There was much controversy in the way Herbert Hoover and Franklin D. Roosevelt handled the depression in their presidential terms. Both of their methods can be either praised for their successes and criticized for their failing during their reign in the Great Depression. Not only was the U.S. was in a
depression but with it the whole world was undergoing economic strife. This essay will give an overview of their different methodologies in dealing with the depression and the consequences that affected America’s citizens justice.
Both Hoover and FDR believed that the key to getting America out of the depression was getting the unemployment rate down and getting people back to work. Hoover’s way of accomplishing this task was to keep minimum government involvement and encourage businesses that "the very essence of
great production is high wages and low prices." (Warren 115) Hoover’s plan of having limited government and promote a voluntary recovery for the nation’s economy didn’t work. Hoover was forced to allow government involvement in the nation’s economy even though it went against his own beliefs. He feared that the government would gain too much power and endanger American
justice.
The motions for the Hawley-Smoot Tariff were already in motion before the stock market crash in 1929. Hoover grudgingly accepted the Hawley-Smooth Tariff in 1930. This tariff proved to be a devastating blow to the U.S. economy. The objective behind the tariff was to raise taxes on imported goods in order to protect American investments. In affect this caused European nations to counter the tariff with their own taxes. The affect of this resulted in the reduction American exports and imports. The effect of the tariff is believed to be somewhat responsible for the progression of the depression and European nations to slide down along with the US into a depression.
Hoover implemented the Reconstruction Finance Corporation (RFC) in 1932. This agency aimed to support credit, banking, and the railways, stop deflation, and increase employment. But it appears that Hoover was a little late in implementing the RFC, though it is unknown just how effective the RFC
would have been if it had been implemented earlier on in the depression. The agency was not able to stop the downward spiral of business activity, but it was able to slow it down and cushion the blow. (Warren 144)
In July of 1932, Hoover signed in the Federal Home Loan Bank Bill which in affect created the Federal Home Loan Bank Board. This board authorized the creation of districts capable of making long-term loans, but home owners could not borrow directly from the Home Loan Bank. The Home Loan Bank provided a basis for further federal aid to housing under the New Deal. But it was
again too late for the Home Loan Bank to have any effect on the country’s economic system.
The American citizens viewed Hoover’s attempt to revive the U.S. economy a complete failure and all but insured the election of Franklin D. Roosevelt into the presidential office in 1933. The United States of America was seeking
a means to remove itself from the dire economic situation in which it had become entangled. FDR claimed that he was going to bring a "New Deal" to the American people, which would advance them out of the depression that had been facing for the past four years. In order to stimulate the United States economy Franklin D. Roosevelt fashioned a plethora of programs that he believed would assist the common working man in America, and as a result, increase the overall economy by giving the working man funds to spend with.
The major acts of legislation that FDR enacted during his first "100 days" in office was the National Industrial Recovery Act (NIRA) and the National Recovery Administration (NRA), Agricultural Adjustment Act (AAA), Civilian
Conservation Corps (CCC), the Emergency Banking Act which led way to the Federal Deposit Insurance Corporation (FDIC). The NIRA and the NRA set out to set promote fair competition with businesses, creating jobs and in effect stimulating the nation’s economy.
The AAA set out to accomplish the same goals but the regulations were directed for agricultural business. The AAA set quotas for the amount of product the farms could be produced. And in some cases the AAA had farmers destroy
their product in order to keep prices stable. The CCC was a government institution that trained young men from the age of eighteen to twenty-five at military training camps to get them organized and prepared for their duties in for the preservation of sanctioned lands in the United States. FDR was able to get the Emergency Banking Act out so promptly because Hoover’s dministration had been researching a similar idea before FDR was sworn in as president. "The proclamation of a bank holiday and the emergency banking legislation that quickly followed it were designed by Hoover’s team." (Barber 194) The Emergency Banking Act amended the RFC to allow it to loan sound banks that were in a money crisis up to $1 billion. The FDIC insured depositors up to $100,000, this enable banks to provide a sense of security when they invested their money in banks.
All of this immediate legislation that FDR put into effect went against everything Hoover had stood for when he was in the presidential office. In Hoover’s post-presidential years, he made many efforts to put down the New
Deal and the effect that it was having our nation’s liberty and economy.
"We must fight again for a government founded upon ordered individual liberty and opportunity that was the American vision. If we lose we will continue down this New Deal road to some sort of personal government based upon collectivist theories. Under these ideas ours can become some sort of Fascist government."
(Hoover 87)
FDR believed that getting the government involved to regulate and business practices was for the well being of American citizens. By doing so he thought he could make the market a fair place to do business. And he received letters supporting his actions. Here is part of a letter that was sent to FDR after the Supreme Court had decided that the NRA was unconstitutional.
