I re-read some of the first volume of Robert Caro’s biography of Lyndon Johnson, looking for historical parallels to our CoronaWorld collapse in the nation’s last similar economic calamity.
After Black Friday, 1929, crop prices plummeted to levels below what they’d been in the Colonial era. In part because tariffs kept prices of manufactured goods high, farmers couldn’t come close to breaking even. President Herbert Hoover in 1931 created a Federal Farm Board, which paid farmers more than their produce was worth. But this exacerbated overproduction, the farmers’ main problem; since the Farm Board declined to limit production, farmers grew more crops, and the Board quickly ran out of funds.
“By the time congressional secretary Lyndon Johnson arrived in Washington in December, 1931, the American farmer’s long slide toward ruin had become a headlong plunge. Foreclosures on farms — many by rural banks which themselves were teetering on the brink of failure — had reached a rate of 20,000 per month.”
In the west Texas congressional district where Johnson lived, the 1931 cotton crop couldn’t be harvested because the 1930 crop remained unsold. Farmers let onions, tomatoes, and watermelons rot on the vine. Railroads for years had brought vagrants to the end of the local line, Corpus Christi; but by the end of 1931 even prosperous farmers were in debt; soup kitchens and relief agencies were overwhelmed by locals, not just strangers.
“Relief funds were running out. Since President Hoover felt that any involvement in relief by the federal government would weaken the national character, relief remained the province of local municipalities and private agencies, and as winter approached, not only the municipalities of the 14th [Texas] District but its Red Cross and Salvation Army chapters and local relief committees were all running out of money. … Plain beans were what the hungry were given to eat. The Salvation Army had reduced its allocation for feeding each client to a penny per day. Its funds were virtually exhausted. And each day the soup-kitchen lines grew longer.”
The unemployed in America in 1932 totaled between 15 million and 17 million, 800,000 in New York City alone. Growing numbers of Americans were starving. More than 25,000 World War veterans, called “Bonus Marchers,” in May 1932 walked up Pennsylvania Avenue, setting up tents in parks, sleeping in abandoned warehouses. Congress declined to act. It gave $125 million to farmers to ease mortgage burdens, without easing interest payments or repayment schedules — a sum that proved meaningless. A relief bill aimed at farmers provided a family of four less than 50 cents a day. Tax and tariff reform bills went nowhere.
Hoover declined to meet Bonus Marchers, instead erecting barricades around the White House; in July, he ordered the Army to use fixed bayonets and tear gas to drive them from the D.C. streets. He had been saying since Black Friday that the nation’s economic condition was sound, the economy would rebound. (In March 1930, he said within in two months; May: by fall; June: “the Depression is over”; December: “The fundamental strength of the economy is unimpaired.”) Why are men selling apples on street corners? “Many people have left their jobs for the more profitable one of selling apples.” To those begging for federal relief aid, public works spending, he said, “As long as I sit at this desk, they won’t get by.” He never visited a breadline or relief station, not wanting to witness suffering. “Nobody is actually starving,” he said. “The hoboes, for example, are better fed than they have ever been. One hobo in New York got ten meals in one day.” (He himself routinely ate seven-course dinners.)
When Congress passed a public works bill in 1932 Hoover called it “an unexampled raid on the public treasury,” adding, “We cannot squander ourselves into prosperity.” The main action he approved: creation of the Reconstruction Finance Corporation, which stressed bailing out corporations, railroads, insurance companies, big banks; it gave $30 million to the states, a $90 million loan to the corporation president’s own bank.
In rural areas, Populist policies gained favor, including strikes. Iowa farmers refused to deliver milk and other products in Sioux City, Des Moines, Council Bluffs, Omaha. Violence flared; respect for law plummeted. An Iowa lawyer about to foreclose on a farm was threatened with hanging by a mob brandishing a noose; in Kansas, a similar lawyer was found dead in a field; in Nebraska, a judge who’d approved farm foreclosures was dragged from his bench, blindfolded, stripped, beaten. Across the farm belt, at foreclosed farm auctions, prospective bidders were threatened; farms then sold for only a dollar or two, were returned to their original owners.
Hoover in 1928 had won 40 of 48 states; in 1932, he won six. The GOP lost majorities in both houses: 101 House of Representative seats, the largest pickup in Democratic Party history, 11 Senate seats. These were bigger than the shifts toward Republicans in the 1920 election, when President Woodrow Wilson’s post-World War I internationalism and handling of the 1918 flu epidemic left his party profoundly unpopular.
Hoover remained president until March 1, 1933. His State of the Union called, once again, for a balanced budget, modest government, and a sales tax whose burden would fall heaviest on the underclass. The poor marched in Lincoln, Neb., Columbus, Ohio, Seattle, Chicago; a Communist Party rally in Union Square, New York City, drew more than 35,000.
In February 1933 banks went into deeper crisis. More than 5,500 of 13,000 had closed since Black Friday; the remainder had $6 billion to meet $41 billion in deposits, a balance they could cover only by selling mortgages that had shrunk to a fraction of their initial value. Facing a run, the governor of Michigan declared a moratorium for his state’s 550 banks. Depositors across the country began lining up to take money out. In a week, the Baltimore Trust Company paid out more than $10 million before the governor closed Maryland’s 200 banks. Kansas and Minnesota, North Carolina and Virginia followed suit; Ohio and Kentucky banks limited withdrawals to 5 percent of balances. Governors declared bank “holidays” in 17 more states.
“Crisis was in the air,” wrote historian James MacGregor Burns. “But it was a strange, numbing crisis, striking suddenly in a Western city and then in the South a thousand miles away. It was worse than an invading army; it was everywhere and nowhere, for it was in the minds of men. It was fear.”
The imminent collapse of the farming and banking sectors; the growing popularity of radical politics on both sides of the political spectrum; loss of respect for the rule of law: all of this and worse awaited President Franklin D. Roosevelt when he assumed office on March 4, 1933.
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