Why Did The Policies Of President Hoover Fail To Combat The Great Depression Effectively?

In October 1929, the USA was plunged into the sharpest recession to take place in American history. The period it lasted for became known as the Great Depression. Drastic action was required to fix the situation, and the first person people looked to was President Hoover, who had unluckily took up presidency eight months before the Wall Street Crash.

However, Hoover is known for his inability to sue federal powers to overcome the Depression quickly and effectively. Some recent historians have been more sympathetic towards Hoover because they believe he was a victim of both his own mindset and of one of the most difficult to solve crises in American history.

But most believe it was his political beliefs and policies that stopped him fight the Depression successfully.

Hoover’s main trouble was that he was not willing for direct government to take place. His two central policies were self-help and voluntary co-operation. His continued belief in these represented his continued belief that the economy had to right itself and that changes he made would not help – “Economic depression cannot be cured by legislative action or executive pronouncement”.

Indeed, Hoover knew that the government was urgently required to take action but the action he was willing to take was not nearly enough to deal with the depth of the Depression, as shown through eight different areas of the Depression federal government policies were made on. These were agriculture, tariffs, repudiation of war debts, voluntarism, unemployment relief, Federal Home Loan Bank Act, Reconstruction Finance Corporation (RFC) and war veterans and the ‘Bonus Army’. The legislation passed in all of these areas was a failure, which lost Hoover all credibility.

The Agricultural Marketing Act was passed in 1929, creating a nine-person Federal Farm Board with funds of $500 million to create ‘stabilisation corps’, and the crops created were eventually bought back at higher prices. The agricultural policy failed for two reasons: firstly because it paid US farmers artificially high prices and could not continue in the long term; secondly because it treated agriculture as a domestic, not foreign, issue. Cheap foreign imports became a problem, and the answer appeared to be even higher tariffs.

In June 1930, the Hawley-Smoot tariff was enforced – and was the highest in US history. Its result was most European nations abandoning free trade. Hoover could have vetoed the bill but chose not to.

In the repudiation of war debts, Hoover blamed the Depression on Europe, though the situation was in fact vice versa. Europe could not afford to pay back war debts, and international trades decreased. Countries worldwide were in a more depressed state, again a negative result.

Hoover placed the onus of improving the situation onto the businesses rather than the government. He told businessmen not to cut their workforces or wages but to maintain output and encourage buying. As the depression worsened, however, they could not afford to do this. Workers were fired and wages reduced, raising unemployment levels.

So, Hoover then secured $500 million in 1932 from Congress to use as unemployment relief, but the amount simply wasn’t enough. He also set up the President’s Emergency Committee for Employment to help agencies organise efforts, but still refused to help directly because of his self-help policies.

An example of this is during the 1930-31 drought, which was so severe it led to almost starvation in the South. Congress gave $47 million to be offered as loans, but Hoover still didn’t want to give direct relief. He didn’t believe in giving out benefits.

So unemployment relief was another failed attempt by Hoover to fight the Depression.

The Federal Home Lon Bank Act was passed in July 1932, and

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was Hoover’s attempt to save mortgages. A series of Federal Home Loan banks were set up to help loan associations providing mortgages. However, they only lent 50% of the property value. The Act failed and was largely ineffective, and homes were repossessed.

The Reconstruction Finance Corporation (RFC) was Hoover’s most radical measure to overcome the Depression and the precursor to the New Deal initiatives of Franklin Delano Roosevelt.

The RFC was established in January 1932 and could lend up to $2 billion to stabilise banks, insurance companies, railroads and construction companies that were suffering. It was a measure taken to restore confidence. The loans, however, were given mainly to big banks and larger companies. The RFC eventually failed because it was giving too little too late.

By this time, Hoover’s credibility was severely damaged, but the nail in the coffin was yet to come – the treatment of the Bonus Army, which portrayed him as cold and cruel.

In 1925, Congress agreed to give veterans of WW1a ‘bonus’ to be paid in 1945. In June 1932, 20,000 war veterans marched to Washington to request their bonus early in order to survive the Depression. They were told that the government could not afford to pay them, but Hoover would pay for their trip home. Feeling betrayed, the veterans set up camp. Hoover feared violence, to the extent of revolution, and called in the military. Tanks, infantry and tear gas destroyed the camp and drove away the veterans. These men who had served their country were called “tramps and hoodlums with a generous sprinkling of Communist agitators”. Hoover was solely blamed for the dispersal of the Bonus Army, which was a major political blunder.

By now, the people of America had turned away from Hoover and were looking for answers elsewhere – Franklin Delano Roosevelt. Already popular as Governor of New York State, Roosevelt appealed to the US people because he proposed to take the action that Hoover would not and showed flexibility. Through his time as Governor, Roosevelt showed his willingness to listen to others’ ideas and his belief that direct government intervention was necessary. An example of his flexibility is the Temporary Emergency Relief Administration, set up in 1932. Though it was temporary, it was the first state-run relief effort in the nation.

In comparison, Hoover refused to hear ideas remotely associated with government intervention. However, some historians argue that Hoover did in fact involve the government in more areas of life than ever before, for example the expansion of federal lending and the encouragement of public works’ schemes. Hoover had a personal concern for those suffering the Depression. He cut his own and state officials’ salaries by 20% and had long working hours. On the other hand, he showed optimism in public, which led people to accuse him of losing touch with reality. Although Hoover worked tirelessly to fight the Depression, his refusal to abandon his policies of self-help and voluntary co-operation prevented him from doing so successfully.

In conclusion, President Hoover’s policies failed to combat the Great Depression effectively because the help they provided were very limited in the extent the Depression had gone to. Because of his beliefs in self-help and voluntary co-operation he blocked direct government intervention from his policies, driving away supporters towards Roosevelt, who won the elections of 1932 and began his ‘New deal’.

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