Hoover to FDR: The Presidential Transition of 1932
In 1932 the United States was in the grip of the Great Depression. It began in the summer of 1929, when the United States economy first went into an economic recession. The country spent two months with a declining GDP, before the Wall Street Crash of October 1929 hit, followed by a major worldwide economic downturn. The market crash was followed by a decade of high unemployment, poverty, low profits, deflation, and low prices for farmed crops. Its causes are still the subject of debate, the but the devastating effect was a sudden and general loss of confidence in people's economic future. Industries that suffered the most were construction, agriculture, shipping, mining, manufacturing and logging. The economy was reaching its bottom as the election of 1932 approached.
Many people at the time and since blame Herbert Hoover for taking a hands-off ("laissez-faire") approach to the Depression. This is not necessarily a fair assessment of Hoover, who expressly disagreed with Treasury Secretary Andrew Mellon's suggestion that Hoover "leave-it-alone" and let the problem fix itself. Hoover urged business leaders not to lay off workers or cut wages. He engaged in many unprecedented public works programs, including an increase in the Federal Buildings program of over $400 million and the establishment of the Division of Public Construction to spur public works planning. He granted more subsidies to ship construction through the Federal Shipping Board and asked for a further $175 million appropriation for public works. This was followed in July 1930 with the expenditure of a giant $915 million public works program, including a Hoover Dam on the Colorado River.
Hoover promoted the passage of The Federal Home Loan Bank Act in July, 1932, establishing 12 district banks ruled by a Federal Home Loan Bank Board in a manner similar to the Federal Reserve System. $125 million capital was subscribed by the Treasury. Hoover was also instrumental in passing the Glass-Steagall Act of 1932, allowing for prime rediscounting at the Federal Reserve, allowing further inflation of credit and bank reserves.
But in politics, perception is reality and when, in 1932 unemployment reached 24.9%, businesses defaulted on record numbers of loans, and more than 5,000 banks had failed, especially small rural banks, most placed blame on Hoover. Hundreds of thousands of Americans found themselves homeless and began congregating in the shanty towns called Hoovervilles that sprang up in major cities.
In June of 1932, thousands of World War I veterans and their families demonstrated and camped out in Washington, DC, calling for immediate payment of a bonus that had been promised by the World War Adjusted Compensation Act in 1924 for payment in 1945. The marchers were offered money by Congress to return home, but some members of the "Bonus Army" remained. Washington police attempted to remove the demonstrators from their camp, but they were outnumbered. Police fired shots in an attempt to gain order, and two protesters were killed while many officers were injured. Hoover sent U.S. Army forces led by General Douglas MacArthur to stop the march. MacArthur decided to clear out the camp with military force. In the ensuing clash, hundreds of civilians were injured. Hoover had given orders that the Army was not to move on the camp, but MacArthur chose to ignore the order. Hoover was incensed, but refused to reprimand MacArthur.
In the election campaign that fall, Democratic candidate Franklin Delano Roosevelt blamed Hoover for the Depression and worsening economy. With unemployment above 20% it was hard for Hoover to defend his record. Roosevelt promised recovery with a "New Deal" for Americans. He won by a landslide in both the electoral and popular vote. Hoover received 39.7 percent of the popular vote to Roosevelt's 57.4 percent. In the electoral college Hoover won only Pennsylvania, Delaware, and four other Northeastern states to lose 59-472. The Democrats extended their control over the U.S. House and gained control of the U.S. Senate.
After the election, Hoover requested a meeting with Roosevelt to develop a joint program to stop the downward spiral and calm investors. Roosevelt refused. He said that doing so would tie his hands, and said that Hoover was still President until inauguration day, and had all the power to act if necessary. Privately, he told reporters off the record, "it is not my baby". The economy continued to spiral downward and the banking system began to experience a complete nationwide shutdown as Hoover's term ended. Hoover also requested that Roosevelt keep the Gold standard as the basis of the US currency, and in effect, continue many of the Hoover Administration's economic policies. Roosevelt refused to work with Hoover on these initiatives.
In February 1933, while in Miami, Roosevelt escaped an assassination attempt. Giuseppe Zangara, who expressed a "hate for all rulers," tried to shoot Roosevelt, but missed, and shot and killed Chicago Mayor Anton Cermak who was sitting alongside Roosevelt. His attempt failed when an alert spectator, Lillian Cross, hit his arm with her purse and deflected the bullet.
