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Herbert Clark Hoover was the 31st president of the United States from 1929 to 1933. The Great Depression defined his presidency, which started only months into his tenure; his response to the financial crisis is often criticised for worsening its effects.
Many Americans blamed President Hoover for the Great Depression – was there any truth in this?
Who exactly was this man that received so much criticism as president?
Herbert Clark Hoover was born in 1874 in West Branch, Iowa.
In 1895, Hoover graduated from Stanford University.
He went on to work as a mining engineer in London, where he acquired his fortune.
Soon after the First World War outbreak, Hoover became head of the Commission of Wartime Relief in Belgium.
As a result of his success, Hoover was appointed Director of the American Relief Administration by President Wilson when the United States joined WWI in 1917.
Hoover continued to help with food relief in European nations desperately in need after the war.
Hoover first attempted to gain the Republican nomination for the presidency in 1920 but was unsuccessful.
He served as Secretary of Commerce for President Warren Harding and Calvin Coolidge.
He won a landslide victory in the 1928 presidential election with 58.2% of the vote against the Democrat candidate Alfred Smith and became president on 4 March 1929.
In the 1920s, three Republican presidents held office in America, of which Hoover was the third. Like Warren Harding and Calvin Coolidge, who came before him, Herbert Hoover was committed to conservatism.
A political, social, and economic philosophy, which favours a free economy, private ownership, a limited federal government, and maintaining traditional social ideas.
Hoover focused on the economic aspects of conservatism, as he was quite progressive in his social ideas. A fundamental principle of conservatism is laissez-faire capitalism, which means that businesses are free to expand without government restrictions. Laissez-faire was not only applied to businesses; it also promoted limited government interference in general.
Hoover also believed in what he termed rugged individualism.
The idea that individuals should be entirely self-reliant and without government assistance
Hoover embraced the idea that hard work paid off; he believed that people could overcome their problems, and government intervention would encourage reliance and restrict people's freedom.
Historians of American politics argue that Hoover's belief in rugged individualism had a lot to do with his background. He was born into poverty, orphaned at age 9, and managed to work to become a self-made millionaire. If he could do it, why couldn't other people?
Hoover believed that the government had a duty of care in public works, defence and foreign policy but did not agree that it was the federal government's job to alleviate homelessness, hunger or unemployment – this was a job for charities and other organisations. This belief is called voluntarism.
The idea that help should come from charities, businesses, local governments etc., and not from the federal government
Hoover's political principles are essential when considering his response to the Great Depression. Although many American businesses and citizens turned to the government for assistance when the Depression hit, Hoover quite literally did not view this as the government's responsibility.
At the start of his presidency, Hoover was considered a progressive politician and initially focused on wide-ranging reforms in economic, social, and even environmental fields.
When the stock market crashed in 1929, Hoover saw it as a temporary blip in America’s economic affairs. Immediately after the crash, Hoover stated that
Any lack of confidence in the economic future or the strength of business in the United States is foolish.
Even when the Depression persisted, he remained reluctant to act and, in 1931, blamed setbacks from abroad for the continuing crisis. From what we know about Hoover, we know he would not want to intervene in the economy. So, did he eventually help the American people, or did he stick to his principles?
Initially, President Hoover did very little to address the Depression, which did change at the end of his presidency. Still, his policies tackled the effects of the crisis and not the cause, and this allowed the Depression to worsen. His response is considered a huge failure.
Although the government did not directly intervene at this point, this did not mean Hoover did nothing.
In November 1929, Hoover met with leaders of America's largest businesses. Hoover tried to persuade them to put in measures that would reduce unemployment, maintain wages, and invest in new projects to stimulate the economy. What was his thought behind this?
Hoover believed that businesses maintaining employment levels would restore confidence in the American economy.
Hoover believed maintaining wages and employment levels would retain purchasing power and re-stimulate the economy.
