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You Will Love History

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You Will Love History

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You Will Love History

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worksheet

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1930-1945

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Video

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Video

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Banking Crisis

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Hi, I'm John Green, this is Crash Course: U.S. History, and today we're going to get little bit controversial, as we discuss the FDR administration's response to the Great Depression - the New Deal. That's the National Recovery Administration, by the way, not the National Rifle Association or the No Rodents Allowed Club, which I'm a card-carrying member of.

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US National Archives

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PBS Documentary: The March of the Bonus Army

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Hoover's Response to the Great Depression

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Hoover's Response to the Great Depression

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Worksheet

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The Great Depression

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American in the 20th Century: The Great Depression

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American in the 20th Century: The Great Depression

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Quizlet

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Unit 9: Great Depression & New Deal Flashcards | Quizlet

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Start studying Unit 9: Great Depression & New Deal. Learn vocabulary, terms, and more with flashcards, games, and other study tools.

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Worksheet

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So what did Hoover do? Not enough. It's important to remember that the American government is not just the President. Hoover couldn't always get Congress to do what he wanted but his political ineptitude was not particularly surprising, because the first elected office that he ever held in his life was President of the United States.

Like, let's take the foreign debt issue. Hoover proposed a moratorium on intergovernmental debt payments and he actually got Congress to go along with it, but it wasn't enough, mainly because the central bankers in Europe and America refused to let go of the gold standard, which would have allowed the governments to devalue their currency and pump needed money into their economies.

And when Britain, rather heroically, I might add, did abandon the gold standard in 1931 and stopped payments in gold, the U.S. did not follow suit, which meant that world financial markets froze up even further. Like, this is a little bit complicated but if you and I have always used Cheetos as currency to exchange goods and services, and one day I announce that we can't really do that anymore because it doesn't give us the flexibility that we need to pull ourselves out of this deflationary spiral, if I don't also agree to abandon Cheetos then it's going to be a total disaster, which it was.

And then, even worse, the Fed raised its discount rate, making credit even harder to come by. By the end of 1931, 2294 American banks had failed - double the number that had gone under in 1930. Now, it's easy to criticize poor Herbert Hoover for not doing enough to stop the Great Depression, and he probably didn't do enough, but part of that is down to our knowledge of what happened afterward - the New Deal.

That Franklin Delano Roosevelt at least tried to do something about the Depression makes us forget that when Hoover was president, orthodox political and economic theory counselled in favor of doing nothing. And at least Hoover didn't follow the advice of his Treasury Secretary who, according to Hoover anyway, argued that the solution was to "liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate," which sounds like the worst milkshake ever.

Instead, Hoover believed that the best course of action was to "use the powers of government to cushion the situation", and in a White House meeting, he persuaded a large number of industrialists to agree to maintain wage rates. He also got the Federal Farm Board to support agricultural production and got congressional approval for 140 million dollars in new public works.

Overall, he nearly doubled the federal public works expenditure between 1929 and 1931, it just wasn't nearly enough. Because what Hoover didn't allow was for the federal government to take over the situation completely. He relied primarily on private businesses and state and local governments to stimulate the economy, and that was insufficient. It's not surprising when you consider that in 1929, federal expenditures accounted for 3% of our gross domestic product. Today, it's more like 20%.

So it was just really hard to imagine the federal government doing anything on such a large scale to address a national problem because it had never really done that much before. Hoover also hiked taxes as part of a plan to stabilize the banks by balancing the federal budget, providing confidence for foreign creditors and stopping them from buying American gold. This would support bonds and also keep the federal government out of competition with private borrowers. The Revenue Act of 1932 passed Congress but it didn't do much to stop the Depression. In fact, arguably, it made it worse.

And so, ultimately, this dire situation forced Hoover into a truly radical move. In January 1932, he and Congress created the Reconstruction Finance Corporation, which was basically a federal bailout program that borrowed money to provide emergency loans to banks, building and loan societies, railroads and agricultural corporations.

The problem was that by 1932, bailing out the banks wasn't enough, and the Great Depression started to take shape. By early 1932, well over 10 million people were out of work - 20% of the labor force. And in big cities the numbers were even worse, especially for people of color. Like in Chicago, 4% of the population was African-American, but they made up more than 16% of the unemployed.

Although Hoover famously claimed that no one starved, which was a little bit "let them eat cake-y", people did search trash cans for food and many Americans were forced to ask for relief. Hoover's response was to try to encourage private charity through the unfortunately acronymed President's Organization on Unemployment Relief, or POUR.

New York City's government relief programs rose from 9 million dollars in 1930 to 58 million in 1932 and private charitable giving did increase from 4.5 million to 21 million and that sounds great until you realize that the total of 79 million dollars that New York City spent on relief in 1932 was less than one month's lost wages for the 800 000 people who were unemployed.

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Nerdfighteria Wiki - The Great Depression: Crash Course US History #33

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So what did Hoover do? Not enough. It's important to remember that the American government is not just the President. Hoover couldn't always get Congress to do what he wanted but his political ineptitude was not particularly surprising, because the first elected office that he ever held in his life was President of the United States.