The Great Depression was one of America’s greatest downfalls. What began in the 1930s led to a national disaster from economic hardships and rough lifestyles. The U.S. government including Herbert Hoover was responsible for this downfall because Hoover kept to the idea that allowing the economy to correct itself was the best course of action. Herbert Hoover was a viewed as a hero but his arrogance was seen more. Herbert Hoover once told his old friend Julius Barnes: “No president must ever admit he has been wrong”(millercenter.org).
During the last two years of his presidency as it became more and more apparent that the Depression was worsening and his program of confidence, voluntarism, and business support wasn’t working. He refused to recognize that his philosophy and programs weren’t working. Rather than try something different, he stuck with his program, became more and more defensive, tried to convince himself and Americans that things were getting better, and lost the support of the nation. Hoover’s refusal to authorize large scale relief programs that might have decreased suffering and hunger across the nation would have helped.
Hoover’s unwillingness to use significant federal spending to stimulate the economy, and his general failure to recognize the seriousness of the Great Depression added to the downfall of the economy. Hoover’s plan of action for the Great Depression known as the “Trickle Down” was to distribute loans out to businesses to create more money. He had also encouraged peopled to purchase items, but since no one had money the loans given out to businesses had gone to waste. When the market fell, brokers called in these loans, which could not be paid back. Banks began to fail as debtors defaulted on debt and depositors attempted to withdraw their deposits in massive amounts, triggering multiple bank runs. Government guarantees and Federal Reserve banking regulations to prevent such panics were ineffective or not used. Bank failures led to the loss of billions of dollars in assets. Bank failures increased as desperate bankers called in loans which the borrowers did not have time or money to repay.
The Essay on History of Great Depression
Great depression affected the whole world catastrophically and is certainly the most severe depression ever experienced among industrialized western countries. Many economists and historians cite the crashing of stock market as the first and foremost reason for the Great Depression. However, the dispute among the economists is still continued on the exact causes for the Great Depression. The ...
With future profits looking poor, capital investment and construction slowed or completely ceased. In the face of bad loans and worsening future prospects, the surviving banks became even more conservative in their lending. As more businesses failed unemployment increased dramatically. As more and more millions lost their jobs, the unemployed looked to the federal government for relief of poverty. They demanded that the federal government institute relief or welfare payments for the needy. President Hoover rejected such demands for both visionary and financial reasons. He felt relief should be handled by the private sector Community Chest, United Way, the Salvation Army, churches, individual philanthropy and other forms of relief programs. If government had to deal with this problem, it should be state and local governments where the programs would be more democratic, cheaper, and less bureaucratized.
Hoover also refused to the end of his presidency to begin federal relief or welfare programs because such a program would, he argued, be incredibly expensive, would unbalance the federal budget requiring deficit financing, and would cause businessmen to lose confidence which would possibly delay reinvestment and the beginning of economic recovery. With this act Hoover had, “set his feet in concrete.”(conservations4palin.com) Hoover had also decided to create the Smoot-Hawley Tariff Act, which he enacted to increase the price of foreign goods, which angered the Europeans, who then enacted upon this and set tariffs to increase the price of American goods.
The Essay on Federal Reserve Act Government Legislation
The Progressive Era - Federal Legislation The Progressive Era was a period in which the federal government increased its legislation and its grasp of the nation. There were three distinct pieces of federal legislation that seem to stick out, The Meat Inspection Act The Federal Reserve Act, , and The Hepburn Act. All of this legislation gave the government an extremely large amount of power to ...
Hoover believed this act would prevent and assist American businessmen from foreign competition. The act had helped American business to produce products at a steady rate with other countries. However as Europeans increased the price of American goods the price was too high for citizens. Due to this the price of trade between America and Europe decreased dramatically over time. He still stuck with his plan and stated “Economic depression cannot be cured by legislative action or executive pronouncement. Economic wounds must be healed by the action of the cells of the economic body – the producers and consumers themselves.”(brainyquote.com) Read more at
Now when the banks distributed loans to citizens who couldn’t qualify to pay it back this had unbalanced the federal budget. However it wasn’t the banks fault because the government should have regulated them. Loans should have been giving out to citizens who were qualified. Also when the banks began to shut down or conserve money the government could have helped the American citizens first, other than help businesses. The U.S. government including Herbert Hoover was responsible for this downfall because Hoover kept to the idea that allowing the economy to correct itself was the best course of action. If it wasn’t for Herbert Hoover’s arrogance, refusal to laws and outrageous acts the Great Depression would have never occurred. This is the government is to blame for America’s downfall during the decade of the Great Depression.
