institutions. He was soundly defeated by Franklin D. Roosevelt in 1932. Hoover Three Major Problems: When the stock market crashed in October 1929, Hoover tried to reassure the nation. -“Any lack of confidence in the economic future…is foolish” -Americans believed that depressions were a normal part of the capitalist business cycle, and that the best course, was to let the economy fix itself. Hoover took a slightly different course from laissez-faire policies, believing the government could play a small role in solving problems. -Believed that the government’s role was to encourage and facilitate cooperation, not control it. US Government provided “ indirect ” relief by assisting insurance corporations, banks, agricultural organizations, railroads and state and local governments. The theory was that prosperity at the top would help the economy as a whole ( Trickle-down effect ). 4
Many Americans saw it as helping bankers and big businessmen, while ordinary people went hungry. BUT, no direct relief to American people . Why? Hoover did not support federal public assistance because he believed it would destroy people’s self-respect and create big government which would violate laissez faire. HOOVER’S ATTEMPTS TO SOLVE THE GREAT DEPRESSION ► Industry pledged to keep factories open and stop slashing wages. ► This did not work: by 1931 most businesses reneged. ► Next step was public works : government financed building projects. (Ex. Hoover Dam) ► Hoover urged governors and mayors throughout the nation to increase public works spending. Many governors and mayors did not choose to do this. They thought the federal government should do it and not the local 7 state government Pay higher taxes or borrow money from banks (deficit spending ) which leaves less money for banks to loan out to people. (Hoover increased taxes ) Hoover feared that deficit spending could delay an economic recovery. ► Hoover asked the Federal Reserve Board to pump more money into circulation. ► The National Credit Corporation was created to have a pool of money that would enable troubled banks to continue lending money in their communities he encouraged wealthy New Yorkers to contribute to this ► By 1932 he believed that this wasn’t going to be effective and the government had to do the lending in what was called the Reconstruction Finance Corporation . The RFC lent out $238 million to approximately 160 banks. A total of $500 million the US Government provided “ indirect ” relief to assist insurance corporations, agricultural organizations, railroads and state and local governments. Why did Hoover lose in 1932? Everybody blamed Hoover for the great depression. His election platform included higher tariffs, keeping the gold standard, and continuation of His policies which people thought they were the cause of the great depression 5
Hoover lost the election because he lost the confidence of many people. He made many mistakes. He was regarded as a ‘do-nothing’ president. He tried to restart the economy with tax cuts in 1930 and 1931 and to persuade business leaders not to cut wages. One of his schemes was to introduce tariffs on
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