The Great Depression was actually a double-dip recession. The first dip was caused by declining demand for American farm and factory products. Europe, which was in shambles due to the war, could no longer consume our surplus. Prices here fell and farms & businesses began to fail. The local banks that fincanced them then began failing, and the economy crashed.
Herbert Hoover correctly understood the Great Depression as a global economic calamity. Without currency stabilization in the global market, international trade would not return and American factories would remain closed or understaffed. FDR ignored (or more likely did not understand) this and treated the Depression as a domestic issue. He approached unemployment by hiring people to do anything and everything his Administration could think of.
The massive increase of federal hiring in FDR’s first term produced a modest recovery. Workers had paychecks (albeit small ones) and thus had money to spend. FDR was reelected and decided that since the economy was recovering, he could cut spending and transition the work force to the private sector. When he cut many of his programs, the workers were not hired in the private sector. This was the “second dip”. FDR and his Administrators then realized that what they thoguht was “recovery” was actually a false recovery.
When it all came apart, Hoover (who had always been somewhat of a neo-con in his belief that government intervention could accomplish wonderful things) took the ridiculous, but then stylish, economic advice that wages must remain high. He gathered together the leading tycoons of the day and convinced them not to cut wages.
As long as workers' wages remained high, the thinking went, consumption would be stabilized and the economy saved. Of prices for producer goods were dropping (as they must to recover from a recession). Low prices combined with high wages made a bad situation even worse.
FDR campaigned against Hoover's policies, but, once elected, kept them in place and added to them. Sound familiar?
The American people will always believe that Herbert Hoover “deliberately caused” the Great Depression. Hoover’s party paid for this failure in five consecutive presidential elections from 1932-1948.