4 • Nature Takes Its Course: The First Years of the Depression

(photo credit 4.1)

Although the term “depression” had been used to describe earlier economic slumps, it came to be particularly associated with the years following the collapse of 1929. Ironically, the person most responsible for this association was Herbert Hoover himself. The President consciously used the word as part of his psychological campaign to keep up confidence. He believed “depression” had a less ominous ring to it than the more common previously used words “panic” and “crisis.” Such semantic games have been played by presidents and their aides ever since, often with more success than Hoover had with his choice of words.

After the Crash, President Hoover did more than issue optimistic statements; he also held optimistic conferences. The conferences were at least partially successful. The President asked business to maintain wage rates and keep up investment. He also called for lower taxes. This was a much better approach to a depression than any previous president had employed. “Keynes could not have done better,” as one economic historian has said. For more than a year, many businesses kept their pledges not to cut wages. Upon emerging from one of Hoover’s business conferences in November 1929, Henry Ford told reporters that he would do his part by raising daily wages to $7 and launching a $25 million expansion of his operations. A greater demonstration of confidence could not be asked for, but it did little good. While many corporations refrained from wage cuts, investing heavily in the future was a more optimistic step than most were willing to take. Gross investment in the United States fell by 35 percent from 1929 to 1930 and at the same rate from 1930 to 1931. In 1932 investment in the American economy almost ceased, dropping 88 percent from the greatly deflated 1931 level and totaling only $800 million (down from $16.2 billion in 1929).

Nor did wage maintenance produce the desired effect. One reason was that as demand fell corporate leaders saw no alternative but to cut production. Rather than slicing wages, they reduced payrolls. Wages remained stable for a time for those who had jobs, but that number was shrinking. Under these circumstances, aggregate purchasing power was falling even while that of many individual workers held steady (or, as prices began to fall, actually increased). But even those who kept their jobs reduced their buying out of fear that their turn to be laid off would come soon. As an economist said in 1931, “The employed have not dared spend what they have lest they be walking the streets next month.” “The basis of this fear,” he pointed out, was “the insecurity which characterizes the incomes of the great masses of the population.” The contrast with the mass psychology of the twenties was striking. When the outlook had been sanguine, large numbers of Americans had been willing not only to spend most of their current incomes, but to commit future income through installment purchases. Once the Depression was under way, this psychology reversed itself completely.

Declining consumption and investment were the keys to the worsening depression. But Hoover was not wrong in placing a great emphasis upon confidence. Prosperity in the twenties had been built on faith in the future. It seemed logical that what the depressed economy needed was a “fix” of faith. Business leaders at Hoover’s November 1929 conferences committed themselves to an optimistic view, but if one followed the sage advice John Mitchell gave forty years later and watched what they did rather than what they said, it soon became clear that the supply of optimism, unlike that of so many commodities, fell far short of the demand. Many businessmen actually expected the worst and prepared for it. Their preparations helped ensure that the worst would, in fact, happen. Business retrenchment was the order of the day in 1930 and 1931. Demand was down and inventories were unsold. The only sensible course for the individual company to follow was to cut production and prices. In the aggregate, though, the effect of many such separate actions was to deflate the economy further. When production was cut, more people lost their jobs. This reduced demand more, both directly and indirectly (by increasing insecurity). The futher drop in demand would lead to new slowdowns in production, more layoffs, and so on in an ever-deepening spiral.

The thinking of individual businessmen was well illustrated in testimony given by Daniel Willard, president of the Baltimore & Ohio Railroad, before a Senate subcommittee in 1931. “We have had to discontinue our purchases,” Willard told the committee. Replacement of rails normally was at the rate of 60,000 to 80,000 tons a year. In 1931, he said, it would not be more than 15,000. “We are not painting any buildings. We are not doing a thing that we can help in order that we may preserve, as far as possible, our financial status.” Who could blame companies for following such a policy? They had no real choice. The trouble, again, was that steps that were sensible—even necessary—for separate units in the economy weakened the economy as a whole. It was a classic example of the fallacy of composition: an action, like standing up at a football game, that can help an individual harms everyone if everyone does it. So it was with attempts by companies to secure their own financial positions during the Depression.

Despite the pledges made at the presidential conferences, investment dropped precipitously, and construction, which had been falling at an accelerating pace since its peak in 1925, sank by 26 percent in 1930, 29 percent in 1931, and 47 percent in 1932. In addition to the slashes in investment and construction, the drop in demand also led to a decline in prices. This was moderate at first, with the Consumer Price Index falling by 2.6 percent in 1930. The next year, though, saw an additional price decline of 9 percent. By the time the economy hit bottom in 1933, consumer prices had fallen 18 percent from their 1929 level. Maintaining wages in the face of falling prices was no easy task for the businessman. In May 1930, Henry Ford hinted that the united wage maintenance front had some cracks. “Issuing optimistic statements on the one hand and lowering wages on the other,” the automaker warned, “is a sure way to prevent betterment.” Despite the cracks, the no-wage-reduction plan remained widely in effect until the late summer of 1931. Then it, like the economy around it, collapsed. When U.S. Steel announced in September a 10 percent wage reduction, other companies hastily joined in breaking ranks. Ford himself, who had eagerly sought publicity when he raised wages, very quietly cut his pay rates in October 1931. The wage maintenance plan, the Commercial & Financial Chronicle declared, had “proved a flat failure.”

That conclusion would be hard to dispute. The magnitude of the collapse was unprecedented. There was a brief recovery of sorts in early 1930. On May 1, President Hoover said: “I am convinced we have passed the worst and with continued effort we shall rapidly recover.” That month marked instead the end of the weak recovery. By the close of the year everything—except unemployment—was down sharply. Statistics tell only a small part of the story, but they are startling. From the top of prosperity in 1929 to the bottom of depression in 1933, GNP dropped by a total of 29 percent, consumption expenditures by 18 percent, construction by 78 percent, and investment by an incredible 98 percent. Unemployment rose from 3.2 to 24.9 percent. By almost any standard, the United States was in its worst crisis since the Civil War.1

Although most of the blame for failing to reverse the collapse finally fell on Herbert Hoover, it was in fact everyone’s concern. The President did not, as historian Albert Romasco reminds us, “struggle to overcome it in some sort of splendid isolation.” Congress, businessmen, the general public—and even some economists—had ideas on how to deal with the Depression.

