Government's Response HS623 Activity Introduction Hey, there! My name is (Name), and I ve got some kinda heavy stuff on my mind. During the nineteen-thirties, the United States suffered through one of the worst crises in its history: the Great Depression. The economy was a mess, people couldn t find jobs, and there seemed to be no way out. Surely there was something the government could do to help people who were struggling and turn the economy around! Actually, yes, there was plenty the government could do, and today we re going to look at President Herbert Hoover s response to this economic disaster. Video 1 - Introduction Believe it or not, the Empire State Building, the Hoover Dam, and the Golden Gate Bridge are all products of the Great Depression. Hoover authorized these public construction projects in the hope that they would put people back to work and renew people s faith in their government and the economy. Hoover didn t necessarily take the fiercest approach toward economic recovery, but these public works were a start. Hoover had his own ideas about how the government should try to fix such an economic mess. Check out this video to better understand his vision.
Video 1 President Hoover believed that relief from the depression should come from the private businesses and people in volunteer organizations, not the federal government. He wanted to keep the federal government small in size and power. Hoover believed in rugged individualism. This meant personal liberty and self reliance and free competition in economics. Because of this, he thought that federal aid would destroy a person s moral fiber. In other words, he thought that if a person got money from the government, it would make them not want to work anymore; a characteristic that most people felt was unrespectable. Hoover thought the emphasis should be on voluntary action, rather than federal bail outs of the economy. He believed that voluntary controls by business would end the economic crisis and that private charities and local governments would provide relief for the unemployed. Hoover s reliance on volunteerism failed. Businesses did not have the discipline to help people and they also didn t seem to care enough about the average people to help them. He later gave in somewhat on federal intervention. In 1931, he allowed the Red Cross to distribute agricultural supplies to the hungry. And in 1932, states were given small federal loans to help with the relief effort. As the depression continued, some U.S. economists came to agree with John Maynard Keynes, a British economist, who argued that massive government spending could help a collapsing economy. Hoover, however, remained strongly opposed to greater federal spending. By the last year of Hoover s term, there was a strong push for the government to fund public works. Writers, economists, politicians, both democratic and republican, and the construction industry asked for billions more to be spent on federal building programs.
In fact, Hoover actually reduced spending on public works. He saw such spending as costly and helpful to only a select group. He favored projects that made money, like toll roads, toll bridges and water works. He disliked non income producing projects, such as buildings, highways, streets, etcetera because he did not want to put a drain on the budget or tax payers. Plus, he continued to absolutely reject any federal relief for the unemployed in order to maintain his balanced budget. He also wanted to preserve the basic American principles of individual and local responsibility. Hoover s refusal to authorize direct relief to people or to increase spending on public works contributed to growing levels of unemployment. Since people lacked jobs, their living conditions worsened. Groups were starting to grow restless with a lack of government aid. The best example of this was the Bonus Army. In 1924, Congress voted to award the veterans of World War One a bonus for military service. The money was to be invested for 20 years and then paid to them in 1945. In the summer of 1932, around 15,000 veterans marched on Washington D.C. to convince Congress to give them their bonuses early. Veterans and their families decided to stay in the city until the situation was resolved. Many relied on sympathetic railway workers for rides in box cars on trains. They could not afford hotels, so they settled in unfinished federal buildings located blocks from the Capital. As their numbers grew, many lived in tent cities made out of cardboard and metal, known as Hoovervilles, on a muddy area across the Potomac River from D.C. The U.S. Army helped set up tents and camps for the veterans. In June, 1932, a Bill for early payment passed the House, but it was blocked in the Senate. Angered by the Bonus Army s continued presence, Hoover launched a smear campaign against them to make them look bad. He used the newspapers to connect
the protesters with communism, claiming they posed a threat of revolutionary action. The papers further stated that many of them were not even veterans. As tensions flared, Hoover ordered the military to get rid of the veterans and their families. The military, led by General Douglas MacArthur and Major George Patton, sent in troops with rifles, bayonets and tear gas, hoping that a show of force would get the protestors to leave quickly. Hundreds of veterans were injured. Some were killed and family members of veterans were also injured and killed. Hoover s poor handling of the Bonus Army s protest did not help his re-election efforts and it paved the way for veteran s relief. The fact that he did not support helping suffering Americans with federal money more or less made sure that he would not win a second election. Video 1 Recap Much of Hoover s lackluster response was connected to his beliefs that the crisis would slowly fix itself and that the federal government shouldn t get too involved in public life. I m guessing the public whose life he was trying to stay out of would have really appreciated having the government all up in their business if it meant that they could eat. You can check out that video again, or we can move on to a question. Reading Passage Introduction OK, it s not like Hoover sat in the White House all day eating filet mignon and ignoring the financial crisis that gripped the nation. He just didn t realize what the United States was up against. His response to the Great Depression was pretty weak, mostly because he really didn t think the depression would be that big a deal.
