The frantic response mirrored current efforts to rescue the U.S. economy from the damage inflicted by the coronavirus pandemic. In late March, Congress passed a $2 trillion economic stimulus bill signed by President Trump. Now, with 17 million Americans out of work, lawmakers and the White House are wrangling over another huge aid package to try to keep unemployment rates from rising toward Depression-era levels.
The 1932 bill’s inflation-adjusted price tag of $38 billion was dwarfed by this year’s $2 trillion price tag, but it was “gigantic” in its day. President Herbert Hoover, like Trump a Republican, had resisted federal spending, but this was an election year. On July 8, the Dow Jones industrial average had plummeted to 41.22, down nearly 90 percent from its peak before the market crashed on Black Monday in October of 1929. Many of the homeless were living in shacks in “Hoovervilles.”
During his nearly four years in office, Hoover had focused on trying to balance the budget. But as the jobless rate rose to a record 23.6 percent in 1932, he proposed a $1.8 billion relief package. Then, as now, Republicans controlled the Senate and Democrats led the House. Sen. Robert Wagner (D-N.Y.) and Democratic House Speaker John Nance Garner of Texas responded with a $2.3 billion proposal.
The foundation of both plans was $1 billion to expand loans by the government’s Reconstruction Finance Corporation. But the Garner-Wagner bill also called for up to $1.2 billion for public works to create jobs. Garner’s bill further wanted to expand the RFC’s lending beyond big banks and corporations to individuals and small businesses.
To Hoover this was spending money for “pork” and “unproductive” jobs. Republican Rep. Fiorello La Guardia, the future mayor of New York, shot back that the legislation was a “breadbasket bill” and represented “the first ray of hope that has been cast in a critical situation.”
By late June, the Senate passed a “gigantic $2,300,000,000 unemployment relief bill designed to provide food and work for the jobless and give new impetus to industry,” the Associated Press reported. The bill was sent to the House, which had already passed its own measure. Without debate, the House by voice vote sent the final bill to a House-Senate conference.
Then the finger-pointing and delays began. Hoover called the Garner-Wagner relief plan “the most gigantic pork-bill ever proposed in the history of Congress.” Wagner responded that Hoover “throughout the depression has been wrong, late and futile.” He “was wrong when he announced on March 7, 1930, that within 60 days the depression would be over.”
While the bill was in conference, many Democrats left town to attend the Democratic National Convention in Chicago. The Democrats nominated New York Gov. Franklin D. Roosevelt as their candidate to face Hoover in the fall election. Roosevelt picked as his running mate none other than “Cactus Jack” Nance Garner. He was the first House speaker ever nominated for vice president.
By early July, it was clear that the House-Senate conference bill was doomed. “Weary leaders looked to the veto message already penned and waiting at the White House as marking the end of the long and bitter controversy over federal aid to the jobless,” the AP reported.
On July 11, Congress sent its bill to Hoover. Sure enough, the next day Hoover vetoed the bill, saying it would “bring far more distress than it will cure.” It was a phrase similar to Trump’s declaration last month that “we cannot let the cure be worse than the problem itself" as he considered urging Americans to end their coronavirus quarantines.
Hoover called for a reduced public works spending bill subject to Treasury approval and no loans to private individuals.
“In a night session which was astonishing for the swift and decisive action of its nonpartisan coalition,” the Senate passed a revised bill and sent it to the House, the AP reported. There, what was now called “the Hoover bill” passed by a vote of 296 to 46. When the final conference bill came back to the House, members passed it by unanimous consent. Only one lawmaker gave a speech, and he was nearly drowned out by cries of “Vote, vote!”
Then the speeding legislative train ran into a snag. The bill was sent back to conference when bankers from all over the country protested a Garner provision to require the Reconstruction Finance Corporation to disclose who got loans. It was a fight reminiscent of the current clash between congressional Democrats and the White House over the coronavirus rescue effort’s oversight and a $500 billion fund controlled by the Treasury Department.
In 1932, the bill was amended to allow the disclosures only with the Treasury’s approval. As lawmakers headed for final passage, members of the “Bonus Army” of World War I veterans protested outside the Capitol, demanding full payment of bonuses promised them.
Finally, on July 16, the Senate worked into the night to pass the bill and then adjourned at 11:26 p.m. The final bill authorized $1.8 billion for the Reconstruction Finance Corporation and $2.1 million in “employment relief," but the public works funding was cut to $322 million. Hoover said he still had objections, but that “it is a strong step toward recovery." On July 21 he signed the measure into law.
By August, the Dow Jones averages were up to 61. “The whole country drew a sigh of relief. Confidence began to return,” Hoover wrote later. The voters didn’t agree. In November, Roosevelt won the presidency in a landslide. The new vice president was Garner, who famously said “the vice presidency is not worth a bucket of warm spit.”
Unemployment continued to rise in 1933 to a record 24.9 percent, before falling as Roosevelt’s New Deal policies kicked in. Will Rogers, the top humorist of the day, summed up the Great Depression this way:
“Mr. Hoover was an engineer. He knew that water trickles down. … But he didn’t know that money trickled up. Give it to the people at the bottom and the people at the top will have it before night, anyhow. But it will at least have passed through the poor fellows’ hands. They saved the big banks, but the little ones went up the flue.”
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