Hoover’s response to the Depression

• What action did Hoover take to help the economy during his presidency?

  He introduced the Hawley-Smoot Act in 1930.
• What was the purpose of the Hawley-Smoot Act introduced by Hoover?

  To increase tariffs by 50% on imported manufactured items to help industry sell more home-produced goods.
• When was the Reconstruction Finance Corporation (RFC) established?

  In 1932.
• What was the main function of the Reconstruction Finance Corporation (RFC)?

  To provide loans totalling $1,500 million to rescue businesses, banks, and insurance companies.
• Hoover’s actions didn’t halt the Great Depression


  Hoover’s actions did not halt the Great Depression. It continued to deepen. The Hawley-Smoot Act meant foreign countries retaliated by taxing American goods coming into their areas, so trade fell even further. The loans did not save enough companies. The additional taxes on business did not help balance the budget, plus they made the survival of firms more difficult. Industrial production continued to drop. It decreased by 45 per cent between 1929 and 1932. House-building fell by 92 per cent between 1929 and 1932.
• How much did Hoover initially cut taxes by to stimulate investment?

  $130 million.
• What change occurred to taxes in 1932 under Hoover's administration?

  Taxes were increased on businesses to help balance the budget.
• How much money did Hoover make available to states to help the unemployed?

  $300 million.
• How much of the $300 million made available to states for the unemployed was actually given out?

  Only $30 million was given out.
• What were the key actions taken by Hoover to address the economic crisis during his presidency?

  • Introduced the Hawley-Smoot Act (1930) to increase tariffs by 50%
  • Established the Reconstruction Finance Corporation (RFC) in 1932 to provide $1,500 million in loans
  • Initially cut taxes by $130 million, then increased them in 1932
  • Made $300 million available to states for unemployment aid, but only $30 million was distributed
• Businesses going bankrupt


  Businesses continued to go bankrupt, especially banks. From 1929 to 1932, 5,000 banks, which tended to be too small and unregulated, went out of business. In New York, 10,000 of the 29,000 manufacturing firms closed. However, not all businessmen lost out in the depression. Overall, the very rich remained prosperous. Multi-millionaires, such as J D Rockefeller, kept their wealth in items like gold and property so they did not suffer as much as small businesses, workers and farmers when the banks failed.
• For lots of workers the Great Depression was a period of misery and desitution

  For many workers, the Great Depression was a period of misery and destitution. Unemployment increased: It rose from 1.6 million in 1929 to 14 million in 1933 (i.e. from 3 per cent to 25 per cent of the workforce). People were desperate for work. For example, in 1930 there were 6,000 men on the streets of New York trying to survive by selling apples.
• Wages fell


  Wages fell: As competition for jobs increased, even those in work suffered. Employers reduced wages and increased hours. Some government employees, for example teachers, were not paid when city councils, for example in Chicago, went bankrupt.
• Charity and relief schemes

  Reliance on charity and relief schemes escalated: America did not have unemployment benefits. Hoover eventually had to lend billions of federal monies to them in 1932 to fund public works schemes. Charities and wealthy individual stepped in to organise soup kitchens and cheap meals centres. Even Al Capone gave money for a soup kitchen in Chicago. In several cities, the unemployed organised themselves into groups to support each other.
• Things turned violent


  Demonstrations, by both the unemployed and employed, at the lack of action by the government turned into violence. In 1930, a rally of unemployed people became a riot as police charged the crowd. There were strikes and bitter clashes in many American cities because of starvation level wages
• Biggest Protest March 


  The biggest protest march was by the Bonus Army in 1932. The First World War veterans demanded early payment of their $1,000 war bonuses, which were not due until 1945. With their wives and children, 15,000 of them set up a camp on Anacostia Flats, Washington. Hoover accused them of being communists and ordered their removal. They were dispersed by armed troops, cavalry, tanks and tear gas on the command of General MacArthur. Two babies died and many children were injured.