Herbert Hoover’s Economic Policies And The Great Depression: Laissez-Faire, Violence, And Intervention

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President Hoover's laissez-faire response to the Great Depression, based on rugged individualism, exacerbated the crisis, leading to the rise of Hoovervilles. His violent suppression of the Bonus Army protest marked a shift away from inaction. Despite establishing the Reconstruction Finance Corporation to intervene in the economy, the Smoot-Hawley Tariff's protectionist measures undermined its impact.

Laissez-Faire During the Great Depression

  • Explain the definition of laissez-faire and its relevance to the government's response to the Great Depression.

Laissez-Faire During the Great Depression

At the onset of the Great Depression, the United States government embraced the economic philosophy of laissez-faire, an ideology that advocates for minimal government intervention in the economy. This belief held that economic downturns were a natural part of the economic cycle and that the government should not interfere with the market.

Self-Reliance and Rugged Individualism

Laissez-faire was deeply rooted in the American ethos of self-reliance and rugged individualism. Citizens were encouraged to pull themselves up by their bootstraps and fend for themselves, without relying on government assistance. This belief was reflected in the government's initial response to the Depression, which focused on providing limited relief while allowing the economy to "self-correct."

Consequences of Laissez-Faire: Hoovervilles and the Bonus Army

However, the consequences of laissez-faire were devastating. As unemployment and economic hardship spread, Hoovervilles, shantytowns named after President Herbert Hoover, sprang up across the United States, housing the homeless and destitute. The Bonus Army, a group of World War I veterans seeking payment of a promised service bonus, marched on Washington D.C. in 1932 to press their demands.

Government Response: From Inaction to Violence

Initially, the government remained largely inactive in addressing the Depression. However, as the economic crisis deepened and social unrest grew, the government shifted its stance. Hoover ordered the violent dispersal of the Bonus Army, contrasting sharply with the laissez-faire approach that had been adopted earlier.

Rugged Individualism: The Core Belief of Laissez-Faire

During the Great Depression, the laissez-faire approach to government intervention gained prominence. This belief in limited government involvement was deeply rooted in the rugged individualism that characterized American society at the time.

Individuals were expected to be self-reliant, relying on their own initiative and hard work to achieve success. The government was seen as a hindrance to this process, a force that would stifle innovation and entrepreneurship. As such, the government's role was primarily limited to maintaining law and order, leaving the economy to the free market.

This belief in self-sufficiency was closely intertwined with the American Dream. Individuals believed that anyone could achieve great things if they worked hard enough. The government was viewed as a threat to this ideal, a potential obstacle that could prevent individuals from realizing their full potential.

As a result, during the Great Depression, government assistance was often seen as a sign of weakness. Individuals were encouraged to pull themselves up by their bootstraps and overcome adversity on their own. This belief in rugged individualism had a profound impact on the government's response to the economic crisis, leading to a hands-off approach that exacerbated the suffering of millions.

Hoovervilles: A Tangible Consequence of Laissez-Faire

As the Great Depression ravaged the nation, laissez-faire policies held sway, leaving the government largely uninvolved in economic affairs. This belief in self-reliance and minimal government interference had dire consequences, one of which was the emergence of Hoovervilles, makeshift shantytowns that became the tragic symbols of the laissez-faire approach.

Hoovervilles were a stark contrast to the American dream of prosperity and stability. They sprang up on vacant lots, abandoned fields, and along riverbanks, populated by those who had lost everything. Families, the elderly, and the unemployed huddled together in these squalid camps, their makeshift shelters offering little protection from the elements or the relentless despair that gnawed at their souls.

The inhabitants of Hoovervilles were not idle. They scavenged for food, scoured for work, and tried desperately to maintain some semblance of dignity in the face of adversity. But their efforts were often futile, the laissez-faire policies that had failed to prevent the Depression now hampering their ability to recover. Without government assistance, they were left to fend for themselves, their fate determined by the whims of an unyielding economy.

Hoovervilles became a poignant reminder of the shortcomings of laissez-faire during times of economic crisis. The government's refusal to intervene in the economy condemned countless Americans to a life of poverty and despair. The plight of Hooverville residents served as a harsh indictment of the belief that individuals could pull themselves up by their bootstraps alone, even when faced with a calamity of such magnitude.

