The Great Depression beginning in 1929 was a time of hardship and suffering for many Americans. The people of the United States looked for leadership, sympathy, and someone help to get them through this time. Herbert Hoover, President at this time, offered little help to the people.
Hoover did not believe in direct relief because it would hurt self-esteem and pride. In the eyes of the public, he seemed unresponsive to their needs. He urged people to help each other and encouraged non-government actions by private organizations. Businesses agreed to sustain pay and production to avoid numerous strikes. Urging states to increase spending on public projects, he hoped to create jobs without being directly involved with spending the deficit. He created the President?s Organization on Unemployment Relief, which was designed to generate private donations for relief to the public. He had workers building the Hoover and Grand Coulee Dams that required more spending by the government. The Agricultural Marketing Act of 1929 created the Federal Farm Board. This organization supported crop prices by buying excesses and keeping them off the market. Eventually, it ran out of money.
In 1931, Hoover announced an extension on payments of WWI debts. The Reconstruction Finance Corporation was created and given 2 billion dollars to loan money to banks, insurance companies, railroads, and local/state governments. This system was supposed to give money to the top of the economic chain and allow it to spread to the rest of the country. Hoover passed the Hawley Smoot Tariff of 1930. This raised taxes on incoming foreign products, which decreased their money flow and flexibility to buy American products. Hoover?s background made him see a balanced budget as most important and deficit spending as wrong. He decreased spending and increased taxes. He encouraged people to spend money to spur the economy, but the taxes prevented them from doing so. He rejected several relief bills. He supported prohibition, but alcohol was consumed anyways. Most of his efforts proved ineffective, except for the Hoover and Grand Coulee Dam projects, which did create some jobs.
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Roosevelt?s history was much more liberal than conservative as Hoover was. Roosevelt believed much more in involvement by the government to solve economic problems. FDR supported direct relief payments for the unemployed. He created a ?Brain Trust? of lawyers, economists, and professors to theorize causes and remedies to the depression. He included businesses and monopolies under government regulation. He ordered to cut production so that prices, profits, and wages, would rise.
Franklin?s ideas were sympathetic and appeared to be effective in a time of need. He hoped to return money back to farmers and workers so that they would be able to consume products. He was also willing to abandon prohibition. He called his plan for the future the New Deal, which is designed to boost the economy and give jobs to the unemployed. Roosevelt had soothed the public and gave them hope when they had hardly anything left.
In the 1932 election, Roosevelt won by a landslide and Democrats won the House and Senate. FDR began his projects soon as he was able to, when he called a special session of Congress and declared a bank holiday.