The President’s Response to the Great Depression: FDR’s and Hoover’s Approaches Compared

The Great Depression, a period of severe economic downturn that lasted from 1929 until the late 1930s, posed a significant challenge to the United States and its presidents. Herbert Hoover and Franklin D. Roosevelt (FDR) both had to navigate this economic crisis, but their approaches and effectiveness differed greatly. This article explores how each president responded to the Great Depression and the consequences of their actions.

Herbert Hoover's Inefficient Response

Herbert Hoover, who served as president from 1929 to 1933, attempted to address the economic downturn, but his methods were primarily ineffective. While Hoover did manage to create a few temporary measures, such as the Civilian Conservation Corps (CCC) and the Works Progress Administration (WPA), these measures were largely insufficient in alleviating the widespread suffering and unemployment. The CCC and WPA did provide some job opportunities and helped families survive briefly, but they were not enough to substantially mitigate the economic devastation of the Great Depression.

The real turning point in the economy began only after Japan's attack on Pearl Harbor, which propelled the United States into World War II. The war effort led to a surge in employment, which helped end the Great Depression. Despite these efforts, FDR, who took office in 1933, received much of the credit for the economic programs that began several years earlier, and these programs were often misattributed to his presidency.

Herbert Hoover's Efforts in the First Years of the Depression

During the first three years of the Great Depression, Hoover took some steps to address the economic crisis. He continued his tradition of creating infrastructure projects, as he had done throughout his career, particularly in developing new mines in remote areas like Australia, Russia, Chile, South Africa, and others. However, FDR, who had little experience with infrastructure projects as governor of New York and before that, focused his efforts on non-economic purposes. He directed his Depression-era programs toward constructing city halls, public buildings, national parks, tourism support, and public parks. These projects provided temporary employment but were not designed to create sustained economic growth.

Additionally, Hoover played a significant role in stabilizing the US banking system. He created the highly effective Reconstruction Finance Corporation (RFC) and recruited Jesse W. Jones, a Houston businessman and banker, to run it. Jones’s efforts led to the reorganization of insolvent banks, the creation of the Federal Deposit Insurance Corporation (FDIC), the Federal Savings and Loan Insurance Corporation (FSLIC), and the Office of the Comptroller of Currency. Jones also established the Small Business Administration (SBA), the Farmers Home Administration (FmHA), and the Commodity Credit Corporation (CCC). Furthermore, he was instrumental in financing the Tennessee Valley Authority (TVA) and other projects over the next 16 years, eventually becoming Secretary of Commerce in the process.

Hoover’s Treasury Secretary Andrew Mellon

Hoover’s Secretary of the Treasury, Andrew Mellon, was a significant figure during the Great Depression. Mellon was a successful banker and investor, known for his expertise in managing crises. He began his banking career in 1873 during what was previously known as the Great Depression and weathered subsequent economic downturns, including the beef bubble collapse in 1887, the railroad’s collapse in 1893, the banking crisis of 1907, and the post-war recession in the early 1920s. His experience and acumen were crucial during the Great Depression, and his calm approach contrasted with the panic evident in others who only remembered the 1920s boom.

The Smoot-Hawley Tariff and International Trade

The Smoot-Hawley Tariff Act, often blamed for exacerbating the Great Depression, is a topic of much debate. While it was part of a long history of tariff and trade wars stretching back to the 1700s, its impact on the Depression was arguably less significant than many believe. International trade had been in decline since World War I, and it was only after the war that trade began to recover. By the 1990s, international trade had reached levels similar to those seen in 1915. The Smoot-Hawley Tariff Act became a scapegoat in part because it represented a significant change in the U.S. approach to trade during the early 1930s.

Impact of Key Industries and Businesses

Several major industries and businesses were already in trouble before the Great Depression. General Motors, for example, spent much of the 1920s in bankruptcy. Ford also faced challenges due to competition from General Motors. General Electric, like Ford, struggled in the early 1930s. The railroads were under severe pressure due to overbuilding in previous decades and faced additional challenges from the Interstate Railroad Commission. In the West, over a third of banks failed in the 1920s due to small customer bases, droughts, and low commodity prices. Additionally, the auto and aircraft manufacturing sectors, which had seen numerous start-ups with high failure rates, also struggled during the Depression.

Other industries, such as those related to consumer goods, entertainment, and technology, also faced significant challenges. Radios, power generation, cars, magazines, movies, home construction, and home appliances—all of which were hot sectors in the 1920s—suffered greatly as consumer spending diminished. Many consumers were out of work or receiving lower salaries, leading to a sharp decline in household spending. This widespread economic hardship was not just confined to a few East Coast cities, but rather affected a vast majority of the country.

Conclusion

The Great Depression presented a tremendous challenge for both Herbert Hoover and Franklin D. Roosevelt. While Hoover attempted to address the economic crisis with temporary measures, his efforts were generally insufficient. FDR, on the other hand, implemented a series of programs that many credit with reversing the economic downturn, even though many had actually been in place for years before his presidency. The economic challenges faced by various industries, such as railroads, auto manufacturing, and retail, were significant and complex, contributing to the prolonged economic downturn of the 1930s.