Tariff – a tax paid on imported or exported goods
Epitome – a person or thing that is a perfect example of a particular quality or type.
Bonus – In 1924, as a thank you to veterans of World War I, Congress voted to give a bonus to World War I veterans - $1.25 for each day served overseas, $1.00 for each day served in the States. The money was meant to help the veterans when they reached retirement age and was not to be paid until 1945.
Undermine – to gradually damage or weaken someone or something
Great Depression in the United States
Initial Response to the Depression
The initial government response to the Great Depression was ineffective, as President Hoover insisted that the economy was sound and that prosperity would soon return. Hoover believed the basic need was to restore public confidence so businesses would begin to invest and expand production, providing jobs and income to restore the economy to health. But business owners saw no reason to increase production while unsold goods clogged the shelves. By 1932 investment had dropped to less than 5 percent of its 1929 level.
Convinced that a balanced federal budget was essential to restoring business confidence, Hoover sought to cut government spending and raise taxes. But in the face of a collapsing economy, this served only to reduce demand further. As conditions worsened, Hoover’s administration eventually provided emergency loans to banks and industry, expanded public works, and helped states offer relief. It was too little, too late.
How did the Hoover administration initially respond to the Great Depression?
Was the response effective? Why or Why not?
The epitome of a “self-made man”, Hoover believed in individualism and self-reliance. As more and more Americans lost jobs and faced hunger, Hoover asserted that “mutual self-help through voluntary giving” was the way to meet people’s needs. Private giving increased greatly, reaching a record high in 1932, but charitable organizations were overwhelmed by the enormous number of people in need. To many, government assistance seemed the only answer, but Hoover was convinced that giving federal relief payments would undermine recipients’ self-reliance and he resisted this step throughout his term.
Why did Hoover resist providing suffering Americans with government assistance?
The tension between citizens seeking government action and Hoover’s administration came to a head in June 1932. More than 20,000 World War I veterans marched on Washington, D.C., to ask for early payment of government bonuses they had been promised. But the government refused, and when some members of the so-called “Bonus Army” didn’t leave the capital, federal troops used tear gas and bayonets to evict the men and their families.
Who were members of the Bonus Army?
What did the Bonus Army demand from the government in 1932?
How did Hoover’s administration respond to the Bonus Army?
Hoover and most of his Republican Party firmly supported protective tariffs to block imports and stimulate the American economy by increasing sales of American-made products. In 1930 they enacted the Hawley-Smoot Tariff, which established the highest average tariff in American history. This was a crushing blow to European economies, which were already sinking into depression. Other nations retaliated by raising their own tariffs. This action helped to worsen and spread the depression by choking off international trade. Between 1929 and 1932 the total value of world trade had declined by more than half.
What was the purpose of the Hawley-Smoot tariff?
How did other nations react to the Hawley-Smoot tariff?
Was the Hawley-Smoot tariff successful? Why or Why not?
How would you describe Hoover’s response to the Great Depression?