13.2 Hoover administration's economic policies
2 min read•july 25, 2024
's response to the Great Depression was rooted in American and . His approach relied on and private sector solutions, resisting direct federal relief and emphasizing in public statements.
Hoover's policies, including the and , proved ineffective in addressing the crisis. shifted dramatically, with Hoover viewed as favoring big business over average citizens. This led to his landslide defeat in the 1932 election.
Hoover's Economic Policies and the Great Depression
Hoover's limited intervention approach
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- Hoover's economic philosophy championed American individualism emphasized voluntary cooperation limited federal government role
- Initial response to stock market crash featured optimistic public statements relied on private sector solutions downplayed severity
- Voluntary measures included conferences with business leaders encouraged wage maintenance promoted by state and local governments
- Resistance to direct federal relief opposed "dole" system preferred feared dependency
Effectiveness of Hoover's economic policies
- Smoot-Hawley Tariff Act (1930) aimed to protect American businesses and farmers backfired reduced international trade provoked retaliation deepened global crisis
- Reconstruction Finance Corporation (RFC) established 1932 provided loans to banks railroads businesses had limited impact due to strict lending criteria
- (1932) created to support mortgage lending proved insufficient to address housing crisis (foreclosures continued)
- (1932) authorized public works projects implemented too late to be effective (unemployment remained high)
Public perception of Hoover's leadership
- Public perception shifted from capable leader to ineffective as crisis worsened viewed as favoring big business over average citizens
- symbolized hardship shantytowns named after president "" (empty pockets) mocked economic failures
- Media portrayal turned negative press coverage critical depicted Hoover as indifferent out of touch
- incident (1932) violent dispersal of World War I veterans severely damaged Hoover's public image seen as callous
- 1932 presidential election resulted in landslide victory for Hoover associated with failed economic policies rejected by voters
Hoover vs Roosevelt on Depression
- Philosophical differences: Hoover advocated limited government intervention Roosevelt embraced active federal role in economy society
- Scale of government action: Hoover implemented gradual limited expansion of federal programs Roosevelt rapidly executed extensive New Deal policies
- Relief efforts: Hoover emphasized local private charity Roosevelt provided direct federal aid (, )
- Banking and financial reforms: Hoover established RFC loans to banks Roosevelt passed created
- Labor policies: Hoover sought voluntary agreements with business leaders Roosevelt supported unions passed
- Agricultural policies: Hoover created (limited success) Roosevelt implemented price supports
- Public perception and communication: Hoover perceived as aloof ineffective Roosevelt projected confidence action through Fireside chats
Key Terms to Review (26)
Agricultural Adjustment Act: The Agricultural Adjustment Act (AAA) was a New Deal legislation enacted in 1933 aimed at boosting agricultural prices by reducing surpluses. It sought to stabilize the economy during the Great Depression by paying farmers to cut production of certain crops, thereby increasing scarcity and raising prices. The act reflected the urgent need for economic recovery and significantly influenced both agricultural policy and social conditions in the United States.
Banking Act of 1933: The Banking Act of 1933, also known as the Glass-Steagall Act, was a significant piece of legislation that established reforms in the banking sector during the Great Depression. It aimed to restore public confidence in the financial system by separating commercial banking from investment banking and creating the Federal Deposit Insurance Corporation (FDIC) to insure bank deposits. These measures were critical for stabilizing the economy and regulating financial institutions during a time of economic crisis.
Bonus Army: The Bonus Army was a group of World War I veterans who marched to Washington, D.C., in 1932 to demand early payment of bonuses that had been promised to them for their service. This protest highlighted the desperation many Americans felt during the Great Depression and revealed the growing discontent with the federal government's response to economic hardship. The government's eventual decision to forcibly remove the veterans from their encampment reflected the tensions between citizens and the Hoover administration.
