Economics

"Herbert Hoover: Father of the New Deal"

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In a new Cato Institute briefing paper, St. Lawrence University economist Steven Horwitz sets the record straight about the real economic legacy of President Herbert Hoover:

Politicians and pundits portray Herbert Hoover as a defender of laissez faire governance whose dogmatic commitment to small government led him to stand by and do nothing while the economy collapsed in the wake of the stock market crash in 1929. In fact, Hoover had long been a critic of laissez faire. As president, he doubled federal spending in real terms in four years. He also used government to prop up wages, restricted immigration, signed the Smoot-Hawley tariff, raised taxes, and created the Reconstruction Finance Corporation—all interventionist measures and not laissez faire. Unlike many Democrats today, President Franklin D. Roosevelt's advisers knew that Hoover had started the New Deal. One of them wrote, "When we all burst into Washington … we found every essential idea [of the New Deal] enacted in the 100-day Congress in the Hoover administration itself."

Hoover's big-spending, interventionist policies prolonged the Great Depression, and similar policies today could do similar damage. Dismantling the mythical presentation of Hoover as a "do-nothing" president is crucial if we wish to have a proper understanding of what did and did not work in the Great Depression so that we do not repeat Hoover's mistakes today.

Read the whole thing here.

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  1. The claim that FDR saved the economy is the Democratic creation-myth. If you challenged it you’re guilty of heresey.

    1. I agree.

      While Hoover was a progressive Republican who enjoyed tinkering with the economy. So what? It’s FDR who served FOUR TERMS. It’s FDR who got Father Coughley thrown off the air (Coughley was a socialist who agreed with FDR until America got involved in WW2). FDR created the National Recovery Agency which regulated prices, he imprisoned German and Japanese Americans, he imprisoned people for sedition (i.e. criticizing FDR)…

      Frankly, I think Reason has been infiltrated by progressives. The proof is obvious, why would they publish an article against Hoover and not one against FDR, Woodrow Wilson or LBJ?

      Is it because they want to appeal to progressives? Come on Reason, have some self-respect, progressives are not our friends!

      PROOF THAT PROGRESSIVES HAVE INFILTRATED THE LIBERTARIAN MOVEMENT.
      http://libertarians4freedom.bl…..-have.html

      1. Everything you wrote is mostly true, but calling Hoover a progressive is absolutely accurate and is not a sop to progs at all, since he is their all purpose devil.

      2. Re: BILL,

        While Hoover was a progressive Republican who enjoyed tinkering with the economy. So what?

        While it may be true that Hoover was a Progressive while FDR was a full-fledged Fascist, the narrative pushed by the leftists today is totally contradictory to those facts: That Hoover was the villain because he was NOT a Progressive at all but a do-nothing free marketer, while FDR was this Progressive genius that saved Capitalism from itself. Or the war got us out of The Great Depression – depends on which fucking liar tells the story.

        1. So What? Hoover’s stupidity opened the door for FDR.

          FDR was able to rightly criticize Hoover for wasting money in front of conservatives – and blast him for doing nothing about the recession in front of Democratic crowds.

          1. FDR criticizing Hoover is like Michael Moore telling criticizing Chris Christie for being too fat.

            In fact, FDR was way worse than Hoover. People didn’t go to jail for criticizing the government when Hoover was president.

  2. Lalala! Lalala Lalala! Lalala!Lalala Lalala!Lalala! Lalala!

  3. Oh, yawn. Please stop running this crap. Hoover cut taxes at the beginning of the Depression. That didn’t work. He raised taxes later because government receipts had dropped so drastically and balanced budgets were sacred for conservatives at that time, something they’ve since “forgotten.”

    Taking the 1935-1939 average of GNP as 100, US GNP hit 101.4 in 1929, falling to 68.3 in 1933 and rising to 103.9 in 1937, remaining above Hoover’s 1929 high throughout Roosevelt’s presidency. If Hoover’s little New Deal drove GNP down to 68.3 in four years, how come GNP rose to 103.9 despite Roosevelt’s big New Deal?

