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Democracies in Change - America > Topic 2.2 - Hoover's response to the Depression 1929-33 > Flashcards

Topic 2.2 - Hoover's response to the Depression 1929-33 Flashcards

1
Q

When was Hoover president?

A

1929-1933

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2
Q

What was Hoover’s background and beliefs?

A
  • He was a self-made engineer who had been involved in various high-profile activities, such as managing relief for refugees during WW1.
  • He was elected as Republican president in 1928 and Americans had very high expectations of his administration.
  • It seemed the economy was booming- and as Secretary of Commerce during the 1920s, he was widely believed to have been one of the architects of the prosperity of the 1920s. This changed with the onset of the Depression.
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3
Q

What were Hoovers beliefs which made him inflexible in the handling of the Depression?

A
  • He believed that people should be responsible for their own welfare.
  • He didn’t believe that the government should try to solve peoples problems.
  • It was the government’s job simply to help people solve their problems by themselves.
  • He believed above all in “equality of opportunity”. He was a self-made man and believed everyone else should be also.
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4
Q

What did Hoover cut and by how much to provide revenues for his recovery measures?

A

He cut his own and state officials salaries by 20%.

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5
Q

THE PROMOTION OF VOLUNTARIANISM

What did Hoover hope to persuade businessmen and state governments to do to combat the Depression?

A
  • He hoped they would combat the Depression through their own voluntary efforts.
  • He called meetings of businessmen in which he implored them not to reduce their workforce or cut wages, but rather to maintain their output and urge people to buy.
  • He encouraged state leaders to begin new programmes of public works as well as continuing with the old.
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6
Q

THE PROMOTION OF VOLUNTARIANISM

As the Depression worsened, what were businessmen forced to do?

Why did this occur?

A
  • Businessmen had little choice but to cut back.
  • Workers were laid off
  • Most investment was postponed.
  • States had to reduce their spending.

This was due to the problems being too big for voluntarianism to work!

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7
Q

What did bankers set up in October 1931, with the task of helping failing banks survive?

A

National Credit Corporation

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8
Q

When was the National Credit Corporation set up?

What was its task?

A

October 1931

Task- helping failing banks survive.

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9
Q

National Credit Corporation- October 1931

  • What capital fund did it start with and who was it given by?
  • How much had the banks spent by the end of 1931 and why?
  • What happened to the corporation?
A
  • $500 million, donated by the major financial institutions.
  • Banks continuing to fail at unprecedented rates- meant Corporation had spent only $10 million.
  • Bankers- too ingrained in their ways to invest in failing concerns.
  • The corporation faded away, showing again that individual financial concerns would almost always put their own interests before those of their country.
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10
Q

1929

  • What was unemployment at?
  • GDP?
  • GNP?
  • Growth Rate
  • October- prices of shares fall?
A

Unemployment- 3.2%.

GDP- $103.6 billion.

GNP- $203.6 billion.

Growth Rate- 6.7%.

October- prices of shares fell by $14 billion.

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11
Q

1929

What was unemployment at as a percentage?

A

Unemployment- 3.2%

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12
Q

1929

What was the GDP and GNP?

A

GDP- $103.6 billion (around 103 billion)

GNP- $203.6 billion (around 203 billion)

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13
Q

1929

What was the growth rate?

In October- what did the prices of shares fall by?

A

Growth rate- 6.7%

Price of shares fell by $14 billion.

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14
Q

What Act did the government introduce in 1929?

A

Agricultural Marketing Act

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15
Q

What government action was introduced in 1930?

A
  • Smoot- Hawley tariff
  • $49 million in loans to drought victims.
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16
Q

What government action was imposed in 1931?

A
  • Moratorium for 18 months on collection of war debts.
  • National Credit Corporation set up with funds of $500 million.
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17
Q

1932- what are the statistics for the following:

  • Unemployment
  • GDP
  • GNP
  • Growth rate
A

Unemployment- 24.1%

GDP- $58.7 billion (Around 59 billion)

GNP- $144.2 billion (Around 144 billion)

Growth rate- 14.7%

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18
Q

What government action was imposed in 1932?

A
  • 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’
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19
Q

What was unemployment at in 1932?

A

24.1%

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20
Q

What was the GDP and GNP in 1932?

A

GDP- $58.7 billion

GNP- $144.2 billion

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21
Q

What was the growth rate in 1932?

A

14.7%

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22
Q

AGRICULTURE

What act was put in place in 1929?

A

The Agricultural Marketing Act

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23
Q

What did the Agricultural Marketing Act, 1929 establish?

What were they given the task of doing?

A
  • Established a Federal Farm Board with funds of $500 million to create ‘stabilisation corporations’.
  • Task of buying, storing and eventually disposing of farm surpluses in an orderly way.
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24
Q

The Agricultural Marketing Act, 1929

  • What did the ‘stabilisation corporations’ not have the power to do?
  • Where were there huge surpluses in 1931 & 1932 and what did it result in corporations doing?
A
  • They had no power to order reductions in production.
  • Huge surpluses in 1931 & 1932 both at home and abroad saw prices fall and the corporations paying above-market values for produce.
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25
Q

The Agricultural Marketing Act, 1929

What did The Grain Stabilization Corporation buy from where and what was it compared to the world?

