Hoover's Administration, 1929-33
Herbert Hoover defeated Democrat Alfred E. Smith in the election of 1928. Hoover announced that the United States in 1928 was nearer than any country had ever been to achieving "a final triumph over poverty." But collapse of prosperity came within a few months after he took office. In October, 1929, prices of securities fell so sharply that billions of dollars were lost in a matter of days. This stock-market crash began an economic slump so severe and long-lasting that it is known as the Great Depression. Millions of workers lost their jobs as factories reduced production or closed. Banks failed by the hundreds. Prices of farm products fell disastrously. Thousands of families lost their farms or homes when they became unable to make payments on their mortgages. Many people depended on charity for food.
The Hoover administration hoped that natural economic forces or voluntary action by business groups would end the depression. As the crisis deepened, however, the administration sponsored or approved some proposals for government action to promote recovery and relieve distress. The Reconstruction Finance Corporation (RFC) was created in 1932 to lend government funds to banks, insurance companies, railways, and other large enterprises. Funds were provided with which banks could grant more generous loans to farmers and businesses. To help banks extend mortgages on homes, the Home Loan Bank Act was adopted in 1932. To provide employment, construction of federal buildings was increased.
Hoover's administration opposed direct assistance to individuals by the federal government. It argued that states, cities, and private agencies should carry that responsibility. However, under the Relief and Construction Act of 1932, loans were made available to states for relief purposes. Franklin D. Roosevelt, Democratic candidate against Hoover in 1932, said that Hoover's program was inadequate. The emphasis, Roosevelt urged, should be on the welfare of "the forgotten man at the bottom of the economic pyramid." Roosevelt promised a "new deal for the American people." He was elected by a large majority, carrying all but six states.
The 20th Amendment to the Constitution, which changed inauguration day from March 4 to January 20, was adopted in February, 1933. (It was too late to affect Roosevelt.) It shortened the "lame duck" period (the period between an election and the day new officials take office).
