After the crash of 1929, a deep depression set in across the world. In 1930, the market continued it's decline, retail sales were down 7%, manufacturing was down 20%, wholesale prices were down 17% and unemployment hit 8.9% up from 3.2% just one year ago. About the only thing that was up was bank deposits, as people hoarded their money, being afraid to spend it. Many people were calling for increased federal spending and government action, but President Herbert Hoover refused. In his 1930 annual address to congress, Hoover expressed this refusal.
"Economic depression can not be cured by legislative action or executive pronouncement. Economic wounds must be healed by the action of the cells of the economic body--the producers and consumers themselves. Recovery can be expedited and its effects mitigated by cooperative action. That cooperation requires that every individual should sustain faith and courage; that each should maintain his self-reliance; that each and every one should search for methods of improving his business or service; that the vast majority whose income is unimpaired should not hoard out of fear but should pursue their normal living and recreations; that each should seek to assist his neighbors who may be less fortunate; that each industry should assist its own employees; that each community and each State should assume its full responsibilities for organization of employment and relief of distress with that sturdiness and independence which built a great Nation."
Instead President Hoover organized a plan of cooperation across all levels of government to encourage voluntary cooperation in the community. This plan included the following.
- Employers agreed to maintain current standard of wages. High wages means more buying power. Consequently. Hoover stated that in1930 the buying power was much higher than it otherwise would have been.
- Federal, state and municipal government worked with industries and business to distribute jobs as equally as possible.
- Public works projects were increased. This included federal and state as well as railways, public utilities and other large organizations. Coolidge explained that in 1930 these construction projects would amount to $7 million, up from $6.3 million ion 1925.
- States and local municipalities organized local employment agencies to provide relief of distress.
Herbert Hoover wrote in his address that the result of this plan had been magnificent, "suffering has been kept to a minimum during the past 12 months, and our unemployment has been far less in proportion than in other large industrial countries". As a result, the labor force in Hoover's point of view, was doing better than the "published estimates of the number of unemployed would indicate". Yes, it was true that there were 2.5 million people out of a job, but one million of those were shifting "from one job to another". Moreover, it was 2.5 million employees, not 2.5 million families. Hoover estimated that half the households had two breadwinners, therefore the number of families without a breadwinner was much less than the 2.5 million figure.
Herbert Hoover was optimistic. He tried to paint a rosy picture. Hoover was intent on limiting the role of the federal government, but the depression continued to worsen. There were more and more calls for federal intervention and spending, but Hoover refused to fix prices, control business or manipulate the currency. He felt each of these were steps towards socialism. Hoover tried to convince Americans, that the measures they were asking for would ruin the country in the long-run. But, by 1932, unemployment hit 24% and Hoover the great humanitarian was painted as uncaring and out of touch with the populous. In 1932, Herbert Hoover was soundly defeated by Franklin D. Roosevelt and his promise of a "New Deal".
http://www.presidency.ucsb.edu/ws/index.php?pid=22458
https://www.gilderlehrman.org/history-by-era/new-deal/resources/herbert-hoover-great-depression-and-new-deal-1931%E2%80%931933
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