Beginning in December 1902, the company faced mounting legal and financial issues after one of the partners admitted to having fraudulently sold stock in a mine. More issues arose in 1904, after the British government formed two separate royal commission to investigate Bewick, Moreing's labor practices and financial dealings in Western Australia. After the company lost a suit Hoover began looking for a way to get out of the partnership, and he sold his shares in mid-1908. Despite his service in the Democratic administration of Woodrow Wilson, Hoover had never been closely affiliated with either the Democrats or the Republicans. He initially sought to avoid committing to any party in the 1920 election, hoping that either of the two major parties would draft him for president at their respective national convention. After a decade of budget surpluses, the federal government experienced a budget deficit in 1931. Though some economists, like William Trufant Foster, favored deficit spending to address the Great Depression, most politicians and economists believed in the necessity of keeping a balanced budget.
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