He felt the less government intervention in their lives, the better. Throughout his early career in public service, he was committed to relief for people around the world. In , he coordinated relief efforts for foreign nationals trapped in China during the Boxer Rebellion. At the outset of World War I, he led the food relief effort in Europe, specifically helping millions of Belgians who faced German forces.
President Woodrow Wilson subsequently appointed him head of the U. Food Administration to coordinate rationing efforts in America as well as to secure essential food items for the Allied forces and citizens in Europe. He continued the civil service reform of the early twentieth century by expanding opportunities for employment throughout the federal government.
In response to the Teapot Dome Affair, which had occurred during the Harding administration, he invalidated several private oil leases on public lands. He directed the Department of Justice, through its Bureau of Investigation, to crack down on organized crime, resulting in the arrest and imprisonment of Al Capone. By the summer of , he had signed into law the creation of a Federal Farm Board to help farmers with government price supports, expanded tax cuts across all income classes, and set aside federal funds to clean up slums in major American cities.
The promise of the Hoover administration was cut short when the stock market lost almost one-half its value in the fall of , plunging many Americans into financial ruin. However, as a singular event, the stock market crash itself did not cause the Great Depression that followed.
In fact, only approximately 10 percent of American households held stock investments and speculated in the market; yet nearly a third would lose their lifelong savings and jobs in the ensuing depression. The connection between the crash and the subsequent decade of hardship was complex, involving underlying weaknesses in the economy that many policymakers had long ignored.
To understand the crash, it is useful to address the decade that preceded it. The prosperous s ushered in a feeling of euphoria among middle-class and wealthy Americans, and people began to speculate on wilder investments. As a result, the money supply in the U. They felt that prosperity was boundless and that extreme risks were likely tickets to wealth. Speculation, where investors purchased into high-risk schemes that they hoped would pay off quickly, became the norm.
Several banks, including deposit institutions that originally avoided investment loans, began to offer easy credit, allowing people to invest, even when they lacked the money to do so. Several warning signs portended the impending crash but went unheeded by Americans still giddy over the potential fortunes that speculation might promise.
A brief downturn in the market on September 18, , raised questions among more-seasoned investment bankers, leading some to predict an end to high stock values, but did little to stem the tide of investment.
Even the collapse of the London Stock Exchange on September 20 failed to fully curtail the optimism of American investors. In an effort to forestall a much-feared panic, leading banks, including Chase National, National City, J. Morgan, and others, conspired to purchase large amounts of blue chip stocks including U. Steel in order to keep the prices artificially high. Even that effort failed in the growing wave of stock sales.
As newspapers across the country began to cover the story in earnest, investors anxiously awaited the start of the following week.
When the Dow Jones Industrial Average lost another 13 percent of its value on Monday morning, many knew the end of stock market speculation was near. The evening before the infamous crash was ominous. After a night of heavy drinking, they retreated to nearby hotels or flop-houses cheap boarding houses , all of which were overbooked, and awaited sunrise. Children from nearby slums and tenement districts played stickball in the streets of the financial district, using wads of ticker tape for balls.
Although they all awoke to newspapers filled with predictions of a financial turnaround, as well as technical reasons why the decline might be short-lived, the crash on Tuesday morning, October 29, caught few by surprise. The volume of Western Union telegrams tripled, and telephone lines could not meet the demand, as investors sought any means available to dump their stock immediately.
Rumors spread of investors jumping from their office windows. Fistfights broke out on the trading floor, where one broker fainted from physical exhaustion.
Stock trades happened at such a furious pace that runners had nowhere to store the trade slips, and so they resorted to stuffing them into trash cans. When the final bell rang, errand boys spent hours sweeping up tons of paper, tickertape, and sales slips, as shown in Figure To put this in context, a trading day of three million shares was considered a busy day on the stock market.
People unloaded their stock as quickly as they could, never minding the loss. Banks, facing debt and seeking to protect their own assets, demanded payment for the loans they had provided to individual investors. Those individuals who could not afford to pay found their stocks sold immediately and their life savings wiped out in minutes, yet their debt to the bank still remained. The financial outcome of the crash was devastating.
Any effort to stem the tide was, as one historian noted, tantamount to bailing Niagara Falls with a bucket. The crash affected many more than the relatively few Americans who invested in the stock market. While only 10 percent of households had investments, over 90 percent of all banks had invested in the stock market. Many banks failed due to their dwindling cash reserves. This was in part due to the Federal Reserve lowering the limits of cash reserves that banks were traditionally required to hold in their vaults, as well as the fact that many banks invested in the stock market themselves.
Eventually, thousands of banks closed their doors after losing all of their assets, leaving their customers penniless. While a few savvy investors got out at the right time and eventually made fortunes buying up discarded stock, those success stories were rare.
Housewives who speculated with grocery money, bookkeepers who embezzled company funds hoping to strike it rich and pay the funds back before getting caught, and bankers who used customer deposits to follow speculative trends all lost.
While the stock market crash was the trigger, the lack of appropriate economic and banking safeguards, along with a public psyche that pursued wealth and prosperity at all costs, allowed this event to spiral downward into a depression. The crash of did not occur in a vacuum, nor did it cause the Great Depression.
