By Milton Meltzer
Published by The Library of American History
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"We have not yet reached the goal, but given a chance to go forward with the policies of the last eight years, and we shall soon, with the help of God, be withing sight of the day when poverty will be banished from the nation." Herbert Hoover on August 12, 1928 in this speech accepting the Republican nomination for President.
(Pg-7) The gap between incomes was wide. The 27,500 wealthiest families in America had as much money as the 12 million poorest families. The nation's top and bottom were worlds apart. While miners and lumbermen earned about $10 a week, Andrew Mellon was paying an income tax of $1,883,000, Henry Ford a tax of $2,609,000 and John D. Rockefeller Jr. a tax of $6,278,000.
During the twenties, Mellon was secretary of the treasury in the cabinets of Presidents Harding, Coolidge and Hoover. His goal was to cut government spending and reduce taxes. By 1928, as the wave of prosperity carried large capital investors to new peaks of income, he succeeded in drastically chopping the income tax of the very rich. During that decade the income of the rich from dividends, interest and rent rose by almost 30%. By 1929 the 5% of Americans with the highest income were taking in about one-third of all personal income.
(Pg. 10) A New York Times reporter described the scene:
"Fear struck the big speculators and the little ones, big investors and little ones. Thousands of them threw their holding into the whirling Stock Exchange pit for what they would bring. Losses were tremendous and thousands of prosperous brokerage and bank accounts, sound and healthy a week ago, were completely wrecked in the strange debacle. . . The entire financial district was thrown into hopeless confusion and excitement. Wild-eyed speculators crowded the brokerage offices, awed by the disaster which had overtaken many of them."
(Pg. 11) The big bankers tried to come to the rescue: They pooled their resources to halt the collapse. Prices moved up a little during the afternoon, but within a few days the avalanche roared down again.
On Monday, October 28, the losses were much worse. The next day, Tuesday, was what historians have called "the most devastating day in the history of markets." Sixteen million shares were sold, and many put up for sale could find no buyers, no matter how low the price. . . . .
The shock was terrible, but most people could not really believe what was happening. On October 25, the day after the crash, President Hoover had reassured the nation: "The traditional business of the country, that is, production and distribution of commodities, is on a sound and prosperous basis." On November 4, Henry ford announced: "Things are better today than they were yesterday." On November 15, Hoover spoke to the newspapers again: "Any lack of confidence in the economic future of the basic strength of business in the United States is foolish." And on December 10, the chairman of the board of Bethlehem Steel, Charles M. Schwab, declared: Never before has American business been as firmly entrenched for prosperity as it is today."
(Pg. 15) Within two months, the crash of the stock market had thrown several million people out of work. The trouble spread quickly. Many businesses came to a dead halt. Salespeople were fired from stores, factories cut down on production, executives decided not to expand. Recently completed office buildings, apartment houses and hotels could find few tenants. Construction ground to a standstill. Banks tightened up on credit, and business and industry ran dry of funds. And as the wheels slowed down, and then stopped, pink slips began to appear in pay envelopes . . .
(Pg. 16) The auto industry shrank like a punctured balloon. Certainly no one would make a down payment on a Model T or Stutz Bearcat now. The Willys plant in Toledo dropped from 28.000 workers in March 1929 to 4,000 in November. In Detroit it was no better. The Ford payroll - 128,000 in March - sank to 100,000 in December. eighteen months later it had dwindled to 37,000.
(Pg. 28) Undernourishment was common throughout the country. Infants and children, in the growing years when good food and decent shelter and a sense of security are of the greatest importance, faced the specter of famine. A big drop in consumption of milk was noticed in state after state. Everywhere health officials reported that child welfare and public nursing were usually the first services to suffer when city and state budgets were cut.
(Pg. 30 & 31) As early as 1930 the census revealed that over 3 million children seven to seventeen years old were not in school. Soon, in Alabama five out of six schools were shut down for lack of funds. Over 300 schools in Arkansas were open only 60 days during the year. In the hard-hit coal state of West Virginia, 1,000 schools gave up altogether and turned their pupils away. New York City laid off 11,000 teachers in 1932-1933. By the end of 1933 it was nationwide: 2,600 schools had closed their doors. The education of at least 10 million children was disabled by shutdowns or shortened terms.
At least a third of the children reported out of school by the 1930 census were working - in factories, canneries, farms, or sweatshops in the home. Parents were desperate to see anyone in the family earning and sent their children to work. As a result, sweatshops were springing up everywhere. Back again, as in the earliest years of the Industrial Revolution, were the abuses of long hours, low wages and unhealthy working conditions. child labor laws were being openly flouted.
