The Economic Policies of Herbert Hoover during the Great Depression

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During the Great Depression, Herbert Hoover, the 31st President of the United States, implemented various economic policies in an attempt to address the severe economic downturn. This article will delve into the details of Hoover’s economic policies and their impacts on the nation.

1. Introduction

In the early 1930s, the United States faced one of the worst economic crises in its history. The stock market crash of 1929 triggered a chain of events that led to widespread unemployment, bank failures, and a significant decline in industrial production. As president, Hoover faced the challenge of stabilizing the economy and restoring confidence among the American people.

2. Hoover’s Beliefs and Approach

Herbert Hoover was known for his belief in limited government intervention in the economy. He favored a laissez-faire approach, emphasizing individualism and self-reliance. However, the severity of the Great Depression forced Hoover to deviate from his traditional beliefs and adopt some measures to combat the crisis.

2.1 Hoover’s Initial Response

Hoover initially believed that the economic downturn was a temporary setback and would correct itself without significant government intervention. He encouraged voluntary cooperation between businesses and labor unions to stabilize wages and prices. Additionally, he called for increased public works projects to boost employment opportunities.

2.2 The Smoot-Hawley Tariff Act

One of Hoover’s most controversial policies was the passage of the Smoot-Hawley Tariff Act in 1930. This act significantly raised tariffs on imported goods, aiming to protect American industries and farmers. However, it resulted in retaliation from other countries and further worsened the global economic situation.

3. Reconstruction Finance Corporation (RFC)

To address the financial crisis, Hoover established the Reconstruction Finance Corporation (RFC) in 1932. The RFC aimed to provide loans to banks, railroads, and other industries to stimulate economic activity. It was intended to stabilize the financial system and restore public confidence.

3.1 Effectiveness of the RFC

The RFC faced criticism for its slow response and limited impact on the overall economy. While it did provide some relief to struggling businesses, the loans often came with strict conditions and were not sufficient to combat the magnitude of the crisis.

4. Hoover’s Approach to Unemployment

The Great Depression led to skyrocketing unemployment rates across the country. Hoover implemented several measures to address this issue, although they were largely insufficient in alleviating the widespread joblessness.

4.1 Public Works Projects

One of Hoover’s strategies to combat unemployment was the promotion of public works projects. The government invested in infrastructure development, such as the construction of roads, bridges, and dams, to create jobs and stimulate economic growth. However, the scale of these projects was not enough to significantly reduce unemployment levels.

4.2 Volunteerism and Private Charities

Hoover’s belief in individualism led him to rely heavily on volunteerism and private charities to address the needs of the unemployed. He encouraged Americans to support local relief efforts and believed that private initiatives would be more effective in providing relief compared to government intervention. However, the voluntary efforts were insufficient to meet the overwhelming demand for assistance.

5. The Bonus Army Incident

One of the most controversial events during Hoover’s presidency was the handling of the Bonus Army protest in 1932. World War I veterans marched to Washington, D.C., demanding early payment of bonuses promised by the government. Hoover ordered the eviction of the protesters, which resulted in a violent clash and further damaged his public image.

5.1 Impact of the Bonus Army Incident

The handling of the Bonus Army incident severely damaged Hoover’s reputation and portrayed him as unsympathetic to the struggles of the American people. It contributed to further public dissatisfaction with his administration’s response to the economic crisis.

6. Conclusion

Herbert Hoover’s economic policies during the Great Depression were largely ineffective in addressing the severe economic downturn. His initial reliance on voluntary cooperation and limited government intervention proved insufficient to combat the magnitude of the crisis. The Smoot-Hawley Tariff Act and the handling of the Bonus Army incident further exacerbated the economic challenges faced by the nation. Although Hoover’s intentions were to stabilize the economy and restore public confidence, his policies fell short, and the effects of the Great Depression continued to haunt the nation until Franklin D. Roosevelt’s New Deal.


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