President Hoover believed that the economic problems that faced the country after the Wall Street Crash were best solved by private charities and/or local government. Tied to traditional laissez-faire economic concepts, Hoover and the Republican Congress were unable to do much to help the country out of its economic woes. Reflecting the hands-off economic approach favored by traditionalists, President Hoover commented, “All the country needs is a good long laugh.”
One program that the Hoover Administration initiated was the Reconstruction Finance Corporation (RFC). The RFC was started in 1932, operated during the Roosevelt years and finally stopped functioning in 1957. Reflecting the limited role of the federal government favored by laisse-faire thinkers, the RFC made loans to state and local governments so that they could create projects and employ out-of-work people. It also lent money to banks and businesses in an effort to “prime the pump” of the economy. The powers of the RFC were expanded significantly by Roosevelt, increasing the economic areas that received assistance to include loans to assist agriculture, housing, exports, business, governments, and, for disaster relief.