On Hoover’s right flank were some businessmen and archconservatives who favored the “proven” policy used by Grover Cleveland: sit it out; wait for natural forces to bring about recovery. The classic statement of this approach was Andrew Mellon’s: “Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate.” The Treasury secretary based this formula on an odd, mistaken memory of the Panic of 1873, which he told Hoover had ended quickly “and in twelve months the whole system was again working at full speed.” Mellon was only eighteen at the time and may perhaps be forgiven this gross historical error. It is less easy to absolve him for either his tax policies in the twenties or his attitude toward the Depression.

Quite willing to let the collapse take its “natural” course, Mellon had somehow not foreseen this healthy cleansing of the economy. A year before the Crash he had declared: “There is no cause for worry. The high tide of prosperity will continue.” Of course for Mellon himself the ebb in the tide was slight. Born into a family of substantial means, Mellon had increased the family fortune through banking, steel, aluminum, oil, real estate, and other enterprises. He was one of the richest men in the world. Still, he believed that greedy New York bankers were responsible for the Crash. His verdict: “They deserved it.” At least Mellon was as good as his word. He recommended that manufacturers curtail output, and he did just that in his own plants. The Treasury secretary was, as Galbraith has observed, “a passionate advocate of inaction.” This was not Herbert Hoover’s style. Hoover was especially outraged when, in 1931, Mellon refused a presidential request, as part of Hoover’s effort to get bankers to help each other voluntarily, to contribute a million dollars to an emergency fund to save the Bank of Pittsburgh. If Mellon would not volunteer, what chance did voluntarism have?

While Hoover did not agree with Mellon’s deflationary inaction as an approach to the Depression, the Treasury secretary was far from alone in his old-fashioned beliefs. The hand of the “liquidationists” was strengthened by the extreme fear of inflation that survived the terrible German experience of 1923. Even moderate programs that involved inflation seemed terrifying. A year after the Crash, Senate Democratic leader Joseph T. Robinson of Arkansas wrote to Bernard Baruch that the only solution was to “sit steady in the boat.” “I grow more and more impressed,” Robinson told the Democratic financier, “with the necessity of conservative action.…” Baruch, as might be expected, was of the same mind: “No government agency … can cure this situation.” In 1930 and 1931 there was, in fact, something approaching consensus in business and political circles to follow Mellon’s prescription. Even the President accepted—at least in public—Mellon’s contention that the first priority in restoring business confidence must be balancing the budget.

“The fact that we have let nature take its course,” declared the Stock Exchange’s Richard Whitney, “may augur well for the ultimate prosperity of the country.” One business representative said in 1931 that since the Depression was “a business ailment,” “the remedy, if one is to be found, must be a business remedy.” This might strike some as a curious logic: “Physician, heal thyself!” Yet it was a widespread attitude. At least equally common among the well-to-do and their political representatives was the refusal to admit that a serious problem existed. Such sentiments were to be expected from administration spokesmen, who had to be professional confidence builders, but they were common enough even among lesser folk. A Maryland building contractor, for example, wrote to Hoover in 1931, “of this fact I am very positive, that there is not five percent of the poverty, distress, and general unemployment that many of your enemies would have us believe.”

Others realized that there was a good deal of poverty and distress, but thought it best if no one mentioned it. A Syracuse automobile dealer was one of those who subscribed to the “out of sight, out of mind” formula. “I believe,” he wrote to a government official in 1931, “that if you could see your way clear to discontinue your publicity on unemployment and its kindred evils, the return of prosperity would be less hampered.” An apparently wealthy Minnesota man contended that talk of starvation could not “help but have a depressing effect.” And a New Jersey woman found the “UNEMPLOYED” signs used by apple sellers unsightly and tending to retard progress. Some seemed to think that recognizing the collapse’s existence bordered on disloyalty. “I’m sold on America. I won’t talk depression,” read buttons worn by Cincinnati residents.

Some—including on occasion Secretary Mellon—went beyond trying to ignore the Depression and attempted to make a case that it was actually beneficial. Erstwhile popular hero Henry Ford was one of the leading offenders in this regard. In the fall of 1930 he declared that it was “a good thing the recovery is prolonged. Otherwise people wouldn’t profit by the illness.” The Depression, Ford said shortly thereafter, was a “wholesome thing in general. If we could only realize it, these are the best times we ever had.” These were opinions that seem to have come more easily to Ford than to the unemployed.

In comparison with the Mellonites—and with his presidential predecessors in hard times—Herbert Hoover was extraordinarily active. But, being a man of principle, he would go only so far. His basic concept was to utilize the government as a catalyst for voluntary cooperative action in the private sector. Organizations formed with Hoover’s blessings—the Federal Farm Board (established before the Crash), the National Business Survey Conference, and the National Credit Corporation—attempted to make voluntarism work. In view of the enormity of the economic disaster, it should have been no great surprise that they failed. In attempting to stabilize prices through temporary purchases of surplus farm production, the farm board lost $345 million and wound up in 1931 with farmers angrier and farm prices lower than when it started. Optimism was the National Business Survey Conference’s business, its only business. It was a product that simply could not be moved by 1931, and the organization was quickly dissolved. This test of voluntary business action was such a failure that Hoover, who had once been bullish on the organization, neglected even to mention it in his Memoirs.

Herbert Hoover was nothing if not persistent. The failure of voluntarism in agriculture and industry did not dissuade him from trying the idea with bankers. Created at the President’s behest in October 1931, the National Credit Corporation amounted to a final test for voluntary cooperation. Within two months of its inception the NCC was an unmistakable flop. Hoover said years later that the bankers’ association quickly “became ultraconservative, then fearful, and finally died.… Its members—and the business world—threw up their hands and asked for government action.” For bankers, at least, such action would soon be forthcoming. In his recollection, the former President had hit upon an important point. Bankers, who were essential to a restoration of confidence, were fearful themselves. Like businesses, banks worked to improve their individual positions, but this weakened the economy as a whole. Banks seeking stronger, more liquid positions were loath to help weaker banks. As the latter failed, depositor confidence in the institutions in general declined, placing further pressures on all banks. They also reduced available credit. The latter fact, however, was of little immediate importance in the last two years of the Hoover administration. The nearly total lack of confidence meant that very few businesses wanted to borrow money, regardless of its availability. As Ogden Mills, Mellon’s successor as Treasury secretary, said in 1932, there was “more to fear from frozen minds than frozen assets.”

It was a singular misfortune that a president as committed to confidence as Hoover was so incapable of instilling it. Hoover did keep trying, though. Early in 1931 he said: “What this country needs is a good big laugh. There seems to be a condition of hysteria. If someone could get off a good joke every ten days, I think our troubles would be over.” What humor there was, though, was likely neither to lift the spirits nor please the President. An example: “Business is improving,” says the straight man. The comedian responds: “Is Hoover dead?”

