Black Tuesday, October 29, was disastrous, but it was not the end of the stock market tumble—the market continued falling. It was November 13 before the market closed the day with a gain. By that time many stocks were worth only half of the value they had been worth just two months earlier.
Even during the height of the stock market boom, only 4 million Americans actually invested. But after the October 1929 Crash, the stock market breakdown affected millions of others.
Hundreds of banks had invested enormous sums of money in the stock market. Most of that money came from investors’ savings. Some banks literally went bankrupt right away. When investors saw a neighbor’s bank going out of business, they rushed to withdraw their own savings. These massive withdrawals forced other banks to fold. More than one thousand banks closed in 1930 alone. The Bank of the United States, with fifty-nine branches and in excess of four hundred thousand investors, was one of them.
Occasionally an investor got lucky. Former Nebraska schoolteacher Inez Warren recalled:
I got my monthly paycheck on Good Friday. I didn’t get to the bank until Saturday, and the cashier asked if I wanted to deposit the check or just take the cash. I said for no particular reason, I would take the cash. I was lucky to have a month’s pay in my hands, because the banks closed that Monday.1
Thousands of Americans were not as fortunate. Small businesses that had invested their money in the banks were forced to close. When those businesses folded, the employees were out of work. Most larger businesses stayed open, but many laid off workers. They cut production drastically, because fewer people could afford their products.
For some people, the Crash came all at once. Neil Schaffner, owner of a dramatic touring company, recalled July 6, 1930, as his day of doom:
We ended up our usual big week on the Fourth of July at Ollie, Iowa. We moved down to Fairfield, where we had always had big crowds. On the night of July 6, we played to about $30 gross business. That week, we took in $200 with a show costing us $1,500. We couldn’t understand.… All of a sudden, the plug was pulled out of the bathtub.2
Others saw the Depression hit more gradually. Author Studs Terkel wrote a book, Hard Times, which captured people’s memories of the Depression. His own memories were vivid. Terkel’s mother owned a small hotel in downtown Chicago. Before the stock market crash, the hotel was always full of working people.
Afterward, the hotel was not always full. Fewer and fewer of the guests were working. Many now hung around the lobby most of the day. “The decks of cards were wearing out more quickly. The black and red squares of the checkerboard were becoming indistinguishable,” Terkel wrote.3
Soup Lines, Bread Lines, and Apple Sellers
Economic downturns had occurred in America every twenty years or so. But nothing matched the severity of the 1930s. During previous depressions, most Americans lived on farms. If nothing else, they could feed themselves. Now, more Americans earned a living from industry than agriculture. The economy was interdependent. If one segment suffered, everyone suffered.
The fortunate people kept their jobs. If they did, their working conditions usually worsened. Most companies lowered their workers’ pay. Hourly wages declined 60 percent from 1929 to 1932.
Some no longer paid their workers in cash. Mine companies gave their miners paper called scrip, which they could use in place of money. This paper was good only at expensive company stores. Chicago teachers were also paid in scrip. Banks accepted their scrip, but not at its full value.
At the Depression’s height, a quarter of the population was out of a job. The unemployed scrambled for whatever work was available. Ed Paulsen sought a sugar refinery job in San Francisco in 1931. “A thousand men would fight like a pack of Alaskan dogs to get (the job). Only four of us would get through,” he recalled.4
When joblessness hit, families did all they could to fight the crisis. If there was a savings account, they withdrew it. If there was an insurance policy, it was cashed in. They sold anything they considered a luxury, for whatever price they could get. They borrowed from friends and avoided paying bills.
Men, in particular, took the Depression hard. They held the traditional role of breadwinner. When they no longer brought home money, most felt disgraced and shamed. Some of their neighbors pitied them. Others tried to ignore them.
At first, the unemployed went job-hunting every day. After a while, those searches became less and less frequent. Unemployed people left home, but went to the park instead of looking for work. Their clothes and appearance got dirtier. They did not want to be dirty. Their money was used to buy food for their children instead of soap for themselves.
Some swallowed their pride and begged for change. These were proud people, whose hard work had helped build the nation. The most popular song of the time described one man’s plea: “Brother, Can You Spare a Dime?”
That dime, if obtained, could go a long way. “For ten cents you could buy soup greens and you’d get a soup bone,” said Chicago resident Carl Lundell. “That would be soup for four people.”5
Charitable groups worked to help the poor. Some started bread lines. In big cities, these lines would extend for several blocks. Soup kitchens opened throughout the nation. Service agencies and private individuals alike served hot meals. Chicago gangster Al Capone operated one of the largest kitchens.
In 1930, the International Apple Growers Association peddled surplus apples to unemployed men on credit. Suddenly six thousand vendors appeared on New York street corners, selling apples for a nickel apiece. The dreary-looking apple vendor became one of the lasting images of the Depression.
Businesses adjusted to the new American poverty. Even Popsicles changed. The fruit-flavored ice now came in two parts with two sticks. The new Popsicle made it easier for hungry poor kids to share the treat with a brother, sister, or friend.
