PROMOTING RECOVERY
Voluntary Efforts and Public Works
•
Public Works: government financed building projects
• Hoover encouraged governors and mayors across the country to increase public
works spending so that people could get jobs
• Some jobs were created but only a small fraction of what was needed
• The problem with public works projects is that someone has to pay for them
which leaves two options
• Loans from banks
• Creates a budget deficit: spending more than is collected in taxes
• Increase taxes
•
Midterm Elections: the Republicans who held power in congress lost 49 seats in
the mid-term elections of Hoover’s presidency
• Americans blamed those in power at the time
for the depression
PUMPING MONEY INTO THE ECONOMY
Trying to Rescue the Banks
Many Banks had collapsed after the stock market crash.
Hoover asked the Federal Reserve Board to put more currency into circulation, but the
board refused (this would have caused inflation).
Hoover then set up the National Credit Corporation (NCC) which created a
pool of money from New York bankers for other banks to use to lend money
in their communities
Hoover asked congress to set up the Reconstruction Finance Corporation
The RFC made loans to banks, railroads, and agricultural institutions
The RFC was overly cautious and did not do enough to make an impact
PUMPING MONEY INTO THE ECONOMY
Direct help for Citizens
Relief: money that went directly to impoverished families
Hoover believed that only state and city governments should dole out relief
By the spring of 1932, state and city governments were running out of
money
Congress responded by passing the Emergency Relief and
Construction Act
$1.5 billion to public works projects
$300 million in loans to states for direct relief
IN AN ANGRY MOOD
Hunger Marches
Americans were angry and wanted to do something so some went on hunger
marches to vent their frustrations at public officials
Farmers Revolt
Farmers could not pay their mortgages on the land that they farmed and the
houses that they lived in
Banks were forced to foreclose on the farmers.
Foreclose: banks taking ownership of the property and forcing the
occupants to leave
BONUS MARCH
Veterans of WWI were expecting to receive a bonus of $1000 from the government for their
service to be distributed in 1945
They needed the money now and were asking for it early.
They marched on Washington DC to ask for their money early.
These veterans and their march became known as the “Bonus Army”
President Hoover and Congress said, “no”.
Most veterans returned home peacefully, but some stayed and occupied
abandoned government buildings demanding their money
Hoover ordered the buildings cleared and police tried to force
the veterans to leave. During the clearing, a
panicked police
officer fired into a crowd of veterans
killing two veterans. The
government then the sent in
the army led by Douglas
MacArthur (chief of staff) who
ignored Hoover’s orders.
Eventually the veterans were
cleared from the city but the press
made Hoover look bad.
HOOVER FAILED TO END THE GREAT DEPRESSION
…however, he did expand the role of the federal government in economic concerns
than what was previously accepted.
ESSAY QUESTION
Describe Herbert Hoover’s dilemma in considering whether to greatly increase public
works projects to spur economic recovery.
ESSAY QUESTION
Describe Herbert Hoover’s dilemma in considering whether to greatly increase public
works projects to spur economic recovery.
The problem was that someone had to pay for public works projects. If the
government raised taxes to pay for them, it would take money away from
consumers and hurt businesses that were already struggling. If the government
decided to keep taxes low and run a deficit instead, it would have to borrow the
money from banks. If the government did this, less money would be available for
businesses that wanted to expand and for consumers who wanted mortgages or
other loans. Hoover feared that deficit spending would actually delay an economic
recovery.