Depression In America

America's future appeared to shine brightly for most Americans when Herbert Hoover was inaugurated president in 1929. His personal qualifications and penchant for efficient planning made Hoover appear to be the right man to head the executive branch.

However, the seeds of a depression had been planted in an era of prosperity that was unevenly distributed. In particular, the depression had already sprouted on the American farm and in certain industries.

The Hoover term was just months old when the nation sustained the most ruinous business collapse in its history. The stock market crashed in the fall of 1929. On just one day, October 29, frantic traders sold off 16,400,000 shares of stock. At year's end, the government determined that investors in the market had lost some $40 billion.

Previous to the 1929 collapse, business had begun to falter. Following the crash, the United States continued to decline steadily into the most profound depression of its history. Banks failed, millions of citizens suddenly had no savings. Factories locked their gates, shops were shuttered forever, and most remaining businesses struggled to survive. Local governments faced great difficulty with collecting taxes to keep services going.

Hoover's administration made a bad mistake when Congress, caving in to special interests, passed the Hawley-Smoot Tariff Act in 1930. The measure would hike up tariffs to prohibitively high levels. The president signed the bill into law over the objections of more than 1,000 economists. Every major trading nation protested against the law and many immediately retaliated by raising their tariffs. The impacts on international trade were catastrophic. This and other effects caused international trade to grind nearly to a standstill; the depression spread worldwide.

Meanwhile, the president and business leaders tried to convince the citizenry that recovery was imminent, but the nation's economic health steadily worsened. In spite of widespread hardship, Hoover maintained that federal relief was not necessary. Farm prices dropped to record lows and bitter farmers tried to ward off foreclosers with pitchforks. By the dawn of the next decade, 4,340,000 Americans were out of work. More than eight million were on the street a year later. Laid-off workers agitated for drastic government remedies. More than 32,000 other businesses went bankrupt and at least 5,000 banks failed. Wretched men, including veterans, looked for work, hawked apples on sidewalks, dined in soup kitchens, passed the time in shantytowns dubbed "Hoovervilles," and some moved between them in railroad boxcars. It was a desperate time for families, starvation stalked the land, and a great drought ruined numerous farms, forcing mass migration.

The Hoover administration attempted to respond by launching a road, public building, and airport construction program, and increasing the country's credit facilities, including strengthening the banking system. Most significantly, the administration established the Reconstruction Finance Corporation (RFC) with $2 billion to shore up overwhelmed banks, railroads, factories, and farmers.

The actions taken signified, for the first time, the U.S. government's willingness to assume responsibility for rescuing the economy by overt intervention in business affairs. Nevertheless, the Depression persisted throughout the nation.

A thirst for change

The electorate clamored for changes. The Republicans renominated Hoover, and the Democrats nominated Franklin D. Roosevelt. His energetic, confident campaign rhetoric promoted something specifically for "the forgotten man" -- a "new deal." Roosevelt went on to a decisive victory. At his inauguration in March 1933, Roosevelt declared in his lilting style, "Let me assert my firm belief that the only thing we have to fear is, fear itself -- needless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance."

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The nation needed immediate relief, recovery from economic collapse, and reform to avoid future depressions, so relief, recovery and reform became Roosevelt's goals when he took the helm. At his side stood a Democratic Congress, prepared to enact the measures he proposed.

Congress passed a historic series of significant bills, most of which had originated in the White House, in just shy of a whirlwind 100 days. Congress also enacted several important relief and reform measures in the summer of 1935 -- sometimes called the Second Hundred Days.

Significant legislation:

One act created the Federal Emergency Relief Administration to be administered by Harry Hopkins. For relief or for wages on public works, it would eventually pay out about $3 billion.

Three million young men found work in road building, forestry labor and flood control through the establishment of the Civilian Conservation Corps (CCC).

The Works Progress Administration (WPA) of 1935 would grow out of the previous two agencies.

The Emergency Banking Act provided the president with the means to reopen viable banks and regulate banking.

Another law insured bank deposits up to $5,000, and later, $10,000.

A new Home Owners Loan Corporation (HOLC) assisted homeowners.

Farmers who voluntarily decreased the acreage of specified crops could become recipients of subsidies from the Agricultural Adjustment Administration (AAA), set up by the government.

One particularly significant act created the Tennessee Valley Authority (TVA). The vast, ambitious project, coupled with agricultural and industrial planning, would exploit the great river basin's resources with government dams and hydroelectric plants.

Progress was made on the labor front:

The National Recovery Administration (NRA) came into being through a significant measure in 1933. The NRA attempted to revive industry by raising wages, reducing work hours and reining in unbridled competition. The NRA was ruled unconstitutional by the Supreme Court in 1935; however, the majority of its collective bargaining stipulations survived in two subsequent bills.

Employees were guaranteed the right to negotiate with employers through unions of their choosing by the Wagner Act of 1935, and it established a Labor Relations Board as a forum for dispute resolution. The act bolstered