(Pg. 32) Many boys and girls who failed to find jobs near home of felt they were a burden to their parents simply took to the road. A sight new to the 1930's was the army of young transients. The Children's Bureau estimated that by late 1932 a quarter of a million under the age of 21 were roaming the country. They hopped freights, bummed their food and lived along the tracks with the hardened hoboes in squatters camps called jungles.
(Pg. 39) Off all those thrown out of work by the crash, proportionately more blacks than whites lost their jobs. The percentage of jobless blacks sometimes ran four, five, or six times higher. In 1930, 15.7% of blacks were unemployed, against 9% of whites; in 1932, 56% of blacks, 39.7% of whites.
(Pg. 46) In business, it was the independent merchant, the small manufacturer, and the small banker who collapsed or was swallowed up by the giant operators. The retail chains and the mail-order houses did not fail, nor did such corporations as U.S. Steel or General Motors, though their profits dropped sharply. By the end of 1933, altogether 85,000 businesses had failed, with losses of 4.5 billion. Professionals who were self-employed lost clients or patients. Some who worked for others were fired, or their salaries were slashed.
By July1, 1932, stockholders had lost 74 billion from the fall in stock values.
(Pg. 47) By the fall of 1932 over 6,000 banks - about one-fourth of the country's total - had closed their doors. Nine million people who believed their cash had been safely stored deep inside steel vaults saw it disappear overnight. What was now "as good as money in the bank," if banks could collapse? The shock left people thinking there was nothing they could believe in.
One such stunned town, a small Midwestern place of 19,000 which he concealed under the name of Melrose, was visited by Marquis W. Childs in the winter of 1932-33. The columnist saw "the recurrent phenomena of the depression, empty stores, For Rent signs, smokeless factories, closing-out sales."
The collapse of the banks and the bonds the banker sold was the immediate cause of the deflation in Melrose. School teachers, insurance salesmen, small age earners, dentists, retired farmers, saw life savings disappear, security vanish. . . . Within two or three hours everyone knew of the disaster. Depositors, stunned and disbelieving, gathered in small groups to read the notice on the door . . . .
The most shocking example was old Mrs. Gearman. She beat with her fists upon the closed plate-glass doors and screamed and sobbed without restraint. She had in a savings account the $2,000 from her husband's insurance and $963 she had saved over a period of twenty-five years from making rag rugs. Nothing was left but charity.
(Pg. 59-60) Unemployment became a way of life, and out of it developed a new style of housing. There was no money for rent. The homeless could make only short stays in the shelters supported by the city or private charity. Unemployed men began to create their own shelters wherever they could find unused land. New York City was soon sprinkled with new settlements. Mathew Josephson described them:
Idle workers congregated in numbers that ran into the thousands in those shantytowns made of tine cans and packing boxes that dad sprung up in vacant lots near the river's edge, in the swamps on the New Jersey side of the Hudson, and finally in the "jungle" at the north end of Central Park. These communities were named, in honor or our thrifty President, Hooverville.
In the autumn of 1932 Josephson visited a Hooverville at the foot of East 10th Street on the East River.
It was a fairly popular "development", made up of a hundred or so dwellings, each the size of a dog house or chickencoop, often constructed with much ingenuity out of wooden boxes, metal cans, strips of cardboard or old tar paper. Here human beings lived on the margin of civilization by foraging for garbage, junk, and waste lumber. I found some splitting or sawing wood with dull tools to make fires; others were picking through heaps of rubbish they had gathered before their doorways or cooking on open fires or battered oilstoves. Still others spent their days improving their rent-free homes, making them fairly solid and weatherproof.
(Pg. 84-85) From the Midwest, Wayne Gard reported to theNation in September of 1932 on the farmers rebellion:
Torpedoes, tear gas, rotten eggs, brickbats, and planks used to puncture truck tires figure in this latest effort of out belt farmers to boost the prices of their products to the cost of production. Declaring a holiday on selling, thousands of farmers have been picketing the roads to "persuade" their neighbors to join in holding back produce for higher prices. The movement began quietly but soon was dramatized by the dumping of several truckloads of milk on a road outside Sioux City, Iowa. The pickets allowed milk and cream for hospitals to enter, however, and they donated 2,200 gallons of milk to the unemployed. Suddenly realizing that 90 percent of the shipments from nearly milk-producers had been cut off, Sioux City people began frantically to order milk shipped by train from Omaha and to have the blockage run by trucks bearing armed deputy sheriffs. . . . At the height of the Sioux City milk war, two thousand sunburned and overall-clad farmers were living in tent colonies along the nine truck highways leading to that city. Some were armed with pitchforks for use on truck tires. But except for sporadic outbreaks the picketing has been peaceful, and truck drivers not amenable to arguments have been allowed to pass on. On August 17, a crowd of 450 farmers, equipped with clubs and brickbats, tried to remove animals from stockyard pens in Sioux City and from trucks which had run the blockade, but this attempt was repulsed by deputy sheriffs and city policemen. . . . .
