How Did Herbert Hoover Contribute To The Great Depression

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Jimmy Roach Mr. Salisbury World History 4 October 2013 Great Depression Research Paper The Great Depression is by far the worst economic outfall that the world or the USA has ever experienced. Many say that the Great Depression was not the governments fault and that they did not play a major role in the events that led up to it. However it has been made very obvious over the years that the government played a huge role in the events leading up to the Great Depression and their poor decisions cause the terrible disaster that is the Great Depression. The Federal Reserve first contributed to the great depression by fueling the speculative bubble that led to the stock market crash of 1929. From 1921 to 1929 we see a 61 percent increase…show more content…
The place to start, of course, is Herbert Hoover. Herbert hoover did a great number of things to harm the economy in the early 1930's. In 1930 he passed the Smoot Hawley Tariff which doubled taxes on import, and contributed heavily to a 66% fall in imports between 1929 and 1933. Perhaps even worse, Hoover raised taxes in 1932, thus further dampening aggregate demand. But Hoover's greatest attack on prosperity came in his actions towards wages. He help a conference which ensured that industrial wages would be kept stable. Due to deflation, nominally stable wages actually entailed an increase in real wages in the first years of the depression. During this time period industrial production fell by 34%. Compared to total factory productivity which only fell 5%. We can make sense of this only if we look at hours worked which fell by 40%, no doubt due to the artificially high wages imposed by Hoover. Hoover further raised the cost of labor by requiring all federally aided projects to pay the union wage with the davis-beacon act of 1931. If that wasn't enough he passed The Norris-LaGuardia Act in 1932. This act gave unprecedented power to unions and even went as far as to make union-free labor contracts unenforceable in federal courts. Given hoovers destruction of aggregate demand via tariffs and taxes in conjunction with his artificial increases in real wages and the sharp…show more content…
He caused what is known as regime uncertainty. He left investors worried about the future of the market. Would FDR create a primarily government run economy in the near future? Would new taxes be introduced? Polls from the time period show that many businessmen were unsure and that they were consciously aware of the fact that this uncertainty, caused by the policies of FDR, was stopping business from expanding. After all, why would one make an investment that would reap its profits 5 years from now when one is unsure if profits will substantially exist 5 years from now! This hypothesis helps explain the fact that private investment took a huge fall in the 1930's that didn't sustainably recover until 1946 long after FDR's rain and the age of the New

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