<P> In June 1930 Congress approved the Smoot--Hawley Tariff Act which raised tariffs on thousands of imported items . The intent of the Act was to encourage the purchase of American - made products by increasing the cost of imported goods, while raising revenue for the federal government and protecting farmers . Other nations increased tariffs on American - made goods in retaliation, reducing international trade, and worsening the Depression . </P> <P> In 1931 Hoover urged bankers to set up the National Credit Corporation so that big banks could help failing banks survive . But bankers were reluctant to invest in failing banks, and the National Credit Corporation did almost nothing to address the problem . </P> <P> By 1932, unemployment had reached 23.6%, peaking in early 1933 at 25% . Drought persisted in the agricultural heartland, businesses and families defaulted on record numbers of loans, and more than 5,000 banks had failed . Hundreds of thousands of Americans found themselves homeless, and began congregating in shanty towns--dubbed "Hoovervilles"--that began to appear across the country . In response, President Hoover and Congress approved the Federal Home Loan Bank Act, to spur new home construction, and reduce foreclosures . The final attempt of the Hoover Administration to stimulate the economy was the passage of the Emergency Relief and Construction Act (ERA) which included funds for public works programs such as dams and the creation of the Reconstruction Finance Corporation (RFC) in 1932 . The Reconstruction Finance Corporation was a Federal agency with the authority to lend up to $2 billion to rescue banks and restore confidence in financial institutions . But $2 billion was not enough to save all the banks, and bank runs and bank failures continued . Quarter by quarter the economy went downhill, as prices, profits and employment fell, leading to the political realignment in 1932 that brought to power Franklin Delano Roosevelt . It is important to note, however, that after volunteerism failed, Hoover developed ideas that laid the framework for parts of the New Deal . </P> <P> Shortly after President Franklin Delano Roosevelt was inaugurated in 1933, drought and erosion combined to cause the Dust Bowl, shifting hundreds of thousands of displaced persons off their farms in the Midwest . From his inauguration onward, Roosevelt argued that restructuring of the economy would be needed to prevent another depression or avoid prolonging the current one . New Deal programs sought to stimulate demand and provide work and relief for the impoverished through increased government spending and the institution of financial reforms . </P>

When did the great depression reached its peak