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Hoover vs. FDR: Reactions to the Great Depression

Hoover vs. FDR: Reactions to the Great Depression

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Published by irregularflowers
A table comparing and contrasting Hoover and FDR's reaction to and philosophy regarding the Great Depression.
A table comparing and contrasting Hoover and FDR's reaction to and philosophy regarding the Great Depression.

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Published by: irregularflowers on May 31, 2009
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04/08/2013

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HooverRooseveltPhilosophy-blamed the severity of the depression on the international economic situation.-promised to eradicate poverty while running for election-turned to the business community for leadership. He asked businesses to maintainwages voluntarily, keep up production, and work with the government to buildconfidence in the system.
Voluntarism
.-cut federal taxes and called on state and municipal governments to increase capitalspending. He later asked congress for a tax increase to balance the budget-raised the federal public works budget-believed that money lent at the top of the economic structure would stimulate production, which would create new jobs.
Trickle down
.-eventually turned to federal action to stimulate the economy when voluntary actionfailed.-refused to consider any plan for direct federal relief for unemployed Americans. He believed that private organized charities were sufficient to meet social and welfareneeds.Philosophy-centralized decision making in the white house, expanding role of executive branch-ND planners hoped that prices would rise in response to government-created scarcity-fiscal conservative afraid of deficit spending, and moved reluctantly towards federalaid for the unemployed-promoted work relief over cash subsidies. Favored relief jobs that did not competedirectly with the private sector -tried to trigger rises in prices to stimulate recovery-abandoned the
gold standard
. Allowed the FRS to manipulate the value of the dollar in response to economic conditions-centralized banking system-billed himself as savior of capitalismActs/Programs-1929
Agricultural Marketing Act
gave the federal government its largest role to datein a program of agricultural stabilization and farm relief -
Revenue Act of 1932
was largest peacetime tax increase in nation’s history. Higher taxes choked consumption and investment and prolonged the depression-
Glass-Steagall Banking Act
of 1932 made government securities available toguarantee FR notes and temporarily helped the banking system-
Reconstruction Finance Corporation
was developed in collaboration with the business and banking communities and was the first federal institution created tointervene directly in the economy during peacetime. Provided federal loans to railroads,financial institutions, banks, and insurance companies.
Pump priming
. Its caution inlending money limited its influence.-
Hoover Dam
Acts/Programs-declared bank holiday. 4 days later passed
emergency banking bill
, which permitted banks to reopen beginning on March 13, but only if TD inspections showed that theyhad adequate cash reserves-
Home Owners Loan Corporation
refinanced home mortgages threatened byforeclosure-
Glass-Steagall Act
curbed speculation by separating investment banking fromcommercial banking and creating the
FDIC
, which insured bank deposits up to 2500-
Civilian Conservation Corps
employed young men-
Tennessee Valley Authority
received legislative approval for government-sponsored public energy in rural areas-
Agricultural Adjustment Act
established a domestic allotment system for 7commodities with w/cash subsidies to cut production. Those benefits were financed by atax on processing, which was passed on to consumers. Stabilized the agriculturalsystem, but its benefits were distributed unevenly. Subsidies for reducing productionwent primarily to large farms, who often cut production by reducing the acreage of their tenants.-
National Industry Recovery Act
created the
National Recovery Administration
.The NRA set up a system of individual self-government to handle the problems of overproduction, competition, and price instability. For each industry a code of pricesand production quotas was established. Established a minimum wage, maximum hours,and banned child labor.-
Section 7(a)
guaranteed workers the right to organize and bargain collectively.-
Federal Emergency Relief Administration
offered federal money to the states for relief programs.-
Securities and Exchange Commission
regulated the stock market. The commissionhad the power to regulate the purchase of stocks on credit and to restrict speculation.-
Banking Act of 1935
enhanced the federal government’s role in controlling the
 
economy and business. Authorized the president to appoint a new board of governors of the FRS, placing control of interest rates at the federal level-The
Wagner Act
placed the weight of the federal government on labor’s side in thestruggle to organize. It upheld the right of industrial workers to join a union andoutlawed many unfair labor practices. Established the
National Labor Relations Board
to protect workers.-Social Security Act provided pensions for workers in the private sector and establisheda joint federal-state system of unemployment compensation.-
Works Progress Administration
became the main federal relief agency. It put relief workers on a federal payroll. Ended in 1943-the
Revenue Act of 1935
included federal gift and inheritance taxesPublic Response-many citizens hated him. He became the scapegoat for the depression-he seemed to relate better to banks/businesses more than the people-farmers harassed bank agents and government officials. They dumped crops becausethey were too expensive to grow-rampant labor strikes, some organized by Communist Party-
Bonus Army
Public Response-many citizens credited him with the positive changes in their lives-
fireside chats
created public support-the wealthy saw him as a traitor -the
Liberty League
rallied against “reckless spending” and “socialist reforms”-lack of support from conservative court-
Francis Townsend
proposed
Old Age Revolving Pension Plan
, which would haveencouraged older workers to spend money and open new positions in the workforce-
Charles Coughlin
split with FDR over his refusal to support nationalization of the banking system and increase of the money supply-
Huey Long
created
Share Our Wealth Society-court packing
Causes of Depression-After 1927, consumer spending declined and housing construction slowed. Inventories piled up, and in 1928 and 1929 manufacturers began to cut back on production and lay off workers.-reduced buying power -unregulated stock market activity. Easy credit lured less creditworthy investors to the market-defaults on loans for stocks caused bank failures-Agriculture had never recovered from the recession of 1920-21. Farmers faced high fixed costs for equipment and mortgage rates. At the same time prices fell due tooverproduction, forcing farmers to default on their mortgage payments.-drastically unequal distribution of wealth. The tax policies of Andrew Mellon contributed to this disparity by lowering personal income taxes, eliminating the wartime profits tax,and increasing deductions that favored affluent individuals and corporations.-the international economic system was dependent on the influx of American capitalReactions-The Federal Reserve System reacted cautiously. In October 1931 the FRB of NY increased the discount rate—the interest rate it charged on loans to member banks—and cut back the amount of money placed in circulation through purchase of government securities. This squeezed the money supply, forcing prices down and depriving businesses of funds for investment.-People preferred to hold onto their money.

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good chart, wish this also had a current comparison of Bush and Obama since while teaching the Great Depression we all now compare it to our current "Great Recession."

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