Government reaction to the depression

The USA 1929 to 1932

Aims of the lesson

By the end of this lesson you will

• Understand how the Republican government reacted to the economic problems that faced them between 1929 and 1931

• Evaluate the influence of Hoover on these policies

Background

• 1929 – Wall Street Crash• The USA went into a huge

depression at the start of the 1930s

• The Republican government believed in laisses-faire and refused in interfere

• 1928 – Hoover elected promising more prosperity

• His dreams lay in ruins

The influence of Hoover

• Hoover believed that government made people weak and dependant

• Rugged individualism• Had set up the Federal Farm Board in

1928 to help farmers – special case• Cut taxes in 1930 – in order to give people

more money to spend• Put money into building public building to

lower unemployment

PECE and POUR

• Set up a group called the President Emergency Committee (PECE) for employment to help business

• Renamed the Presidents Organisation for Unemployment Relief (POUR) in 1931

• In 1932 started to get backsides into gear

• It was election year and the Republicans faced defeat if they did not do something

What they did

• July 1929 – Federal farm Board - $500m dollars on farm relief – destroyed the food it bought as opposed to giving it to the poor

• June 1930 – Smoot-Hawley Relief – increased tariffs in order to persuade people to buy American goods. As a result it made things worse as opposed to better

What they did (2)

• 1931 – National Credit Corporation – funded by banks and businesses to save smaller businesses had lent only $10m in its first year – replaced by ……

• January 1932 – Reconstruction Finance Corporation – govt controlled replacement for the NCC

What they did (3)

• July 1932 – Emergency Relief and Construction Act – promoted public works – gave $300m for states to provide relief to the unemployed

• July 1932 – Federal Home Loan Act – had a fund to help people in trouble with loans. Out of 41 000 applications three were accepted

• Too much, too little, too late