Civilian Conservation Corps: The Civilian Conservation Corps (CCC) was a public work relief program established in 1933 as part of Franklin D. Roosevelt's New Deal, aimed at providing jobs for young men during the Great Depression. The program focused on environmental conservation projects, including reforestation, flood control, and national park maintenance, helping to build infrastructure and improve natural resources across the United States while also providing financial support to struggling families.
Dole system: The dole system refers to a method of government assistance that provides financial aid or food to individuals in need, particularly during times of economic hardship. This system became prominent during the Great Depression under President Herbert Hoover, as it was a way to support those who were struggling due to massive unemployment and widespread poverty. The approach was often criticized for being insufficient and ineffective in fully addressing the needs of the impoverished population.
Economic crisis: An economic crisis is a severe disruption in the economy, characterized by a significant decline in economic activity, rising unemployment, and widespread financial instability. It often leads to a recession or depression, causing hardship for individuals, businesses, and governments. The impact of an economic crisis can be profound, influencing policies and the overall direction of a nation’s economy.
Emergency Relief and Construction Act: The Emergency Relief and Construction Act was a piece of legislation passed in 1932 during the Great Depression aimed at providing direct relief to unemployed Americans and stimulating economic recovery through public works projects. This act marked a significant shift in the federal government's role in economic intervention, as it authorized loans to states for emergency relief and funding for infrastructure projects, which was a key aspect of the Hoover administration's response to the economic crisis.
FDIC: The Federal Deposit Insurance Corporation (FDIC) is a U.S. government agency created in 1933 to provide insurance for bank deposits, protecting depositors against bank failures. The establishment of the FDIC aimed to restore public confidence in the banking system during the Great Depression, ensuring that even if a bank failed, customers would not lose their savings.
Federal Farm Board: The Federal Farm Board was established in 1929 as part of the Hoover administration's effort to stabilize agricultural prices during the Great Depression. It aimed to assist farmers by providing loans, encouraging cooperative marketing, and managing surplus crops to prevent price drops. This board represented a significant governmental attempt to address the economic struggles of the farming sector, highlighting the broader economic policies that were in place during Hoover's presidency.
Federal Home Loan Bank Act: The Federal Home Loan Bank Act, enacted in 1932, established a system of Federal Home Loan Banks to provide liquidity and support for mortgage lending, aiming to stimulate the housing market during the Great Depression. This act was a crucial part of the Hoover administration's economic policies as it aimed to prevent foreclosures and stabilize the housing market by allowing banks to access low-cost loans, thereby making it easier for them to offer loans to homeowners.
Franklin D. Roosevelt: Franklin D. Roosevelt (FDR) was the 32nd President of the United States, serving from 1933 to 1945. He is best known for his leadership during the Great Depression and World War II, implementing significant economic reforms aimed at recovery and social safety nets, which reshaped the role of government in American life.
Herbert Hoover: Herbert Hoover was the 31st President of the United States, serving from 1929 to 1933, during the onset of the Great Depression. His administration's economic policies were characterized by a belief in limited government intervention and a reliance on voluntary cooperation between businesses and government to stimulate recovery. This approach ultimately faced criticism as the economic crisis worsened, leading to significant changes in public expectations of government involvement in economic affairs.
Hoover Flags: Hoover Flags were empty pockets turned inside out that became a symbol of the economic hardships faced by many Americans during the Great Depression. Named after President Herbert Hoover, who was in office when the economic crisis began, these flags represented the widespread poverty and desperation of the time as people struggled to cope with unemployment and financial ruin.
Hoovervilles: Hoovervilles were makeshift shantytowns that emerged during the Great Depression, named sarcastically after President Herbert Hoover, whom many blamed for the economic hardships. These communities were often constructed from scrap materials and housed the unemployed and homeless who lost their homes due to the economic downturn. Hoovervilles became a symbol of the widespread poverty and suffering faced by many Americans during this period, reflecting the inadequacy of governmental responses to the economic crisis.