The Bonus Army: A Cry for Help Amidst the Great Depression

During the Great Depression, a group of World War I veterans known as the Bonus Army marched on Washington, D.C., in 1932, desperate for their promised service bonus. These soldiers had fought for their country, but upon returning home, they found themselves jobless and struggling to make ends meet.

The soldiers, who had been promised a payment of $1,000 upon their discharge, were outraged when the government decided to delay payment until 1945. The Bonus Army, as they came to be known, felt betrayed and demanded immediate payment.

Led by Walter Waters, a former Army sergeant, the Bonus Army marched on Washington, 17,000 strong. They set up makeshift camps near the Capitol Building, hoping to pressure the government into action.

The Government's Reaction: From Inaction to Violence

The Initial Laissez-Faire Stance

Throughout the early years of the Great Depression, President Herbert Hoover adhered to a strict laissez-faire policy, believing that the economy would eventually self-correct without government intervention. However, as the crisis deepened, Hoover's stance faced growing criticism.

The Bonus Army

In 1932, a group of World War I veterans assembled in Washington, D.C., to demand immediate payment of a bonus that had been promised to them but deferred until 1945. Hoover initially ignored their demands, which exacerbated their anger and frustration.

The Violent Response

On July 28, 1932, Hoover ordered the U.S. Army to forcefully remove the Bonus Army veterans from their encampment near the Capitol Building. The soldiers, led by General Douglas MacArthur, used tanks, bayonets, and tear gas against the unarmed veterans and their families.

Contrasting the Response

The government's violent response to the Bonus Army protest stood in stark contrast to the initial laissez-faire approach. Hoover's decision to use force against desperate veterans highlighted the failure of his economic policies and the erosion of trust in the government's commitment to its citizens.

The Aftermath

The government's brutal treatment of the Bonus Army shocked the nation and permanently damaged Hoover's presidency. The incident became a symbol of the government's heartless response to the suffering caused by the Great Depression. It also marked a turning point, leading to a gradual shift away from laissez-faire towards government intervention.

Laissez-faire's Failure: Embracing Government Intervention

As the Great Depression raged, its devastating impact spurred a shift in government policy. The laissez-faire approach, which advocated for minimal government interference in the economy, proved ineffective in alleviating the crisis. Instead, the government recognized the need for intervention to address the widespread economic collapse.

One key development was the establishment of the Reconstruction Finance Corporation (RFC) in 1932. The RFC played a vital role in stimulating the economy by providing loans to banks, railroads, insurance companies, and other struggling businesses. These loans helped stabilize the financial system and prevent further economic deterioration.

The RFC differed significantly from the ill-fated Smoot-Hawley Tariff, which had been enacted in 1930. While the Smoot-Hawley Tariff raised tariffs on imported goods in an attempt to protect domestic industries, it had the unintended consequence of reducing international trade and worsening the Depression. In contrast, the RFC focused on supporting the domestic economy through direct government intervention.

The creation of the RFC marked a departure from the laissez-faire approach that had characterized the earlier years of the Depression. It demonstrated the government's willingness to take an active role in addressing the economic crisis. By providing financial support to key industries, the RFC helped stabilize the economy and pave the way for eventual recovery.

Comparing the Contrasting Responses: Smoot-Hawley Tariff vs. Reconstruction Finance Corporation

As the Great Depression ravaged the nation, the government's initial response of laissez-faire and rugged individualism proved disastrous. Yet, a turning point emerged with the shift towards government intervention. Two significant measures that exemplified this shift were the Smoot-Hawley Tariff and the Reconstruction Finance Corporation (RFC).

The Smoot-Hawley Tariff, enacted in 1930, epitomized protectionist policies. It raised tariffs on imported goods, intending to protect American industries from foreign competition. However, its unintended consequences were devastating. Foreign countries retaliated with their own tariffs, reducing global trade and deepening the economic crisis.

In contrast, the RFC, established in 1932, embodied a focus on economic recovery. It provided loans to banks, businesses, and municipalities, injecting capital into the struggling economy. Unlike the Smoot-Hawley Tariff, which exacerbated the depression, the RFC played a crucial role in stabilizing the financial system and stimulating economic activity.

The key distinction between the two measures lies in their long-term impact. The Smoot-Hawley Tariff's protectionist approach hindered economic growth, while the RFC's investment-oriented strategy fostered recovery. By providing liquidity and supporting businesses, the RFC helped restore confidence in the economy and lay the foundation for eventual recovery.

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