Transcript
Anacostia
July 28, 1932
Washington, D.C. July 28, 1932 · night
The men who built this camp were veterans of the First World War. They had come to collect a bonus Congress had promised them. It wasn't due until 1945.
Tonight their own army drove them out, and the camp burned within sight of the Capitol.
Herbert Hoover We in America today are nearer to the final triumph over poverty than ever before in the history of any land.
He said it to seventy thousand people in a football stadium. He meant it. Most Americans believed him.
Four years apart. How does the richest economy on Earth fall this far, this fast?
Everybody Ought to Be Rich
1928–1929
Big companies had filled American homes with cars, radios and refrigerators. Families bought on installment: a little down, the rest in monthly payments.
Republican businessmen ran an ad: a chicken in every pot, and a car in every backyard. Hoover never said it. The ad did.
Herbert Hoover We were challenged with a peace-time choice between the American system of rugged individualism and a European philosophy of diametrically opposed doctrines.
Meanwhile, the stock market more than quadrupled in five years. The Dow closed at 381 on September 3, 1929.
John Raskob of General Motors said everybody ought to be rich. Put fifteen dollars a month in stocks. In twenty years, eighty thousand.
Twenty years is a long wait. Buy on margin instead. Put down as little as a dime. Your broker lent you the rest.
Brokerage offices filled up. Customers sat in rows and watched the prices climb. Some offices even had a separate room for women.
On March 4, 1929, Herbert Hoover took the oath in the rain. The radio carried his speech.
Herbert Hoover I have no fears for the future of our country. It is bright with hope.
By September, the people who borrowed most looked like geniuses.
Wall St. Lays an Egg
October 1929
Irving Fisher Stock prices have reached what looks like a permanently high plateau.
Irving Fisher of Yale was one of the best-known economists in America.
Nine days later, on Thursday, October 24, everyone tried to sell at once. The board boys couldn’t keep up. In the corner of your screen, your Radio stake was falling.
At 1:30, Richard Whitney bid 205 a share for U.S. Steel, well above the market. The big banks had sent him. Prices steadied. In 1938, he went to Sing Sing for embezzlement.
At seven, the ticker was still printing, four hours behind. Brokers began wiring everyone who had bought on margin. Over the weekend, thousands of calls like this one went out. On Monday and Tuesday, the forced sales hit all at once. That’s how borrowed money turned a fall into a crash.
On Tuesday, October 29, more than sixteen million shares changed hands. That record stood for decades.
By mid-November, the Dow had lost almost half its value.
Show business took it personally. Variety’s front page said: “Wall St. Lays an Egg.”
Brokers had borrowed the money they lent: about eight and a half billion dollars, from banks and corporations.
Legend says ruined bankers leaped from windows that fall. The records show no such wave. The real damage came slower.
Most Americans owned no stock at all. To see how the crash reached them, go somewhere that never saw a ticker.
Middletown
October 30, 1929 → late 1932
In 1929, two sociologists, Robert and Helen Lynd, published a study of one small American city. They called it Middletown, because it seemed so typical. It was Muncie, Indiana.
A lifelong resident had a shorter version.
A lifelong Midwesterner I can tell you what's happening in just four letters: a-u-t-o!
A Muncie newsboy Extra! Stocks crash in New York!
The morning after Black Tuesday, Muncie went to work. The crash was a headline from New York.
But the cracks were already here. Three years later, every crack had split open.
By late 1932, General Motors had stripped its Muncie plant and left town. One family in four was on relief.
Historians call the crash a trigger. The cracks were the causes underneath.
A boom built on debt, and on paychecks that couldn't keep up.
Cents on the Dollar
1930–1932
Herbert Hoover I am convinced we have now passed the worst and with continued unity of effort we shall rapidly recover.
He was wrong, and so were most experts.
A slump feeds itself. Laid-off workers stop buying, so stores order less, so factories lay off more.
Then the banks. In December 1930, the Bank of United States closed on more than 400,000 depositors. It wasn't the government's bank. It just sounded like one.
From 1930 to 1933, nearly eight thousand banks failed. No federal insurance covered the savings inside.
