Why did Hoover fail to end Depression?

Kinza Hussain
Mind Map by Kinza Hussain, updated more than 1 year ago
Kinza Hussain
Created by Kinza Hussain over 3 years ago


President Hoover, The Great Depression

Resource summary

Why did Hoover fail to end Depression?
1 Smoot-Hawley Tariff (1930)
1.1 Raised import taxes (tariffs) to the highest level in US history.
1.2 Aims were to protect US economy and domestic producers from foreign competition
1.3 Average tariffs on imported agricultural and industrial goods rose to 40%
1.4 Other countries retaliated by raising their tariffs and US farmers could not sell surpluses. This made economic recovery difficult
2 Homelessness and the Hoovervilles
2.1 Hoover offered positive words about economic recovery but reality of Depression was different
2.2 During Hoover's presidency 13 million Americans lost their jobs
2.3 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
2.4 'Hoover wagon', 'Hoover blankets', 'Hoovervilles'- shanty towns. No water supply, sanitation, power, sewerage disposal.
3 The Reconstruction Finance Corporation
3.1 First major departure from reliance on voluntarism to deal with economic crisis.
3.2 Corporation was given $2 billion of taxpayers money to directly assist banks and insurance companies that were in finanfical trouble.
3.3 90% of the RFC's money went in loans to small/medium size banks. But was only partially successful.
3.4 Helped a worsening of the Depression. From Feb-March 1932, helped 160 banks, 60 railroads + 18 mortgage companies.
3.4.1 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)
4.1 Was the USAs first massive relief programme.
4.1.1 Had the power to give $1.5 billion to state governments to fund public works for the unemployed.
4.2 Criticism was that $2 billion would be enough to help just 10% of American's unemployed
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