He did respond, though. That s important to remember. Let s take a look at this reading passage to get a better understanding of Hoover s beliefs and how they worked to rein in his response. Reading Passage Introduction It s kind of amazing that Hoover had any time to focus on foreign policy But he did. Even in the midst of a huge domestic crisis, the United States still had neighbors to deal with, and those neighbors needed attention. Check out this passage to see how Hoover handled foreign affairs in the midst of a depression. Video 2 - Introduction If you needed financial support, who would you rather ask, a rugged individualist or a Keynesian? I ll tell ya this much you d wanna know what you were getting yourself into before you made that choice. Check out this video to see the differences between those two points of view, and how each position dealt with the Great Depression. Video 2 Given the seriousness of the Stock Market Crash of 1929 and the following economic problems, President Hoover s response was relatively modest. His advisors had a wait and see philosophy. They believed the economy would, in time, fix itself. Hoover soon realized that this was not the case. Hoover believed that the depression was part of a recurring cycle of boom and bust. He strongly believed in the ability of big business to get the economy going on its own. He repeatedly made optimistic statements about the economy in hopes of making people more confident about business. His most famous
statement was Prosperity is just around the corner. Hoover urged businessmen to continue making investments, maintaining production, paying high wages and keeping workers. Business maintained high wages at first, but when conditions did not improve, owners had to cut production, reduce wages and eventually lay off workers. Hoover did not want to increase the power of the federal government. Remember, at this time, the government did not help regular citizens. There were no government assistance programs. He encouraged state and local governments, as well as private charities, like churches, to help ease the effects of the depression. Even as things got worse, Secretary of the Treasury, Andrew Mellon, advised Hoover to let the depression run its course. Hoover disagreed and finally called on Congress to try and stop the economic crisis. Hoover greatly increased spending on federal construction projects and asked state and local governments to do the same. The plan was to provide jobs for the unemployed and to stimulate construction companies to buy the materials they needed to build things. In 1930, Congress authorized a 420 million dollar increase for public works. Hoover also increased money to help ship construction through the Federal Shipping Board. Public works during Hoover s administration were seen as triumphs of engineering; the tallest buildings, the longest bridges. Also building costs were often dramatically lower than before because of the depression, so it was cheaper to build these things. There were many famous projects planned and begun during the Hoover administration. The Hoover Dam is the first example. Construction began in 1931 and it was originally called, Boulder Dam. The renaming was seen as a political maneuver, since President Hoover had started campaigning for re-election. The Golden Gate Bridge is another
project built at this time. Construction began in January, 1933 and it was the longest suspension bridge at that time. The Empire State Building is another very famous project built because of Hoover. Construction began in March, 1930 and it was the tallest building in the world at the time. It symbolized progress and success in a time when people were losing hope. Despite spending a lot of money on public works, unemployment continued to rise, conditions worsened and banks failed. By 1932, Hoover and the federal government were forced to take more action. The Reconstruction Finance Corporation or RFC was established in January, 1932. It leant money to banks, railroads, farm mortgage associations and other large concerns. The RFC was supposed to encourage banks to start lending money again, so business could start an economic recovery. Banks would not have to compete with RFC loans because RFC loans have high interest rates. At first, the RFC stopped a banking catastrophe, but it did not turn the economy around. The RFS operated on the trickle down theory. Give the rich people at the top more to spend. They will invest money and stimulate the economy and the benefits will eventually reach those at the bottom. In reality, only the wealthy benefited. Those at the bottom never saw relief. Critics called it the Millionaire s Dole, which means welfare. In keeping with economic philosophy, Hoover thought that the RFC would be a temporary measure. He finished out his term believing that strong governmental intervention was not the answer to pulling the country out of the Great Depression, but the people seemed to believe differently. Video 2 - Recap Hoover was definitely more of a rugged individualist! Unfortunately, that philosophy was not going to end a crisis as big as the Great Depression.
It would take methods more similar to those supported by economist John Keynes to really provide help. You can take a second look at that video, or we can keep on truckin.