Changes

== The Banking Crisis ==

== The Banking Crisis ==

In the last weeks of his term, Hoover faced a desperate crisis of confidence as uncertain investors sought reassurance that the new administration would defend the [[gold standard]]. On February 17, 1933, the president wrote president-elect Roosevelt, seeking assurances that Roosevelt would balance the budget, combat inflation, and halt publication of loans made by the [[Reconstruction Finance Corporation]]. Roosevelt, sensing that his discredited predecessor was trying to tie his hands, kept silent.

In the last weeks of his term, Hoover faced a desperate crisis of [[confidence]] as uncertain investors sought reassurance that the new administration would defend the [[gold standard]]. On February 17, 1933, the president wrote president-elect Roosevelt, seeking assurances that Roosevelt would balance the budget, combat inflation, and halt publication of loans made by the [[Reconstruction Finance Corporation]]. Roosevelt, sensing that his discredited predecessor was trying to tie his hands, kept silent.

Soon banks in two dozen states began to totter. Hoover denounced corrupt bankers as worse than [[Al Capone]] ("He apparently was kind to the poor.") He proposed that the Federal Reserve guarantee every depositor's account in the nation. The idea of deposit insurance would eventually become law, but in February, 1933 the Reserve's governors preferred a general bank holiday instead. Hoover refused to take such a drastic action without Roosevelt's agreement. And FDR had his own agenda.

Soon banks in two dozen states began to totter. Hoover denounced corrupt bankers as worse than [[Al Capone]] ("He apparently was kind to the poor.") He proposed that the Federal Reserve guarantee every depositor's account in the nation. The idea of deposit insurance would eventually become law, but in February, 1933 the Reserve's governors preferred a general bank holiday instead. Hoover refused to take such a drastic action without Roosevelt's agreement. And FDR had his own agenda.

Twice on the night of March 3, Hoover telephoned the president-elect trying to persuade him to join in concerted action. FDR replied that governors were free to do what they wished on a state by state basis. A little after one in the morning, the Governors of New York and Illinois unilaterally suspended banking operations in their states. "We are at the end of our string," President Hoover remarked to his secretary that morning, "there is nothing more we can do."

Twice on the night of March 3, Hoover telephoned the president-elect trying to persuade him to join in concerted action. FDR replied that governors were free to do what they wished on a state by state basis. A little after one in the morning, the Governors of New York and Illinois unilaterally suspended banking operations in their states. "We are at the end of our string," President Hoover remarked to his secretary that morning, "there is nothing more we can do."

Economist Milton Friedman points out the Federal Reserve Board did not do what it was created to do—act as lender of last resort to keep the money supply from shrinking—which caused the banking crisis.  

Economist Milton Friedman points out the Federal Reserve Board did not do what it was created to do—act as lender of last resort to keep the money supply from shrinking—which caused the banking crisis.

== The Drought ==

== The Drought ==