HOOVER vs. FDR. Causes of the Great Depression Wages lagging behind the cost of living Overproduction of consumer goods Excessive buying on credit Stock.

HOOVER vs. FDR

Causes of the Great Depression

• Wages lagging behind the cost of living• Overproduction of consumer goods• Excessive buying on credit • Stock Market Crash• Agricultural Depression• Worldwide Economic

Downturn

Major characteristic of a depression: Few jobs & Little Demand

Government: Hands off• Historically the government has been very hands off the economy.

– Laissez-faire approach– The business of government is business – It’s not the government’s job to regulate the economy – American dream is that anyone can “pull themselves up by their bootstraps”

Hoover• He continued the tradition of staying out of

the economy

After the stock market crash, Hoover asked businesses not to lay off employees, and asked unions to not go on strike for higher wages.

Can’t we all just get along?

• When the stock market crashed Hoover wanted to help but “didn’t think it was the government’s job”

• He thought the government should help foster cooperation– Ask businesses to not lay off workers so that they

wouldn’t be unemployed – Ask unions not to go on strike for more pay

No Welfare

• Hoover didn’t believe in direct relief (no welfare)– Thought it was too expensive for the gov. to do– Thought local charities and churches could

accomplish more– Thought it would cause people to no want to work

if they were getting a handout from the gov.

Hoover believed the best way to end the Depression was through voluntary controls by American businesses

Our system is… founded on the conception that only through ordered liberty, through freedom to the individual, and equal opportunity to the individual will his initiative and enterprise be summoned to spur the march of progress…

It is in the further development of his cooperation and a sense of its responsibility that we should find solutions for many of our complex problems, and not by the extension of government into our economic and social life…

Herbert Hoover campaign speech 1932

• Hoover believes that the extension of the government into peoples’ lives is NOT a solution to the problems of the economy.

• Hoover believes that through voluntary cooperation among business AND unions we will find a way to support the economy.

More Action

• His ideas didn’t succeed so he moved for more direct action– Hoover Dam: Located in Colorado the dam provides

not only electricity and flood control, it’s a regular water supply that enabled the growth of California’s massive agricultural economy.

– Federal Home Loan Bank Act: Lowered mortgage rates for homeowners and allowed farmers to re-finance

– Reconstruction Finance Corporation: Aimed to provide government credit to banks

1932 Presidential Election: Should the Federal Government try to fix peoples problems?

• People blamed the government and Hoover for the Depression– Hoovervilles: shanty towns built by the homeless in American

cities- The name was a slap in the face to Hoovers public policy they saw him as a cold heartless leader

• Franklin Roosevelt (Dem. Candidate) promises a “New Deal” for Americans saying the gov. should and would help them out

• FDR was elected almost 2-1 with his promise of the New Deal

FDR campaigned on the promise that as president he would attack the Great Depression by experimenting with bold new programs for economic and social reform.

• Roosevelt believed that the gov. should spend money in an effort to get the economy moving again, while

• Hoover believed that the gov. should stay out of peoples lives

The 1932 election served as a turning point in the way Americans viewed the responsibilities of the federal government!

'1933' '1934' '1935' '1936' '1937' '1938' '1939' '1940'0

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Unemployment, 1933-1940

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FDR’s plan for the economy was successful

What does this graph tell you about FDR’s ‘New Deal’ economic plan? After the 1932 election