Hoover's response

• Hoover encapsulated the American Dream
• Hoover believed in self-reliance and American individualism
• Hoover worked endlessly, gave generously to charity and cut his and his state officials' salaries by 20% to help fund relief efforts
• Hoover lost credibility for his forced optimism and shanty towns and newspapers were renamed to spite him ('Hoovervilles' and 'Hoover blankets')
• Hoover refused to fully abandon his principles, but involved the government in the economy an unprecedented amount without introducing direct government relief
• The 1929 Agriculture Marketing Act formed a nine-person Federal Farm Board with $500 million to create stabilisation corporations
• Stabilisation corporations were to buy, store and dispose of farm surplus but they had no power to cap production
• Surpluses in 1931 and 1932 made the corporations have to pay above-market values for produce
• The Grain Stabilisation Corporation had to pay $0.82 per bushel, when the world price was only $0.40
• The corporations were accused of wasting taxpayer money and failed to bring prices above harvesting cost
• Hoover vetoed a proposed bill to subsidise farmers
• Agricultural policy failed because it was paying farmers unsustainably high prices and it treated the problem as a purely domestic issue
• The Smoot-Hawley Tariff, the highest in US history, came into force in June 1930
• The Smoot-Hawley Tariff had average duties of 40% on agricultural and industrial items
• The Smoot-Hawley Tariff led to less American goods being exported
• In 1931, international trade fell by $1.2 billion
• Many European countries stopped repaying their wartime debts due to a lack of American credit
• Hoover postponed the collection of debts for 18 months in 1931, but this was too late to save European countries
• The pause of repayment of wartime debts was called the 'moratorium'
• Hoover initially hoped to persuade businessmen and state governments to solve the depression through their own voluntary efforts
• Bankers set up the National Credit Corporation in October 1931 to help failing banks
• The National Credit Corporation had $500 million of funding from financial institutions
• The NCC faded away after bankers proved unwilling to invest in failing causes
• The problems were too great for voluntarism to work, especially if it went against customary business practices
• Hoover was granted $500 million from Congress to help agencies provide relief, which he used to set up the President's Emergency Committee for Employment
• Hoover wouldn't entertain the idea of direct relief
• Hoover refused to give direct aid in the severe drought of 1930-1931. Congress eventually gave $47 million in repayable loans
• The Federal Home Loan Bank Act was passed in July 1932 to save mortgages and make credit easier
• Federal Home Loan banks were set up to help loan associations to provide mortgages
• The maximum loan from the FHL banks was only 50% of the property's value, which was insufficient in preventing homes from being repossessed
• The Reconstruction Finance Corporation (RFC) was created in January 1932 to lend up to $2 billion to rescue banks, insurance companies, railways and construction companies. It was designed to restore confidence
• 90% of the RFC loans went to small or medium banks. However, of the first $61 million spent, $41 million was loaned to 3 institutions
• The biggest RFC loans went to the biggest institutions
• Central Republican National Bank and Trust Company received $90 million in total
• Hoover finally gave direct relief in summer 1932 in the Emergency Relief and Construction Act, which authorised the RFC to lend $1.5 billion to states for public works
• States had to declare bankruptcy before they could receive help and the projects had to repay the loans
• Hoover had set up the Veterans' Administration and federal spending on veterans with disabilities was $675.8 million per year
• Congress had agreed to a veteran's bonus in 1925, to be paid in 1945
• During the depression, a march to Washington was organised to ask for the bonuses early. It was in June 1932 and involved 20 000 veterans who camped in the capital
• On 15th June 1932, the House of Representatives voted 226-175 to allow immediate payment of the bonus