In the fall of 1930, Hoover announced formation of the President’s Emergency Committee for Employment (PECE), with Colonel Arthur Woods, an old right-thinking Hoover friend who had organized relief activities during the 1921 slump, as its chairman. As part of the confidence campaign, the committee was a marvelous example of positive thinking. Even the name was well chosen: “emergency” meant the crisis would not last long, and “employment” avoided emphasizing the negative “unemployment.” The PECE was the President’s committee—a classic Hoover organization. The purpose was “to soothe the nation, not to alarm it.” The committee collected and passed along ideas and sketchy information, always accentuating the positive. No attempt was made to collect reliable statistics on such critical subjects as unemployment levels and local availability of relief funds. The PECE’s information (like that of Ronald Reagan) was anecdotal rather than accurate. Thus Colonel Woods was able to declare: “The country as a whole has responded most heartily to the emergency. Evidence is pouring in that communities are organizing to meet their own problems.” This statement was true enough, as far as it went. Many communities were organizing heartily. But the implication that this would be sufficient to meet the mushrooming needs was highly misleading.

The Emergency Committee lasted until August 1931, when it was transformed into the President’s Organization for Unemployment Relief (POUR). Named as new chairman was Walter S. Gifford, president of AT&T. This amounted more to a facelift than to a change of policy or function. The intention remained to manipulate public psychology to bring about a return to optimism. While attempting to spread cheer, POUR did try to help local groups raise money to help the unemployed. The main thrust of POUR was advertising. Major periodicals contributed space and leading advertising agencies provided talent. The results can be judged from the following copy, which appeared beneath a picture of an unemployed worker in a POUR ad:

They tell me there’s five or six million of us—out of jobs. I know that’s not your fault, any more than it is mine. But that doesn’t change the fact that some of us right now are in a pretty tough spot—with families to worry about—and a workless winter ahead.

Understand, we’re not begging. We’d rather have a job than anything you can give us.

We’re not scared, either. If you think the good old U.S.A. is in a bad way more than temporarily, just try to figure out some place you’d rather be.…

I’ll see it through—if you will!

How much encouragement those among the jobless who were either insufficiently frugal to have kept up their magazine subscriptions or lucky enough to find a periodical in a trash can derived from such ads cannot be said with certainty. It does seem likely that the ads were helpful in collecting funds for local relief.

Chairman Gifford was called before a Senate subcommittee in January 1932. He provided assurances that local relief groups were prepared to meet the needs of the winter. Quotas for contributions, Gifford said, had “gone over the top.” Gifford told the committee: “My sober and considered judgment is that at this stage … Federal aid would be a disservice to the unemployed.” Gifford was uninterested in learning of actual needs, unemployment levels, and the like. He told the senators that he did not think “the data would be of any particular value.” As the POUR director continued to paint his brightly hued landscape, Democratic Senator Edward P. Costigan of Colorado became exasperated. “You are always hopeful!” he exclaimed. “I find it pleasant, Senator, to be hopeful,” Gifford responded.2

On the ground, where relief was desperately needed, it was both less pleasant and less hopeful than in the circles frequented by Gifford. The President and his committees continued to insist that state and local agencies had the situation in hand. These claims were based on reports from the governors. This source was less then reliable, as governors are not in the habit of admitting that their states are beyond their control. Those in positions to know conditions were less sanguine. At the time Gifford was giving his cheerful assessments, his claims—and Hoover’s—were directly contradicted by the head of the Association of Community Chests and Councils. “I am stating that the funds we have are altogether inadequate to meet the situation,” declared Arthur T. Burns, “and we are not yet aware that local public funds have been appropriated in any such amount as to meet the situation.”

In point of fact, it was beyond the realm of possibility for states and localities to meet the enormous need for relief by the beginning of 1932. In most places funds were completely exhausted. People would not readily tolerate tax increases in the midst of a depression. Borrowing through bond issues was a possibility, but few buyers could be found for the bonds. And in many states constitutional restrictions that would take years to alter prohibited unbalanced budgets. In 1932 only eight states provided any form of unemployment compensation, and none of these even nearly approached adequacy.

The Hoover administration remained adamantly opposed to federal relief. Secretary of War Patrick J. Hurley spoke the typical language of the administration in June 1932, when he argued that “to give a gratuity to an individual, is divesting men and women of their spirit, their self-reliance. It is striking at the very foundation of the system on which this nation is builded.” This may have been true, but it was clear that one could not subsist on spirit and self-reliance for long. The Hoover argument was dependent upon the invalid assumption that the degree of suffering was still manageable on an individual basis. Hurley demonstrated this connection when he went on to say: “I disagree with all who think that there is not still opportunity for the man with the nerve and the capacity and the desire.”

Misconceptions in high places covered the gamut from the possibility of getting jobs, through the adequacy of local relief funds, to the degree of acute suffering among the unemployed. “Nobody is actually starving,” Hoover always contended. As in most of his perceptions of Depression conditions, the President was mistaken. Relatively few people literally starved, but genuine hunger was widespread. One study of health in eight cities found that families with a fully employed member had 66 percent less illness than those of the unemployed. Desperate people took desperate steps to feed themselves. In rural areas hungry people sometimes turned to eating weeds. Less appetizing were the urban scenes of men digging through garbage cans and city dumps. A Chicago widow followed the practice of removing her glasses before using rotting meat; in this way she avoided seeing the maggots she was eating.

Many of the nation’s more fortunate people were genuinely concerned about the plight of the unemployed. Generous contributions to local relief funds made this point clear. Some of the philanthropic impulses of the well-off were more ambiguous, though. Several proposals were made, for example, to feed the unemployed with leftovers from the tables of the affluent. In 1932 a midwestern newspaperman suggested that the needy be fed with “the side dishes of vegetables, half bowls of soup, half cups of coffee, portions of rolls … and all the rest that is left on plates by restaurant patrons.” Some such suggestions were undoubtedly made tongue in cheek, but similar ideas were actually put into practice in some localities. Princeton University’s eating clubs were among those generous enough to send their table scraps to the poor.