    Oh, and, over at the Nation, a great story about how Charlie Koch (yeah, that Charlie Koch) told Freidrich Hayek that he shouldn’t worry about giving up Austria’s state-supplied medical care when he moved to the U.S. Social Security and Medicare would take care of him! Problem solved!

    http://www.thenation.com/artic…..&page=full

    1. Re: Anal Vanneman,

      Oh, yawn. Please stop running this crap. Hoover cut taxes at the beginning of the Depression. That didn’t work.

      Didn’t work to do what?

      He raised taxes later because government receipts had dropped so drastically and balanced budgets were sacred for conservatives at that time, something they’ve since “forgotten.”

      Ah, and did that “work”?

      I can’t figure you out, Alan – I don’t know if you’re ignorant, dishonest or downright incompetent. Maybe you’re like Tony: The three things altogether into one big, fat tasty treat.

      1. Re: Anal Vanneman,

        Oh, yawn. Please stop running this crap. Hoover cut taxes at the beginning of the Depression. That didn’t work.

        The most fascinating thing about your conclusion (because that is what it is) is that there was an even bigger depression (by 1929 standards) right after WWI, when the Harding government reduced taxes and spending. That seemed to work, if one compares with what Hoover did, because THAT depression was all over 17 months later and ushered in the Roaring 20s.

        So what exactly was supposed to happen that didn’t, Anal? The economy rebounding? The crisis was actually quite over by 1930 after the malinvestments were liquidated, and still Hoover RAISED taxes, IMPOSED a commerce-killing TARIFF, imposed wage FLOORS and INCREASED federal expenditures – which ushered in the Great Depression adn 25% unemployment. So please, educate me: What IS your standard of achievement? What were the goals suppose to look like? Inquiring minds want to know.

        1. Don’t expect a response from Alan. He’s a hit and run troll.

          1. Re: Jordan,

            I am aware of his antics and M.O. Still, you and I continue to reply regardless, either as a way to express ourselves about issues we care about or as catharsis.

        2. I’m not sure how one can argue the “crisis” was over by 1930 when unemployment went from 5% in 1929 to 14% in 1930, and to 25% in 1931. The empirical evidence is quite clear the Great Depression was caused not by malinvestment, but by massive private debt resulting in a drop in aggregate demand.

          Austrian thought on business cycle recessions does not apply to a balance-sheet recession.

          1. Re: Ben Wolf,

            I’m not sure how one can argue the “crisis” was over by 1930 when unemployment went from 5% in 1929 to 14% in 1930, and to 25% in 1931.

            The malinvestments were being liquidated in 1930, Ben. All that was needed was for Hoover NOT to intervene and the whole thing would have been pretty much done by 1931. Instead, Hoover RAISED TAXES, IMPOSED A TARIFF, PLACED WAGE FLOORS and INCREASED SPENDING.

            The empirical evidence is quite clear the Great Depression was caused not by malinvestment, but by massive private debt resulting in a drop in aggregate demand.

            Yeah, right – that was it: People were not spending enough. Sure.

            Idiot.

    2. Actually, the truth is FDR ran in 1932 on the balancing the budget the Hoover busted.

      Nice try, asswipe. Be sure to play again. Perhaps after you sing “The Internationale” with all our comrades from the Nation.

    3. Well, you have to cut taxes AND spending. That’s what Calvin Coolidge did, google “the forgotten depression” and you’ll see.

    4. Oh, and, over at the Nation, a great story about how Charlie Koch (yeah, that Charlie Koch) told Freidrich Hayek that he shouldn’t worry about giving up Austria’s state-supplied medical care when he moved to the U.S. Social Security and Medicare would take care of him! Problem solved!

      Hayek was forced to pay for those services for 10 years and decided to use them for 1 year since any possible alternatives had no doubt already been displaced. How scandalous!

  4. Hoover’s big-spending, interventionist policies prolonged the Great Depression, and similar policies today could do similar damage.

    Yet we have his granddaugher – Margaret Hoover – defending his great memory by pointing out just what a great humanitarian and defender of freedom he was… Despite calling herself an “individualist.”

    Some myths don’t seem to die, ever.

    1. I think the Committee for Relief in Belgium certainly qualifies him for the title of humanitarian. Hoover was a good engineer and a fantastic administrator. His mistake was thinking that he could engineer the economy and administer the nation from the White House. A man’s got to know his limitations.