A

They bought wheat in Chicago at 80 cents per bushel while the world price had fallen to 60 cents.

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26
Q

The Agricultural Marketing Act, 1929

  • By the end it had ceased its purchases in summer 1931, it had paid how much on average for a bushel and how many bushels did it buy?
  • What had the world price fallen to per bushel?
A
  • Paid on average 82 cents per bushel for 300 million bushels.
  • World price- 40 cents per bushel.
27
Q

The Agricultural Marketing Act, 1929

Who had the corporation been helping and what were they accused of however?

A

They may have been helping the farmers however were accused of throwing tax payers money away.

28
Q

The Agricultural Marketing Act, 1929

What was seen to encourage farmers to produce more when they should have been producing less?

A

Buying farm produce at well over market price!

29
Q

The Agricultural Marketing Act, 1929

By 1932, what was the world price of wheat?

A

Between 30 & 39 cents a bushel- less than harvesting costs in the USA.

30
Q

The Agricultural Marketing Act, 1929

What did Hoover do when Congress proposed a bill to subsidise farmers to reduce production and what was his reasoning?

What happened to the bill?

A
  • He threatened to veto (reject) it because it undermined the principle of voluntary action.
  • The bill failed without any need for a veto. It was too a radical measure for the time.
31
Q

The Agricultural Marketing Act, 1929

What were the two main reasons that the agricultural policy failed?

A
  • It was paying American farmers artificially high prices and this could not continue in the long term.
  • It treated agriculture as a domestic issue and therefore failed to take into account foreign considerations. Without high tariffs, there was little point in trying to keep the American price artificially high. The answer to the problem of cheap foreign imports, then, seemed to be even higher tariffs.
32
Q

When was the Smoot-Hawley tariff imposed?

A

June 1930

33
Q

Tariffs, Smoot-Hawley tariff

What was it the highest and what were its duties?

A

It was the highest in American history with average duties of 40% on both agricultural and industrial items.

34
Q

Tariffs, Smoot-Hawley tariff

What did the Tariff result in European nations abandoning and what happened to goods being exported?

Who was this of no advantage to?

A
  • Led to most European nations abandoning free trade and to even fewer American goods being exported.
  • No advantage to farmers with their huge surpluses!
35
Q

Tariffs, Smoot-Hawley tariff

In the years 1929-1930, what did the value of international trade fall by?

What did it fall by in 1931?

A

1929-1930, fell by $500 million.

1931- fell by $1.2 billion.

36
Q

Tariffs, Smoot-Hawley tariff

What did imports fall from in 1929- 1932?

A

1929- just over $1,300 million

1932- $390 million

37
Q

Tariffs, Smoot-Hawley tariff

What happened to exports in 1929-1932?

A

Fell from

1929- just over $2300 million

1932- $780 million

38
Q

Who did Hoover blame the Depression on?

What did others argue?

A
  • Blamed the Depression on Europe!
  • Others argued that it was the American Depression that spread to Europe not vice versa. After the Wall street crash, American credit dried up & the Smoot-Hawley tariff made matters worse. This led to European countries repudiating war debts in the early 1930s.
39
Q

What did Hoover announce on the 21st June 1931?

A

Announced the USA would postpone the collection of its debts for 18 months if other countries would do the same.

40
Q

When did Hoover announce he would postpone the collection of its debts for 18 months if other countries did the same?

A

21st June 1931

41
Q

The repudiation of war debts

What did Hoover hope would happen as a result of postponing the war debts?

What is this generally known as?

A
  • He hoped it would release monies (plural form of money) for investment.
  • Generally known the moratorium, (a legal authorization to debtors to postpone payment.)
42
Q

The repudiation of war debts

What happened when the proposed moratorium came up for renewal in December 1932 (during Hoover’s lame duck presidency) ?

What did this Act do?

A

Hoover advised Roosevelt to continue the moratorium- however Roosevelt sensing hostility in Congress agreed to the passage of the Johnson Act.

It made it illegal to sell in the USA the securities of any country that had refused to repay its debts.

43
Q

The repudiation of war debts.

  • What did the Johnson Act do and who passed it?
  • What happened as a result?
  • What was the only country to repay its debts?
A

Passed by Roosevelt

  • It made it illegal to sell in the USA the securities of any country that had refused to repay its debts.
  • As the stock market was still stagnant, it had little effect but to make European countries even more resentful of the USA.
  • Finland!
44
Q

Unemployment relief

What was unemployment like in 1932 and who could no longer meet the demand?

A

24.1 % and relief agencies and charities could no longer cope with the demand!

45
Q

Unemployment relief

Hoover secured additional amounts of money from Congress to help various agencies provide relief in 1932, how much and was this amount large enough to meet demand?

A

$500 million!!

This was wholly inadequate to meet the scale of the problem.

46
Q

Unemployment relief

What did Hoover set up and what was still the problem/ what did he argue?

