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Hoover vs FDR: The Great Depression

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									                                         Hoover vs FDR:

                                      The Great Depression

       On October 29, 1929, the United States fell in an unimaginable way. The stock market

dropped nearly forty points and left the United States in the worst depression to this date.

However, the United States was not the only county at this time in the depression. Almost all

of North America and Europe were in the same position. The great depression came about

when Federal employees thought that what’s good for banks is good for America. Some actions

were taken to try to restore the U.S. to its normal state but nothing seemed to work because

the depression lasted ten years:

               During the next three years stock prices in the United States continued to fall,

               until by late 1932 they had dropped to only about 20 percent of their value in

               1929. Besides ruining many thousands of individual investors, this precipitous

               decline in the value of assets greatly strained banks and other financial

               institutions, particularly those holding stocks in their portfolios. Many banks

               were consequently forced into insolvency; by 1933, 11,000 of the United States'

               25,000 banks had failed. The failure of so many banks, combined with a general

               and nationwide loss of confidence in the economy, led to much-reduced levels of

               spending and demand and hence of production, thus aggravating the downward

               spiral. (Nelson)

       The depression left millions unemployed and caused manufacturing output to fall as

well. This arose when Herbert Hoover was president. He served one term and lost his

reelection and lost to Franklin D. Roosevelt in a landslide. Hoover was president for the first

couple of years of the depression. Many people think Hoover didn’t try to do anything to get

out of the depression. His original plan was to reduce prices to increase economic spending.

However, this did not happen when Hoover designed the Smoot-Hawley Tariff Act. All the acts

put into place by Hoover and Congress made the depression worse. The Smoot-Hawley Tariff

Act, which raised taxes on all imports, did the exact opposite of what would help get the nation

out of the depression. This tariff actually raised the prices of everything. The United States

economy took a huge hit when this act was put into place:

               It provoked a storm of foreign retaliatory measures and came to stand as a

               symbol of the ‘beggar-thy-neighbor’ policies (policies designed to improve one’s

               own lot at the expense of that of others) of the 1930s. Such policies contributed

               to a drastic decline in international trade. For example, U.S. imports from Europe

               declined from a 1929 high of $1,334 million to just $390 million in 1932, while

               U.S. exports to Europe fell from $2,341 million in 1929 to $784 million in 1932.

               Overall, world trade declined by some 66% between 1929 and 1934. More

               generally, Smoot-Hawley did nothing to foster trust and cooperation among

               nations in either the political or economic realm during a perilous era in

               international relations. (“U.S.”)

Despite the fact that Hoover tried to make the economy better, he still is “accused of being a

do-nothing president who allowed the country to continue to slide into its worst depression

ever” (“America’s”). Even though his efforts fell short, Roosevelt used some ideas that were

similar to Hoover’s.

       Roosevelt took over in 1932 when he became president. To resolve the depression, he

built off the Hoover programs that increased spending. While these particular programs

worked, Roosevelt also had a few programs that didn’t go as planned. The ones that didn’t

work as planned ended up make the depression worse. The three that really stuck out were his

minimum wage, Davis-Bacon and the Social Security Act. The Social Security Act was put in

place to aid citizens who were in need because of their age, unemployment or sickness. But as

Roosevelt said, “’[we] can never insure one hundred percent of the population against one

hundred percent of the hazards … of life’” (Nardo 21). The minimum wage and Davis-Bacon

plans “reduced price flexibility, often setting a minimum and thus continued to exacerbate the

Great Depression” (“America’s”). Contractors would only pay favorable wages in high-wage

areas, but when they were in a cheaper area the wages were not favorable. This was the case

until it was amended in 1935 charging the secretary of labor with the responsibility of

determining prevailing wage rates in advance of inviting bids for federal projects. This act did

not work so it was dismissed and a set wage was made for federal projects. Thirty days later,

the act was reinstated and the nation was back to its old ways with very little people realizing

the change.

       Another big plan Roosevelt implemented was the Agriculture Adjustment Act (AAA).

The general outline of the AAA was to “*provide+ the basic legislative framework for the New

Deal agricultural relief programs until its production control aspects were ruled

unconstitutional by the Supreme Court on Jan. 6, 1936” (Chandler 215). This act was accepted

by many farmers as soon as it was offered. However, the acceptance of it never lasted more

than a few months. The first AAA of 1933 “gave the farmer the price supports he desired, and

more…” (Nardo 121). It worked by paying farmers to reduce their total crop area. This would

in theory, reduce crop supply and raise the value of it. If farmers were willing to reduce their

crop areas, then the government would pay them subsidies. A major revision of the AAA was

made in February 16, 1938 after the first had been declared unconstitutional. This dealt with

the “concept of an ‘ever-normal granary’” (Chandler 221). The main idea was similar to the first

one in many ways except one. The AAA would make loans to farmers in years of good crop

yields and to store the surplus produce, which it would then release in years of low yield.

       The event that changed the depression was when Roosevelt’s plan for the New Deal.

Roosevelt started signing all sorts of programs to get the nation jumpstarted again. This

resulted in a series of ways to get the nation turned around:

               Based on the assumption that the power of the federal government was needed

               to get the country out of the depression, the first days of Roosevelt's

               administration saw the passage of banking reform laws, emergency relief

               programs, work relief programs, and agricultural programs. Later, a second New

               Deal was to evolve; it included union protection programs, the Social Security

               Act, and programs to aid tenant farmers and migrant workers. (“President”)

These new programs started to turn the nation around. Many of the new programs that were a

result from the New Deal are known by acronyms. For example, the Work Progress

Administration is better known as the WPA and the Civilian Conservation Corps are better

known as the CCC. Ultimately the New Deal was successful when looked at as a short and long

term perspective. As a short term perspective, it improved lives of the people that were

struggling to get by during the depression. As a long term perspective, the rules said that

government must take part in economic and social affairs that would happen in the United


          Each president handled this situation in a different way. Even though many people saw

Hoover as a lazy president who didn’t care about making the nation better, he was the root of

the programs to help America out of the Great Depression. Roosevelt simply took some of

these same ideas and added to them. The original concept was already there, there were just a

few revisions made to it and all the programs put together made up the New Deal. Roosevelt

once said, “I pledge you, I pledge myself, to a new deal for the American people” (“President”).

As a result he did just as he said he would do. He made a New Deal for the American people

and got the nation out of depression.

                                        Works Cited

America's Great Depression. 10 May 2008 <>.

Chandler, Lester V. America's Greatest Depression. New York, NY: Harper & Row, Publishers,

       Inc., 1970.

Nardo, Don, ed. The Great Depression. San Diego, CA: Greenhaven Press, Inc., 2000"

Nelson, Cary. "About the Great Depression." Modern American Poetry. 10 May 2008


President Franklin Delano Roosevelt and the New Deal." Great Depression and World War II,

       1929-1945. 2 Feb. 2004. 10 May 2008


"U.S. Department of State." Smoot-Hawley Tariff. 10 May 2008



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