Hoover
Philosophy
-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 maintain
wages voluntarily, keep up production, and work with the government to build
confidence in the system. Voluntarism.
-cut federal taxes and called on state and municipal governments to increase capital
spending. 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 action
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
-1929 Agricultural Marketing Act gave the federal government its largest role to date
in 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 to
guarantee 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 to
intervene directly in the economy during peacetime. Provided federal loans to railroads,
financial institutions, banks, and insurance companies. Pump priming. Its caution in
lending money limited its influence.
-Hoover Dam
Roosevelt
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 federal
aid for the unemployed
-promoted work relief over cash subsidies. Favored relief jobs that did not compete
directly 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 capitalism
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 they
had adequate cash reserves
-Home Owners Loan Corporation refinanced home mortgages threatened by
foreclosure
-Glass-Steagall Act curbed speculation by separating investment banking from
commercial 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 7
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

Public 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 because
they were too expensive to grow
-rampant labor strikes, some organized by Communist Party
-Bonus Army
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
-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 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”