Presidents: The Great Depression in America

Part 1 

Q1. 

President Hoover faced the following economic challenges: 

Deteriorating stock market 

Food Crisis 

High unemployment rate 

Inadequate financial reserves in all sectors 

Deflation 

During President Herbert Hoover’s reign in 1929, the crash of the stock market quickly ushered in the Great Depression. Despite his knowledge on the dangers of wild stock speculation at the time, Hoover preferred to avoid national panic by shunning the regulation of the stock market. In response to the food crisis, President Hoover pledged federal aid in case the nation was hit hard by starvation despite the fact that many children and elderly people were already dying of starvation. However, the President was not in denial, only that he believed that the Great Depression did not alter the systems (Crafts & Fearon, 2010). Despite worsening unemployment, Hoover believed that the people needed to work hard to combat the ongoing challenge. Further, he urged businesspeople to retain staff and keep paying them as a means of sustaining the economy, abating deflation, and curbing high unemployment rate (Crafts & Fearon, 2010). When the situation became dire, he initiated firm protections in the labor market and boosted agriculture’s federal subsidies. To deal with financial inadequacies, Hoover’s administration ensured the passing of Glass-Steagall Act of 1932 into law, which prescribed limitations for the operations of commercial banks to neutralize the banking sector ( MacKenzie, 2010) 

Q2. 

At the least, Hoover should have acknowledged the crisis situation and appropriated federal interventions to deal with the circumstances. For instance, he should have introduced timely regulations on the stock market to discourage Americans from such investments. The President’s Emergency Committee for Employment (PECE) was also not good in dealing with the poverty issue especially since he shunned handouts, preferring to channel the funds to the people through different charity organizations. According to Crafts & Fearon (2010), the best decision for the President would be to lower interest rates so as to boost the supply of monetary resources, thus strengthening all sectors. 

Part 2 

President Fredrick D. Roosevelt took office during the global economic crisis while President Obama’s reign begun amidst fears that America was at the brink of a second economic slump. In response both presidents initiated high-end economic stimulation strategies such as Roosevelt’s New Deal and Obama’s taxation policy (National Public Radio [NPR], 2009). Unlike Roosevelt, whose focus was Democratic affiliates from the South, Obama capitalized his strategies on the GOP (The Record, 2008). President Obama succeeded well in his economic policies whereby higher income earners were taxed more to help finance the health care system, minimize federal budget deficit and lower inequality in terms of income (NPR, 2009). In the end, America was cushioned from the looming economic crisis. 

References 

Crafts, N., & Fearon, P. (2010). Lessons from the 1930s great depression. Oxford Review of Economic Policy , 26 (3), 285-317. 

MacKenzie, D. W. (2010). Industrial Employment and the Policies of Herbert C. Hoover.  Quarterly Journal of Austrian Economics ,  13 (3). 

National Public Radio. (November 1, 2009). Obama and FDR: Similar Challenges. Retrieved from https://www.npr.org/templates/story/story.php?storyId=114376732 

The Record. (2008). President Obama on the Economy: Economic Rescue, Recovery, and Rebuilding on a New Foundation. Retrieved from https://obamawhitehouse.archives.gov/the-record/economy