Farmers were hit particularly severely. Many could not pay their mortgages and had their farms seized, taking to the road to get work wherever they could. Those who had not owned their own farms in the first place - Black farmers and laborers were often even worse off.

The situation got dramatically worse when over farming in the Southern and Midwest states caused the topsoil to turn to dust. This was whipped up by the wind to create a huge dust bowl making life intolerable. Many farmers headed to California.

The rapid rise in unemployment also led to homelessness in the cities. Many ended up on the streets - queueing for food handed out by charities (see photo at the top of the page). A large number of men travelled by railways from city to city looking for work.

In every city, Hoovervilles developed. This was a shanty town of quickly built huts made from corrugated iron and other bits of rubbish that people could find.

President Hoover’s core philosophy regarding government was that it should follow a principle of ‘laissez faire’ and that there should not be any expansion of federal government power. Hoover’s Secretary of the Treasury, Andrew Mellon, advised the President to do nothing.  Mellon believed that the crash was a correction in the system and that bad companies forced to close would free up investment for more promising and profitable ventures.  Less effective people would be replaced by the more competent and in general people would work harder.  The system would correct itself and there would be a recovery. 

Although he had experience as an administrator of relief programs before he became president, Hoover took on board this advice and believed that voluntary assistance to those in need would be sufficient until the economy recovered.  Hoover offered support to the financial structure but did not offer direct assistance to individuals.  He did not want to undermine the ‘American character’ of individualism and self-sufficiency. 

Hoover believed that the role of government should be to coordinate rather than take direct action.  He referred to the US constitution which gives states rather than federal government responsibility for welfare.  When the depression took hold in the US only 8 states had unemployment compensation, which meant the unemployed had to rely on charities.

Hoover’s initial policy was to support ‘voluntaryism’.  This policy was in line with his belief in individualism and self-reliance and Hoover argued that as relief was the responsibility of local government federal interference would damage self-government. He promoted the idea that local politicians should take action.  The mayor of Detroit created food stations for 14,000 people after his election in 1930.  Governor Franklin Roosevelt organized relief for the poor in New York which garnered him a national reputation. 

Hoover did not look for domestic causes of the depression and argued that the international economic situation was to blame; the collapse in international trade and conditions in Europe were dictating the crisis and that the Federal government could do little to affect it.

In fact, Hoover did not ignore the USA's economic problems, but many of the measures he introduced failed to meet the needs of the time.

As you will have seen in the diagram above, some of Hoover's measures were useful, such as the Emergency Relief and Construction Act which gave relief money to states for federal and local public works, and the Federal Home Loan Bank Act which helped people give mortgages. The Reconstruction Finance Corproation had power to lend up to $2 billion to rescue banks and insurance companies.  90% of loans went to small and medium-sized banks.  [FDR continued to use RFC to combat depression].

However, the rise in interest rates made borrowing more expensive and reduced the amount of money available for spending - just when more spending was needed. The Hawley-Smoot Act of 1930 meanwhile raised import duties by one-third despite protest letters from a thousand economists. If foreign countries could not sell profitably in the USA they could not earn enough dollars to repay war debts to American bankers

The Revenue Act of 1932 increased corporate and income taxes making it harder for industry to expand and take on more workers.

For the general public Hoover’s response to the economic crisis was totally insufficient. By the time of his defeat in the 1932 Presidential election, Hoover had become one of the most unpopular presidents in US history.  As you have read above, the shanty towns made of old packing cases and scrap metal to form makeshift dwellings for the homeless in urban areas were termed ‘Hoovervilles’ and old newspapers were called ‘Hoover blankets'.