2.2 Hoovers Response To The Depression

Question 1

HOOVERS REPONSE TO THE DEPRESSION
Smoot Hawley Tariff 1930

Answer 1

organized a MORATORIUM on inter allied war debt +cancellation of Germany reparations
*cancellation of inter- allied debts should have helped increase international trade but potential benefit lost by SMOOT HAWLEY TARRIFF

• raised import taxes to the highest level in US history (to protect the US economy from foreign competition)
• 40% ( raise prices on foreign good & ensure domestics producers were protected)
  BUT
• abandoned free trade for European countries
• reduced USA exports
• 1000 economists petitioned to veto the tariff
• contraction rather than the expansion of the world economy

Question 2

HOOVERS REPONSE TO THE DEPRESSION
homelessness & Hooverville’s

Answer 2

• 13 million Americans lost their jobs (24%)
  (65% unemployed for longer than a year)
  + had to rely on state gov (failed to offer long term help = increased homelessness) b/c did not have welfare system
  = increased demand for lodging houses = HOOVERVILLES
• clustered in shanty towns ; wastelands ; no water, sanitation and power
• constant harassments from police
• HOOVERBLANKETS (newspapers as blankets)

Question 3

HOOVERS REPONSE TO THE DEPRESSION
reconstruction finance corporation (RFC)

Answer 3

before: attempt to deal with crisis by relying on voluntarism

1932: RFC 1st direct attempt by the federal gov for USA to get out of the depression
- given $2 billion taxpayer money to assist directly to banks +insurance companies - to revive banking systems
- helped 160 banks, 60 railroads +18 mortgage companies

BUT
- filed to encourage banks to lend more to business facing financial problems
- criticized that relief was only given to large form and no individuals in distress

Question 4

HOOVERS REPONSE TO THE DEPRESSION
emergency relief & construction act 1932

(public work)

Answer 4

to directly help the unemployed (previous responsibility of the state)
Relief Program:
cooperation similar to RFC was created
- give $1.5 billion to fund public work (avoid direct payments from federal gov) BUT states had to prove they were running out of money for aid

• criticized that $2 billion was only enough for 10%of the population
• “going to far” + compared to soviet Russia
  BUT did provide support for individuals + businesses

Question 5

HOOVERS REPONSE TO THE DEPRESSION
President Hoover

Answer 5

vilified
looked indecisive and lackluster
believed the economy would right itself as the business cycle would eventually lead to recovery
any intervention by federal government would seen as a barrier to recovery
believed strength of US society was ‘rugged individualism’ people should be self-reliant + not dependent on government financial support
believed the cause of depression was outside of the USA