"Hoover's wage idea sounded good to some. And they were indeed the opposite of federal policies in the last downturn. But they really did not make sense: to force businesses to go spending when it did not want to was to hurt business. And in some areas - wages, especially - the president's policy was dramatically counterproductive. As the crash continued, profits began to drop. Yet businesses could not adjust: if they wanted to be good citizens, they had to keep their pledge to Hoover and sustain employment and wages. The president was, essentially, requiring that companies take the hit in profits instead of employment.
...But there was also, of course, and effect on employers. Their wage costs forced down the value of the company shares, aggravating the downturn that Hoover had vowed to fight.... In the end, business had to choose between lowering wages and shutting down."
Many businesses simply shut down.