Individualism: Individualism is a social and political philosophy that emphasizes the moral worth of the individual over the collective group. It promotes self-reliance, personal freedom, and the idea that individuals are responsible for their own success or failure, reflecting the belief that people should have the right to pursue their own paths in life. This principle became particularly significant during economic downturns, as it influenced how people viewed government intervention and support.
Limited government intervention: Limited government intervention refers to a political and economic philosophy advocating minimal involvement of the government in the economy and individual lives. This concept is rooted in the belief that free markets and private enterprise lead to more efficient outcomes than government regulations, allowing for personal freedoms and economic growth. During specific historical periods, this philosophy has influenced policies that favor individual entrepreneurship and reduced bureaucratic control.
Loans over grants: Loans over grants refers to a financial strategy where governments prioritize lending money to businesses and individuals rather than providing direct financial aid without expectation of repayment. This approach was significant during economic downturns, as it aimed to stimulate economic activity by encouraging borrowing and investment rather than offering handouts that could increase dependency on government support.
National Labor Relations Act: The National Labor Relations Act (NLRA), enacted in 1935, is a foundational labor law in the United States that protects the rights of employees to organize, join labor unions, and engage in collective bargaining. This act established the National Labor Relations Board (NLRB) to oversee and enforce these rights, significantly shaping labor markets, organized labor movements, and economic policies during a pivotal time in American history.
Optimism: Optimism refers to the tendency to have a positive outlook on future events, believing that outcomes will generally be favorable. This mindset is crucial in economic contexts, as it can influence consumer behavior, business investment, and overall economic growth, especially during challenging times. In the context of economic policies, optimism can be a driving force behind government actions aimed at stabilizing and revitalizing the economy.
Political Cartoons: Political cartoons are illustrations or comic strips that use humor, satire, and caricature to comment on political events, issues, and figures. They play a significant role in shaping public opinion and providing critique on policies or government actions, often reflecting the societal sentiments of their time.
Public perception: Public perception refers to the collective opinions, attitudes, and beliefs that individuals hold about a person, group, policy, or event. It plays a crucial role in shaping political decisions and economic policies, particularly during times of crisis, as leaders often rely on the prevailing views of the public to gauge support and legitimacy for their actions.
Public works: Public works refer to government-funded projects that create and maintain infrastructure for public use, such as roads, bridges, schools, and parks. These initiatives are aimed at improving community welfare and stimulating economic growth, especially during times of financial downturn. In the context of economic policies, public works can serve as a tool for job creation and enhancing public services, thereby addressing unemployment and fostering development.
Reconstruction Finance Corporation: The Reconstruction Finance Corporation (RFC) was a government agency created in 1932 during the Hoover administration to provide financial support to banks, industries, and state and local governments to help stimulate the economy during the Great Depression. The RFC aimed to stabilize the financial system by lending money to troubled businesses and supporting public works projects, reflecting Hoover's belief in limited government intervention in the economy while trying to restore confidence and economic stability.
Smoot-Hawley Tariff: The Smoot-Hawley Tariff was a protective tariff enacted in 1930 that raised duties on hundreds of imports to the United States. It aimed to protect American industry during the Great Depression by making foreign goods more expensive, but it ultimately led to retaliatory tariffs from other countries, worsening the global economic downturn.
Voluntary cooperation: Voluntary cooperation refers to the willingness of individuals and organizations to work together towards common goals without coercion or force. This concept emphasizes the importance of mutual support and collective action, often seen in times of economic challenge when communities unite to address shared issues.
Works Progress Administration: The Works Progress Administration (WPA) was a New Deal agency created in 1935 that aimed to provide jobs and support economic recovery during the Great Depression. It employed millions of Americans in various public works projects, including construction of roads, schools, and parks, while also promoting arts and cultural programs. This initiative not only helped reduce unemployment but also laid the groundwork for long-term infrastructure improvements across the country.