As Americans suffered through the first two years of the Great Depression, they attempted to analyze the cause of their troubles and to suggest cures. The fact was, however, that potent remedies appeared to require a radically different approach to public finance and a revolutionary concept of the role of federal government in the time of economic crisis. Herbert Hoover had been elected to office on a platform promising safe, conservative economic programs. It was almost asking too much of him to come up with the imaginative, even radical, leadership that seemed needed to deal with the crisis.
It's erroneous to think that Hoover did nothing to combat the depression, as some Democrats later tried to make people believe. It's also fallacious to blame Hoover himself for the depression - in the same way that it is fallacious to dump the responsibility for World Wars I and II into the laps of Wilson and Roosevelt. In any event, Hoover, within the limits of economic orthodoxy and perhaps somewhat beyond, did attempt to restore equilibrium during the depression. Perhaps his sharpest break with tradition was the establishment of the Reconstruction Finance Corporation in January, 1932.
The idea behind the RFC was that the Corporation, capitalized to the tune of a half-billion dollars by the federal government, would make loans to railroads, banks, insurance companies, and other financial institutions in distress. There seems to be little question that for a short time the RFC, by feeding money in at the top, staved off many bankruptcies and prevented more serious losses than otherwise would have occurred. However, by the fall of 1932, this was no longer the case as banks again were tightening credit, deflation ground on - and it was seen that the assistance had been only a passing stimulant. Whatever its value to the economy, many people weren't happy with the RFC, saying that it helped only the large and powerful. This criticism wasn't entirely valid after mid-1932, for at that time Hoover pushed through legislation authorizing the RFC to lend $1.8 billion to states, cities, and other government agencies for self liquidating public projects and for direct relief. Even though little evidence existed, the idea persisted in many minds that the RFC was impersonal, and that it cared more about bankers and railroad owners than common folk. Even today, historians continue to debate the role of the RFC in easing the Great Depression and helping everyday people.
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Which of the following can you logically infer from the passage?
In 1932, the RFC gave more money to states, cities and governmental agencies that it did to financial institutions and railroads.
Credit tightening by financial institutions is a contributing factor to bankruptcy.
The RFC was conceived within the limits of economic orthodoxy.
After mid-1932 railroads received no more assistance from the RFC
The Great Depression would have been much more severe without the implementation of the RFC.
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Which of the following is the primary purpose of the passage above?
To criticize an important program implemented during the Great Depression
To argue that Herbert Hoover could have done more during the Great Depression
To highlight an unexpected program of Herbert Hoover during the Great Depression
To summarize the implications of a policy that Herbert Hoover instituted during the Great Depression
To analyze Herbert Hover's legacy during the Great Depression
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