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The Great Depression Begins . Hoover responds. Promoting recovery. Voluntary Efforts and Public Works Public Works : government financed building projects Hoover encouraged governors and mayors across the country to increase public works spending so that people could get jobs
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The Great Depression Begins Hoover responds
Promoting recovery • Voluntary Efforts and Public Works • Public Works: government financed building projects • Hoover encouraged governors and mayors across the country to increase public works spending so that people could get jobs • Some jobs were created but only a small fraction of what was needed • The problem with public works projects is that someone has to pay for them which leaves two options • Loans from banks • Creates a budget deficit: spending more than is collected in taxes • Increase taxes • Midterm Elections: the Republicans who held power in congress lost 49 seats in the mid-term elections of Hoover’s presidency • Americans blamed those in power at the time for the depression
Pumping money into the economy • Trying to Rescue the Banks • Many Banks had collapsed after the stock market crash. • Hoover asked the Federal Reserve Board to put more currency into circulation, but the board refused (this would have caused inflation). • Hoover then set up the National Credit Corporation (NCC) which created a pool of money from New York bankers for other banks to use to lend money in their communities • Hoover asked congress to set up the Reconstruction Finance Corporation • The RFC made loans to banks, railroads, and agricultural institutions • The RFC was overly cautious and did not do enough to make an impact
PUMPING MONEY INTO THE ECONOMY • Direct help for Citizens • Relief: money that went directly to impoverished families • Hoover believed that only state and city governments should dole out relief • By the spring of 1932, state and city governments were running out of money • Congress responded by passing the Emergency Relief andConstruction Act • $1.5 billion to public works projects • $300 million in loans to states for direct relief
In an angry mood • Hunger Marches • Americans were angry and wanted to do something so some went on hunger marches to vent their frustrations at public officials • Farmers Revolt • Farmers could not pay their mortgages on the land that they farmed and the houses that they lived in • Banks were forced to foreclose on the farmers. • Foreclose: banks taking ownership of the property and forcing the occupants to leave
BONUS MARCH • Veterans of WWIwere expecting to receive a bonus of $1000 from the government for their service to be distributed in 1945 • They needed the money now and were asking for it early. • They marched on Washington DC to ask for their money early. • These veterans and their march became known as the “Bonus Army” • President Hoover and Congress said, “no”. • Most veterans returned home peacefully, but some stayed and occupied abandoned government buildings demanding their money • Hoover ordered the buildings cleared and police tried to force the veterans to leave. During the clearing, a panicked police officer fired into a crowd of veterans killing two veterans. The government then the sent in the army led by Douglas MacArthur (chief of staff) who ignored Hoover’s orders. Eventually the veterans were cleared from the city but the press made Hoover look bad.
HOOVER FAILED TO END THE GREAT DEPRESSION • …however, he did expand the role of the federal government in economic concerns than what was previously accepted.
Essay question • Describe Herbert Hoover’s dilemma in considering whether to greatly increase public works projects to spur economic recovery.
Essay question • Describe Herbert Hoover’s dilemma in considering whether to greatly increase public works projects to spur economic recovery. • The problem was that someone had to pay for public works projects. If the government raised taxes to pay for them, it would take money away from consumers and hurt businesses that were already struggling. If the government decided to keep taxes low and run a deficit instead, it would have to borrow the money from banks. If the government did this, less money would be available for businesses that wanted to expand and for consumers who wanted mortgages or other loans. Hoover feared that deficit spending would actually delay an economic recovery.
