Major Recovery Plans Results Results Results Hoover Responds to the Depression P resident Hoover tried to fix the economy by provid- ing loans to banks and corporations and by starting public works projects. Later, he reluctantly supported direct aid to impoverished families. By the early 1930s, more Americans were demanding the government‘s help. Promoting Recovery MAIN Idea Hoover encouraged businesses to stop laying off workers and created public works projects. HISTORY AND YOU What efforts would you have taken to help the econ- omy if you had been president? Read about the public works efforts of the early 1930s. On Friday, October 25, 1929, the day after Black Thursday, President Herbert Hoover declared that “the fundamental business of the country . . . is on a sound and prosperous basis.” On March 7, 1930, he told the press that “the worst effects of the crash upon employment will have passed during the next sixty days.” Critics derided his optimism as conditions worsened. Hoover, however, hoped to downplay the public’s fears. He wanted to avoid more bank runs and layoffs by urging consumers and business leaders to make rational decisions. In the end, Hoover’s efforts failed to inspire the public’s confidence, and the economy continued its downward slide. President Hoover believed that the American system of “rugged individualism” would keep the economy moving. He felt that the government should not step in to help individuals out. After World War I, many European countries had implemented a form of social- ism, which Hoover felt contributed to their lack of economic recovery. In 1922 Hoover had written a book, American Individualism, which presented arguments for why the American system of individualism was the best social, political, spiritual, and economic system in the world. Thus, it was difficult for Hoover to propose policies that had the government taking more control. Despite his public statements that the economy was not in trouble, Hoover was worried. To devise strategies for improving the economy, he organized a series of conferences, bringing together the heads of banks, railroads, and other big businesses, as well as labor leaders and government officials. Industry leaders pledged to keep factories open and to stop slash- ing wages. By 1931, however, they had broken those pledges. Hoover then increased the funding for public works, or government- financed building projects. The resulting construction jobs were intended to replace some of those lost in the private sector.
Chapter 18 The Great Depression Begins 641 Public works projects did create some jobs but for only a small fraction of the millions who were unemployed. The government could create enough new jobs only by massively increasing government spending, which Hoover refused to do. Someone had to pay for public works proj- ects. If the government raised taxes to pay for them, consumers would have less money to spend, further hurting already struggling busi- nesses. If the government kept taxes low and ran a budget deficit instead—spending more money than it collected in taxes—it would have to borrow the money. Borrowing would
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