With the nation unprecedentedly prosperous and with large Republican majorities in Congress, Hoover began his administration under auspicious circumstances. In his campaign he had promised to call Congress into special session to consider farm relief and limited changes in the tariff. He called Congress into special session on April 15, 1929, and on June 15 it passed the Agricultural Marketing Act, designed to help farmers suffering from low incomes in an era of prosperity.
Hoover’s recommendation for tariff revision, an increase in agricultural duties also designed to help the farmer, became the Hawley-Smoot Tariff, the highest peacetime tariff in the nation’s history. Although the bill was not what he wanted, Hoover signed it on June 17, 1930, justifying his act on the ground that the flexible provision, permitting him to change rates within a compass of 50% on the advice of the tariff commission, would enable him to remedy injustices in the law.
Early in his administration Hoover attacked the problem of enforcing prohibition. On May 28, 1929, he announced that he had appointed the National Commission on Law Observance and Enforcement, with George W. Wickersham as chairman, to investigate the problem. The commission made its report nearly two years later. The report was self-contradictory, and nothing came of it.
Hoover’s administration, like that of Martin Van Buren almost a century earlier, was dominated by one development–an economic depression. The disastrous slump that began when the stock market crashed on Oct. 29, 1929, left from 12 to 14 million Americans unemployed before the end of Hoover’s term. In the 1930 congressional elections the weak Democratic minority in the House of Representatives became a majority, and the Republican majority in the senate dwindled to a plurality of one.
Hoover believed that aid to the hungry and the deserving unemployed should come from local governments in the states and counties, not from the federal government. Yet he recommended and Congress appropriated funds for huge public works. On Hoover’s recommendation, Congress established the Reconstruction Finance Corporation, approved Jan. 22, 1932, with an initial working capital of $500 million.
It tried to provide indirect relief to the unemployed by lending insurance companies, banks, farm organizations, railroads, and state, county, and city governments money to stimulate economic activity and employment. His opponents criticized him for this “trickle down” theory, based on the idea that if the government aided big business at the top of the nation’s financial structure, business would then create more jobs and relieve unemployment at the bottom. Yet, he inaugurated a new policy of government assistance to those in need in time of economic crisis, though not directly to the masses of unemployed.