Hoover thought that these measures would lead to increased inflation and increased demand levels.
A general decrease in the purchasing power of money due to an increase in prices
Hoover also negotiated a $160 million tax cut and committed more federal money to public works programmes.
In an attempt to help farmers, the Agricultural Marketing Act 1929 was passed. Hoover established the Federal Farm Board to help farmers buy, sell, and store agricultural surpluses. It also offered money to farm organisations, but not to farmers themselves, as Hoover did not want them to become dependent on it. The board was rather unsuccessful, and Hoover failed at the first initiative he created.
An excess of production or supply
Another failure came as the investment in American industry and the demand for goods had begun to fall, leading American businesses to lay people off. Hoover's decision to encourage rather than enforce businesses to maintain employment and wages backfired and effectively led to mass unemployment.
At this point, Hoover was praised for his efforts; in fact, the New York Times wrote:
“No one in his place could have done more.
Business and government spending was increasing, but unemployment also continued to rise. In an attempt to tackle this, Hoover created the President’s Emergency Committee for Employment (PECE) in October 1930 to provide welfare to US citizens who had lost their jobs.
The PECE coordinated state and local relief programmes rather than giving federal assistance, limiting its success as state and local governments lacked finances. In keeping with Hoover's belief in voluntarism, he also convinced Congress to allow agriculture surpluses to be transferred to the Red Cross and distributed by various relief agencies.
One of Hoover’s most infamous responses to the Great Depression was the protectionist Smoot Hawley Tariff, introduced on 13 March 1930. Hoover placed high tariffs on imports to America to protect American labour, business, and farmers. What were the consequences?
Over 25 nations responded by placing tariffs on American goods.
This was catastrophic for the United States, its manufacturers and producers.
These tariffs, and their retaliation, played a key part in the collapse of world trade.
Increasing taxes and placing other restrictions on foreign goods to protect domestic businesses from competition
In August 1931, the PECE was reorganised as the President’s Organisation on Unemployment Relief (POUR), which continued to coordinate other relief efforts, and pushed for donations from wealthy people to help the people, again refusing to provide direct funding.
Hoover was subject to much criticism, focusing on public works funding seen as a waste of money and his refusal to give federal aid seen as cruel. In late 1931, Hoover switched tactics.
What did Hoover's new approach include?
On 22 January 1932, Hoover established The Reconstruction Finance Corporation (RFC) to provide financial aid to businesses in urgent need. This did stabilise some businesses but the aid was not large enough to give significant relief.
In July 1932, the Emergency Relief Construction Act gave the RFC power to lend money to states and public works. Public works projects did not really take off until after Hoover's presidency had ended.
The Federal Home Loan Bank System was developed to provide banks with funds to be used for mortgages, and to make homeownership and home security more achievable; these banks were given $125million.
Hoover's reputation took a hit in July 1932 when around 17,000 WWI veterans and their supporters marched to Washington DC to claim payment of their war bonuses.
The 1926 Bonus Act awarded compensation to war veterans, but this was not due to be paid out until 1945. In 1932, veterans demanded the money immediately and marched on Washington DC.
Hoover refused to give in and eventually sent the US army to disperse the veterans, making him appear without compassion.
Hoover lost the 1932 election to Democrat candidate Franklin Roosevelt, who brought in the 'New Deal', which included programs Hoover had advocated in his final months as President, but Congress refused to enact his policies. For example, the Emergency Banking Relief Act introduced by Roosevelt in the first days of his presidency was very similar to one proposed by Hoover.
The Gold Standard
A monetary system in which a nation’s currency is pegged to the value of gold
Although he eventually changed tactics, Hoover remained committed to the gold standard.
Gold standard nations could not increase their money supply without increasing their gold reserves. Due to the global economic crisis, many people were storing gold globally, which led to reserve shortages. This limited investment and borrowing cut the supply of money in the USA and led to deflation.