On inauguration day, the contempt that Hoover felt for his successor was so strong that he refused to speak to Roosevelt on the ride from the White House to the inauguration. He left Washington in March 1933, bitter and disappointed. Roosevelt's inauguration on March 4, 1933, occurred in the middle of a bank panic. In his inaugural address, he uttered the famous words: "The only thing we have to fear is fear itself." The very next day he declared a "bank holiday" and called for a special session of Congress to start March 9, at which Congress passed the Emergency Banking Act.
Many people at the time and since blame Herbert Hoover for taking a hands-off ("laissez-faire") approach to the Depression. This is not necessarily a fair assessment of Hoover, who expressly disagreed with Treasury Secretary Andrew Mellon's suggestion that Hoover "leave-it-alone" and let the problem fix itself. Hoover urged business leaders not to lay off workers or cut wages. He engaged in many unprecedented public works programs, including an increase in the Federal Buildings program of over $400 million and the establishment of the Division of Public Construction to spur public works planning. He granted more subsidies to ship construction through the Federal Shipping Board and asked for a further $175 million appropriation for public works. This was followed in July 1930 with the expenditure of a giant $915 million public works program, including a Hoover Dam on the Colorado River.
Hoover promoted the passage of The Federal Home Loan Bank Act in July, 1932, establishing 12 district banks ruled by a Federal Home Loan Bank Board in a manner similar to the Federal Reserve System. $125 million capital was subscribed by the Treasury. Hoover was also instrumental in passing the Glass-Steagall Act of 1932, allowing for prime rediscounting at the Federal Reserve, allowing further inflation of credit and bank reserves.
But in politics, perception is reality and when, in 1932 unemployment reached 24.9%, businesses defaulted on record numbers of loans, and more than 5,000 banks had failed, especially small rural banks, most placed blame on Hoover. Hundreds of thousands of Americans found themselves homeless and began congregating in the shanty towns called Hoovervilles that sprang up in major cities.
In June of 1932, thousands of World War I veterans and their families demonstrated and camped out in Washington, DC, calling for immediate payment of a bonus that had been promised by the World War Adjusted Compensation Act in 1924 for payment in 1945. The marchers were offered money by Congress to return home, but some members of the "Bonus Army" remained. Washington police attempted to remove the demonstrators from their camp, but they were outnumbered. Police fired shots in an attempt to gain order, and two protesters were killed while many officers were injured. Hoover sent U.S. Army forces led by General Douglas MacArthur to stop the march. MacArthur decided to clear out the camp with military force. In the ensuing clash, hundreds of civilians were injured. Hoover had given orders that the Army was not to move on the camp, but MacArthur chose to ignore the order. Hoover was incensed, but refused to reprimand MacArthur.
In the election campaign that fall, Democratic candidate Franklin Delano Roosevelt blamed Hoover for the Depression and worsening economy. With unemployment above 20% it was hard for Hoover to defend his record. Roosevelt promised recovery with a "New Deal" for Americans. He won by a landslide in both the electoral and popular vote. Hoover received 39.7 percent of the popular vote to Roosevelt's 57.4 percent. In the electoral college Hoover won only Pennsylvania, Delaware, and four other Northeastern states to lose 59-472. The Democrats extended their control over the U.S. House and gained control of the U.S. Senate.
After the election, Hoover requested a meeting with Roosevelt to develop a joint program to stop the downward spiral and calm investors. Roosevelt refused. He said that doing so would tie his hands, and said that Hoover was still President until inauguration day, and had all the power to act if necessary. Privately, he told reporters off the record, "it is not my baby". The economy continued to spiral downward and the banking system began to experience a complete nationwide shutdown as Hoover's term ended. Hoover also requested that Roosevelt keep the Gold standard as the basis of the US currency, and in effect, continue many of the Hoover Administration's economic policies. Roosevelt refused to work with Hoover on these initiatives.
In February 1933, while in Miami, Roosevelt escaped an assassination attempt. Giuseppe Zangara, who expressed a "hate for all rulers," tried to shoot Roosevelt, but missed, and shot and killed Chicago Mayor Anton Cermak who was sitting alongside Roosevelt. His attempt failed when an alert spectator, Lillian Cross, hit his arm with her purse and deflected the bullet.
On inauguration day, the contempt that Hoover felt for his successor was so strong that he refused to speak to Roosevelt on the ride from the White House to the inauguration. He left Washington in March 1933, bitter and disappointed. Roosevelt's inauguration on March 4, 1933, occurred in the middle of a bank panic. In his inaugural address, he uttered the famous words: "The only thing we have to fear is fear itself." The very next day he declared a "bank holiday" and called for a special session of Congress to start March 9, at which Congress passed the Emergency Banking Act.