It also represented both the end of an era characterized by blind faith in American exceptionalism and the beginning of one in which citizens began increasingly to question some long-held American values. A number of factors played a role in bringing the stock market to this point and contributed to the downward trend in the market, which continued well into the s.
The Allies owed large amounts of money to U. Unable to repay these debts, the Allies looked to reparations from Germany and Austria to help. The economies of those countries, however, were struggling badly, and they could not pay their reparations, despite the loans that the U. The U. When other countries began to default on this second wave of private bank loans, still more strain was placed on U.
Poor income distribution among Americans compounded the problem. In the s, this was not the case. Eighty percent of American families had virtually no savings, and only one-half to 1 percent of Americans controlled over a third of the wealth.
Many banks and businesses failed. At times, nearly one in four people in the U. Millions of people lost their homes and savings. But many Americans blamed Hoover for their suffering. They believed he permitted the economic crisis to continue — and even deepen — during his time in office. Herbert Hoover was born in a small house in the state of Iowa. His parents were Quakers. Their religion valued simplicity, hard work, equality among people, and peaceful resolution of conflict.
Hoover and his brother and sister were influenced by these beliefs, even after their parents died. By the time young Herbert Hoover was nine, he was an orphan. He moved to the state of Oregon, in the Pacific Northwest, and lived with an uncle.
Hoover did not thrive in that situation. Reports say that he usually kept to himself. And he did not do particularly well in school. Yet one official from Stanford University liked what he saw in the young man — hard work and a desire to learn new things. At the time, Stanford University was just getting established. It admitted Hoover into its first class. Hoover had to work hard at Stanford, both in class and to earn money to pay tuition. But the experience brought many benefits.
Hoover studied geology, and went on to work as a mining engineer. The job led to positions in Australia, China and other parts of the world. He became an internationally-known expert on mining. Unless the subject is a monster, all that intimacy typically turns the biographer into a personal partisan. This did not happen with Whyte and Hoover. Biographers want psychological access, but Hoover, though the records he left behind are vast, has the quality of not being personally present in a life that, for a long while, produced one triumph after another.
All the evidence suggests that Hoover was genuinely devoted to what he construed as the public good, with the proviso that he wanted his devotion to be recognized. What gave him renown enough to make him a plausible Presidential candidate was his self-appointment as the manager of an international effort to get food into Belgium after it had fallen to the Germans during the First World War. Whatever qualities had made Hoover successful as an operator of mines in remote areas also made him successful at delivering relief under emergency conditions.
He borrowed money to buy food before he had succeeded in getting government assistance. He persuaded George Bernard Shaw, Thomas Hardy, and other leading authors to publish statements in support of his efforts. He negotiated with food brokers and shipping companies. At a time when the world adored people who had spectacular organizational skills, here was somebody using them not to build a factory or administer an empire but for purely humanitarian purposes.
Hoover was a logistical saint. In , after many years in London, Hoover returned to the United States, won the friendship and admiration of President Woodrow Wilson, and was made the director of a new government agency called the United States Food Administration, which was charged with managing the national food supply now that the country was a participant in the war. He wound up not entering the race, but he eventually declared himself a Republican and was appointed Secretary of Commerce by President Warren Harding.
Hoover turned that usually obscure position, which he held through most of the nineteen-twenties, into a platform for further increasing his fame, culminating in one more turn as the orchestrator of a vast relief effort, after the Mississippi River flood of In those days, Hoover was, Whyte observes, on the liberal edge of the Republican Party.
Hoover, who as Commerce Secretary made himself into the first federal official with power over new industries like aviation and broadcasting—Congress created the F. He also loved taking on projects like standardizing the sizes of bricks and wood screws.
Whyte, however unsympathetic he finds Hoover personally, is almost entirely on his side as a policymaker—not least when it comes to his handling of the economic crisis that began a few months into his Presidency.
As early as , Hoover was warning publicly that, sooner or later, the booming economy of the nineteen-twenties was going to go bust. In the early months of his Presidency, he began selling his own stocks in anticipation of a crash.
And when the crash came, on October 29, , Hoover immediately grasped its importance and began exploring what to most of Washington seemed like the outer acceptable limit of an aggressive government response to an economic crisis. The Herbert Hoover Presidential Museum is now open to the public for viewing of the permanent galleries on the life and times of Herbert Hoover and the temporary exhibit gallery, Leonardo da Vinci Machines in Motion.
The s were a period of optimism and prosperity — for some Americans. When Herbert Hoover became President in , the stock market was climbing to unprecedented levels, and some investors were taking advantage of low interest rates to buy stocks on credit, pushing prices even higher. In October, , the bubble burst, and in less than a week, the market dropped by almost half of its recent record highs. Billions of dollars were lost, and thousands of investors were ruined.
After the stock market crash, President Hoover sought to prevent panic from spreading throughout the economy. In November, he summoned business leaders to the White House and secured promises from them to maintain wages. The President ordered federal departments to speed up their construction projects and asked all governors to expand public works projects in their states.
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