"My business was well on the way to recovery under the N.R.A. cigarette and cigar code. All indications point to conditions more chaotic than when you took
office. Prices are being ruthlessly slashed. I, like all other small retailers, I am keeping my faith in you to keep me from losing my business. Save the people." (newdeal.feri.org)
Though Roosevelt also received letters from people opposing his legislation. Here is a quote from a clergy member that informs FDR of a problem that he sees occurring as a result of the New Deal legislation. "In my opinion, the present system of relief is going to develop a vast class of all-time dependents, thereby prolonging the depression." (newdeal.feri.org/clergy) This clergyman’s oberservation is correct according to the statement of the man who praised FDRs actions. "I am keeping my faith in you to keep me from losing my business" Which shows that this man is dependent on the regulations that FDR was enforcing. This is not to say that what FDR was doing was wrong, but it may elude to the fact, that if people would have heeded Hoovers call for voluntary action in keeping the market fair. This man would not have been in this position to be supported by the government. But, of course, that would require people to be fair, but as American history shows, and being fair it
is not how America has gotten head and has become one of the top world powers of its time.
What is interesting, considering that Hoover was fanatically against FDR’s action, about how much of Hoover’s work went into making some of the legislation in the New Deal possible. Rexford Guy Tugwell observed
"The ideas embodied in the New Deal legislation were a compilation of those which had come to maturity under Hoover’s aegis…We all of us owed much to
Hoover, [especially] for his enlargements of knowledge, for his encouragement to scholars, for his organization of research… [T]he brains trust got much of its material from the Hoover committees or from the work done under their auspices."
And one might be also curious is to how FDR got all of these Bills ready in such a short period of time. "The Hundred Days was the breaking of a dam rather than the conjuring out of nowhere of a river." (Barber 195) This quote implies that Rosevelt just didn't get all of these ideas out of nowhere and just didn’t start implementing them into our society. It appears that he got a lot of his ideas for his legislation that was released in his first hundred days came from the research that Hoover and his administration was conducting. This is a fairly interesting statement since it is not mentioned in the overall occurrence of the new deal in the history books. This may be because it can not be completely
verified. And it appears that Hoover denied his involvement in the idea or creation of the New Deal. Hoover spent his post-presidential years battling the affects of the New Deal and he continuously fought to have them overturned and removed from policy.
The consequences for Hoovers supposed inaction during the Depression gave the citizens of America a poor opinion of him. Even though by election time in 1932 "the GNP was actually leveling off and industrial production, factory
employment, and freight-car loadings were up in the four months prior to the election."(Fausold 215). Despite the slight increases in America's economic area Herbert Hoover was not reelected as president, instead Franklin D. Roosevelt won a landslide victory.
Franklin D. Roosevelt didn't have a plan to help get America out of the depression before he won the election. But Roosevelt was sure that he could come up with a plan before the time he took office. Roosevelt's lack of knowledge in dealing with national economics may have caused him to make mistakes in what legislation he passed in his famed first "100 days." It is known that because of the United States involvement in the WWII, that surge of production pulled the US out of the depression that it had been plagued with
since 1929. Due to Roosevelt's take over manipulation of America's business practices and the control he granted himself. He possibly prolonged the depression for American citizens.
Here are some examples of how the legislation that Roosevelt put into effect from his new deal affected America. Due to the Agricultural Marketing Act as amended in 1937, the government sent billions of dollars to farmers who agreed not to grow certain crops. Arrests were even made when farmer grew unauthorized crops or sold over the qouta. This restricted smaller farmers from being able to make a living and not to mention having the large corporate farmers destroying enormous amounts of food during a time when families were starving is quite the odd act for a government promoting the free world. Tugwell acknowledged that it benefited about 20 percent of American farmers, primarily big corporate farmers. (Powell 139)
As we looked back at what the two Great Depression presidents did during their time in office to get the United States back on to economic recovery, we noticed that they each had a different idea on what should be done, and what the best
way they thought it was for the American public. Hoover held back the government in order to preserve American liberties and let the economy heal its self over time. When Roosevelt took office he increased government control and put out many regulations on farmers and businesses, and raised taxes in order for him to try to bring the country out of the depression himself. But instead Roosevelt ended up prolonging the depression until the US joined WWII. Which could lead us to the question "Would one administration had been more prepared than the other for WWII?" If the economy had continued its upward trend as it had been doing when Hoover was leaving office and continued to heal itself through the 1930's, and not have been hindered by Roosevelt's legislation of the New Deal, the American economy could have been stronger. If there was a stronger American economy present, would Nazi Germany have been so bold to wage their war against the world?
The results of Roosevelt's New Deal have been effecting American's since they were first introduced. Nearly every president after JFK has been making tax cuts from the 90% level where Roosevelt had it when his administration had ended. America might have been a different place if it weren’t for the New Deals, but another administration could have came along and found a need for the New Deal type of reforms. Through the New Deal reforms American’s economic liberties have been reduced and left no justice for the average working class citizen.
In another light we could view this time period of the Great Depression as an expirement. These two administrations threw in what they thought could work. And they both did it within their respective extremes. The United States could learn that maybe taking the lessons learned from both parties would yeild better results the next time a depression hits. This was the first time the world had experianced such a grand downfall on this kind of scale that effects everyone in the world. One could not expect for one individual or one administration to be able to fix this monumental debalicle. But American citizens should demand justice from the leader that they trusted to be their voice.