The general decline of prices for goods and services, usually as a result of a decline in the money supply
In 1931, Britain was the first nation to abandon the gold standard and other nations quickly followed but the US did not abandon it until 1933 under Roosevelt, when the damage had been done.
Life in America during the Great Depression was miserable and Hoover's policies did not do much to remedy this. Below we will look at some of Hoover's impacts on the American people.
A huge proportion of the population was living in poverty, with millions also at risk of starvation.
Between 1930 and 1933, around 9,000 banks failed.
Unemployment was estimated to be around 25% by 1933.
Industrial production between 1929 and 1933 fell by over 40%.
Average income dropped by 40% between 1929 and 1933.
The lack of tax income led to many towns and cities going bankrupt. These towns and cities were forced to slash their employees' salaries, like teachers and police, or make them redundant.
African Americans were particularly affected:
Between 1929 and 1933, Gross Domestic Product (GDP) declined by around 30%.
Gross Domestic Product
The total value of the goods and services produced in a country
Thousands of people were evicted from their homes. Many Americans had to live in self-constructed corrugated makeshift housing structures in shanty towns, popularly coined as Hoovervilles. See right -->
Before we evaluate Hoover's failure to tackle the Depression effectively, let's acknowledge some of his achievements:
Hoover did substantial work on prison reform, tackling overcrowding, and offering more educational opportunities for those in prison.
Before the Depression had painted him as a cruel man, he had a reputation as a successful humanitarian due to his relief work.
In 1930, he convened the first White House Conference on Child Health and Protection, bringing children's issues into the discussion.
His achievements were overshadowed by his failure to alleviate the damages of the Depression – the key reason for this was that he tackled the effects, not the causes. Hoover's response exacerbated the economic crisis, so he was heavily blamed for the Depression.
Causes of the Depression
The causes of the Depression are complex; for more information, visit The Great Depression article. Some of the main causes relevant to Hoover's failure were:
The historiography around Hoover has shifted from the negative literature of the 1930s and 40s to more favourable revisionist interpretations. This is explored in Patrick O'Brien and Philip Rosen's 1981 article 'Hoover and the Historians: The Resurrection of a President'. 1
Public works funding was a huge part of Roosevelt's 'New Deal' which was argued to be a key factor in ending the Depression, but it was Hoover who had begun the emphasis on public works.
Hoover became president in 1929 and held office until 1933.
Despite achievements concerning prison reform and humanitarianism, Hoover is most well known for his failure to effectively tackle the Great Depression.
Initially, Hoover did very little to address the Depression as he did not want to intervene in the economy. Later, he introduced things such as high tariffs, welfare measures, public works funding, and eventually federal funds.
Hoover thought that by helping businesses, he was helping individuals. He was against giving government assistance to individuals due to his belief in rugged individualism.
Hoover was a conservative Republic and believed in minimal intervention in the economy. However, the Great Depression that began shortly after he became president posed difficulties - he is most well known for his failure to tackle this effectively. He famously introduced the disastrous Smoot Hawley Tariff and other unsuccessful measures, which overshadowed his social achievements.
How did Hoover attain his early fortune?
He was a mining engineer for a London company.
What role did Hoover play in the First World War?
He was the Head of the Commission of the relief in Belgium
What role did Hoover play in WWI for the United States?
Director of the American Relief Administration
What role did Hoover have under President Coolidge’s presidency?
Secretary of Commerce
When did Hoover become president?
4 March 1929
Hoover was considered a __________ politician at the start of his presidency.
Hoover believed that ___________ ____________ could help the average American leave poverty.
What type of attitude did Hoover push for during the Great Depression?
Name some policies Hoover enacted.
Smoot Hawley Tariff, Federal Home Loan Banking Act, Reconstruction Finance Corporation
What was the economic impact of Hoover’s policies?
Increased unemployment (23.3 increase from 4.4%), decreased GDP growth (12.9 decrease)
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