A growing discontent among the jobless (and those who feared they soon might be) was evident in many of their statements, including the letters they sent to Hoover and his committees. Of course working-class Americans were far from agreed on what the Depression’s causes and solutions were. Opinions ranged from “All this country needs is assurance that the law of supply and demand can work,” to finding the major cause of the collapse in “the placing of property rights above human rights.” Some searched for culprits, human or supernatural. A nearly illiterate Illinois man who warned that “the Emty Stomack does not Recogniz no laws,”* placed the blame on the devil. Many Americans who had come to believe that Herbert Hoover was Lucifer in disguise would have agreed. From the other side of the political fence, a New Haven Republican suggested that the Wall Street Crash and Depression had their “origin in the subtle schemes and manipulations of the interests and institutions represented by Alfred E. Smith and his friend Raskob.”

The search for a Satan, in the form of elephant, donkey, or Wall Street octopus, was all too common in the early Depression years. A good many workers, though, came to believe that it was not individual demons but the whole hellish system that had caused their troubles. A Pennsylvanian wrote to Hoover in 1932 that it was the capitalists who were “responsible for this unemployed situation,” and so they should be made to pay the cost of remedying it. A Denver man made the point that “purchasing power is not lost but redistributed and now rests in the hands of a few.” He did not suggest altering that situation drastically, but others did demand legislation giving everyone his fair share. A poorly educated New Yorker said in late 1930, “I am neither an anarchist, socialist, or communist—but, by God, at times I feel as if I should affiliate myself with the radicals.”3

The picture that many contemporaries have given us of the mood of the downtrodden in the Hoover years is one of defeat, resignation, and self-blame. Hitchhikers picked up by author Sherwood Anderson apologized for their condition. Marquis Childs wrote in January 1933: “What is surprising is the passive resignation with which the blow has been accepted; this awful pretense that seeks to conceal the mortal wound, to carry on as though it were still the best possible of all worlds.” Childs saw something quite the opposite of class consciousness. “Sympathy,” he said, “is all too often an ill concealed form of triumph, a kind of ‘Thank God, someone is worse off than we are.’ ” The sad acquiescence of a farmer at the foreclosure of his estate was shown when he said only, “The Lord gave and the Lord has taken away.” Louis Adamic, speaking of American workers, wrote in 1931: “I have a definite feeling that millions of them, now that they are unemployed, are licked.” The New Yorker summed up the contemporary view in mid-1931: “People are in a sad, but not a rebellious mood.”

To a large extent, all of this was true. The initial reactions to the Depression on the part of many of its victims were bewilderment, defeat, and self-blame. Glad to believe themselves responsible for whatever success they had enjoyed in the twenties, many “ordinary” people found themselves during the early Depression in a position similar to that of businessmen and Republicans. Having taken credit for the good, they had little choice but to accept responsibility for the bad. As they groped for some way to understand the calamity that had befallen them, however, some of the unemployed began to work toward values quite different from the egoism that had dominated the twenties.

Discontent remained amorphous in the Hoover years, but the potential for the development of a value system stressing morality, justice, equality, and compassion was beginning to appear. “Oh why is it,” a December 1930 letter asked Colonel Woods, “that it is allways a bunch of overley rich, selfish dumb, ignorant money hogs that persist in being Senitors, legislatures, representatives Where would they and their possessions be if it were not for the Common Soldier, the common laborer that is compelled to work for a starvation wage.” The writer went on to complain: “In the Public Schools our little children stand at salute and recite a ‘rig ma role’ in which is mentioned ‘Justice to all’ what a lie, what a naked lie.”4

It is plain that in its first years the view of the Depression from below was rather different from the way it appeared in Washington or on Wall Street.

While slowly growing discontent in society’s lower ranks was of obvious concern, Americans of the upper ranks had other troubles in 1930 and 1931. Many people believed that the Depression was somehow caused by European events. Cutting ourselves off from the contagion of the rest of the world seemed a possible way out. As it happened, it was instead a way to get in deeper.

A world economic conference in Geneva in 1927 had recognized the threat that tariffs posed to the functioning of the world economy. The conference reached agreement on a tariff truce. It was an idea somewhat like the nuclear freeze proposals of the early 1980s. The hope was that a truce would provide a climate in which meaningful tariff reductions could take place. Tariffs were, however, as American as apple pie, or at least as American as the Republican party. High import levies were, as Joseph Schumpeter put it, “the household remedy” of the Grand Old Party. Although Herbert Hoover did not march in lockstep with his party, he was “solid” on the tariff. The candidate pledged in 1928 that, as part of his program to help farmers, he would seek higher duties on agricultural commodities. True to his word, the new President called a special session of Congress, beginning in April 1929, for the purpose of “selective revision” of the tariff. But the hearings on the bill were not restricted to questions involving agricultural duties. Hoover and the congressional Republican leadership failed to keep control over the bill. The traditional back-scratching process that had turned so many previous attempts at tariff reform into higher duties began to operate. In the view of one early student of the enactment of the new tariff, Hoover must bear a heavy share of the blame: “To manage pressure is to govern, to let pressures run wild is to abdicate.”

Talk on the tariff for public consumption centered upon helping the American farmer and “equalizing” production costs at home and abroad. Both arguments amounted to nonsense. There should have been no doubt that farmers would lose more from increased costs of articles they bought than they would gain from price increases for their products, most of which faced little foreign competition in the domestic market. As one historian noted, “Far more farmers wore shoes than sold hides.” An American Farm Bureau Federation study indicated that American farmers would gain $30 million from the increases in agricultural tariffs and lose $330 million. The “equalizing costs” concept was a wonderful political tool, but was impossible of realization. In any event, such arguments were a smokescreen. What the organized business interests sought, simply, was to exclude foreign competition so they could charge more for their products.

The special session dragged on, through the Crash, without settling the tariff question. Opposition by Democrats and insurgent Republicans blocked the increases sought by the special interests. Some Republicans even blamed the Crash on Democrats’ opposition to high tariffs. When the regular session began a few weeks later, the high tariff forces pushed harder. The resulting Hawley-Smoot tariff, which Hoover signed into law in June 1930, was the highest in American history, with ad valorem rates jumping from an already high 33 percent to more than 40 percent.

Before its passage, economist (and later U.S. Senator from Illinois) Paul Douglas drafted a statement denouncing the bill and quickly obtained the signatures of more than one thousand economists representing 179 institutions of higher learning and all but two states. The statement pleaded for congressional rejection of the bill or, failing that, a presidential veto. The economists’ arguments that the high tariff would “injure the vast majority of our citizens” and that “countries cannot permanently buy from us unless they are permitted to sell to us” were unassailable. It is understandable, of course, that many people might not take the views of a thousand economists too seriously in 1930, but on this point they were right, as events soon showed. Other nations rapidly retaliated and the world depression grew worse.