A
  • Set up the President’s Emergency Committee for employment to help the agencies to organise their efforts.
  • He would not countenance (approve/ accept) direct federal relief, arguing that this destroyed self- help and created a class full of people dependent on the government for hand outs.
47
Q

Unemployment Relief

Even when there was the severe drought 1930-1931 which saw near-starvation conditions in much of the South, what did Hoover do and what did Congress allocate?

A
  • He baulked ( unwilling) at direct relief.
  • Congress allocated a pitifully small sum, $47 million and even that was to be offered as loans that must later be repaid!
48
Q

When was the Federal Home Loan Bank Act introduced?

A

July 1932

49
Q

The Federal Home Loan Bank Act

What did this measure intend to do?

A

It was intended to save mortgages by making credit easier.

50
Q

The Federal Home Loan Bank Act

  • What were the banks set up to do?
  • What was the maximum loan and how effective was it?
A

Set up to help loan associations to provide mortgages.

  • Maximum loan = 50% of the value of the property, so it was largely ineffective.
  • It was another example of help that failed because it was insufficient to deal with the seriousness of the situation, in this case homes being reposessed.
51
Q

When was the Reconstruction Finance Corporation established?

A

January 1932

52
Q

Reconstruction Finance Corporation

What was the authority of this measure and what was it designed to do?

A
  • It had the authority to lend up to $2billion to rescue banks and other financial institutions in distress.
  • It was designed to restore confidence, particularly in the financial system.
53
Q

Reconstruction Finance Corporation

  • Out of its loans, what percentage went to small and medium banks?
  • What percentage went to towns with a population of less than 5,000?
A

90% - small and medium banks.

70% - towns, less than 5,000

54
Q

Reconstruction Finance Corporation

  • What did critics argue?
  • Out of the first $61 million committed by the RFC, how much was loaned to no more than 3 institutions?
  • How much did the Central Republican National Bank and Trust Company receive?
A
  • They argued that 50% of the loans went to 7% of borrowers who happened to be the biggest banks.
  • $41 million
  • $90 million alone- almost as much as the bank held in deposits at the time.
55
Q

Reconstruction Finance Corporation

  • The clamour for direct relief became so great that in Summer 1932, what did Hoover give his support to?
  • Why was this important?
  • How much did it authorise the RFC to lend up to and what was it to finance?
A
  • He gave his support to the Emergency Relief and Construction Act.
  • It was the first major legislation to offer relief from the Depression.
  • Lend up to $1.5 billion to states to finance public works.
56
Q

Emergency Relief and Construction Act.

What would this act create?

To be eligible, what did states have to do?

What happened when Hoover agreed to this?

A
  • It would create temporary employment in local areas while the works were undertaken and improve public facilities such as leisure and sporting facilities.
  • States had to declare bankruptcy and the works undertaken had to produce revenues that would eventually pay off the loans.
  • Many of his ernstwhile supporters felt he had gone too far, 1932, James M Beck compared Hoovers government action to that of Soviet Russia.
57
Q

What event caused Hoover’s credibility which was already severly damaged to be destroyed?

A

The treatment of the ‘Bonus Army’

58
Q

War veterans and the ‘Bonus Army’

What had Congress agreed to do in 1925 and what was it based on?

A

They agreed a veterans ‘bonus’ in 1925.

Based on the number of years of service, it was to be paid in full to each veteran in 1945.

59
Q

As a result of the veterans being hit really hard by the Depression, what did they organise?

What had happened by June 15th, 1932?

What did Hoover do in response to this?

A
  • They organised a march to Washington to publicise their cause.
  • 20,000 people were camped in the capital, mainly around the Anacostia Flats region.
  • He was insistent that nothing could be done and offered them $100,000 to pay for their transportation home. Many refused to budge.
60
Q

War veterans and the ‘Bonus army’

What was the secretary of war determined to do and what happened as a result?

A
  • He was determined to move the squatters so he called in troops under General Douglas MacArthur.
  • Tanks and infrantry not only shifted the squatters, but chased them back to the main camp on Anacostia Flats, where tear gas was used to disperse them.
  • The camp was destroyed, many marchers injured, two babies died from the effects of the gas.
61
Q

War veterans and the ‘bonus army’

What were Americans response to the camp being destroyed and how it was carried out?

A
  • Americans were horrified at the scenes and whether they were his fault or not, Hoover was blamed.
  • The violent dispersal of the Bonus Army was a major political blunder.
62
Q

The 1932 presidential election

Who was selected by the Democrats?

A

Franklin Delano Roosevelt.

63
Q

CONCLUSION -Hoovers response to the Depression??

A
  • He appeared to do more than any other president- however the intensity of the economic downturn was too great for his policies to address effectively.
  • He would not consider direct government intervention.
  • The Depression affected every aspect of the US economy & the financial and banking sectors remained in turmoil.
  • Millions became unemployed.
  • Many became homeless-crossing continent in search of work.
  • Hoovers policies were inadequate to meet the scale of the problem.
  • The high tariffs made matters worse.

Democracies in Change - America (16 decks)

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