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Background

When the Great Depression struck in 1929, the United States was unprepared for its scale and duration.
President Hoover (1929–1933) clung to traditional laissez-faire principles, believing voluntary cooperation would restore stability. His cautious approach deepened public despair.
In contrast, Franklin D. Roosevelt’s New Deal (1933–1938) represented a decisive ideological shift toward government intervention, social reform, and economic regulation.
Though the New Deal did not end the Depression entirely, it fundamentally reshaped American political life.

During the Great Depression, President Herbert Hoover (1929–1933) initially relied on volunteerism and limited government intervention, believing that the economy would self-correct. As the crisis worsened, his policies became more interventionist, but public dissatisfaction with his response ultimately led to his landslide defeat in 1932.

Herbert Hoover (1929–1933): Voluntarism and Limited Intervention

Nature of Policies

Philosophy of Government
1. Believed in individual self-reliance and voluntary cooperation between business, labor, and government.
2. Feared direct relief would weaken American character and create dependency.
Initial Measures
1. Federal Farm Board (1929): Attempted to stabilize agricultural prices by buying surplus crops. It failed as prices continued to fall.
2. Encouraged local charities and private businesses to maintain employment and wages voluntarily.
Public Works Efforts
1. Supported limited infrastructure spending such as the Hoover Dam to stimulate jobs and regional development.
2. Authorized Reconstruction Finance Corporation (RFC, 1932) to lend to banks, railroads, and industries.
Monetary and Fiscal Policy
1. Opposed large-scale government spending or deficit financing.
2. Raised taxes through the Revenue Act (1932), worsening deflation.

Definition

Reconstruction Finance Corporation (RFC)

Federal agency created in 1932 to provide emergency loans to financial institutions; symbolized Hoover’s shift toward limited government intervention.

Efficacy and Assessment

Economic Results
1. Unemployment reached 25% by 1933; over 9,000 banks failed.
2. Relief programs were local and inadequate.
3. Business and agricultural recovery efforts collapsed under deflationary pressures.
Social Unrest
1. The Bonus Army March (1932) (WWI veterans demanding early pension payments) was violently dispersed, damaging Hoover’s reputation.
Legacy
1. Hoover’s policies were too cautious and too late; his faith in voluntarism failed against systemic crisis.
2. However, his creation of the RFC laid groundwork for later New Deal institutions.

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What was the impact of the New Deal on federal power?

Note

The Great Depression was a severe worldwide economic downturn that began in 1929 and lasted throughout the 1930s. It was the longest, deepest, and most widespread depression of the 20th century, with devastating effects on economies and societies around the globe.

The stock market crash of October 1929 marked the beginning of the Great Depression, but the underlying causes were more complex and included factors such as overproduction, declining international trade, and a fragile banking system.
Unemployment rates soared, reaching as high as 25% in the United States, while industrial production fell by nearly 50%.
The economic crisis led to widespread poverty, homelessness, and social unrest, with many families losing their homes and savings.

AnalogyThink of the Great Depression as a massive economic earthquake that shook the foundations of the global economy, causing widespread damage and hardship.

ExampleIn the United States, the number of banks fell from 25,000 in 1929 to just 15,000 by 1933, as thousands of banks failed during the depression.

Background

When the Great Depression struck in 1929, the United States was unprepared for its scale and duration.
President Hoover (1929–1933) clung to traditional laissez-faire principles, believing voluntary cooperation would restore stability. His cautious approach deepened public despair.
In contrast, Franklin D. Roosevelt’s New Deal (1933–1938) represented a decisive ideological shift toward government intervention, social reform, and economic regulation.
Though the New Deal did not end the Depression entirely, it fundamentally reshaped American political life.

Herbert Hoover (1929–1933): Voluntarism and Limited Intervention

Nature of Policies

Philosophy of Government
1. Believed in individual self-reliance and voluntary cooperation between business, labor, and government.
2. Feared direct relief would weaken American character and create dependency.
Initial Measures
1. Federal Farm Board (1929): Attempted to stabilize agricultural prices by buying surplus crops. It failed as prices continued to fall.
2. Encouraged local charities and private businesses to maintain employment and wages voluntarily.
Public Works Efforts
1. Supported limited infrastructure spending such as the Hoover Dam to stimulate jobs and regional development.
2. Authorized Reconstruction Finance Corporation (RFC, 1932) to lend to banks, railroads, and industries.
Monetary and Fiscal Policy
1. Opposed large-scale government spending or deficit financing.
2. Raised taxes through the Revenue Act (1932), worsening deflation.

Definition

Reconstruction Finance Corporation (RFC)

Federal agency created in 1932 to provide emergency loans to financial institutions; symbolized Hoover’s shift toward limited government intervention.

Efficacy and Assessment

Economic Results
1. Unemployment reached 25% by 1933; over 9,000 banks failed.
2. Relief programs were local and inadequate.
3. Business and agricultural recovery efforts collapsed under deflationary pressures.
Social Unrest
1. The Bonus Army March (1932) (WWI veterans demanding early pension payments) was violently dispersed, damaging Hoover’s reputation.
Legacy
1. Hoover’s policies were too cautious and too late; his faith in voluntarism failed against systemic crisis.
2. However, his creation of the RFC laid groundwork for later New Deal institutions.

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IB History Paper 1 - Conflict and Intervention

IB History Paper 1: The Move To Global War (1931-1941)

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What was the impact of the New Deal on federal power?

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Note

The stock market crash of October 1929 marked the beginning of the Great Depression, but the underlying causes were more complex and included factors such as overproduction, declining international trade, and a fragile banking system.
Unemployment rates soared, reaching as high as 25% in the United States, while industrial production fell by nearly 50%.
The economic crisis led to widespread poverty, homelessness, and social unrest, with many families losing their homes and savings.

AnalogyThink of the Great Depression as a massive economic earthquake that shook the foundations of the global economy, causing widespread damage and hardship.

ExampleIn the United States, the number of banks fell from 25,000 in 1929 to just 15,000 by 1933, as thousands of banks failed during the depression.

Paper 1 - The Move to Global War6 subtopics

Paper 1 - Rights and Protest6 subtopics

Paper 1 - Conflict and Intervention6 subtopics

Paper 2 - Independence Movements5 subtopics

Paper 2 - Authoritarian States7 subtopics

Paper 2 - Causes and Effects of 20th Century Wars4 subtopics

Paper 2 - The Cold War: Superpower Tensions and Rivalries31 subtopics

Paper 3 - History of Europe18 subtopics

Paper 3 - History of the Americas18 subtopics

Paper 3 - History of Asia and Oceania18 subtopics

Solutions in the United States Notes

Background

Herbert Hoover (1929–1933): Voluntarism and Limited Intervention

Nature of Policies

Efficacy and Assessment

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Paper 1 - The Move to Global War6 subtopics

Paper 1 - Rights and Protest6 subtopics

Paper 1 - Conflict and Intervention6 subtopics

Paper 2 - Independence Movements5 subtopics

Paper 2 - Authoritarian States7 subtopics

Paper 2 - Causes and Effects of 20th Century Wars4 subtopics

Paper 2 - The Cold War: Superpower Tensions and Rivalries31 subtopics

Paper 3 - History of Europe18 subtopics

Paper 3 - History of the Americas18 subtopics

Paper 3 - History of Asia and Oceania18 subtopics

Background

Herbert Hoover (1929–1933): Voluntarism and Limited Intervention

Nature of Policies

Efficacy and Assessment

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