The Hawley-Smoot Act, conceived in 1929, was the last will and testament of the New Era’s “every man for himself” ethic. It was motivated, as tariffs almost always are, by the greed of special interests. Fittingly, this relic of the prosperity decade left as a further legacy of the twenties a deepening of the Depression that other aspects of that era had already produced.

With the new tariff war, the focus of economic problems shifted to the international arena. Herbert Hoover contended for the rest of his life that the United States economy was recovering in the spring of 1931, when the collapse of the European banking system plunged this nation, along with the rest of the world, deeper into depression. In fact an extremely modest improvement was registered in the first months of 1931, but stock prices and other indicators hit new lows in April and continued with brief pauses to plunge until the bottom was hit in 1932 and early 1933.

The international crisis of 1931, like that of 1914, began in Austria. In May it was announced in Vienna that a major bank, the Kreditanstalt, had lost during the preceding year an amount equal to the total of its capital reserves. The bank remained open with assistance from the Rothschilds, the Austrian government, and the Austrian Nationalbank. The news, however, precipitated a banking crisis in Germany. The domestic political situation in Germany was tense, with great pressure on the government from both Nazis and Communists. Chancellor Heinrich Brüning argued that the nation was on the verge of bankruptcy and could not continue to make reparations payments. The idea was to get relief on reparations in order to defuse the Nazi attacks on the government. A financial crisis would help make Brüning’s point. The act worked too well. A run on German banks led in mid-July to the failure of one of the nation’s leading financial institutions and the temporary closing of all banks in the country.

One reason that all this was of more than academic interest in the United States was that a complete German collapse would have taken many American banks with it. Chase and the Guaranty Trust Company, for example, each had placed nearly half of their capital in German securities. This was, of course, foolish (it bears disturbing similarities to the massive lending by American banks to Third World countries in the late 1970s and early 1980s), but the Germans were offering especially high interest rates and there was a shortage of investment opportunities in the United States.

While the German banking crisis was unfolding, President Hoover issued a proposal for a one-year moratorium on all intergovernmental payments. The French, who had not been consulted before Hoover’s announcement, were outraged, although they finally agreed to go along. The German government, however, felt itself obliged to make increasingly jingoistic statements in order to undercut the Nazi appeal. When Berlin began talking of military parity, it gave rise to fears in France and elsewhere that freeing the Germans of their reparations obligations would enable them to put the money saved into arms. The hoped-for consequences of the “breathing space” provided by the Hoover moratorium never materialized. By the second half of 1931, most of the world’s leading countries were consumed by supernationalism.

The final blow of the international crisis of 1931 came in September when, after a prolonged run on the overvalued pound, the British abandoned the gold standard. This was followed immediately by heavy conversion of dollars into gold. The pressure certainly did not help the weak American economy, and the fall in prices, imports, and industrial production accelerated.5

Herbert Hoover’s insistence that the Depression was ending early in 1931 and continued only because of the European financial crisis is unacceptable. There can be no question, though, that foreign problems added to the woes of the depressed United States.

Politics in a democracy ought to be a mirror of social and economic life. As values change, so should the political complexion of the nation. The appearance of this reflected image is not always immediate, however.

In 1930, American voters had their first significant opportunity to react to the altered conditions brought by the Depression. The results were not encouraging for President Hoover or his party. Republican House losses were their worst since 1922, when another economic slump had hurt the party in power. The Republicans did remain the majority party, winning 54.1 percent of the popular major party votes for House seats, compared with 57.4 percent two years before. But their margin of control in both houses was paper thin. In the Senate, the Republican majority dropped from 17 before the election to one after it. In the House, where Democrats picked up more than 50 seats in 1930, the Republican margin was so small that it had vanished after by-elections were held in the 13 months between the election and the convening of the Seventy-second Congress. Eleven of the 13 new senators elected in 1930 were Democrats, and progressives of both parties fared well.

When the Seventy-second Congress convened in December 1931, Hoover seriously considered allowing the Democrats to organize both houses so that they would have to share responsibility (and blame) for economic policies. This idea can be viewed as a bold stroke of genius or sign of lack of leadership. It might have helped the country to reduce partisanship in determining how to deal with the crisis. It might have helped Hoover politically in 1932 by allowing him to take a page from the as yet unwritten 1948 book of Harry Truman. Although it is highly unlikely that he could have pulled it off, Hoover might have been able to get off the defensive by attacking a Democratic Congress. However that might be, the idea was surely unrealistic. Neither party would go for it. Republican senators were not prepared to give up their committee chairmanships in order to help either the nation or Hoover’s chances for reelection. And Democrats, sensing victory in 1932, had, as political scientist Arthur W. MacMahon pointed out at the time, “no wish to incur premature responsibility.” It was a Republican depression, and Democrats wanted to keep it that way. It was the old idea of giving one’s opponents enough rope to hang themselves.

Although there are indications that in private Hoover said he believed moderate deficits might be as necessary in depressions as in wars, he concluded that this position was politically untenable. The deficit for fiscal 1932 was the largest, as a percentage of federal expenditures, in peacetime American history. It approached 60 percent of spending, more by this measure than even the Reagan deficits of the early 1980s. As the Depression slashed normal revenues, the only way to balance the budget was to raise taxes. Both Mellon and his successor, Ogden Mills, were longtime advocates of a sales tax, the regressive nature of which held great appeal for the wealthy. The desperate need for new revenue if the budget was to be balanced appeared to give them their chance. The battle lines were drawn over the issues of taxation—and a national sales tax in particular—as the critical issue Congress would decide in preelection 1932.

At first it did not appear likely to be much of a battle. Democratic leaders deferred to Bernard Baruch, whose differences on the subject with Mellon, Mills, and Raskob were negligible. Democratic Speaker of the House John Nance Garner, publisher William Randolph Hearst, and Jouett Shouse, director of the Democratic National Committee, all endorsed the sales tax idea. Their argument was simply that it was essential to balance the budget and a sales tax was the only way to raise sufficient revenues. Democratic leaders were so anxious to place the tax burden upon those least able to pay that they allowed Mills to maneuver them into accepting responsibility for authorship of the idea.

