On Hoover Administration's Moratory Policies

As one of the most controversial U.S. presidents in history, Hoover is controversial not only because of a series internal measures he had implemented to save the economic crisis, but also a number of international economic initiatives he had taken. The moratory policies are international economic initiatives that Hoover had taken to response to the Great Depression in the 1930s.The so-called debt moratory policies, refers to the policies taken by the Hoover Government to postpone the European countries'war debts to the U.S. during the the Great Depression. The moratory policies are not just a policy, but rather a series of policy, centered in the"Moratorium"issued in June 20, 1931 by Hoover, (also known as "Hoover's war debt memorandum," "Hoover Plan"), also including a number of initiatives taken after the Hoover plan, until Hoover out of office.European countries'war debt to the U.S. originated in the First World War, including the loans which are borrowed by the allies from U.S. in the war, and the revival loans the United States lent to the allies. The loans are realized in the form of count. The American Department of the Treasury shows the borrowing interest rate is 5% in the receipt, but they did not set the repayment period and methods. Thus the repayment of the loans formed the the War dept Problem. What is More , the War dept Problem complex is closely connected with the Reparation Problem. America had nothing to do with the Reparation Problem, but the European plight give an opportunity to America. "Dawes Plan" regulates that the U.S. bankers provide large loans to Germany to promote the revival of the German economy. Thus, financial relations between Europe and the United States actually are as follows: loan - reparation - war debt. This was a cycle. In the war debt issue, the United States opposed associating the debt with the reparation, adhereing the principle of must be paid. U.S. Congress established "World War Foreign Debt Commission" in 1922 to resolve the debt problem .From 1923 to 1926, U.S. reached 13 agreement with concerned countries, providing the repayment period and interest.When Hoover became president in 1929, the Reparation problem recurred .This time Hoove Government's attitude is still as follows: Every country must repay war debts in strict accordance with the agreement, reparations had nothing to do with the war debts. The newly established Young plan rules: the amount of compensation that Germany will pay per year should base on the Allies'war dept to the United States; set up the BIS to collect the reparations and convert reparations into the Allies'war dept to the United States. Actually, the Young plan had made the relationship between reparations and war debts public that it had been resisted by the Hoover Government from the ever beginning.However, the Depression and the international financial system crisis forced the Hoover Government changed the established policy finally. After the eruption of the crisis, Crisis, the domestic fund in the United States became tight and loans to the foreign country reduce sharply. As a result, the European countries faced severe financial fiscal pressure and financial crisis broke out, especially in Germany. The deteriorating financial conditions in Europe mean that the U.S. may not recover their loans. In this situation, Hoover finally issued"the Moratorium"on June 20, 1931. He declared,"The American Government proposes the postponement during one year of all payments on intergovernmental debts, reparations and relief debts, both principal and interest, not including obligations of governments held by private parties". He stated further that the purpose of the action was to give the forthcoming year to the economic recovery of the world and to help free the recuperative forces already in motion in the United States from retarding influences from abroad. On the relationship between reparations and war debts, Hoover was still saying,"Reparations is necessarily wholly a European problem with which we have no relation."Hoover Plan can not prevent the deterioration of Germany's financial situation, failed to stabilize the world economy and restore American prosperity. But in the Depression setting, Hoover declared the postponement during one year of all payments on intergovernmental debts, which cannot but be considered as an easing of the existing war debt policies, and will surely be regarded as admitting the link between war debts and reparations in reality.In December 1931, Hoover submitted the Moratorium to Congress, asking Congress to enact an Bill on the plan, and to re-establish the World War Dept Commission which could review the debt problems. Congress ultimately passed the plan with a rider that it is against the policy of Congress that any of the indebtedness of foreign countries to the United States should be in any manner canceled or reduced. It also refused to approve the proposal of re-establishing the World War Dept Commission. World Disarmament Conference and Reparations Conference were held in Geneva and Lausanne separately in 1932. Hoover believed that arms reduction would contribute to enhance the solvency of the indebted countries, and he attempted to link the two conferences, oppressing the indebted countries to reduce arms, which was resisted by all countries and failed. Finally, as Hoover defeated in the 1932 Campaign, his moratory policies yielded no results.Although the moratory policies fails, but Hoover's acts that seek to solve the reparation--war dept problem and to save the depression through international cooperation demonstrate that he is a pragmatic internationalist, not usually thought isolationists.