Hoover's Failure

• Reparation payments


  After the First World War, Germany was forced to accept responsibility and to pay reparation payments to the Allied powers to help repair the damage of the war. Mainly paid to Britain, France and Belgium, this money would help the Allies repay their own debts to the USA.
• Moratorium


  A temporary suspension. In this case it was a temporary suspension of reparation payments.
• President Hoover


  • Vilified for his action (at the time, and since)
  • Aimed for mass-wealth during his 1928 election campaign
  • Has suffered with public opinion since, as he preceded FDR (Roosevelt), who is generally regarded to be one of the USA's greatest presidents
  • Hoover looked indecisive and lacklustre in comparison
• Why did Hoover fail to solve the Great Depression?

  • Hoover believed that the economy would correct itself, and that intervention by the federal government might undermine that
  • Hoover believed that US society should not be reliant or dependent on financial support (no benefits!)
  • After 1930 he lost control of the House of Representatives making passing any legislation more difficult
  • If any welfare support was to be given, it was to be done at state level, not by the federal government
  • Hoover believed the problems of the Great Depression were international, and that there was very little to fix in America
• Hoover's response to the Great Depression

  1. Continue with laissez-faire policies

  2. Smoot-Hawley Tariff 1930

  3. Moratorium on war debt

  4. Reconstruction Finance Corporation 1932

  5. Emergency Relief and Construction Act, 1932
• Unemployment was spiralling – during Hoover's presidency, 13m American's lost their jobs – 62% were unemployed for more than 1 year
• Unemployment rate increased from 6.9% (1930) to 24.1% (1933)
• Lack of a federal welfare system – state responsibility, but many failed to offer anything
• Led to increase in homelessness
• Hoover's response was to do very little – state not federal business!
• New vocabulary relating to the Great Depression


  • Hoover wagon – a car pulled by mules
  • Hoover blankets – newspapers used to keep warm at night
  • Hooverville – a shanty town for unemployment and homeless people to live in (by 1930 nearly every town had one). They lacked water, power and had poor sanitary conditions.
  • Hobos – homeless people (often harassed by the police)
• Smoot-Hawley Tariff 1930


  • Increased the level of tax on imports to the highest they'd every been (e.g. agricultural tax went up by 40%)
  • Aimed to protect US businesses and encourage Americans to 'buy American'
  • Majorly criticised by the US economists
  • The tariff encouraged other countries to respond with their own tariffs which then limited the opportunities for American companies to sell overseas
  • This caused a contraction, not expansion of the world economy
• By 1930 the US people were beginning to turn against the government…
• In the 1930 mid-term elections, the government lost their control of the House of Representatives. They had held this since 1918.
• Moratorium on war debt

  • A one year suspension of all payments due on WW1 debts
  • Aimed to allow other countries to grow their economies by having more money to invest in it – this would've sped up the expansion of the world economy
  • Very limited impact, too little too late – the damage to the world economy was already done
  • Any benefit that could've come from it, was the undermined by the Smoot-Hawley Tariff
• Reconstruction Finance Corporation 1932

  • Gave $2bn of tax paper money to assist struggling banks and insurance companies
  • Aimed to prevent further collapse of banks, which consequently lost investor money
  • First evidence of the Republicans moving away from laissez-faire towards more interventional policies
  • Only partly successful, helped to prevent the Depression worsening – helped 160 banks, 60 railroads and 18 mortgage companies
  • Failed to encourage banks to lend more to businesses facing severe financial problems/potential bankruptcy
  • FDR continued to use the Reconstruction Finance Corporation after he became President
• Emergency Relief and Construction Act, 1932


  • $1.5bn given to state governments to fund public works for the unemployed, through the Reconstruction Finance Corporation
  • Aimed to provide relief programme to help unemployed, and prevent current public works schemes from collapsing
  • Provided important support for some businesses and individuals
  • Widely criticised – money given was only enough to help 10% unemployed
• By 1932 it was evident that more radical change was needed.
• In November 1932 Hoover lost the Presidential election to Franklin Roosevelt who had promised more aggressive measures to tackle the Depression.
• Whilst Hoover failed without question, there is great debate about why this was – would any other Republican President have done things differently?