Chapter 31: The Response to the Economic Collapse 1 December 2017

Initial Response from the Federal Government to the Collapse Hawley – Smoot Tariff Act - The act raised U.S. tariffs on imported goods to record levels. Increased the interest rate – tightened money supply = harder to receive a loan

What Response Do You Most Agree With?

Differences of Opinion As the depression grew deeper three main movements emerged to combat this epic situation. The three main movements were Conservatives, Liberals, and Radicals. Each had their own ideology: Ideology: is a set of basic ideas, beliefs, and values that form the basis of a social, economic, or political philosophy or program.

Conservative Response Conservative: Is someone who cherishes and seeks to preserve traditional customs and values. Values in the 1930s: Self-reliance, individual responsibility, and personal liberty. Opposed: Large governmental efforts to effect change. Strongly believed in laissez-faire government – government does not interfere with business; allow the invisible hand to work its magic. Believed in the business cycle – a pattern in which economic growth is followed by decline, panic, and finally recovery.

Liberal Response Liberal: Someone who is committed to the expansion of liberty and government. Government should play a role in regulating economic affairs. Wanted the government to expand its powers to protect individual liberty. Increase spending on public works – government – funded construction projects provide for such local needs as roads, bridges, and dams. Increase taxes on corporations and the wealthy to raise money for social welfare programs – provide aid to those in need. Government to work closely with businesses to aid in their recovery.

Radical Response Radical: Someone who wants to make sweeping social, political, or economic changes in a society. Radicals seek change by democratic means or through revolution. Socialists and Communists are two branches of the radical movement. Communists wanted to replace capitalism with communism; where economic decisions would move out of the marketplace and into the hands of government planners. Wealth would be distributed to people according to their needs. Encouraged working – class citizens to rise up against the “greedy capitalists.”

President Hoover’s Response President Herbert Hoover initially rejected bold gov’t action in response to the depression: He tried to reassure Americans that prosperity would return He called for volunteerism & “rugged individualism”— Americans need to work together to end the depression

Hoover’s Response (cont) Hoover also decided to deport 2 million people of Mexican descent back to Mexico, which became known as the Mexican Repatriation Act. 1.3 million of those deported were actually American citizens. Hoover created this legislation in response to American farmers who wanted their jobs, primarily in California

Midterm Shellacking and Change In 1930, Republicans lost 52 seats in the House and held on to the Senate by a single vote. The new Congress had to make sure that banks could make loans to corporations so they could expand production and rehire workers. Hoover asked Congress to establish the National Credit Corporation (NCC). NCC created a pool of money to enable troubled banks to continue lending money in their communities. Established because Federal Reserve refused Hoover’s request to put more currency into circulation. Hoover requested that Congress set up the Reconstruction Finance Corporation (RFC). RFC would be used to make loans to banks, railroads, and agricultural institutions. By spring of 1932 the RFC had lent over $238 million to estimated 160 banks, 60 railroads, and 18 building and loan organizations. Too overly cautious and failed to increase its loans in sufficient amount to meet the need. Issue loans to states that no longer had enough resources to help the needy.

Boulder Dam was renamed Hoover Dam

Bonus Army Consisted of WWI Veterans who had fallen on hard times during the Great Depression. Founder: Walter Waters Started in Portland, Oregon, traveling east on board empty boxcars and cattle cars. By the time they reached Washington, D.C., WWI veterans flocked to support their cause. In 1924 Congress passed to a law for WWI veterans that included: each former soldier would be paid $1 for every day they had served during the war, plus an extra $.25 for every day spent overseas. This bonus would not be paid until 1945. Goal of the Marchers: Convince Congress to pass a stipulation that would allow for half of their already promised bonus to paid in 1932 and the other half in 1945. Results: President Hoover orders the Cavalry to fix bayonets and drove them out of Washington, D.C.

Roosevelt’s New Deal First 100 Days While campaigning for the White House, Roosevelt promised “a new deal for the American people.” This New Deal would do whatever was needed to help the needy and promote recovery. His promises led to a blowout victory 472 – 59 in the Electoral College and over 7 million in the popular vote.

Roosevelt’s First 100 Days Emergency Banking Act gave the federal government broad power to help reopen the nation’s banks. Beer-Wine Revenue Act legalized the sale of beer and wine Reforestation Act established the Civilian Conservation Corps – provided work for 250,000 men. Federal Emergency Relief Act granted money to states for relief project to help unemployed. Agricultural Adjustment Act set prices for farm crops while trying to reduce overproduction. Tennessee Valley Authority funded construction of flood control dams and power plants in the Tennessee Valley States. Federal Securities Act regulated the sale of stocks and bonds Home Owners Refinancing Act provided aid to families in danger of losing their homes. National Industrial Recovery Act established the Public Works Administration to supervise building projects and the National Recovery Administration to encourage fair business practices. Banking Act of 1933 established the FDIC to insure depositors from losses with banks failed.