HOOVER vs. FDR

Causes of the Great Depression

• Wages lagging behind the cost of living• Overproduction of consumer goods• Excessive buying on credit

Major characteristic of a depression: Few jobs & Little Demand

Republican Government: Hands off• Historically the government has been very hands off the economy.

– Laissez-faire approach– The business of government is business – It’s not the government’s job to regulate the economy – American dream is that anyone can “pull themselves up by

their bootstraps”

Government Involvement in 1920s• Lack of regulation helped contribute to poor

financial policies • EX: “Buying on the Margin”

Hoover• He continued the tradition of staying out of

the economy

• When the stock market crashed Hoover wanted to help but “didn’t think it was the government’s job”

• He thought the government should help foster cooperation– Ask businesses to not lay off workers so that they

wouldn’t be unemployed – Ask unions not to go on strike for more pay

No Welfare

• Hoover didn’t believe in direct relief (no welfare)– Thought it was too expensive for the gov. to do– Thought local charities and churches could

accomplish more– Thought it would cause people to not want to

work if they were getting a handout from the gov.

Hoover believed the best way to end the Depression was through voluntary controls by American businesses

Our system is… founded on the conception that only through ordered liberty, through freedom to the individual, and equal opportunity to the individual will his initiative and enterprise be summoned to spur the march of progress…

It is in the further development of his cooperation and a sense of its responsibility that we should find solutions for many of our complex problems, and not by the extension of government into our economic and social life…

Herbert Hoover campaign speech 1932

• Hoover believed that the extension of the government into peoples’ lives was NOT a solution to the problems of the economy.

• Hoover believed that through voluntary cooperation among business AND unions would find a way to support the economy.

More Action

• His ideas didn’t succeed so he moved for more direct action– Hoover (Boulder) Dam: on Colorado River the dam

provides not only electricity and flood control, it’s a regular water supply that enabled the growth of California’s massive agricultural economy.

– Federal Home Loan Bank Act: Lowered mortgage rates for homeowners and allowed farmers to re-finance

– Reconstruction Finance Corporation: Aimed to provide government credit to banks

The Bonus Expeditionary Force

• A group of World War I Veterans and their families marched on Washington D.C. to try to get the Patman Bill passed– A bonus that was to be paid to WWI vets who had not

been compensated adequately for their wartime services.

– approved by Congress in 1924 and was supposed to be paid out in 1945 in the form of cash (about $500 per soldier) and a life insurance policy

– Some Congressmen thought it should be paid out immediately

Hoover Disbands the Veterans

• July 28, 1932 - Nervous that the group could become violent, Hoover orders General Douglas Mac Arthur and Dwight D. Eisenhower to disband the Bonus Army.

• MacArthur used force to make the marchers leave the capital.

Hoover’s Image Suffers

“The 12th infantry was in full battle dress. Each had a gas mask and his belt was full of tear gas bombs…. At orders, they brought their bayonets at thrust and moved in. The bayonets were used to jab people, to make them move. Soon, almost everybody disappeared from view, because tear gas bombs exploded. The entire block was covered by tear gas. Flames were coming up, where the soldiers had set fire to the buildings to drive these people out… Through the whole afternoon, they took one camp after another.”

An 11-month old baby was gassed and died, an 8-yr. old boy was permanently blinded. Two people were shot and many injured. Most Americans were stunned and outraged at the treatment of the veterans. And Hoover has an election to face in November of that year.

1932 Presidential Election: Should the Federal Government try to fix people’s problems?

• People blamed the government and Hoover for the Depression– Hoovervilles: shanty towns built by the homeless in American

cities- The name was a slap in the face to Hoovers public policy they saw him as a cold heartless leader

• Franklin Roosevelt (Dem. Candidate) promises a “New Deal” for Americans saying the gov. should and would help them out

• FDR was elected almost 2-1 with his promise of the New DealFDR campaigned on the promise that as president he would attack the Great Depression by experimenting with bold new programs for economic and social reform.

• Roosevelt believed that the gov. should spend money in an effort to get the economy moving again, while

• Hoover believed that the gov. should stay out of peoples lives

The 1932 election served as a turning point in the way Americans viewed the responsibilities of the federal government!

'1933' '1934' '1935' '1936' '1937' '1938' '1939' '1940'0

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Unemployment, 1933-1940

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FDR’s plan for the economy was successful

What does this graph tell you about FDR’s ‘New Deal’ economic plan? After the 1932 election