Tracy High School
HA 2
Hoover Notes
FQ: How successfully did President Hoover’s administration tackle the Great Depression?
What was Hoover like as a
president?








Progressive
Very modern and uses empirical data to develop policy
Commissions a study to look at all aspects of society to help guide policy
President's Research Committee on Social Trends is not relevant when published
because the Great Depression was in full swing and changes our social fabric.
Hoover's tragedy was that he could not shift from his fundamental beliefs, which he
acquired at an early age and never altered.
He believed people should be responsible for their own welfare.
He did not believe that the government should solve people's problems.
It was up to the government to give people the ability to solve their own problems by
themselves.
What role did the federal
government have in society
prior to the Great Depression?



Very small influence
Little government regulation of business
Federal government's input to the GDP was only about 3%
What did Hoover think caused
the Great Depression?

International causes so he tried to isolate us from the international economy.
What did Hoover’s
Administration do for
Agriculture?


He was prepared to help farmers to help themselves.
The Agricultural Market Act of 1929 established a nine-person Federal Farm Board
with funds of $500 million to create farmers’ marketing co-operatives called
stabilization corporations.
These corporations were given the task of buying, storing, and eventually disposing
of farm surpluses in an orderly way.
However, they had no power to order reductions in production.
Huge surpluses at home and aboard caused prices to fall.
Corporations began paying above-market values for produce.
Grain Stabilization Corporation bought wheat for 80¢ a bushel while the world
market price was 60¢.
Agriculture policy failed mainly because it was paying American farmers artificially
high prices and this could not continue in the long term and it treated agriculture as a
domestic issue and failed to take into account foreign considerations.






What was the impact of the
Hawley-Smoot Tariff?





What was the purpose of
repudiating war debts?







This tariff was the highest in American History.
It led most European nations to abandon free trade and even fewer American good
being exported.
This tariff did not benefit farmers so the farm interest in Congress fought against it.
This bill only passed the Senate by 2 votes. However, there was more support for it
in the House of Representatives where the vote was 264 to 147.
Hoover could have vetoed the bill but chose not to do so.
American credit dried up after the Wall Street Crash.
The Hawley-Smoot Tariff made things worse.
International trade fell more than $500 million.
This lead to European countries repudiating their war debts.
Germany announced it was bankrupt and would suspend it reparation payments.
Hoover, fearing a war over this, agreed to a moratorium for 18 months if other
countries agreed to this arrangement.
It was too little too late to prevent the collapse of European economies.
How effective was voluntarism
in halting the Depression?













How effective Federal
government relief?















Hoover hoped to persuade business owners and state governments to continue as if
there was no Depression and to solve problems through own voluntary efforts.
He secured pledges from business leaders and organizers to stabilize wages and not to
strike.
He encouraged state governments to create new program of public works as well as
continue funding those already in progress.
As the Depression worsened, business owners had no choice but to lay off workers,
postpone investment, and cut wages.
States also had to reduce spending.
The effects of the Depression were very overwhelming and too great for a policy of
voluntarism to be effective.
Hoover did convince bankers to try to help themselves.
They created the Nation Credit Corporation to help prevent banks from failing.
The NCC was designed to make loans to banks.
The NCC began with $500 million donated by major financial institutions.
By the end of 1931, the NCC had only spent $10 million in a time when banks were
failing at unprecedented rates.
Bankers were simply too ingrained in their ways to invest in failing concerns.
This shows again that individual financial concerns would almost always put their
own interest before those of the country.
Hoover secured additional amount from Congress to the tune of $500 million in 1932
to help various agencies to provide relief.
This was inadequate to solve the effects of the Great Depression.
Hoover set up the President's Organization for Unemployment Relief.
Its commission was to help U.S. citizens who lost their jobs due to the Great
Depression.
Its purpose was to coordinate local welfare agencies, without spending government
money.
The program ended because the government was not willing to help the agencies
through the aid of money and this therefore led to them becoming simply
overwhelmed by the magnitude of the problem of the Great Depression.
Hoover introduced the Federal Home Loan Bank Act. This measure was intended to
save mortgages by making credit easier.
Federal Home Loan banks were set up to help loan associations to provide mortgages.
The maximum loan was only 50% of the value of the property.
It was not effective because it failed to deal with the seriousness of the situation and
prevent homes from being foreclosed.
The Reconstruction Finance Corporation was established to lend up to $2 billion to
rescue banks, insurance companies, railroads, and construction companies in distress.
Many argued that most of the loans went to the biggest banks, railroad companies,
and public utilities.
Government argues its case by saying that the largest firms were the biggest
employers to it made sent to help them in the war on unemployment.
Critics saw the RFC as giving direct relief to large concerns while none was offered
to individuals in distress. (Supply side economics-give to business and the effects
would trickle down to individuals).
The Emergency Relief and Construction Act authorized the RFC to lend up to $1.5
billion to states to finance public works.
States had to declare bankruptcy and build public works that would generate revenue
which could be used to pay back the loans.