Government Response to the Great Depression

How did this affect those in need?

2. 
   Government policies
   

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  He constantly gave generously to charity, cut his own and state official salaries by 20% to help provide revenues for recovery measure and in public he was optimistic. In March 1930 he said, ‘All the evidence indicates that the worst effects of the Crash upon unemployment will have passed during the next 60 days’. This led many to say he had lost touch with reality. When he told the press that unemployment was falling, this created considerable resentment among many of the jobless. The result of his constant public hopefulness was that he gradually lost all credibility.
  
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  However, Hoover could not abandon his idea of self-help and voluntary co-operation. The President was still adamantly opposed to direct federal relief to individuals.
  

When the Depression began in 1929 Hoover was sure that the formula of hard work and minimum interference from Government that had worked so well in the past would soon restore prosperity. However, as the economic situation deteriorated he realised that the Government would have to do something to provide relief for the poor and encouragement for business and industry.

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  Secured a pledge from employers to maintain wage rates and avoid redundancy
  
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  At Hoover’s request, Congress voted $423 million for a Government building programme to provide new jobs. One scheme was the construction of the Hoover Dam on the Colorado River.
  
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  Attempted to stabilise and bolster grain, cotton and other agricultural produce prices through newly created federal farm bonds. Surplus produce was bought at the commercial rate. However, by 1932 the Farm Board had spent its budget of $500 million and grain prices fell again. It did not have a big enough budget, and the efforts to persuade farmers to reduce production voluntarily went unheeded.
  
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  Tried to reduce foreign competition by raising tariffs. The Hawley Smoot Act of 1930 increased tariffs by 50% on many farm products and manufactured goods imported from foreign countries. However, foreign countries retaliated by raising tariffs on American goods entering the countries and trade fell.
  
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  Released gold to support the dollar and expanded credit facilities. Hoover worked tirelessly to combat the Depression.
  

In January 1932 the Reconstruction Finance Corporation (RFC) was created. It was Hoover’s most radical measure to combat the Depression.

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  The RFC lent state and municipal Governments $1.5 billion for public works and a further $3,000 million for relief. Eligible states had to declare virtual bankruptcy and the works undertaken had to produce revenues that would eventually pay off the loans.
  
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  Provided loans totalling $150 million to businesses, in order to enable them to increase employment.
  
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  Authority to lend up to $2 billion to rescuer banks, insurance companies, railroads and construction companies in distress. Designed to restore confidence particularly in financial institutions. 90% of loans went to small/medium banks, 70% in small towns.
  
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  Critics saw the RFC as giving direct relief to businesses while offering nothing to individuals in distress. The Government argued that the largest businesses were the biggest employers so it made sense to help them in the war against unemployment.