Despite the hardships, many people kept their good nature. “No one was envious of anyone else, because we were all in the same boat,” said Alice Swanson of Chicago.6
“Some people were especially kind,” remembered Omaha resident Ora Glass. “I had small children, so the milkman said, ‘You need this; you’ve always paid and that’s the way it’s gonna be.’ He went to the company, and it said, ‘Fine.’ So we always had milk.”7
Tens of thousands of Americans lost their homes. Often they drifted to makeshift settlements on the outskirts of towns. These settlements always had the same name.
Charles R. Walker wrote in 1932:
I visited the incinerator and public dump at Youngstown, Ohio. Back of the garbage house there are at least three acres of waste land. The place is indeed a shanty town, or rather a collection of shanty hamlets. . . . [It] is called by its inhabitants—Hooverville. . . .
The inhabitants were not, as one might expect, outcasts or “untouchables”, or even hoboes in the American sense; they were men without jobs. . . . This pitiable village would be of little significance if it existed only in Youngstown, but nearly every town in the United States has its shanty town for the unemployed, and the same instinct has named them all “Hooverville.”8
Settlements appeared everywhere. Some of them had enough people to be considered small cities. Oklahoma City’s Hooverville covered approximately one hundred square miles.
There were no rules to Hooverville housing. People lived inside anything that provided shelter. Many of these homes were no larger than doghouses or chicken coops. Rusted out cars provided one type of housing. A house could also be a packing carton, an orange crate, or a piano box. Building materials included anything that could be scrounged from a garbage dump or the street—pieces of wood, tin cans, tar paper, cardboard. The materials were free and not fancy.
President Herbert Hoover was the subject of ridicule. Anything bad about the Depression gained a Hoover nickname. There were “Hoover blankets” (old newspapers which served as cover for homeless sleepers), “Hoover flags” (empty pocket linings turned inside out), “Hoover hogs” (jackrabbits caught for food), and “Hoover wagons” (broken down cars pulled by mules).9
“In Hoover We Trusted”
Less than two months after the October 29 market crash, President Hoover addressed Congress. There is no cause for alarm, he said during the State of the Union address. “We have reestablished confidence.”10 Over the next two years, he would issue many such statements. Signs showed that “the nation was turning the corner,” he claimed in January 1930. “The worst effects of the crash will have passed in the next sixty days,” he stated two months later. In May 1930, Hoover promised, “We have now passed the worst . . . we shall rapidly recover.”11 He missed few opportunities to call the economy “fundamentally sound.”12 On June 30, he declared, “We have now passed the worst.”13
As more and more people were put out of work, fewer and fewer believed him. Even the Federal Reserve Board cautioned Hoover, “It will take perhaps months before readjustment is accomplished.”14
Hoover did take actions to ease the financial crisis. Soon after the Crash, he met with business leaders. The president asked them not to cut workers’ pay. At first, many went along with the request. But as conditions kept getting worse, most could not keep their promises. Some cut wages. Others laid off employees instead of slashing wages. Others demanded increased production, which meant more work for the same pay from their workers.
Yet Hoover hesitated to use the federal government’s powers to halt the economic decline. He felt that state governments, local governments, and private charities should do that work. Yet these groups were strapped for money. They could not carry the burden of lifting the nation.
Hoover refused to consider financial relief for individuals. Part of this opposition came from personal beliefs that men and women lost their dignity if the government gave them a handout.
Big businesses also opposed relief. Their money provided the core of Hoover’s election support, and he would not desert them. Millionaire Andrew Mellon served as secretary of the treasury under Hoover’s predecessors Harding and Coolidge. Mellon worked mainly to cut taxes for the wealthiest Americans. Hoover had little use for Mellon. But he kept him as treasury secretary anyway, because he feared criticism from the business community if he did otherwise.
That fear of opposition also made him sign the Smoot-Hawley bill in 1930. Economist Paul Douglas gave Hoover a petition with signatures of one hundred economists who opposed the bill. Automobile magnate Henry Ford called the Smoot-Hawley bill “an economic stupidity.”15 Hoover signed it anyway.
This law created the highest tariff (tax on imported goods) in American history. Republican Congress members who had proposed the bill hoped that high prices of foreign goods would force Americans to buy American-made products. Instead, other countries imposed their own high tariffs. These taxes kept American companies from selling their goods abroad.
Hoover made one critical move to free up European money. In 1931, he proposed a one-year moratorium (halt) on World War I debts. He hoped debtor nations would use that money to buy American consumer goods. Germany instead used the money saved to build up its military forces.
The average American could not identify with the wealthy, aloof Hoover. Most Americans felt he could not identify with them. Even when Hoover tried a humanitarian gesture, it met with protests. When the president appropriated money to the Department of Agriculture for feed for livestock, thousands complained. Why was he willing to feed their animals but not their children?
