Herbert Hoover never saw it coming. On New Year’s Day 1932 the Republican president was in good cheer as he looked forward to another year in the White House. And another year after that. And another. And …
He never seemed to contemplate that with the election later that year he might actually lose. True, unemployment was rising, but it had to level off, then go down at some point. Right?
After all, history showed time and again that the economy was cyclical, and always rebounded somewhere down the road. Where that road would take the millions out of work, he did not say. He only knew that better times were just around the corner. Government need only stay out of the way and things would work out in the end.
Problem is, far too many Americans sensed that the end was near. For them.
By autumn 1932 unemployment was hovering around 25%, Gross Domestic Product growth hit an astonishing minus 13%. For the third straight year the stock market was down. Way down. Inflation plummeted to minus 10%, since few had any money to buy anything.
Hoover was at his wits end. He figured he had tried everything, even when it ran against his best capitalist instincts. To secure more federal money to try to slow the economic downturn he even raised taxes across the board, causing the opposite effect when federal revenue actually fell.