Compare and contrast Herbert Hoover's economic policies with those of Franklin Roosevelt - Essay Example

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Numerous factors affected the stability of the United State’s economy during the time of Herbert Hoover, and during the late 1920’s to the early 1930’s the unnoticed signs of trouble in the economic policies led to the crash of the stock market and eventually started the…
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Compare and contrast Herbert Hoovers economic policies with those of Franklin Roosevelt
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ECONOMIC POLICIES OF PRESIDENTS’ HERBERT HOOVER AND FRANKLIN ROOSEVELT Economic Policies of Presidents’ Herbert Hoover and Franklin Roosevelt Numerous factors affected the stability of the United State’s economy during the time of Herbert Hoover, and during the late 1920’s to the early 1930’s the unnoticed signs of trouble in the economic policies led to the crash of the stock market and eventually started the Great depression.1 Tax rates were lowered and the combination with falling income resulted to low tax revenues, which eventually caused huge budget deficits.2 Some of the problems were also due to the lack of rapid action to address the plummet of the country’s economy, and the laissez-faire attitude was due to beliefs that: the government should not be entirely responsible to the well-being of the people; and the government is incapable of regulating and controlling businesses.3 Hoover’s beliefs were partly due to the belief that the economy would be able to bounce back after several setbacks just like before, but these were unable to explain why decreases in costs of production did not allow the fall of prices and subsequent economic growth, and Hoovers’ policies on letting the market forces, private sector as well as the Federal Reserve to drive the economy was unable to stimulate employment.4 The downward economic spiral was aggravated further by the declining federal revenues, relying on the gold standard when it was already abandoned by other countries, and declining to spend and providing federal relief to people and wholly relying on local government and charity.
Franklin Roosevelt also had to deal with some similar setbacks such as dealing with deflation, preventing wages and prices from falling further to maintain the incomes of workers and employers as well as restoring the reliability of the banking system.5 Some of the New Deal programs were effective in stimulating spending and eventually raising the levels of commerce among the people. Roosevelt’s experimentalist views were able to push through some policies that Hoover might have not even thought of, such as expanding the role of the government in the business and economic sectors, departure from the gold standard, aiming to increase industrial and farm price levels, and the provision for income redistribution, which became the Social Security legislation.6However, while being effective in reviving the economy, some of the programs in the New Deal policy were counterproductive in some strategies. The employment of people by the government kept them earning, and the increase in wages may have increased the spending of the workforce, but the tax increase compelled some not to spend even more.7 Another is that the unsubsidized privately-owned businesses were greatly affected by high long-term interest rates and taxations, which made it hard for them to compete, making the climate unfit for business ventures. Inefficiencies in the advancement of businesses led to the increase of inefficient industries like mining, and discouragement of business-government cooperation in the public works sector. In addition, business investment was hushed by the Public Utilities Holding Company Act.8 Nevertheless, Roosevelt’s unorthodox views brought the US up from the Great depression towards self-sufficiency in the economy.
Hall, Thomas E., and J. David Ferguson. The Great Depression: An International Disaster of Perverse Economic Policies. Ann Arbor, MI: University of Michigan Press, 1998.
Rosen, Elliot A. Roosevelt, The Great Depression, and the Economics of Recovery. Charlottesville, VA: University of Virginia Press, 2007.
Siracusa, Joseph M., and David G. Coleman. Depression to Cold War: A History of America from Herbert Hoover to Ronald Reagan. Westport, CT: Greenwood Publishing Group, 2002. Read More
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