Mr. Watson

American History

Great Depression

Herbert Hoover’s Response to the Great Depression

Name: ______Date: ______Period: ______

Herbert Hoover was a firm believer that cooperation between public and private spheres would lead to long-term economic growth. Hoover feared that too much intervention or coercion by the government would destroy individuality and self-reliance (a concept he referred to as "rugged individualism"), both of which he considered to be important American values. However, both his ideals and the economy were put to the test with the onset of the Great Depression.

  1. What was Herbert Hoover’s philosophy of government?
  1. Why did Hoover fear too much intervention of the government?

After the stock market crashed, the U.S. economy continued to decline. This period from 1929 to 1939 was called the Great Depression. Many lost their jobs, houses, and savings.

  1. What was the national’s economic situation in the 1930s? What was this called?

Many thought that the government should assist he poor and those out of work. Yet, Hoover refused direct federal relief payments to individuals. He believed that individuals would become too reliant on such assistance, which would in turn reduce their incentive to work. Additionally, because Hoover strongly believed in balanced budgets, he was unwilling to run a budget deficit to fund welfare programs.

  1. Did Hoover change his mind as the Depression grew worse?

Hoover did pursue some policies in an attempt to pull the country out of depression. In 1929, he authorized the Mexican Repatriation program to combat rampant unemployment, reduce the burden on municipal aid services, and remove people who were perceived as usurpers of American jobs. The program, which continued until 1937, entailed a mostly forced migration of approximately 500,000 Mexicans and Mexican Americans to Mexico. In June, 1930, despite the objections of many economists, Hoover signed into law the Smoot–Hawley Tariff Act, which raised tariffs on thousands of imported items. The intent of the Act was to encourage the purchase of American-made products by increasing the cost of imported goods while raising revenue for the federal government and protecting farmers. By that time, however, economic depression had spread throughout much of the world, spurring other nations to retaliate by increasing tariffs on American-made goods. This reduced international trade, which in turn worsened the Depression.

  1. Name two actions that Hoover took.

a.

b.

  1. Why didn’t these actions work?

Hoover also urged the major banks in the country to form a consortium known as the National Credit Corporation (NCC) in 1931. The NCC exemplified Hoover's belief in volunteerism as a mechanism for aiding the economy. Hoover encouraged NCC member banks to provide loans to smaller banks in order to prevent them from collapsing. The banks within the NCC were often reluctant to provide loans and usually required banks to provide their largest assets as collateral. It quickly became apparent that the NCC would be incapable of fixing the problems it was designed to solve.

  1. Describe how Hoover tried to fix the banking problem? Was this a voluntary program? Did it succeed?