Given the bipartisan support, some sort of sales tax seemed certain. But one quarter had not yet been heard from: the people. It was apparent to many Americans that the purpose of the sales tax was to “soak the poor.” Some of its advocates made little attempt to hide this. The sales tax was “proper,” said Hudson Motors’ board chairman Roy Chapin, “since the lower income brackets pay nothing to the maintenance of the National Government.” As it happened, though, the view of proper redistribution subscribed to by Chapin and so many business and political leaders was not shared by those upon whom the tax would fall. A large number of Americans perceived that “the interests” were trying to substitute the sales tax for income and corporate taxes. “It’s a wonder,” said Socialist leader Norman Thomas, “they don’t put a tax on tickets to the breadline.” (Forty years later, members of the Reagan administration suggested almost that: to tax unemployment benefits.)

An unprecedented volume of mail poured into congressional offices. Constituents denounced the sales tax in no uncertain terms and, making democracy work as it ought to, obliged their representatives to defeat the proposal. The events of March 18–24, 1932, in the House were truly remarkable. Prompted by the largely spontaneous outpouring of sentiment from their constituents, congressmen rebelled against their leaders. Amidst cheers, foot stomping, whistling, and wild applause, progressive Republicans united with Democrats in voting to increase income taxes, surtaxes, and estate taxes. Shouts of “soak the rich!” and “conscript wealth!” rose from the House floor. Complaining of “a runaway House,” Democratic leader Henry Rainey declared with more than a little exaggeration: “We have made a longer step in the direction of communism than any country in the world ever made except Russia.”

When the sales tax itself came before the House, opponents defeated it handily, 223–153. The battle showed that the people had moved far ahead of Congress in their quest for fairer economic arrangements. The tax bill had become a symbol, as one lobbyist put it, “of the struggle between those who have and have not.” For once, the latter won.

But what did they win? The Revenue Act of 1932 has often been denounced as one of Hoover’s greatest mistakes. Raising taxes in a depression has come to be unthinkable (although not “undoable,” as Congress showed in 1982) in subsequent decades. Many economists have blamed the further worsening of the Depression in 1932–33 on the new higher taxes. Jude Wanniski goes so far as to attribute to them the bank panic of early 1933, which he says was caused by people withdrawing deposits to pay their 1932 taxes. Leaving such silly arguments aside, the effects of the tax increase must be assessed.

The 1932 tax bill enacted the largest peacetime percentage increase in taxes in American history. Thanks to the protests from the public, however, that burden did not fall directly upon the mass of consumers, although there were a substantial number of “manufacturers’ excise taxes” on specific products, which amounted to hidden sales taxes. Corporate income taxes of 1.75 percent would not seem to have approached the point of diminishing returns on the Laffer Curve. And the raising of surtaxes to 55 percent on incomes in excess of $1 million would not appear likely to have been discouraging to very many people. Did an estate tax of 45 percent on legacies of more than $10 million put a serious brake on industriousness? Even after the Revenue Act of 1932, the vast majority of Americans paid no federal income taxes whatsoever. Only about 15 percent of all American families and unattached individuals experienced the tax bite. A family of four earning $20,000—a very sizable income in those days—paid taxes at an effective rate of only 8.1 percent.

The notion that the Revenue Act of 1932 was an economic disaster is highly questionable. Parts of it were certainly counterproductive, but most of its sections were reasonably well conceived. Later changes in 1935 and 1936 were not nearly as dramatic as the 1932 legislation, which, as one economist has said, “essentially set the tax structure for the entire period up to the Second World War.” One thing can be said with assurance: any harmful effects of the final act were far less than would have been caused by a sales tax, which would have reduced consumption directly.

The great failing of Hoover’s fiscal policies was in not spending enough, rather than taxing too much. Even on spending though, the criticism is often too harsh. Hoover’s spending of $700 million on public works in 1931 was a large step toward subsequent New Deal levels. When it came to relief spending, however, Hoover remained adamant. If anything, he grew more hostile to the idea. The President came to believe a huge work relief program might be as demoralizing as a dole. His objections easily prevailed in January 1932.

The same alteration in public mood that was evident in the outcry over the sales tax soon made itself felt on the question of relief. The momentum for federal assistance for Depression victims became irresistible. After relief measures had passed both houses by comfortable margins, Senator Costigan rightly pointed out that “legislation which was taboo in January is sanctified in June.” The President vetoed the bill and obtained a version more to his liking, which he signed into law late in July. The sustained veto could not hide the fact that Hoover had lost on the question of principle. In his veto message, the President declared: “Never before has so dangerous a suggestion been seriously made to our country.”

The results of the sales tax and relief battles showed that by 1932 the shift away from the self-centered values of the twenties was well under way. “Leaders” were far behind the public mood and had to scramble to catch up with their “followers.” The growing values of compassion, justice, and equality were an important backdrop to the election of 1932, as well as to the rest of the Depression decade.

Until the results of that election took effect, however, the Hoover administration remained in charge. That its values were out of step with the public mood was amply demonstrated in the handling of relief under the newly passed Emergency Relief and Construction Act. Hoover’s people were placed in the awkward position of administering a program to which they were philosophically opposed. The result was that the very limited federal funds made available for relief and public works were granted in the most parsimonious manner. Before a state’s governor could apply for a loan (for such they were, not grants), he had to sign an oath of poverty. Then federal officials nit-pickingly went over the application to see what they could reject. In short, a destitute state was to go through the same sort of humiliating experience that greeted the individual who sought assistance.6

The oft-noted contrast between the Hoover administration’s favorable attitude toward assistance for bankers and its reluctance to help the poor centers on the most important institution created in the Hoover presidency, the Reconstruction Finance Corporation.

When the National Credit Corporation fizzled in the fall of 1931, voluntarism had had its last chance. Bankers themselves were, as Hoover said, clamoring for government action. The result was the creation of the RFC, the boldest move Hoover made in the way of government intervention to combat the Depression. The model was the War Finance Corporation. In finally taking action based on the war analogy, Hoover was recognizing that the collapse was more severe than he had previously admitted. The war analogy was important, too, because it emphasized the temporary nature of the proposed agency.

While the RFC was unquestionably a new departure, it was also based firmly upon Hoover’s earlier assumptions. Business confidence was still seen as the key to recovery. “After all,” Ogden Mills asked at the Senate committee hearings on the RFC bill, “what is credit but confidence?” Moreover, the President still believed the essence of the crisis to be financial. And by emphasizing credit, Hoover was still working through the private sector. Noting these continuities, some observers go on to assert that Hoover had not changed his mind about government intervention at all. Elliot Rosen points out that while the President was pushing for the establishment of the RFC, he was simultaneously slashing the budget for public works: “RFC had really served as a camouflage for the achievement of federal fiscal retrenchment of a catastrophic nature.”

