The Great Depression

• What are the two key features of President Hoover’s main beliefs about government?

• How was the associative state supposed to work?• What do you think Hoover meant by “rugged

individualism”?• What actions did Hoover take in response to the

Great Depression?• How were cooperatives supposed to help farmers

and why did they backfire in the face of economic disaster?

• Why did Hoover have a problem with credibility?• Do you think that Hoover should have been more

concerned about a balanced federal budget or about overspending and expanding government to help people?

Entered the presidency knowing how he wanted to run the country

His core beliefs guided his action when the crisis of the Great Depression hit

Served under Harding and Coolidge

Shared their pro-business, limited government belief

Thought too much government threatened prosperity and American people’s belief in their own power and responsibility

The philosophy that people can make it on their own and that government shouldn’t help

Hoover believed businesses should form voluntary associations

Associations would then work w/ government experts to accomplish public initiatives

Hoover called meetings of business leaders and government experts to figure out how to achieve public goals

Voluntary partnership between business associations and government

One main project of Hoover’s associative state was the construction of the Hoover Dam

Gov. funded the project and six companies worked together to design and build it

GOAL: harness Colorado river, provide electricity and water to 7 states

Dam showed success of partnerships between business and government

Believed government should NOT provide direct aid to people

Wanted to help struggling farmers

Pushed for loans to create and strengthen farm cooperatives

Farmer cooperatives (large group of farmers) could buy materials (like seeds) at lower prices than individual farmers

Hoover thought this would help farmers market crops and prices might rise Increasing farmers

income

Cooperative: an organization that is owned and controlled by its members, who work together for a common goal

Worsening economy led Hoover to alter his beliefs

1932 – Hoover urged Congress to create Reconstruction Finance Corporation (RFC) Gave $2 billion in

direct government loans to failing banks, insurance companies, etc.

Also created Federal Home Loan Bank Encouraged home

building Reduced number

of home foreclosures

Huge increase in governments role

But the help came too late

1930 – signed the Smooth-Hawley Tariff Act Raised cost of imported goods Hoped they would buy cheaper American goods

Europeans responded by placing tariffs on U.S. goods and trade plunged Dropped ¾ between 1929 and 1934

TOTALLY BACKFIRED

Claimed the economy was better than it was

Overestimated efforts being made to deal with the Depression

As things got worse, people couldn’t understand why Hoover: Didn’t offer them direct

relief Gave banks and

businesses billions and zero to individuals

May 1932 – 15,000 WWI Veterans set up camp near the nation’s capital

Trying to pressure the federal government to pay them a veteran’s bonus Cash promised to them for

their service in WWI Money not supposed to be

paid to them until 1945

Congress denied their demands

Many left, others remained leading to violence between police and Bonus Marchers

Camps were burned, two killed, hundreds injured

Hoover’s opposition to the Bonus March worsened his reputation Reason for his opposition was he wanted a

balanced budget Gov. didn’t have money to pay out the

bonuses To achieve a balanced budget, Hoover

pushed for a large tax increase in 1932 Larger tax burden = highly unpopular when

people are struggling

1930 – Democrats won majority in U.S. House of Representatives – nearly even in Senate

By 1932, Hoover’s ability to influence the public had disappeared – didn’t even campaign

Vocabulary Quiz