Hoover and Roosevelt`s responses to the Depression pre 1932

Context –

12 million people out of work, 25% of the working population

At its height, in 1932, 12,000 people became unemployed every day

20,000 companies had gone bankrupt

1,616 banks had gone bankrupt

1 farmer in 20 had been evicted from his farm

23,000 people committed suicide in 1932, the highest ever figure for a single year

Herbert Hoover was the sitting president, in power since he took over the presidency in March, 1929

Franklin D. Roosevelt became New York governor in 1928 (earlier in his political career he had served on the New York state senate)

Their different responses to the Great Depression would be of major significance when they both ran for the presidency in 1932. So how did they respond: in words and deed?

Hoover and Republicanism

Believed in laissez-faire and “rugged individualism” + `Prosperity is just around the corner.` Hence: “In Hoover we trusted, now we are busted,” Hoovervilles and “Hoover stew”

Yet:

Hoover supported farm prices, and ordered government purchases of wheat and cotton to support prices. He encouraged farmers to reduce production. And he introduced tariffs to reduce imports.

For industry, Hoover introduced large-scale projects – more in 4 years, than in the previous 30. In 1931 he instigated the biggest ever peace time increase in government spending. In 1931 the budget shifted from a  surplus of $1,175 billion, to a deficit of $2,138 billion.       

Help/relief:

Hoover set up the Relief Finance Corporation as an off-budget item to lend money to Financial Institutions and to state and local governments for construction projects.

But by the end of 1931 there was no sign that deficit spending was working, and so Hoover introduced the Revenue Act of 1932 which raised taxes to the highest level since 1921.

Roosevelt

Promised prompt, vigorous action `The only thing we have to fear is fear itself.`

Roosevelt, as Governor of New York:

Roosevelt took advice from experts. He spent $20 million in relief for the poor. `Aid to the unemployed`, he said,`must be extended by Government, not as a matter of charity, but as a matter of social duty.` He instigated the first state relief agency.

In the election campaign of 1932 Roosevelt said, `I pledge you, I pledge myself, to a new deal for the American people.` He felt that the key to recovery was confidence.