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9 > Image 9 of Inventory of the Records of the Work Projects Administration in Kentucky

Part of Kentucky Works Progress Administration Publications

_ INTRODUCTION The Great Depression, the most devastating economic B crisis in United States history, indicated at least a partial failure of America's economic system. A wave of panic selling on the New York Stock Exchange in October l929 was an indicator of several past years of bad monetary policy by the federal government. Gloom and fear replaced the optimism of the pros- perous twenties as thousands of middleclass families lost their incomes, savings, homes and self-respect. This was not to be a short-lived panic as some thought. Instead it was a world- wide depression lasting until World War II. In past economic emergencies local governments and private organizations provided relief for the unemployed. Federal money was not made available for what was considered by local and state authorities to be their responsibility. It was soon evident that this was not like any past emergency and that past relief methods were no longer viable. Local authorities were unable to provide relief for the increasing numbers of unemployed because of the difficulty in raising the necessary funds to defray the cost. A clamor arose for outside assist- ance. Under the weight of the massive numbers needing assistance state governments began to assist local authorities in providing relief._ By June 1931 four states aided local governments. Seven additional states gave assistance by June 1932 and fifteen more began direct support in 1933, including Kentucky. In Washington, DC however, the clamor fell on the I deaf ears of President Herbert Hoover. Confronted with this national crisis shortly after his election in 1928, Hoover affirmed his belief that the nation's economy was basically sound and that government should not directly interfere with business. His belief that relief measures were local responsibilities in which the federal government should not become involved led him to rely on the voluntary cooperation of business, labor, and farmers with government rather than initiate large-scale federal relief pro- grams. Government could also try to restore the nation's confidence in business through public pronouncements and private advice. By late 1931 Hoover seemed to realize the enormity of the crisis. He still opposed, and would continue to oppose, Congressional efforts to provide direct federal relief for the unemployed. However, through the insistence of Eugene Meyer, Governor of the Federal Reserve Board and former head of the War Finance Corporation, Hoover proposed to Congress establish- ment of a Reconstruction Finance Corporation (RFC). Beginning in January 1932 the RFC loaned $1.5 billion to banks and other credit agencies; a like amount was loaned for a self-liqui- dating public works program; and $300 million was loaned to local governments as direct supplement to relief funds. D 1