The Great Depression

Unemployed men queued outside a depression soup kitchen opened in Chicago by Al Capone. February 1931.

As the Depression spread, public blame settled on President Herbert Hoover and the conservative politics of the Republican Party. In 1928, having won the presidency in a landslide, Hoover had no reason to believe that his presidency would be any different than that of his predecessor, Calvin Coolidge, whose time in office was marked by relative government inaction, seemingly rampant prosperity, and high approval ratings.⁷ Hoover entered office on a wave of popular support, but by October 1929 the economic collapse had overwhelmed his presidency.

Like all too many Americans, Hoover and his advisors assumed – or perhaps simply hoped - that the sharp financial and economic decline was a temporary downturn, another "bust" of the inevitable boom-bust cycles that stretched back through America's commercial history. "Any lack of confidence in the economic future and the basic strength of business in the United States is simply foolish," he said in November.⁸ And yet the crisis grew. Unemployment commenced a slow, sickening rise. New-car registrations dropped by almost a quarter within a few months.⁹ Consumer spending on durable goods dropped by a fifth in 1930.¹⁰

When suffering Americans looked to Hoover for help, Hoover could only answer with volunteerism. He asked business leaders to promise to maintain investments and employment and encouraged state and local charities to assist those in need. Hoover established the President's Organization for Unemployment Relief, or POUR, to help organize the efforts of private agencies. While POUR urged charitable giving, charitable relief organizations were overwhelmed by the growing needs of the many multiplying unemployed, underfed, and unhoused Americans. By mid-1932, for instance, a quarter of all of New York's private charities closed: they had simply run out of money. In Atlanta, solvent relief charities could only provide $1.30 per week to needy families. The size and scope of the Depression overpowered the radically insufficient capacity of private volunteer organizations to mediate the crisis.¹¹

Although Hoover is sometimes categorized as a "business president" in line with his Republican predecessors, he also embraced a kind of business progressivism, a system of voluntary action called associationalism that assumed Americans could maintain a web of voluntary cooperative organizations dedicated to providing economic assistance and services to those in need. Businesses, the thinking went, would willingly limit harmful practice for the greater economic good. To Hoover, direct government aid would discourage a healthy work ethic while associationalism would encourage the self-control and self-initiative that fueled economic growth. But when the Depression exposed the incapacity of such strategies to produce an economic recovery, Hoover proved insufficiently flexible to recognize the limits of his ideology.¹² "We cannot legislate ourselves out of a world economic depression," he told Congress in 1931.¹³

Hoover resisted direct action. As the crisis deepened, even bankers and businessmen and the president's own advisors and appointees all pleaded with him to use the government's power to fight the Depression. But his conservative ideology wouldn't allow him to. He believed in limited government as a matter of principle. Senator Robert Wagner of New York said in 1931 that the president's policy was "to do nothing and when the pressure becomes irresistible to do as little as possible".¹⁴

By 1932, with the economy long since stagnant and a reelection campaign looming, Hoover, hoping to stimulate American industry, created the Reconstruction Finance Corporation (RFC) to provide emergency loans to banks, building-and-loan societies, railroads, and other private industries. It was radical in its use of direct government aid and out of character for the normally laissez-faire Hoover, but it also bypassed needy Americans to bolster industrial and financial interests. New York congressman Fiorello LaGuardia, who later served as mayor of New York City, captured public sentiment when he denounced the RFC as a "millionaire's dole".¹⁵