Borrowing would mean less money available for businesses to expand and for

Borrowing would mean less money available for

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have to borrow the money. Borrowing would mean less money available for businesses to expand and for consumer loans. Hoover feared that deficit spending would actually delay an economic recovery. As the 1930 congressional elections approached, most Americans felt threatened by rising unemployment. Citizens blamed the party in power for the ailing economy. The Republicans lost 49 seats and their majority in the House of Representatives; they held on to the Senate by a single vote. Trying to Rescue the Banks To get the economy growing again, Hoover focused on expanding the money supply. The government, he believed, had to help banks make loans to corporations, which could then expand production and rehire workers. The president asked the Federal Reserve Board to put more currency into circulation, but the Board refused. In an attempt to ease the money shortage, Hoover set up the National Credit Corporation (NCC) in October 1931. The NCC created a pool of money that allowed troubled banks to continue lending money in their communities. This program, however, failed to meet the nation’s needs. In 1932 Hoover requested Congress to set up the Reconstruction Finance Corporation (RFC) to make loans to businesses. By early 1932 the RFC had lent about $238 million to approximately 160 banks, 60 railroads, and 18 building-and-loan organizations. The RFC was overly cautious, however. It failed to increase its lending sufficiently to meet the need, and the economy continued its decline. While the Democratic Party donkey marches outside singing old songs, Hoover tries to deal with economic problems caused by high tariffs, depression and drought. Analyzing VISUALS 1. Analyzing What does the cartoon on the right suggest about Hoover’s plan to help farmers? 2. Analyzing How are Hoover and the Democrats portrayed in the cartoon on the left? Herbert Hoover reassures a farmer his scarecrow labeled farm relief will help. Can Hoover Fight the Depression? (l)The Granger Collection, New York
An Angry Nation Direct Help for Citizens From the start, Hoover strongly opposed the federal government’s participation in relief —money given directly to impoverished families. He believed that only state and local governments should dole out relief. Any other needs should be met by private charity, not by the federal government. By the spring of 1932, however, state and local governments were running out of money, and private charities lacked the resources to handle the crisis. That year, political support for a federal relief measure increased, and Congress passed the Emergency Relief and Construction Act in July. Reluctantly, Hoover signed the bill. The new act called for $1.5 billion for public works and $300 million in emergency loans to the states for direct relief. For the first time in United States history, the federal government was supplying direct relief funds, although governors of the states had to apply for the loans. By this time, however, the new program could not reverse the accelerating collapse.

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