Hoover's Response to the Depression 1929-1932 Flashcards
What was the issue with Hoover?
He could not shift from his fundamental beliefs, that he never altered.
What were Hoover’s beliefs?
Believed people should be responsible for their own welfare.
How did Hoover’s beliefs impact his approach to the Depression?
He simply did not believe the government should try to solve people’s problems.
What did Hoover believe the government’s job was?
It was the government’s job simply to help people solve their problems by themselves.
Who was Hoover as a person?
He believed above all in equality of opportunity, he was a self-made man and felt everyone else could be too.
What did Hoover do to help combat the Depression?
He gave generously to charities, he cut his own and state official’s salaries by 20%.
Why did Hoover cut state official’s salaries?
To help provide revenues for his recovery measures.
Why do many argue that Hoover had lost touch with reality?
He well understood the seriousness of the Depression, but in public he had to be optimistic.
What did the Depression lead to the growth of?
‘Hoovervilles’
What were Hoovervilles?
The name given to the shanty towns that grew in open spaces on the edge of almost every town and city.
Who lived in Hoovervilles?
They were peopled by the homeless and hoboes seeking work.
What were the conditions of Hoovervilles?
People lived in squalid conditions with shelters made from any available materials.
What was hygiene like in Hoovervilles?
No sanitation and often inadequate water supplies.
What was the largest Hooverville?
At St Louis, Missouri, and was financed by private donations and had an unofficial mayor and church.
What happened to Hoovervilles?
Some became semi-permanent and well organised.
What was the most famous Hooverville?
That of the ‘Bonus Army’.
What could Hoover not accept?
Direct government relief.
What did Hoover continue to believe?
That the economy had to right itself.
What did Hoover try to persuade?
Tried to persuade businessmen and state governments to combat the Depression through their own voluntary efforts.
What did Hoover encourage businessmen to do?
He implored them not to reduce their workforce or cut wages, but to maintain output and urge people to buy.
What did Hoover encourage state leaders to do?
To begin new programmes of public works as well as continuing with the old.
What happened to businesses as the Depression worsened?
Had little choice but to cut back, workers were laid off, investment was postponed and wages were reduced.
What did states have to do as the Depression worsened?
Reduce their spending.
What was the extent of the problems of the Depression?
Were simply too great for voluntarism to work, particularly when it went against customary business practice.
What did Bankers set up in October 1931?
The National Credit Corporation, with the task of helping failing banks survive.
What did the National Credit Corporation do?
It began with a capital fund of $500 million donated by the major financial institutions.
Did the National Credit Corporation work?
With banks continuing to fail at unprecedented rates, the Corporation had spent only $10 million by the end of 1931.
What happened to the Corporation?
Faded away.
What was the rate of unemployment in 1929?
0.032
What was the GDP in 1929?
$103.6 billion
What was the GNP in 1929?
$203.6 billion
What was the growth rate in 1929?
0.067
What happened in October 1929?
Price of shares fell by $14 billion.
What government action was taken in 1929?
Agricultural Marketing Act
What was the rate of unemployment in 1930?
0.08900000000000001
What was the GDP in 1930?
$91.2 billion
What was the GNP in 1930?
$183.5 billion
What was the growth rate in 1930?
0.096
What big event happened in 1930?
Serious drought southeast of the Rockies.
What government action was taken in 1930?
Smoot-Hawley Tariff. | $49 million in loans to drought victims
What was the rate of unemployment in 1931?
0.163
What was the GDP in 1931?
$76.5 billion
What was the GNP in 1931?
$169.5 billion
What was the growth rate in 1931?
0.076
What government action was taken in 1931?
Moratorium for 18 months on collection of war debts. National Credit Corporation set up with funds of $500 million.
What was the unemployment rate in 1932?
0.24100000000000002
What was the GDP in 1932?
$58.7 billion
What was the GNP in 1932?
$144.2 billion
What was the growth rate in 1932?
0.147
What government action was taken in 1932?
Federal Home Loan Bank Act | Reconstruction Finance Corporation set up with funds of $2 billion. | Emergency Relief and Construction Act. | Dispersal by force of ‘Bonus Army’.