This, in effect, is what happened; it goes too far, though, to contend that it was what Hoover intended. Believing confidence to be central to recovery and credit to confidence, the President was sincere in his advocacy of the RFC. His assumptions were wrong, but that does not mean that he was deceitful. The purpose of the RFC was to make government credit available to banks and other financial institutions. This, its backers hoped, would loosen credit throughout the economy and bring about recovery. Had the underlying assumptions been correct, it might have worked. The fundamental mistake was to think that the credit problem was one of supply. Given the paucity of purchasing power, businesses were not interested in obtaining loans. Expansion was the last thing on the minds of most businessmen in 1932. And bankers, fearful that their own positions were insufficiently liquid, were not anxious to make new commercial loans. In short, an enlarged supply of credit would not create its own demand. Hoover and the RFC were on the wrong side of the equation.

This is not to say that the RFC did no good in 1932. What it accomplished was to save the American banking system, albeit only temporarily. RFC loans held off the collapse of the banking system until the final weeks of Herbert Hoover’s presidency, thereby providing Hoover’s successor with both a crisis and an opportunity. (I shall come back to the banking crisis in more detail later, because it came to a head during the weeks just before Franklin Roosevelt took office.)

The controversy over banks versus people that plagued Hoover during 1932 reached its head in the summer and centered on the famous—or infamous—$90 million RFC loan to the Central Republic Bank of Chicago. Charles G. Dawes, president of the RFC and former Vice President of the United States, was a director of the bank. When the Central Republic appeared ready to go under in June 1932, Dawes resigned his RFC position and returned to Chicago to take over the affairs of his troubled bank. The only hope was massive assistance from the RFC. This was granted, not because of Dawes’s relationship with the organization, but out of fear that the collapse of the Republic would take the rest of Chicago’s banks—and quite possibly those of the whole nation—with it.

Although very likely justified from an economic standpoint, the Republic loan was a public relations disaster for Hoover. A few weeks before the loan was made, Chicago’s mayor had brought a delegation to Washington seeking an RFC loan to the city so that teachers and municipal employees could be paid. The RFC had no statutory power to make loans to cities and refused the request. To the public, though, the appearance was clear: Hoover’s RFC gave $90 million to a bank at the same time it denied a much smaller amount to the same city to pay its impoverished workers. Democratic campaign workers could not have invented a better piece of propaganda.7

That many people were prepared to believe the worst about the government and its agencies in 1932 was a reflection of how much the economy had deteriorated and the social fabric frayed by late in Hoover’s term. Many observers were warning that the desperate conditions facing Americans might produce a revolution. Such predictions were more common among the potential victims than the putative revolutionaries. A few years later the “substantial businessfolk” of Muncie remembered they had feared in the winter of 1932–33 that their world was collapsing. “We all laugh about it now,” one of them recalled in 1935, “but it was no joke then! At the time of the national bank crisis in 1933, when it seemed for a while that everything might collapse, many of us bought a great deal of canned food and stored it in our cellars, fearing a possible seige. One family I know bought enough for more than five years.”

Wealthy businessmen were not alone in their forecasts of possible bloody upheaval. Prominent journalists and politicians agreed that revolution, rather than prosperity, might be right around the corner. William Allen White wrote in the fall of 1931 that effective relief would be “the only way to keep down the barricades in the streets this winter.” Several normally conservative labor leaders joined in the predictions of revolution. American Federation of Labor President William Green warned in 1931: “When despite every effort to get employment, men and women find no opportunity to earn their living, desperation and blind revolt follow.” Green saw evidence that such a situation was building at that time: “Throughout the width of our country these seeds of unrest are lying ready to be quickened by the radical propagandists or other irresponsible leadership.” As his words reveal, the labor chief emphatically did not favor revolution. Rather, he was suggesting that if revolt was to be prevented, industry must change its ways and give workers a fair share of the profits.

By the spring of 1932, the AFL leadership had escalated its talk of approaching violence. Other leaders went further than Green. Speaking for the AFL, Federation Vice President Edward F. McGrady told a Senate subcommittee, “There will be a revolution in this country if nothing is done at once to create work for the unemployed or to meet their needs in some other way.” If the administration refused, McGrady continued, “to allow Congress to provide food for these people until they do secure work, as far as I am personally concerned, I would do nothing to close the doors of revolt if it starts.” Such strong language from the lips of so conservative a man as McGrady should have been enough to frighten those who had something to lose. If not, Green himself was back before a congressional committee, threatening a “universal strike” if Congress failed to remedy the situation. When Senator Hugo Black of Alabama asked, “That would be class war, practically?” Green replied, “It would be that … that is the only language that a lot of employers ever understand—the language of force.” “If we do not get at the fundamentals in an orderly, constructive way,” Green said in August 1932, “we shall be swept aside by a tide of revolt.”

When Senator Tom Connally of Texas charged the War Department with concentrating troops near urban areas, the secretary of War “referred to Reds and possible Communists that might be abroad in the land.” Some Americans were scared. Their worst fears never materialized, but the period was by no means entirely peaceful.

In the realm of discontent, the farmers had a long head start. The clouds of agrarian unrest had been gathering since 1920. Those clouds were mature enough to produce small but powerful storms of violence in the Hoover years. The rebellious farmers have, however, generally been pictured as conservatives defending private property rather than revolutionaries seeking fundamental change. Arthur Schlesinger, Jr., has said of the agrarian rebels, “Theirs, as they saw it, was the way not of revolution but of patriotism.” But the evidence seems to point to a different conclusion. The leader of the National Farmers Union, John A. Simpson, said, “I feel the capitalistic system is doomed. It has as its foundation the principles of brutality, dishonesty, and avarice.” Conservative Edward O’Neal of the American Farm Bureau Federation told Congress in the winter of 1932–33, “Unless something is done for the American farmer we will have revolution in the countryside in less than twelve months.”

Perhaps the major difficulty concerning the farm unrest lies in Schlesinger’s dichotomy between patriotism and revolution. It was a distinction that radical farmers did not make. As one elderly farmer participating in the Farm Holiday movement put it, “They say blockading the highway’s illegal. I says, ‘Seems to me there was a Tea-party in Boston that was illegal too. What about destroying property in Boston Harbor when our country was started?’ ” Talk of revolution, to these sons of the Middle Border, was the height of patriotism. Their nation had been born in revolution and some of its greatest heroes had glorified the right of revolution. “To the American,” one journalist wrote in 1932, “revolution is a birthright, an inheritance that no power can take away, a privilege to be guarded most jealously. If he seldom exercises his privilege, he has not forgotten that the right and responsibility are his.”

