1. Hoover’s Response Fails
Chapter 12 Section 3

2. Herbert Hoover 31st President
Believed that there was always a technical solution to economic and social problems

3. Hoover’s Idea Hoover believed in hands-off policy
The business cycle moving up and down was natural

4. Volunteerism
Hoover wanted businessmen and labors to voluntarily work toward a common goal
Asked business leaders to maintain employment
Suggested wealthy to give money to charity
Calls on local government to provide jobs and relief

5. Volunteerism Fails Businesses cut wages and laid off workers
Local government could not provide jobs or relief

6. Activist Policy
Hoover begins to use federal resources to battle depression

7. Federal Resources
Hoover creates the Reconstruction Finance Corporation (RFC)
RFC provides government loans to big business and banks

8. Trickle-Down Economic Plan
RFC loans money to large businesses to hire workers
RFC loans money to bankers for business loans
More business activity will lead to greater employment
Greater employment will end the depression

9. Activist Policies Fail
Businesses do not use loans to hire workers
Bankers do not increase loans to businesses
Unemployment remains high
% unemployment rate