"Contemporaries struggled to explain what had gone wrong with capitalism. The American President, Herbert Hoover, was no uncritical believer in laissez-faire economics. During the 1920s, he had expressed his support for export promotion, collective bargaining, agricultural cooperatives and business 'conferences' as ways of tackling economic problems. In Hoover's eyes, however, there were limits to what government could do. The Depression was a 'worldwide' phenomenon due to 'overproduction of . . . raw materials' and 'overspeculation'; the ensuing 'retribution' was similar in its character to what had happened in 1920 and 1921. The country's 'fundamental assets', he argued, were 'unimpaired'. All that was needed was for the Federal Reserve to continue to supply 'ample . . . credit at low rates of interest', while maintaining the dollar's price in terms of gold; for the government to expand public works, though without unbalancing the budget; and for the necessary 'savings in production costs' to be shared between 'labor, capital and the consumer'. Hoover also backed an increase in the numerous tariffs that had long protected American producers of food, textiles and other basic products from foreign competition. Unfortunately, none of this sufficed to counter the plunge in economic confidence. On the contrary, the policy made matters worse. By refusing to relax monetary policy, the Federal Reserve failed disastrously to avert waves of bank closures in 1930 and 1931, actually raising its discount rate in October 1931; the attempt to run a balanced budget meanwhile prevented any kind of counter-cyclical fiscal stimulus; and the protectionist Smoot-Hawley trade bill enacted in June 1930, though it did not radically increase tariff rates, nevertheless dealt a blow to financial confidence. The German economy had to swallow an equally lethal policy brew of interest rate hikes, tax increases, spending cuts and protection."