What was the Agricultural Marketing Act 1929?
Established a Federal Farm Board with funds of $500 million to create ‘stabilisation corporations’.
What was the task for these stabilisation corporations?
Had the task of buying, storing and eventually disposing of farm surpluses in an orderly way.
What was the problems agriculture faced in 1931 and 1932?
Huge surpluses both at home and abroad saw prices fall and the corporations paying above-market values for produce.
How much had the price of wheat fallen by?
World price of wheat had fallen to 60 cents a bushel.
How did the agricultural policy fail?
It was paying American farmers artificially high prices and this could not continue in the long term. Treated agriculture as a domestic issue, and failed to take into account of foreign considerations.
What was the Tariff that came into force in June 1930?
The Smoot-Hawley Tariff
What was the Smoot-Hawley Tariff?
Highest tariff in American history with average duties of 40% on both agricultural and industrial items.
What was the impact of the Smoot-Hawley Tariff?
It led to most European nations abandoning free trade and to even fewer American goods being exported.
How much did international trade fall by between 1929 and 1930?
Value of international trade fell by $500 million.
How much did international trade fall by in 1931?
$1.2 billion
How much did US imports fall by?
From $1,334 million in 1929 to $390 million in 1932.
How much did US exports fall by?
From $2,341 million in 1929 to $784 million in 1932.
What did European countries do after the Smoot-Hawley Tariff?
Repudiated their war debts in the early 1930s.
What did Hoover announce on June 21st 1931?
That the USA would postpone the collection of its debts for 18 months if other countries did the same.
What did Hoover hope this delay in war debts would do?
He hoped it would release monies for investment.
What was the impact of the delay of war debts?
Little too late to stop the collapse of European economies.
What did Hoover do to try fix soaring unemployment rates?
Secured additional amounts from Congress of $500 million. To help the various agencies provide relief.
How did Hoover’s actions impact unemployment rates?
Was wholly inadequate to meet the scale of the problem.
What did Hoover refuse to do for unemployment?
He would not countenance direct federal relief.
How much did Congress allocate for unemployment in the end?
$47 million, but even that was to be offered as loans that must later be repaid.
What was passed in July 1932?
The Federal Home Loan Bank Act
What was the aim of the Federal Home Loan Bank Act?
Intended to save mortgages by making credit easier.
What did the Federal Home Loan Bank Act do?
Federal Home Loan Banks were set up to help loan associations to provide mortgages.
What was the issue with the Federal Home Loan Bank Act?
As the maximum loan was only 50% of the value of the property, it was largely ineffective.
What was established in Jan 1932?
The Reconstruction Finance Corporation.
What was the aim of the RFC?
To lend up to $2 billion to rescue banks and other financial institutions in distress.
How much of the RFC loans went to small and medium banks?
0.9
How much of the RFC loans went to banks in towns with a pop. of less than 5,000?
0.7
How much of individual loans went to the big banks?
50% of loans went to the 7% of borrowers who happened to be the biggest banks.
How much money was given by the RFC?
Of the first $61 million committed, $41 million was loaned to no more than three institutions.
What had Congress promised veterans in 1925?
Had agreed a veteran’s ‘bonus’.
When was this veteran’s bonus meant to be paid?
Based on the number of years of service, it was to be paid in full by 1945.
What did many veteran’s demand?
Due to the impact of the Depression, they said they needed it immediately.
What did veteran’s do to fight this cause?
A march on Washington was organised to publicise their cause.
How many marched on Washington?
By 15 June 1932, 20,000 people were camped in the capital.
What did Hoover offer the veteran’s?
Insistent nothing could be done for them, $100,000 to pay for their transportation home, many refused to budge.
What did the Secretary of War do?
Called in troops under General Douglas MacArthur.
What did the troops do?
Used tear gas to disperse the squatters, the camp was destroyed, many marchers were injured and two babies died from the tear gas.
What was the impact of the Bonus March on Hoover?
Hoover was blamed, major political blunder.
