posted ago by thechitowncubs
+13 / -0
"The Austrian theory further shows that inflation is not the only unfortunate consequence of governmental expansion of the supply of money and credit. For this expansion distorts the structure of investment and production, causing excessive investment in unsound projects in the capital goods industries. This distortion is reflected in the well-known fact that, in every boom period, capital goods prices rise further than the prices of consumer goods. The recession periods of the business cycle then become inevitable, for the recession is the necessary corrective process by which the market liquidates the unsound investments of the boom and redirects resources from the capital goods to the consumer goods industries. "
https://cdn.mises.org/Americas%20Great%20Depression_3.pdf
If Hoover eagerly embraced the statism of the RFC, he gave ground but grudgingly on one issue where he had championed the voluntary approach: direct relief. Governor Franklin D. Roosevelt of New York led the way for state relief programs in the winter of 1931–1932, and he induced New York to establish the first state relief authority: the Temporary Emergency Relief Administration, equipped with $25 million.19 Other states followed this lead, and Senators Costigan and LaFollette introduced a bill for a $500 million federal relief program.20 The bill was defeated, but, with depression deepening and a Presidential election approaching, the administration all but surrendered, passing the Emergency Relief and Construction Act of July, 1932—the nation’s first Federal relief legislation.21 The bill did not go nearly as far as the agitators
Particularly influential in inducing Hoover’s surrender was a plea for federal relief, at the beginning of June, by leading industrialists of Chicago. Having been refused further relief funds by the Illinois legislature, these Chicagoans desired, extending loans for state relief rather than direct grants to states, but this was a trivial difference. The loans to the states were to be made by the RFC at 3 percent on the basis of “need” as requested by the respective governors. The RFC was authorized to lend up to $300 million for this purpose. Grants were quickly made to Alabama, Georgia, Illinois, Montana, North Dakota, Ohio, Utah, Louisiana, and Oregon. The RFC hired a staff of social workers, headed by Fred Croxton, to administer the program. The states, too, expanded their relief programs. While total state expenditures for emergency relief was $547 thousand in 1930-1931, they totaled $57 million in 1931–1932, and $90 million in fiscal year 1933. New York, New Jersey, and Pennsylvania led in relief expenditures, Pennsylvania financing much of its aid by a newly-imposed sales tax. All in all, total public relief in 120 of the nation’s leading urban areas amounted to $33 million in 1929, $173 million in 1931, and $308 million in 1932.