Why did Hoover fail to end Depression?

Why did Hoover fail to end Depression?

1. Smoot-Hawley Tariff (1930)

   • Raised import taxes (tariffs) to the highest level in US history.
   • Aims were to protect US economy and domestic producers from foreign competition
   • Average tariffs on imported agricultural and industrial goods rose to 40%
   • Other countries retaliated by raising their tariffs and US farmers could not sell surpluses. This made economic recovery difficult

2. Homelessness and the Hoovervilles

   • Hoover offered positive words about economic recovery but reality of Depression was different
   • During Hoover's presidency 13 million Americans lost their jobs
   • Because the USA lacked a federal welfare system from 1929-33, unemployed had to rely on help from state governments. These were only able to offer short-term help which led to rapid rise in homelessness
   • 'Hoover wagon', 'Hoover blankets', 'Hoovervilles'- shanty towns. No water supply, sanitation, power, sewerage disposal.

3. The Reconstruction Finance Corporation

   • First major departure from reliance on voluntarism to deal with economic crisis.
   • Corporation was given $2 billion of taxpayers money to directly assist banks and insurance companies that were in finanfical trouble.
   • 90% of the RFC's money went in loans to small/medium size banks. But was only partially successful.
   • Helped a worsening of the Depression. From Feb-March 1932, helped 160 banks, 60 railroads + 18 mortgage companies.
     • However, RFC failed to encourage banks to lend to business that were facing severe financial problems + possible bankruptcy. Did not show signs of economic recovery yet Roosevelt chose to continue with it during his presidency.

4. Emergency Relief and Construction Act (July 1932)

   • Was the USAs first massive relief programme.
     • Had the power to give $1.5 billion to state governments to fund public works for the unemployed.
   • Criticism was that $2 billion would be enough to help just 10% of American's unemployed