Explanation:
When Herbert Hoover became the U.S. president in 1929, the United States was
enjoying great economic prosperity. However, within eight months of Hoover
taking office, the stock market crashed, signaling the economic crisis called the
Great Depression.
A Hands-Off Approach
Like his immediate predecessors, Warren G. Harding and Calvin Coolidge, the
Republican businessman Herbert Hoover believed in a laissez-faire, or hands-off,
approach to economic policy. Hoover feared that providing direct aid to people
in need would cause them to lose their incentive to work hard toward financial
success. Because of this, Hoover did not think the federal government should
give financial aid to the unemployed. Although President Hoover favored a
hands-off approach, he realized that he could not simply stand by and do
nothing as the economic system worsened. Shortly after the stock-market crash,
Hoover began to take action.
Promoting Sound Business Practices
Hoover was a multimillionaire who made his fortune through business ventures.
He believed that following sound business practices would pull the country out of
the Depression. On November 21, 1929, President Hoover met with business
owners, industry giants, and farm leaders to discuss a plan for recovering from
the stock-market crash. Hoover convinced these leaders to keep wages stable
and end any ongoing strikes and demands from unions. Many companies agreed
to cooperate. For example, Henry Ford raised factory workers’ wages from $6 to
$7 per day. Despite the cooperation of industrialists and farm leaders, Hoover’s
plan did not go far enough to restore the economy. In fact, the economy
continued to get worse as unemployment soared. The efforts of industrialists and
union leaders were a temporary bandage. They did little to fix the fundamental
problems of the U.S. economy, such as unstable banks and the lack of
stock-market regulation. As a result, in spite of industry’s initial cooperation,
wage cuts came, especially for unskilled workers,
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