BECOMING MODERN A MERICA STUDY GUIDE Describe how the president responded to the GREAT DEPRESSION: (CAUSES OF GREAT DEPRESSION, NEW DEAL) - Pres. Hoover- Pres. F. Roosevelt -

**Pres. Hoover:**<br /><br />Herbert Hoover initially responded to the Great Depression with a belief in limited government intervention. He favored volunteerism, encouraging businesses and charities to help those in need. He believed the economy would correct itself naturally. He did implement some government programs, like the Reconstruction Finance Corporation (RFC) which provided loans to banks, railroads, and other large businesses, hoping this trickle-down economics would stimulate the economy. However, these efforts were largely seen as too little, too late, and ineffective in addressing the widespread suffering. His approach is often criticized for being inadequate and out of touch with the realities of the Depression's severity. Many historians argue that his policies exacerbated the crisis.<br /><br />**Causes of the Great Depression (relevant to Hoover's response):**<br /><br />* **Stock Market Crash of 1929:** While not the sole cause, the crash triggered a chain reaction of economic instability. Hoover's initial response was to downplay its significance, contributing to a lack of public confidence.<br />* **Overproduction and Underconsumption:** Factories produced more goods than consumers could afford, leading to falling prices and business failures. Hoover's reliance on volunteerism failed to address this fundamental imbalance.<br />* **Banking Crisis:** Bank failures wiped out savings and further restricted credit, deepening the economic downturn. While the RFC was intended to stabilize the banking system, it wasn't enough to prevent widespread bank collapses.<br />* **Global Economic Downturn:** International trade declined sharply, impacting American businesses reliant on exports. Hoover's policies, including the Smoot-Hawley Tariff Act (which raised tariffs on imported goods), arguably worsened the global situation and further harmed the American economy.<br /><br /><br />**Pres. F. Roosevelt:**<br /><br />Franklin Delano Roosevelt responded to the Great Depression with a drastically different approach than his predecessor. His program, known as the **New Deal**, involved extensive government intervention in the economy. He believed the government had a responsibility to provide relief, recovery, and reform.<br /><br />**The New Deal:**<br /><br />* **Relief:** Programs like the Federal Emergency Relief Administration (FERA) and the Civilian Conservation Corps (CCC) provided direct financial assistance, jobs, and food to millions of unemployed Americans. This addressed the immediate needs of the suffering population.<br />* **Recovery:** The National Recovery Administration (NRA) and the Agricultural Adjustment Act (AAA) aimed to stabilize industrial and agricultural production by regulating prices and output. The Public Works Administration (PWA) launched large-scale public works projects to create jobs and stimulate economic activity.<br />* **Reform:** Reforms like the Social Security Act, the Federal Deposit Insurance Corporation (FDIC), and the Securities and Exchange Commission (SEC) were designed to prevent future economic crises by providing social safety nets, insuring bank deposits, and regulating the stock market.<br /><br />Roosevelt's New Deal fundamentally changed the relationship between the American government and its citizens. While some New Deal programs were later deemed unconstitutional, many of its core elements, such as Social Security and bank deposit insurance, remain in place today. His approach is generally credited with mitigating the worst effects of the Great Depression and laying the foundation for a more stable and regulated economy.<br />