The usual method of stopping trucks has been for a mass of men to stand doggedly upon the highway, in the manner of Gandhi's followers, defying the truck drivers to crash into them. Since the drivers do not want to be guilty of manslaughter, they always stop, though some - not influenced by the arguments of the pickets - later drive on. Some of the pickets forces have included women. The two rules of the patrol are "no guns and no liquor".
(Pg. 103) The first signs of protest came only four months after Black Thursday on Wall Street. On March 6, 1930 Communists organized demonstrations in many major cities. WORK OR WAGES! DON'T STARVE - FIGHT! were the slogans on their banners and placards. About a million unemployed marched in the streets for relief and unemployment insurance. At New York City's Union Square, police charged the 35,000 demonstrators with clubs. The New York World reported that women were "struck in the face with blackjacks, boys beaten by gangs of seven and eight policemen, and an old man backed into a doorway and knocked down time after time, only to be dragged to his feet and struck with fist and club".
Cleveland saw a bloody riot of 10,000 that day. In Philadelphia, Chicago, Los Angeles, Seattle, the unemployed marched on city halls.
(Pg. 107-110) Hoover's campaign for re-election was launched Thursday, July 18, at Pennsylvania Avenue and Third Street, with four troops of cavalry, four companies of infantry, a mounted machine-gun squadron, six whippet tanks, 300 city policemen and a squad of Secret Service men and Treasury Agents. Among the results immediately achieved were the folloing:
Two veterans of the World War shot to death; one eleven week-old baby in a grave condition from gas, shock, exposure; one eight-year-old boy partially blinded by gas; two policemen's skulls fractured; one bystander shot through the shoulder; one veteran's ear severed with a cavalry saber; one veteran stabbed in the hip with a bayonet; more than a dozen veterans, policemen and soldiers injured by bricks and clubs; upward of 1,000 men, women, and children gassed including policemen, reporters, ambulance drivers and residents of Washington; and approximately $10,000 worth of property destroyed by fire, including clothing, food and temporary shelters of the veterans and a large amount of building material owned by a government contractor.
As the gassed and wounded veterans fled Washington, Malcolm Cowley of the New Republic followed them. In Pennsylvania he caught up with them at a temporary camp and talked to some of theBonus Marchers: Mile after mile we passed the ragged line as we too drove northward to the camp at Ideal Park. We were carrying two of the veterans, chosen from a group of three hundred by a quick informal vote of their comrades. One was a man gassed in the Argonne and tear-gassed at Anacostia; he breathed with an effort, as if each breath would be his last. The other was a man with family troubles; he had lost his wife and six children during the retreat from Camp Marks and hoped to find them in Johnstown. He talked about his service in France, his tree medals, which he refused to wear, his wounds, his five years in a government hospital. "If they gave me a job," he said, " I wouldn't care about the bonus . . . Now I don't ever want to a flag again. Give me a gun and I'll go back to Washington." - "That's right, buddy," said a woman looking up from her two babies, who lay on a dirty quilt in the sun. A cloud of flies hovered above them. Another man was reading the editorial page of a Johnstown paper. He shouted, "Let them come here and mow is down with machine guns. We won't move this time." - "That's right, buddy." said the woman again. A haggard face - eyes bloodshot, skin pasty white under a three days' beard - suddenly appeared at the window of the car. "Hoover must die," said the face ominously. "You know what this means?" a man shouted from the other side. "This means revolution." - "Yes, you're damned right it means revolution."
(Pg. 112) No, America was not moving toward revolution. Some editors, bankers, industrialists, generals and politicians feared revolution was around the corner, and many radicals hoped or believed it was. Changes were coming, and very soon, but they would be evolutionary. Political power would move from one party to another, not from one class to another. But the changes would make a great difference in the lives of the dispossessed.
Pg. 116) Buy November of 1933, 4 million people were back to work. Farmers were helped with crop-control programs that raised farm prices, and their mortgage burden was lifted. "Economic planning" was the new phrase on every tongue. It was not at all a socialist blueprint but a patchwork of plans improvised for the hour by lawyers, economists and sociologists whom the New Deal brought in to government service. Their function was to save capatilism, a goal Roosevelt declared publicly. In the next few years controls were devised to regulate business and finance and to limit the likelihood of a giddy swing like the twenties. Labor was helped by a law that protected it's right to organize and by unemployment insurance, social security, low-cost housing and wage-and-hour laws. Still, for reasons this book has not room to cover, unemployment persisted through the 1930's. It is cause for thought that it took the menace of Hitler and the war crisis of 1939 to put every employable American to work again in the booming defense industry.