The Federal Reserve existed to stop bank panics. It let the money supply shrink by about a third.
In 2002, Fed governor Ben Bernanke said it out loud. You're right, we did it. We're very sorry.
In 1930, Congress raised tariffs on imports. More than a thousand economists urged Hoover to veto the bill. He signed it.
Other countries answered with tariffs of their own. World trade shrank by about two-thirds. Economists still argue about how much each cause mattered.
In July 1932, the market hit bottom: about eleven cents on the 1929 dollar.
In 1929, about one worker in thirty had no job. By 1933, one in four.
Families who lost their homes built shacks from scrap. People called them Hoovervilles.
In 1932, an Oklahoma editor told a House subcommittee he had seen apples rotting in Oregon orchards.
Oscar Ameringer The farmers are being pauperized by the poverty of industrial populations and the industrial populations are being pauperized by the poverty of the farmers.
In 1932, some farmers burned corn for heat.
Los Angeles County paid for trains to send Mexican families to Mexico. Officials called it “repatriation.” Many of the children were U.S. citizens.
Black workers were often the last hired and the first fired.
The Great Engineer
1929–1932
Hoover was no do-nothing. In the First World War, he had fed millions in occupied Belgium. Now the shantytowns carried his name.
Weeks after the crash, he asked business leaders to hold wages steady. For a while, many did.
He sped up public works, bought surplus crops through his Farm Board, and paused Europe's war-debt payments.
He believed federal handouts would weaken people. Relief was for charities, towns and states.
Herbert Hoover …if the time should ever come that the voluntary agencies of the country,
Herbert Hoover together with the local and State governments, are unable to find resources with which to prevent hunger and suffering in my country,
Herbert Hoover I will ask the aid of every resource of the Federal Government.
By 1932, many cities had run out of relief money.
In 1932 he created the Reconstruction Finance Corporation to lend to banks, railroads and insurance companies. Help at the top, he hoped, would trickle down.
That July, he agreed to lend the states $300 million for relief. A loan, and a late one.
Congress had promised Great War veterans a bonus, payable in 1945. In 1932, jobless veterans came to Washington to ask for it now.
By June, about twenty thousand veterans were camped around the city.
Families came too. In a segregated city, the camp was mostly integrated. Roy Wilkins wrote in The Crisis: …there was one absentee: James Crow.
On June 17, the Senate voted the bonus down. Outside, the veterans sang “America” and walked back to camp.
On July 28, police tried to clear veterans out of buildings downtown. Police shot two of them.
William Hushka. Eric Carlson. Both were buried at Arlington.
The government said police had lost control. Hoover called out the Army. General Douglas MacArthur sent cavalry, tanks and tear gas. That night the soldiers crossed to the camp, and the shacks burned.
MacArthur told reporters the marchers had the spirit of revolution. Newsreels showed soldiers gassing veterans in the capital. Hoover took the blame.
Fear Itself
July 1932 – March 4, 1933
That summer, the Democrats picked New York's governor, Franklin Roosevelt.
Franklin D. Roosevelt I pledge you, I pledge myself, to a new deal for the American people.
That fall's hit song was about a veteran who once built a railroad. Now he had to ask a stranger for a dime.
In November, Roosevelt won forty-two of the forty-eight states. Hoover carried six.
In February 1933, lawyer Ferdinand Pecora questioned banker Charles Mitchell. Mitchell paid no income tax for 1929. He'd sold bank stock to his wife at a loss, on paper.
Charles E. Mitchell I sold this stock, frankly, for tax purposes.
Americans began demanding rules for banks and the stock market.
That month, the bank runs came back. Michigan shut every bank on February 14. By March 4, most states had closed or limited theirs.
Cracks under the boom. A crash on borrowed money. Failing banks, a shrinking money supply, walls around trade. And fear. If people think a bank will fail, they pull out their money, and it fails.
On Hoover's last night in office, his press secretary wrote down what he said.
Herbert Hoover We are at the end of our string.
Franklin D. Roosevelt So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself…
In a bank run, fear is the thing doing the damage. Roosevelt knew it.
Franklin D. Roosevelt This Nation is asking for action, and action now.
What that action was, and how far it would go, is the next story.