Rebellious incidents were by no means confined to agricultural areas. Organized looting of food became a nationwide phenomenon. In March 1930 over a thousand New Yorkers standing in a Salvation Army breadline suddenly charged two bakery trucks that were making a delivery at a nearby hotel. Bread and pastry were thrown into the street and the hungry men scrambled to get it. It was reported to be common practice for groups of thirty or forty jobless men to enter a store and demand food. “The chain stores as a matter of policy refrained from calling the police in order to keep the incidents out of the papers.” In Detroit, people were often seen looting through broken store windows at night. In the drought-stricken areas of Arkansas in 1931, hungry residents used guns to force Red Cross officials (who seemed more worried about the possibility of non-needy impostors than feeding the desperate) to give out food. Hundreds of incidents like these could be recounted, but even that number would only scratch the surface of the rebellious mood many Americans had reached by 1932. It is almost certain that most of the small acts of lawlessness committed by bands of unemployed men were never recorded because in many areas newspapers would not print the stories. The editors, like the chain store managers, feared publicity might precipitate other such actions.

Two urban mass actions of 1932 were, however, far too large to go unnoticed. These were the March battle between workers and police at Dearborn, Michigan, and the summer encampment of World War I veterans in Washington.

On the frigid morning of March 7, 1932, some 3000 persons assembled in Detroit for a Communist-initiated march to the Ford River Rouge factory in Dearborn. Their purpose was to present a number of demands to the management of the Ford plant. Henry Ford had by this time fallen from his lofty perch of respect and was seen by many of the poor in the Detroit area (and throughout the nation) as a symbol of the old order’s evils. The march proceeded uneventfully through Detroit, which was under the enlightened leadership of Mayor Frank Murphy. But when the Dearborn line was reached, a group of gendarmes from that Ford-controlled community ordered the demonstrators to turn back. After they refused the police shot tear gas at the crowd, which responded by hurling back stones and chunks of frozen dirt. The forces of law and order retreated to the factory, where firemen began dousing the crowd with freezing water from their hoses and the police resumed their tear gas barrage, this time mixing it with gunfire. One petitioner was killed at this point and the crowd removed to a nearby field. There the police opened fire again, killing three more demonstrators and seriously wounding fifty others.

This remarkable flash of class conflict ended five days later with a common funeral for the deceased protesters. Some 40,000 persons viewed the four bodies lying beneath a red banner presenting a picture of Lenin and the words “Ford Gave Bullets for Bread.” The bodies were lowered into their graves as a band played the “Internationale.”

The most significant aspect of the battle at River Rouge is that the actual fighting was initiated not by the workers but by those taking their orders from business leaders. As the editor of the Amalgamated Clothing Workers’ Advance said, “The outrageous shooting at defenseless, peaceably marching unemployed workers in front of Henry Ford’s Dearborn plants best shows that the masters won’t wait till the slaves will take matters into their own hands.”

The same point was made even more clearly several months later when the federal government used force to expel peaceable veterans of World War I from Washington. It all began in the spring of 1932, when a group of veterans in Portland, Oregon, began a march on Washington. Their purpose was to obtain the immediate payment of bonuses Congress had agreed to pay in 1945 to veterans of the European conflict. Many veterans insisted that immediate payment of the money would stimulate the economy and so help end the Depression. Styling themselves the Bonus Expeditionary Force (after the American Expeditionary Force, which had been their name in France in 1918), the group set out for Washington, riding freight cars and subsisting on handouts. By the time the Portland group arrived in the District of Columbia, many other veterans had taken up the idea and were en route to the capital. Eventually their number grew to more than 20,000. Under the pressure of these people who lobbied with their feet, the House passed a bill for immediate payment of the bonus. The Senate, however, defeated the measure. Some veterans gave up and went home, but others decided to stay in Washington. They built shacks on the Anacostia Flats and sent for their families. All continued in relative calm until Congress adjourned. On the final day of the session, the veterans massed at the Capitol, expecting to see Hoover, who had firmly refused to meet with any of them. But at the last moment the President decided not to make the traditional visit to the congressional adjournment ceremonies. Their quest for the moment fruitless, some veterans began to leave the city.

Others did not move quickly enough to suit some in positions of authority. At the end of July an incident in which a policeman started shooting at unarmed veterans, one of whom was killed, provided a pretext for action. General Douglas MacArthur, disobeying orders from Hoover, decided to drive the Bonus Army out of the District. The veterans were given one hour to remove themselves, then MacArthur’s troops began throwing tear gas and prodding the slow moving with bayonets. A seven-year-old boy who tried to go back to his tent for his pet rabbit was stabbed in the leg by a soldier who shouted, “Get out of here, you little son of a bitch!” The pathetic “Army” was quickly driven out of Washington by MacArthur’s brave legions. After his glorious victory in the Battle of Anacostia Flats, the general was beside himself with self-congratulation. MacArthur insisted that the “mob” was driven by “the essence of revolution.” He asserted that it was “beyond the shadow of a doubt” that the Bonus Army had been about to seize control of the government. Actually the veterans had been prepared to seize nothing larger than MacArthur’s imagination. The fears of those in power had again magnified the danger.

One of the final ironies of the Hoover administration was that the President was blamed for the brutal eviction of the Bonus Army. Hoover let MacArthur get away with insubordination—encouraging a habit that the general would continue to exercise—and publicly took responsibility for the action. This was part of a calculated campaign move to the right. By this time the President’s knack for assessing situations wrongly was well developed. Moving to the right in 1932 put him on a collision course (or more accurately, a rapidly diverging course, since the public mood was already far to Hoover’s left) with a majority of the people, who were definitely traveling in the opposite direction.

Revolution was not yet likely in 1932. But an unemployed store clerk who had written to the PECE to warn Hoover that he had better take action soon, “before we have to do something desperate,” touched on a critical point. Talk was cheap, and few of those who spoke or wrote radical words were ready to man the barricades. It was not, after all, the protesters who initiated the violence at Dearborn and Washington. But the restless words did show that faith in the economic system was beginning to erode.8

The person elected president in 1932 would have what might well be the last chance to save the system through peaceful change. It was one of history’s critical moments. The time has come for a detailed look at the man upon whom that burden—and opportunity—fell.

* Throughout the book, letters from “ordinary” people are reproduced exactly as they were written, without corrections in spelling or grammar.

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