Why herbert hoover failed

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.

This scenario meant that there were no new buyers coming into the marketplace, and nowhere for sellers to unload their stock as the speculation came to a close. In addition, the vast majority of Americans with limited savings lost their accounts as local banks closed, and likewise lost their jobs as investment in business and industry came to a screeching halt. Finally, one of the most important factors in the crash was the contagion effect of panic.

For much of the s, the public felt confident that prosperity would continue forever, and therefore, in a self-fulfilling cycle, the market continued to grow. But once the panic began, it spread quickly and with the same cyclical results; people were worried that the market was going down, they sold their stock, and the market continued to drop. Historically, markets cycled up and down, and periods of growth were often followed by downturns that corrected themselves.

But this time, there was no market correction; rather, the abrupt shock of the crash was followed by an even more devastating depression. Investors, along with the general public, withdrew their money from banks by the thousands, fearing the banks would go under. The more people pulled out their money in bank runs, the closer the banks came to insolvency.

As the financial markets collapsed, hurting the banks that had gambled with their holdings, people began to fear that the money they had in the bank would be lost. This began bank runs across the country, a period of still more panic, where people pulled their money out of banks to keep it hidden at home.

The contagion effect of the crash grew quickly. With investors losing billions of dollars, they invested very little in new or expanded businesses.

After the crash, both were hit hard. In November , fewer cars were built than in any other month since November Even before the crash, widespread saturation of the market meant that few Americans bought them, leading to a slowdown. Afterward, very few could afford them. By , Stutz, Locomobile, Durant, Franklin, Deusenberg, and Pierce-Arrow automobiles, all luxury models, were largely unavailable; production had ground to a halt. They would not be made again until In construction, the drop-off was even more dramatic.

It would be another thirty years before a new hotel or theater was built in New York City. The Empire State Building itself stood half empty for years after being completed in The damage to major industries led to, and reflected, limited purchasing by both consumers and businesses. Even those Americans who continued to make a modest income during the Great Depression lost the drive for conspicuous consumption that they exhibited in the s.

People with less money to buy goods could not help businesses grow; in turn, businesses with no market for their products could not hire workers or purchase raw materials. Employers began to lay off workers. Unemployment tripled, from 1. By mid, the slide into economic chaos had begun but was nowhere near complete. For most Americans, the crash affected daily life in myriad ways. In the immediate aftermath, there was a run on the banks, where citizens took their money out, if they could get it, and hid their savings under mattresses, in bookshelves, or anywhere else they felt was safe.

Some went so far as to exchange their dollars for gold and ship it out of the country. A number of banks failed outright, and others, in their attempts to stay solvent, called in loans that people could not afford to repay.

Working-class Americans saw their wages drop: Even Henry Ford, the champion of a high minimum wage, began lowering wages by as much as a dollar a day. Southern cotton planters paid workers only twenty cents for every one hundred pounds of cotton picked, meaning that the strongest picker might earn sixty cents for a fourteen-hour day of work. Cities struggled to collect property taxes and subsequently laid off teachers and police.

The new hardships that people faced were not always immediately apparent; many communities felt the changes but could not necessarily look out their windows and see anything different.

They might be found keeping warm by a trashcan bonfire or picking through garbage at dawn, but mostly, they stayed out of public view. As the effects of the crash continued, however, the results became more evident. Those living in cities grew accustomed to seeing long breadlines of unemployed men waiting for a meal, as shown in Figure Companies fired workers and tore down employee housing to avoid paying property taxes.

The landscape of the country had changed. The hardships of the Great Depression threw family life into disarray. Both marriage and birth rates declined in the decade after the crash. The most vulnerable members of society—children, women, minorities, and the working class—struggled the most. Parents often sent children out to beg for food at restaurants and stores to save themselves from the disgrace of begging. Intelligent and hardworking, Hoover traveled all over the world to find valuable mineral deposits and establish business enterprises to extract the resources.

His work made him a multimillionaire. On February 10, , Hoover married his college sweetheart, Lou Henry , and the couple had two sons, Herbert and Allan Henry At the start of World War I , Hoover dedicated his talents to humanitarian work. He helped , stranded American tourists return home from Europe when the hostilities broke out, and coordinated the delivery of food and supplies to citizens of Belgium after that country was overrun by Germany.

When the U. Hoover encouraged Americans to reduce their consumption of meat and other commodities in order to ensure a steady supply of food and clothing for the Allied troops. Once the war ended, Hoover, as head of the American Relief Administration, arranged shipments of food and aid to war-ravaged Europe.

During the fast-paced modernization of the s, Hoover played an active role in organizing the fledgling radio broadcasting and civilian aviation industries, and also laid the groundwork for the construction of a huge dam on the Colorado River between Arizona and Nevada. Named for Hoover, the dam opened in In the U. Promising to bring continued peace and prosperity to the nation, he carried 40 states and defeated Democratic candidate Alfred E.

Smith , the governor of New York , by a record margin of electoral votes. On October 24, —only seven months after Hoover took office—a precipitous drop in the value of the U. Banks and businesses failed across the country. Nationwide unemployment rates rose from 3 percent in to 23 percent in Millions of Americans lost their jobs, homes and savings.

Many people were forced to wait in bread lines for food and to live in squalid shantytowns known derisively as Hoovervilles. His Agricultural Marketing Act had little impact on the prospects of American farmers. Hoover eventually did support some interventionist government programs aimed at combating the Depression. Though undersized, the Reconstruction Finance Corporation used federal money in an ultimately unsuccessful effort to stabilize the nation's banking and financial sector.

The RFC was also aimed at corporations rather than at the growing ranks of the suffering poor, a policy that reflected Hoover's own beliefs. Fearing that government aid would breed a sense of dependence among the poor, Hoover largely refused to extend such assistance to millions of the nation's unemployed and hungry who were overwhelming private relief agencies. In the public eye, Hoover seemed uncaring, unwilling to admit that people were starving and that his ideas were failing.

He lost significant public support in the summer of when General Douglas MacArthur— in defiance of Hoover's orders—removed the World War I veterans known as Bonus Marchers who had massed peacefully in Washington, D. MacArthur was brutal in his treatment of the marchers, using cavalry, tanks, and bayonet-bearing soldiers. In the riot that followed, U.

Hoover ran for reelection in , anxious to prove that his policies could still ameliorate the economic crisis. Americans, though, rallied around Democrat Franklin D. Roosevelt and his "New Deal," with its vague promises of a "crusade to restore America to its own people. Hoover left the White House in disgrace, having incurred the public's wrath for failing to lift the nation out of the Great Depression.

Hoover's reputation has risen over the years. He is no longer blamed for causing the Depression; instead, scholars note that Hoover's efforts to combat its effects were extraordinary when compared to federal anti-depression measures invoked during previous economic crises. These efforts, moreover, flowed logically from the President's unique brand of social, economic, and political progressivism. Nonetheless, the nation's economy continued to sink during the Hoover presidency.

With the public losing confidence in the President's abilities, leadership, and policies, Hoover paid the ultimate political price for these failures in November Assess the impact of economic activities and political decisions on urban, suburban, and rural regions.

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