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Herbert Hoover was Secretary of Commerce from 1921 to 1928 and 31st President of the United States from 1929 to 1933. A Republican, he was widely blamed for doing nothing in response to the 1929 stock market crash, leading to the Great Depression.
Hoover's treasury secretary told the public and Hoover to deregulate, and Hoover ran his campaign on a deregulation platform; but in practice, he froze wages across the spectrum (to raise the cost of labor), gave protection to unions, and significantly decreased liquidity using the Federal Reserve. He still blamed Mexican immigrants for the downturn, and deported hundreds of thousands of Latinos, an estimated 60% of whom were legal residents.
Hoot-Smalley Smoot-Hawley Tariff Act
It is not exactly true that Hoover did nothing in response to the Depression. In 1930, the Republican-controlled House of Representatives, in an effort to alleviate the effects of the...Anyone? Anyone? The Great Depression, passed the, anyone? Anyone? The tariff bill? The Smoot-Hawley Tariff Act? Which, anyone? Raised or lowered? Raised tariffs, in an effort to collect more revenue for the federal government. Did it work? Anyone? Anyone know the effects? It did not work, and the United States sank deeper into the Great Depression.
Hoover had actually opposed Smoot-Hawley Tariff Act but then — despite a petition by 1028 economists opposing the bill, and personal lobbying from none other than Henry Ford begging him not to sign it — he signed it anyway.
The Reconstruction Finance Corporation (RFC), later a key part of the New Deal, was also passed during the Hoover administration.
Fiddling while Rome burned?
While Hoover is accused of being fairly lazy and doing nothing while the Depression deepened, this is simply grade-school history. Hoover broke with conventional wisdom to a large degree by working closely with businessmen, encouraging them to keep wages up. The RFC bailed out failing banks, though the RFC and the Federal Reserve are blamed for not bailing out enough banks at the time as bank failures continued into the 1930s. The money lent to banks under the RFC did little but sit in the vaults, though, as John Maynard Keynes would later argue, it had become a liquidity trap. The RFC was kept on by FDR and reformed to make lending simpler, leading some to refer to FDR as "Hoover's second term" early in his career.
There was some internal tension between Hoover and elements within his cabinet, especially Treasury Secretary Andrew Mellon. Mellon's advice is now infamous:
Hoover used his opposition to the strict "liquidationist" policy (which was literally "do nothing") to try to build on his "It could have been worse" campaign in 1932, saying:
“”Some of the reactionary economists urged that we should allow the liquidation to take its course until it had found its own bottom...However, we determined that we would not enter the morass of using the printing press for currency or bonds...Some assured me that no administration could propose increased taxes in the United States to balance the budget in the midst of a depression and survive an election...We determined that we would not follow the advice of the bitter-end liquidationists and see the whole body of debtors of the United States brought to bankruptcy and the savings of our people brought to destruction.
Of course, the wingnuts like Glenn Beck have seized on this to paint Hoover as one of our first socialist presidents, which is inaccurate to say the least.[note 1] Although Hoover was more pro-active than his predecessors, he still espoused and has become synonymous with rugged individualism. He still believed that private charity would be enough to cure the woes of the Depression and maintained a policy of fiscal conservatism, raising taxes to keep a balanced budget (though the economy was plummeting so fast that even his tax raising didn't always keep pace with diminished receipts, leading to some rather large deficits). Hoover was essentially caught between the rock of his ideology and the hard place of the financial crisis. The above quote is a good demonstration of this contradictory approach. Though some of FDR's policies were based on Hoover's, he ended up being of an entirely different breed. The RFC, especially, was heavily influenced by political favoritism to extend loans under Hoover. FDR abandoned fiscal conservatism entirely (until 1937) and lowered tariffs to avert the trade war that Smoot-Hawley had brought on.
Losing the African-American vote
Also of interest — Herbert Hoover was the first Republican Party Presidential candidate to lose the African-American vote. This was due to a collection of factors, including the Depression. However, a larger factor was his behavior as the chief of reconstruction during the 1927 flood. He made many promises to African-American communities, including jobs in the reconstruction efforts and further civil rights reforms when he became president... and then backed away from all of them. This, plus FDR's more progressive civil rights policies, led to the permanent realignment of the majority of African American voters.
Hoover Boulder Hoover Dam
Hoover has a big concrete dam named after him. During the Depression the dam was temporarily renamed Boulder Dam since there were enough people ticked off at him that they made damn sure no damn dam would be named after him, dammit. The name reverted back to Hoover Dam during the Eisenhower administration. Some folks today still call it Boulder Dam.
Good Latin America policy, on the other hand
Interestingly, Hoover is cited as the only 20th century U.S. president (excepting possibly Jimmy Carter) to not engage in gunboat diplomacy and other imperialistic foreign policy in Latin America. Hoover pulled U.S. Marines out of Nicaragua and initiated a pullout from Haiti as well, stated he did not want the Marines to be the face of the U.S. abroad, refused all requests by United Fruit and other companies for armed intervention by the U.S. during the many 1929-1933 revolts, and at one point his Secretary of State chewed out the president of United Fruit for their activities in Latin America. Hoover's reputation in Latin America suffered anyway because of the Smoot-Hawley Tariff Act which was seen as hindering trade between the U.S. and Latin America.
The same old same old, back when it was original
Hoover may be the first former president to publicly criticize his successor on a live nationwide radio broadcast. On 7 March 1936, in a speech before the Young Republican League of Colorado,[note 2] Hoover claimed the following:
- That Americans had a choice between the "old American system" that promoted "liberty and equality of economic opportunity"[note 3] and FDR's new American system which would create a regimented, bureaucratic "planned economy" that would include crushing tax rates.
- That "taxation enslaves as well as dictatorship."
- That FDR was moving America towards a dictatorship, which he compared to both fascism and communism. Hoover denounced the bank holidays as a "move to gigantic socialism."
- That the New Deal would grow the national debt to an unsustainable level, and that it would increase "inflation."[note 4]
- That FDR and the Democrats were "mortgaging" the freedoms and opportunities of American youth.
- This has been spurred on in part by bullshit artist Amity Shlaes' revisionism. Jon Chait has a good article on this absurdity here. Hoover's encouragement to keep wages up has also been used to paint him as an interventionist, even though this policy failed to have its intended effect for the most part. ("The Ohanion Paper" has become the most widely circulated "research" arguing this point. Brad DeLong criticizes it here, then EconoSpeak criticizes DeLong for not being critical enough.)
- Delivered in Colorado Springs, the future hometown of James Dobson and Ted Haggard. We're guessing that there are some serious heavy metals in the drinking water there.
- Not to mention class warfare and a massive divide between the haves and the have nots.
- Funny how, when ordinary people — liberal and conservative alike — talk about "inflation," they mean price inflation. But when conservative politicians talk about "inflation," they really mean increases in wages and benefits.
- Hoover's Des Moines address
- Robert Freeman Smith, "Good Neighbor Policy," published in Watershed of Empire: Essays on New Deal Foreign Policy, Colorado Springs: Ralph Myles 1976.
- "Hoover Declares Freedom in Peril, Life 'Mortgaged'," New York Times, Sec. 1, Page. 1, Col. 3. 8 March 1936.
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