Herbert Hoover: Annual Message to Congress

Explanation and Analysis of the Document

By December 1931 the United States was in a severe economic recession. Over the previous year, more than 2,200 banks had failed. Since Hoover entered office in 1929, the stock market lost more than 80 percent of its value, agricultural prices had fallen by 40 percent, and unemployment had grown from four million to eleven million. In an effort to protect domestic industries, Hoover signed the Smoot-Hawley Tariff Act in 1930. The tariff was the most restrictive in U.S. history and led to higher prices and reduced exports as other countries enacted retaliatory restrictions on U.S. products. In addition, the international financial and credit system had essentially collapsed. Hoover responded by proposing a moratorium on international debt and reparations payments. The president also increased spending on public works projects in an effort to reduce domestic unemployment and supported reforms in the banking system. However, Hoover continued to believe that the government should have only a limited role in the economy. The president sincerely believed that private groups, with appropriate support from the federal government, could provide relief and assistance for Americans facing hard economic times. He launched a number of public-private programs. Hoover also remained determined to minimize government spending in order to prevent a large federal deficit. Many Americans wanted more government action, and Hoover's political opponents were able to successfully portray the president as remote and uncaring. As the unemployed and destitute created shanty camps, these areas became known as “Hoovervilles.”

In his Annual Message to Congress, which was transmitted in written form on December 8, 1931, Hoover outlines the most ambitious program of government action in U.S. history outside wartime. The president did not betray his belief in the need to limit government intervention, but he proposed a broad agenda that foreshadowed the New Deal. Hoover begins the message by noting the extraordinary times that the nation faced, but he tells Americans that economic downturns “have been recurrent in the life of our country and are but transitory.” He goes on to declare, “The nation has emerged from each of them with increased strength and virility.” The president also reminds the nation that it had been free of the wide-scale labor strife and social revolution that other countries around the globe faced. Hoover was correct at the time, but in the summer of 1932 a group of war veterans, the Bonus Army, descended on Washington, D.C. The fifteen hundred veterans and their families demanded the immediate payment of bonus certificates that had been issued to them for their service and established a camp in the nation's capital. When police tried to disperse the marchers, fighting broke out, and Hoover ordered the military to scatter the protesters. The event further undermined the president's credibility and standing with average Americans.

To ameliorate unemployment, Hoover informs Congress that the federal government had embarked on the largest public works program in U.S. history. He also notes that he had taken action to curb immigration so as to lessen competition for jobs. The president also highlights his public-private partnerships, developed to provide assistance to the poor and unemployed without the creation of new federal bureaucracies. He then attempts to argue that the economic fundamentals of the United States were sound and that the country was in far better shape than most other states because of the nation's balance of trade and gold reserves. He argues against expanding the deficit and asserts that the nation needed to impose “a temporary increase in taxes” so that the budget would be balanced by 1933. The resultant tax increases further constrained economic growth. Hoover proposes that the federal bureaucracy be reformed and streamlined in an effort to reduce waste and redundancy and to direct more resources toward relief efforts.

The bulk of Hoover's message is devoted to specific policy prescriptions. For instance, he asks Congress to enact legislation to allow those who lost their savings in bank failures to recover some portion of the lost monies. Hoover also recommends the creation of a system of discount home-loan banks to make it easier to purchase homes or borrow money for farm operations. The president proposes that Congress create a public works administration to coordinate all construction and public works activities within the federal government. He also asks for the establishment of a reconstruction corporation to oversee the nation's efforts to recover. This proposal was implemented in 1932 with the creation of the Reconstruction Finance Corporation, which oversaw the dispersal of more than $2 billion in assistance to state and local governments and almost $10 billion in loans and assistance to businesses, banks, and farms.

Hoover argues strongly against the creation of government programs that would take employment away from private firms. He also states that he opposed revisions to the nation's tariffs and contends that any effort to revise the system “would prolong the depression.” Hoover declares, “If the individual surrenders his own initiative and responsibilities, he is surrendering his own freedom and his own liberty.” Instead, he contends, the federal government should take appropriate action to ensure that individuals were able to achieve success through their own efforts and initiative.

Hoover's Annual Message to Congress and his general theme of individual responsibility did not resonate with the American people. Most sought more government action to resolve the country's economic woes, and an increasing number wanted direct government intervention in the economy. In addition, Hoover's likely opponent in the upcoming 1932 presidential election, Franklin Roosevelt, increasingly called for an expansion of government programs that he labeled as a New Deal for the American people.