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Hoover was a good guy!!!
Didn't want to do too much as he was afraid the American people would
loose their sense of self sufficiency and "wild west" spirit.
Hoover was dismayed by the economic situation however he maintained
an aura of confidence, attempting to proceed with business as usual and
hoping that this was just a `temporary downturn.' In an attempt to keep the
Hoover responded to crisis with a series of early measures:
oFederal Farm Board (1929): Devised before the crash, the Farm
Board lent some $500m to farmers to keep their homesteads, and
a commission bought up commodity surpluses.
o 1930 Tax Cut: Responding to conservatives' cries for a tax cut to
stimulate spending, the government slashed taxes by 15%.
o The HawleySmoot Tariff (1930): Searching for even more
revenue, Hoover supported a tariff with a 52.8% ad valorem rate.
This enabled American producers to have more competitive
prices in American compared to foreign imports. Protected the
In the wake of the great depression Hoover responded with several
o Reconstruction Finance Board (RFC): Based on the War
Finance Board of WWI, the RFC was authorized to lend $500m
(with up to $2b more) to banks, insurance companies, and other
major credit agencies to forestall failures and increase economic
stability. It remained until 1942.
o Emergency Relief and Construction Act of 1933: In
desperation, Hoover turned to direct federal aid, "lending" (it was
never intended to be paid back) $2b for: $300m for direct relief
payments in states $332m for federal construction projects $1.5b
for state construction projects.
o President's Emergency Committee on Employment: Seeking
a voluntary commitment from businesses, this sought a promise to
maintain employment, price, and wage levels.
Even before his inauguration he urged the Federal Reserve to halt "crazy
and dangerous" gambling on Wall Street by increasing the discount rate
the Fed charged banks for speculative loans. He asked magazines and
newspapers to run stories warning of the dangers of rampant speculation.
Once in the office, the new president ordered a reluctant Andrew Mellon,
his holdover secretary of the treasury, to promote the purchase of bonds
instead of stocks. He sent his friend Henry Robinson, a Los Angeles
banker, to convey a cautionary message to the financiers of Wall
Streetand received in return a long, scoffing memorandum from Thomas
W. Lamont of J.P. Morgan and Company. When the Federal Reserve
Board that August did take steps to check the flow of speculative credit,
New York bankers defied Washington, the National City Bank alone
promising $100 million in fresh loans. An angry Hoover let the president of
the New York Stock Exchange know that he was thinking of regulatory
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Yet he undercut his
own threat by placing ultimate responsibility for such measures on New
York State's new governor, Franklin D. Roosevelt.
After the Wall Street Crash, Hoover summoned industrialists to the White
House on November 21, and secured a promise to hold the line on
wages. Henry Ford even agreed to increase workers' daily pay from six to
seven dollars. From the nation's utilities, Hoover won commitments of
$1.8 billion in new construction and repairs for 1930. Railroad executives
made a similar pledge.…read more