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Hoover Roosevelt

Philosophy Philosophy
-blamed the severity of the depression on the international economic situation. -centralized decision making in the white house, expanding role of executive branch
-promised to eradicate poverty while running for election -ND planners hoped that prices would rise in response to government-created scarcity
-turned to the business community for leadership. He asked businesses to maintain -fiscal conservative afraid of deficit spending, and moved reluctantly towards federal
wages voluntarily, keep up production, and work with the government to build aid for the unemployed
confidence in the system. Voluntarism. -promoted work relief over cash subsidies. Favored relief jobs that did not compete
-cut federal taxes and called on state and municipal governments to increase capital directly with the private sector
spending. He later asked congress for a tax increase to balance the budget -tried to trigger rises in prices to stimulate recovery
-raised the federal public works budget -abandoned the gold standard. Allowed the FRS to manipulate the value of the dollar
-believed that money lent at the top of the economic structure would stimulate in response to economic conditions
production, which would create new jobs. Trickle down. -centralized banking system
-eventually turned to federal action to stimulate the economy when voluntary action -billed himself as savior of capitalism
failed.
-refused to consider any plan for direct federal relief for unemployed Americans. He
believed that private organized charities were sufficient to meet social and welfare
needs.
Acts/Programs Acts/Programs
-1929 Agricultural Marketing Act gave the federal government its largest role to date -declared bank holiday. 4 days later passed emergency banking bill, which permitted
in a program of agricultural stabilization and farm relief banks to reopen beginning on March 13, but only if TD inspections showed that they
-Revenue Act of 1932 was largest peacetime tax increase in nation’s history. Higher had adequate cash reserves
taxes choked consumption and investment and prolonged the depression -Home Owners Loan Corporation refinanced home mortgages threatened by
-Glass-Steagall Banking Act of 1932 made government securities available to foreclosure
guarantee FR notes and temporarily helped the banking system -Glass-Steagall Act curbed speculation by separating investment banking from
-Reconstruction Finance Corporation was developed in collaboration with the commercial banking and creating the FDIC, which insured bank deposits up to 2500
business and banking communities and was the first federal institution created to -Civilian Conservation Corps employed young men
intervene directly in the economy during peacetime. Provided federal loans to railroads, -Tennessee Valley Authority received legislative approval for government-sponsored
financial institutions, banks, and insurance companies. Pump priming. Its caution in public energy in rural areas
lending money limited its influence. -Agricultural Adjustment Act established a domestic allotment system for 7
-Hoover Dam commodities with w/cash subsidies to cut production. Those benefits were financed by a
tax on processing, which was passed on to consumers. Stabilized the agricultural
system, but its benefits were distributed unevenly. Subsidies for reducing production
went 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 prices
and 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 commission
had 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 the
struggle to organize. It upheld the right of industrial workers to join a union and
outlawed 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 established
a 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 taxes
Public Response Public Response
-many citizens hated him. He became the scapegoat for the depression -many citizens credited him with the positive changes in their lives
-he seemed to relate better to banks/businesses more than the people -fireside chats created public support
-farmers harassed bank agents and government officials. They dumped crops because -the wealthy saw him as a traitor
they were too expensive to grow -the Liberty League rallied against “reckless spending” and “socialist reforms”
-rampant labor strikes, some organized by Communist Party -lack of support from conservative court
-Bonus Army -Francis Townsend proposed Old Age Revolving Pension Plan, which would have
encouraged 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 to
overproduction, 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 capital

Reactions
-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.
-when US companies cut back on depression, they also purchased fewer raw materials from abroad, devastating many foreign economies. Demand for American goods decreased
in Europe.
-widespread bank failures
-many forced into poverty and traveled to find work. Development of “Hoovervilles”