Hoover’s most driving program, the Reconstruction Finance Corporation (RFC), gained little popular support. It allowed the president to lend more than $500 million to ailing banks, railroads, and insurance companies.
The RFC ran into problems almost immediately. Central Republic Bank of Chicago received a $90 million loan under the program. Charles G. Dawes, director of the Reconstruction Finance Corporation, was also a director of the bank. Dawes soon resigned from the RFC, and no one accused either Dawes or the bank of wrongdoing. But the incident gave Democrats ammunition in their campaign against Hoover. Here was a president who could not find money to help struggling teachers or unemployed miners, yet he created a program to help rich banker friends.
On July 8, 1932, the stock market bottomed out. The Dow Jones average, which had reached 452 in September 1929, fell to a sickly 58. U.S. Steel had fallen from $262 to $22 a share. Montgomery Ward had plummeted from $183 to $4. General Motors had dived from $73 to $8.
Critics joked that Hoover’s policy of “rugged individualism” was actually one of “ragged individualism.”16 Wherever the president went, he found signs that read “In Hoover we trusted—now we are busted.”17 During an appearance in West Virginia, a military guard gave him the traditional twenty-one-gun salute. Someone in the audience muttered, “By gum, they missed him.”18
Walter L. Waters needed money in 1932. One day that summer, the unemployed World War I veteran had an idea. The government had passed a bill promising war veterans a cash bonus in 1945. Why not give out that bonus now? Waters and neighboring veterans set out from Portland, Oregon, to Washington, D.C., to make his point.
These vets were part of the Allied Expeditionary Force that had helped win the war. Soon news of Waters’s “Bonus Expeditionary Force” spread across the country. Thousands of men and many of their families joined him in a trip to Washington. By July, some twenty thousand “bonus marchers” and family members descended upon the nation’s capital.
Many of the marchers took over abandoned buildings on Pennsylvania Avenue. Most, however, settled across from the Capitol along the Potomac River. The Anacostia Mud Flats, now housing the Bonus Expeditionary Force, became America’s largest Hooverville. Pelham Glassford, the District of Columbia chief of police, sympathized with the marchers. He persuaded the Army to loan them tents and cots.
Others were not so sympathetic. Herbert Hoover opposed the immediate bonus. Congress debated the idea. While the House of Representatives and Senate discussed the measure, the bonus marchers waited. They demonstrated for the bill, but the demonstrations were peaceful.
The House passed a bonus bill in July. The Senate, however, turned down the measure. Most marchers, when they heard of the bill’s failure, returned home. More than eight thousand six hundred stayed in Washington, D.C. They showed no signs of leaving.
To Hoover, they were an embarrassment. Yet he at first refused to force them from their temporary homes. Others, including General Douglas MacArthur, saw them as a danger.
Hoover finally listened to MacArthur’s advice. He ordered the police to evict the marchers from the abandoned buildings. The police moved on the morning of July 28. Around noon, someone threw a brick at a police officer. The police reacted by firing at innocent marchers. Two hours later, two marchers lay dead.
Later that afternoon, MacArthur led troops down Pennsylvania Avenue. At first some veterans cheered the soldiers. They thought the troops were there to help them. They soon learned otherwise.
Hoover did not order MacArthur to rout the Anacostia squatters. The general did so anyway. His troops scattered the marchers with swords, tear gas, and bayonets. Their horses trampled women and children. Then the soldiers set fire to the campsite. Dwight Eisenhower, who served under MacArthur, called it “a pitiful scene.”19
Hoover declared, “Thank God we still have a government that knows how to deal with a mob.”20 The veterans who limped home, their wives, children, and friends thought otherwise. The president was no longer an object of ridicule. He was an object of hatred.
The Bonus March fiasco sealed an already doomed election.
Republicans nominated Herbert Hoover even though his defeat was certain. They would be admitting their failure by not backing their president. And no other Republican wanted to face a humiliating loss.
Hoover lost in November. It was the most one-sided election since 1864. Franklin D. Roosevelt won the election—the same man who had praised Hoover only twelve years earlier.
The Republican Party lost the presidency, both houses of Congress, and the confidence of the American people. They were truly “lame ducks,” defeated politicians waiting until their terms expired.
The economy, however, did not sit idly. Things only got worse in the winter of 1932–33. By March 1933, about nine thousand banks had failed, wiping out the savings of millions of Americans.
A new bank panic began in February 1933. On February 14, worried investors made massive withdrawals from Detroit banks. Michigan’s governor called a “bank holiday”—closing all banks until further notice.
Ten days later, customers made panicked withdrawals from Baltimore banks. This led to a bank holiday in Maryland. Similar actions took place in other states during the next two weeks.
March 4, 1933, was Inauguration Day. Hoover would leave the White House and Roosevelt would enter it. Governors of New York and Illinois called bank holidays at dawn. They feared runs at the major banking centers of New York City and Chicago.
A worn out and weary Herbert Hoover rode to the inaugural site. He told an aide, “We are at the end of our string. There is nothing more we can do.”21