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Hoover's response to the Depression - Coggle Diagram
Hoover's response to the Depression
Smoot-Hawley Tariff (1930)
Hoover aided the contraction rather expansion of the world economy
This made prospects of economic recovery more difficult
Tariff forced other countries to follow suit and raise their own tariffs in retaliation - trade war
Intended to raise prices of foreign goods to protect domestic producers - 1000 economists petitioned to veto the tariff
Average tariffs on agricultural and industrial goods rose to 40%
This raised import taxes to the highest level in US history
Homelessness and the Hoovervilles
New vocabulary of words were fashionable
Pulled out empty pockets were 'Hoover flags'
Many of these failed to offer anything more than short term help leading to a rise in homelessness
'Hoover wagon' was a motor car pulled by mules
Because the USA had no federal welfare system, unemployed relied on help from state governments
'Hoover blankets' were newspapers keeping people warm at night
Unemployment rose by 18% between 1930 and 1933
By 1930 every major town/city had a shanty town which became known as 'Hoovervilles'
62% of those were out of work for a year
Hoovervilles were makeshifts shacks with no water supply, sanitation or power
During Hoover's presidency 13 million Americans lost their jobs
Homeless people were termed hobos and faced harassment from the police
Reconstruction Finance Corporation
Aim was to prevent further banking collapse and bring stability to the financial and banking sectors
RFC failed to encourage banks to lend more to businesses that were facing severe financial problems and possible bankruptcy
Between Feb to March 1932 it helped 160 banks, 60 railroads and 19 mortgage companies prevented a worsening of the depression
No sign of economic recovery by autumn 1932
Aim was to revive the US banking system but this was only partially successful
When FDR became president he continued to use the RFC in attempt to bring economic recovery
Hoover appointed Ogden Mills as Secretary to the Treasury and said 90% of the RFC's money went in loans to small and medium sized banks
Corporation was given $2bn taxpayers' money to assist banks and insurance companies in financial trouble
Established in January 1932
Emergency Relief and Construction Act (July 1932)
Provided important support for business and individuals
By mid-1932, depression was so deep and business and public confidence was so low that a dramatic change was needed if the crisis was to end
This was a major change in federal government policy
Economist Walter Lippmann said $2bn would be enough to help 10% of America's unemployed
State had to prove they were running out of money for unemployment relief to qualify
Power to give $1.5bn to state governments to fund public works for the unemployed
Passed on 21 July 1932 - USA's 1st relief programme
Conclusion
Hawley-Smoot Tariff act made the depression worse but the economy was already fragile
Hoover was in the wrong place at the wrong time
Hoover faced an unprecedented economic crisis
Cost him presidency in Nov 1932
It is clear that Hoover failed to handle the depression