Great Depression

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SubjectHistory
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Write a 5 paragraph essay, using evidence from at least 4 documents in which you: describe Hoover and Roosevelt’s approaches to combatting the Great Depression. Analyze whose approach was more effective

Answer

Introduction

The Great Depression was a 20^th century worst economic catastrophe experienced in the United States between 1923 and 1933. According to Rothbard (1972), the catastrophe was marked with a great fall in the quantities of goods and services, increased number of unemployed individuals by a rate of 25%, the majority of financial institutions failed and the stock market lost around 80% of its value. Most theories tend to examine the cause of this economic collapse, but there remains no single universally agreed upon the cause as to why the Depression occurred or why the economy finally recovered. This essay explains how the two American presidents, Herbert Hoover and Franklin Roosevelt, viewed the role of the government and its response to the economic collapse.

Herbert Hoover’s approach

Herbert Clark Hoover, the 31^st President of the United States between the periods of 1929 to 1933 was a professional author and a mining engineer. Before being the president, Herbert was the Secretary of Commerce under President Warren Harding. As the commerce secretary, he believed in economic modernization through government intervention in the economic market. He also believed in the Efficiency Movement, which was a practical solution for most social and economic problem (Hoover, Roosevelt, & Overproduction, 1952). However, his position on the two perspectives – economic modernization and efficiency movement, was challenged when the economic crisis – Great Depression, hit. Hoover tried to combat the crisis through involving the markets and, volunteer efforts. To him, the Depression was just a temporary bump that would correct itself without government interference but rather the forces mechanism within the market. He perceived the crisis as largely a concern of the public perception and believed that the government ought to have stat out of business affairs. Hoover’s response was rather vigorous and narrow. His main objective was to reestablish confidence in the economy and the banking system. He tried to advocate for rugged individualism – the notion that every individual should be independent and fend for themselves. With the notion, he believed that the government involvement in handling the unemployed and the poor led to the great economic damage experienced. Among his initiative, the most renowned, Smoot-Hawley Tariff of 1930, emerged as an outback for both the country and world economies. The tariff imposed very heavy charges on imported goods to the county’s history resulting in a universal trade conflict and a drastic decline in the international trade (Hoover, Roosevelt, & Overproduction, 1952). According to Houck, (2001), as the gravity of the crisis heightened, he attempted some fiscal reforms such as authorizing loans to farmers and investors under the Agricultural Marketing Act of 1929, to prevent them from running bankrupt, although the loans were to be repaid back to the lenders. He also rejected an Emergency Relief and Reconstruction Act philosophy passed by the US Congress and instead used his powers to slow its implementation. However, none of these measures to combat the crisis produced economic recovery during his term. According to various scholars and historians, Hoover’s great loss in the 1932 election to Franklin Roosevelt, significantly resulted from his incompetence and inability to combat the downward economic collapse from the Great Depression, compounded by general and widespread opposition to prohibition.

Franklin Roosevelt’s approach

Franklin Delano Roosevelt, the 32^nd President of the United States between the periods of 1933 to 1945 was the core figure of the 20^th century during a time of universal economic crisis and collapse. During the Depression crisis, Roosevelt developed the New Deal to provide relief for the recovery and sustainability of the economy, unemployment, and, the reform of the economic and banking systems (Gardner, 1971). As much as the economy took time to recover until almost 1940, his ideas had the greatest impact and role on the country’s commerce. During his era, Roosevelt initiated such programs as – Tennessee Valley Authority (TVA), The United States Securities and Exchange Commission (SEC), the Federal Deposit Insurance Corporation (FDIC), and, his most substantial legacy of Social Security system. According to him, he did not believe that the market has the capability of fixing its problems. He rather established bank holidays just a day after he took office, to lead the enormous panic withdrawals of bank reserves (Houck, 2001). He ordered all banks to remain closed, including the Federal Reserve banks. He after that gave a condition for the reopening of the banks if and only if each bank received a license from the government. A year later, the federal government established a short-term system of federal deposit insurance followed by the FDIC. Roosevelt also launched new taxes that influenced all the income groups. As much as the Conservatives strongly disagreed with the idea, Roosevelt prevailed his stand until he tried to pack the Supreme Court in 1937. With the help from his wife, Eleanor Roosevelt in pushing for the modern American liberalism, Roosevelt re-enforced the American liberalism, in regards to his New Deal coalition of intellectuals, labor unions, farmers, machines, the employees and poor, and, racial and ethnic and religious minorities on relief. Most scholars and historians credit Roosevelt’s idea of New Deal for combating the economic collapse and leading the nation’s economic recovery from the crisis (Gardner, 1971). The scholars and the historians have also consistently ranked him as among the greatest Presidents of the United States.

Most effective approach

Roosevelt’s approach to the Great Depression was more effective and significant to the county. His policies and ideas restored confidence in the banking system, and money began circulating into the financial institutions and systems. The stock of money began to expand which geared the rate of both nation’s production and consumption, as well as an increase in prices. As much as the recovery of the economy was realized at a slow rate, it eventually reached, and the corner turned. The recovery was experienced in such instances as; employment of thousands of individuals, and the make of direct cash loans to people, firms, and the local government. Hoover’s approach was too little too shallow, that lost favor with the American people. President Herbert Hoover resisted the use of government authority and money to apprehend the crisis. Through his devotion to restoring confidence in the banking system and the nation’s economy as a whole, Franklin Delano Roosevelt’s policies certainly did much to catalyst the recovery of the economy.

Conclusion

The Great Depression instigated the economists to learn much about the significance of monetary and financial institutions force in both the recovery and contraction phases of an economic collapse. This concern of ensuring a strong economy has been acknowledged through the importance of macroeconomic policies and the major disturbances within the economic sector. It should be understood that the Depression was not a failure of capitalism or the markets, but rather it resulted from ill-advised government policies. For example. The Federal Reserve policy that ensured the stock of money to collapse as fears and panics engrossed the financial institutions.

References

Gardner, L. C. (1971). Economic aspects of New Deal diplomacy. Beacon Press.

Hoover, H. C., Roosevelt, F. D., & Overproduction, I. (1952). The great depression. Macmillan.

Houck, D. W. (2001). Rhetoric as Currency: Hoover, Roosevelt and the Great Depression (Vol. 4). Texas A&M University Press.

Rothbard, M. N. (1972). America’s great depression. Ludwig von Mises Institute.