  5. When the legend becomes fact, print the legend.

  6. My favorite quote about Hoover comes from Coolidge (he was Coolidge’s Secretary of Commerce): “Over the years that man has offered me much unsolicited advice. All of it bad.”

    1. Best president of the 20th century.

    2. I alos like how Coolidge used to refer to Hoover derisively as “Wonder Boy” or “Superman.”

  7. Coolidge was the do nothing president. So much a do nothing that he actually worked double time making sure nothing got done…and his economy was fucking awesome!!!

    1. The very worst of leftist historians [pretty much most historians today] call Coolidge aloof and elitist, because he did not ‘help the poor working man,’ despite the fact that the ‘ppor working man’ was receiving ever increasing wages, had access to new home appliances, radios, cheap car and food, and improved working conditions. Ah, and all of this no thanks to the Unions, which were nothing more than anti-black and anti-Mexican guilds.

      These same professional liars want us to believe that Hoover was a laissez-faire ‘do nothing’ president that played his fiddle while Rome burned. Despite the TONS of written evidence: Documents, diaries, newspapers, that tell a totally different story.

    2. Stock bubbles are awesome?

      1. Look at real wages, life expectancy, disposable income, infant mortality, etc.

        All improved for the good kido.

        1. I don’t disagree with you on there being a rise in standard of living, but there was a giant stock bubble and too much borrowing on credit. It would appear that the Federal Reserve and government failed to recognize that.

          1. What makes you think it is the Federal Government’s job to prevent bubbles?

            Let it pop and do nothing. The market corrects itself if you leave it alone.

      2. Re: A Serious Man,

        Stock bubbles are awesome?

        That wasn’t because of Coolidge. That was because of the Fed inflating to prop up the British Pound. Do you want to look for treasonous behavior? Look at what the Fed did from 1925-1929: it debased the currency in detriment of this country’s savings to help a foreign country. That’s treason by any book.

  8. My suspicion is that left hate Hoover not because he wasn’t a progressive…he was a progressive.

    They hated him because he was a progressive that wasn’t a foaming at the mouth racist.

    The left prefer white supremacists like Wilson and FDR.

  9. Clearly it was the laissez-faire economy and low taxes of the late 40s and 50s that caused all the prosperity.

    1. Or it was the deaths of 500,000 young men, the widespread destruction of Europe and Asia, and the rapid rising of the savings rate coupled with the dismantling of the New Deal and government spending by Truman and Eisenhower that lead to prosperity.

      FIFY pisshead.

    2. Wage controls, and price controls were removed and taxes were lowered.

      So yes the closer you get to laissez-faire and the further you get from centralized control the better the economy.

    3. Re: Sockpuppet,

      Clearly it was the laissez-faire economy and low taxes of the late 40s and 50s that caused all the prosperity.

      There weren’t any of the regulations that came in the 60s and 70s (LBJ and Nixon, two horsemen of the Apocalypse), nor the spending that came with the Vietnam War. Int’s interesting that you would emphasize the 40s and 50s and not look at how the high-tax and high-regulation and high-inflation 70s were.

    4. Clearly, it was the high government spending of the late 40s and early 50s that caused all the prosperity.

      1. You know, Tony, when Eisenhower was spending $760 billion a year in 1960 compared to $3.5 trillion today. Plus, no Medicare, Medicaid, or any other Great Society or Nixon programs.

        Oddly enough, the conclusion you take from this is that we’re not spending enough.

        1. Tony never fails to sop to his Team Blue handlers. Makes for slightly entertaining reading, though.

  10. “We’re in charge! I don’t blame them for being mad – we’re in charge!”

    Truer words could not have been uttered by anybody else. Thank you, Mr. Vee Pee!

  11. St. Lawrence University is my alma mater. I might have to consider a donation for the first time in decades!

  12. Hoover had a great career as an engineer in the mining industry. He owned several patents and was able to turn around several unprofitable mines.

    He stupidly believed he could do the same thing with national economy through the federal government. He was wrong. Coolidge knew Hoover was wrong and openly mocked him.

    Hoover went out and proved Coolidge absolutely right.

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