H OOVER ’ S R ESPONSE F AILS Chapter 17, Section 3

C AUTIOUS R ESPONSE TO D EPRESSION F AILS When Americans looked to Hoover to solve the crisis of the Great Depression, he did not immediately jump into action. In the beginning, Hoover adopted a hands-off policy because he felt the economic cycle would correct itself. However, to appease public opinion, Hoover chose a policy of volunteerism in which businesses and industrial leaders agreed to keep wages, prices and employment at current levels. In return, they would be given money by the government.

C AUTIOUS R ESPONSE TO D EPRESSION F AILS But this policy relied too much on voluntary cooperation– something which most businesses were not willing to do. So, Hoover instead turned to a policy of localism, in which state and local governments would provide jobs. But, this did not work because the governments did not have the funds, and Hoover refused to help them. Instead, he believed in “rugged individualism” where people should better themselves through their own efforts.

H OOVER A DOPTS M ORE A CTIVIST P OLICIES The American public associated the President’s name with suffering, so eventually Hoover had to get the government involved. He urged Congress to create the Reconstruction Finance Corporation (RFC) to provide loans to railroads, big businesses and banks. By doing so, they would employ more workers and production and consumption would increase again. This theory was known as trickle-down economics – the more wealth at the top of society, the more that was available to ‘trickle-down’ to the poor.

A MERICANS P ROTEST H OOVER ’ S F AILURES Although Hoover was working hard to end the depression, to the everyday American, it was not enough. Some Americans proposed radical change to correct the economy– a rejection of capitalism and instead adopting socialism or communism. They saw capitalism as creating inequalities within American society.

A MERICANS P ROTEST H OOVER ’ S F AILURES Although most Americans did not favor radical change, most did want SOMETHING to change. One group included WWI veterans who had been promised bonuses paid to them in Because of the depression, though, they wanted their money in Congress had passed a bill allowing the early payment, but Hoover vetoed it. They marched on the White House to demand early payment. Hoover ordered Douglas MacArthur to ‘clear out’ the Bonus Army because he feared violence. However, MacArthur took excessive force on the Bonus Army, using sabers and tear-gas. From that point on, Hoover was doomed in the eyes of the public.