Chapter 33: The Politics of Boom and Bust (p.

766 to 776)
President Hoover's First Moves Most of America continued to prosper with the bull market, except for unorganized farmers and laborers So the June 1929 Agricultural Marketing Act set up the Federal Farm Board and lent money to farm organizations to busy, sell, and store surpluses 1930 the Federal Farm Board created the Grain Stabilization Corporation and the Cotton Stabilization Corporation to increase prices by buying surpluses, but they were overwhelmed by surplus, so prices continued to fall The Hawley-Smoot Tariff started out as a mild increase to help farmers, but was amended over 1000 times and raised the tariff to 60%, the highest in peacetime history The extremely high tariff increased trade gaps, put the world deeper into economic depression, increased international financial chaos, forced the US deeper into isolation, and helped Hitler rise to power

The Great Crash Ends In early 1929, it still seemed like the prosperity would continue to increase indefinitely, the Golden Twenties though the speculative bubble was about to burst But October 1929 the British raised their interest rates to entice capital away from American investments, so foreign and domestic investors began selling their insecurities, so October 9, 1929 (Black Tuesday) a selling spree of 16 million shares on Wall Street By the end of 1929, stockholders had lost $40 billion The stock-market crash caused the longest and worst business depression in history;12 million were unemployed by 1932, wages were slashed, thousands of banks collapsed, many homes were foreclosed, and the birth rate declined Hooked on the Horn of Plenty Causes of the Great Depression: America was producing goods faster than it could consume them: There were too many wealthy people who invested their wealth in too many factories Installment-plan buying overexpanded credit, so overstimulated production New, more efficient machines increased production and left many workers without jobs International causes: 1931 financial collapse in Europe after the failure of an important Viennese bank The 1930 Hawley-Smoot Tariff slowed international trade Europe was still reeling from WWI, and the tangle of debts from the war complicated matters 1930 the Mississippi Valley was devastated by drought The national spirit fell as the hard-working lost everything to an invisible force through no fault of their own

Hoovers reputation as an engineer of wonders and efficiency was ruined by the Rugged Times for depression Rugged Individualists At first, humanitarian Hoover was concerned about the peoples suffering but preferred self-reliance over government aid But after local government relief broke down Hoover compromised and gave government aid to the railroads, banks, and rural credit corporations in the hope that the wealth would trickle down; was heavily criticized for aiding the bankers that had started the Depression and feeding pigs before people

 But Hoover succeeded in proving that self-reliance was ineffective in a crisis of such magnitude Herbert Hoover Battles the Great Depression Despite being anti-spending, Hoover secured $2.25 billion for public works, ex. the 1930 to 1936 Hoover Dam on the Colorado River, but opposed those that seemed socialistic, ex. The Muscle Shoals Bill that would have dammed the Tennessee River and sold electricity in competition with private companies 1932 Congress created the Reconstruction Finance Corporation (RFC) that provided indirect relief by lending money to insurance companies, banks, agricultural organizations, railroads, and state and local governments; was not effective because was established too late and benefitted giant corporations 1932 Congress passed the Norris-La Guardia Anti-Injunction Act that prohibited yellow dog contracts that prohibited unions and the federal courts from issuing anti-union injunctions Before, the people had to sweat out economic downturns, but Hoover set the precedent for government aid to the needy that Roosevelt would follow Congress, with a Republican majority the first two years and a Democrat majority in the House the second two years, was often hostile to Hoover Depression-hit veterans were agitating for their bonuses for their service in WWI to be paid 1932 the Bonus Expeditionary Force (BEF) of 20,000 veterans occupied Washington and demanded immediate payment of their entire bonus, but the bill failed to pass in Congress, so the BEF refused to leave despite Hoover offering to pay for their travel expenses and began rioting, so Hoover had troops under General Douglas MacArthur forcefully expel them Hoover was heavily criticized for the brutality of the expulsion and the general failure of the Great Engineer to fix the country September 1931 imperialistic Japan invaded Manchuria, China and closed the Open Door, in violation of several international agreements The US, instead of actually doing something, 1932 issued the Stimson doctrine by Secretary of State Henry L. Stimson that declared that the US would not recognize any territories acquired by force Japan was not deterred and 1932 bombed Shanghai, so Americans held an informal boycott of trifling Japanese goods The League of Nations had the economic and naval power to stop Japan, but did not act because did not have Americas support

Routing the Bonus Army in Washington

Japanese Militarists Attack China

Hoover Pioneers the After the depression, economic imperialism became less popular because Americans had Good Neighbor Policy less money to invest and their investments were going badly Hoover abandoned the Roosevelt Corollary and 1933 and 1934 withdrew US troops from Nicaragua and Haiti So Hoover laid the foundation for the Good Neighbor Policy that Roosevelt would continue to expand upon