive to balance the
budget, his handling of the bonus army, and of course his shy personality and support of
Prohibition didn't help. In fact, odd as it may seem to our 21st century ears, so focused on the
Great Depression, Prohibition costs Burt votes more than any
other issue.
Yet, much of the criticism that will come after the fact forgets that, up until 1932,
the nation was largely with Burt, that the era's experts were just as baffled as anyone
at this inexplicable depression.
It may also be that, for future Americans familiar with the successes of President
Franklin D. Roosevelt's later New Deal, it's hard to see just how much Bert did push the
boundaries and try new things. As historian David M. Kennedy so succinctly puts it, quote,
his, Hoover's, failure in the face of the Depression has obscured his achievement as
an activist president who pointed the way to the New Deal.
Hoover was no moss-back conservative in the Harding-Coolidge mold. Long sympathetic to
the progressive wing of his party, he had supported labor, urged closer business-government
cooperation, established government control over the new technology of radio, and proposed a
multi-billion dollar federal public works fund to offset downswings
in the business cycle."
And indeed, while historian William Luchtenberg is quick to remind us that Burt was quite
loathe to give up on volunteerism and most certainly should not be seen as a fan of expanding
government, it is true that Burt intervened in the economy to an unprecedented degree
for a president up to his time, and
that he planted some New Deal seeds.
As Rex Tugwill of FDR's brain trust will say decades later, we didn't admit it at the time,
but practically the whole New Deal was extrapolated from programs that Hoover started.
So did Burt, the great humanitarian, the master of emergencies, simply come up against a catastrophe
that no one could have beaten? Was it just bad luck? Great humanitarian, the master of emergencies, simply come up against a catastrophe that
no one could have beaten?
Was it just bad luck?
Well, that'll be his take.
But presidents don't have the luxury of excuses, or even legitimate reasons.
The nation judges by outcome, period, and after winning the White House by a landslide
in 1928, Bert loses it by a landslide in 1932.
America now turns to a man who, as governor of New York, has proven a capable executive
even in the midst of the Great Depression.
A man who exudes the kind of charisma and hope that a nation so desperately craves in
these hard times.
A man who offers a fresh face, but a familiar name.
Welcome to the story.
President-elect Franklin Delano Roosevelt.
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