Bryan Caplan  

Hoover Sings His Own Praises

Mr. Caplan Goes to Singapore... Lectures on Macroeconomics, No...
Murray Rothbard opened my eyes to the real story about Herbert Hoover, but his quotation splicing makes me wince.  In my next two posts, I'm going to dissect one of Hoover's last major speeches before the 1932 election - his November 5, 1932 address in St. Paul.  In this speech, Hoover gives two long lists: The first about "our long-view policies to cement that recovery and to stimulate progress in our country for the future", the second about "the measures, lack of measures, or destructive measures proposed by our opponents."

In this post, I'm going to review all 21 items on Hoover's list of what he did right; in the next, I'll turn to all 19 items on his list of what his opponents did wrong.  Ready?  OK, here are the 21 policies Hoover wanted the whole country to know about:

1. The revision of the tariff:

By this act we gave protection to our agriculture from a world demoralization which would have been infinitely worse than anything we have suffered, and we prevented unemployment of millions of workmen.

2. Extension of the authority of the Tariff Commission...

by which the adjustments can be made to correct inequities in the tariff, and to make changes to meet economic tides and emergencies, thereby avoiding the national disturbance of general revision of the tariff with all its greed and logrolling...

3. Informal pressure to maintain wages and control strikes:

At the outset of the depression we brought about an understanding between employers and employees that wages should be maintained. They were maintained until the cost of living had decreased and the profits had practically vanished. They are now the highest real wages in the world.

With the concurrent agreement of labor leaders at that time to minimize strikes, we have had a degree of social stability hitherto unknown in the history of any depression in our country. We have not once in this depression had Federal troops under arms to quell conflicts which is the first time in 15 depressions over a century...

4. Informal pressure to "share the work":

An agreement to a spread of work where employers were compelled to reduce production was brought about in order that none might be deprived of all their living and all might participate in the existing jobs and thus give real aid to millions of families...
5. "Mobilization" of private charity and local and state government relief.

6. An increase in Federal construction spending (plus an attempt to claim credit for other construction spending):

By the expansion of State, municipal, and private construction work as an aid to employment, and by the development of an enlarged program of Federal construction which has been maintained at the rate of $600 million a year throughout the depression, we have given support to hundreds of thousands of families.

7. Debt renegotiations with Germany:

By the negotiation of the German moratorium and the standstill agreements upon external debts of that country, we saved their people from a collapse that would have set a prairie fire and possibly have involved the whole of our civilization.

8. Creation of the National Credit Association:

We created the National Credit Association by cooperation of the bankers of the country, with a capital of $500 million which prevented the failure of a thousand banks with all the tragedies to their depositors and their borrowers.

9. Trying to balance the budget by cutting "ordinary operating expenses" of the Federal government and raising taxes (with the top rate rising from 25% to 63%, though Hoover doesn't specify):

By drastic reduction in the ordinary operating expenses of the Federal Government, together with the increasing of the revenues in the year 1932, we contributed to balancing the Federal budget and thus held impregnable the credit of the United States.

10. Creation of the RFC:

We created the Reconstruction Finance Corporation, originally with $2 billion of resources, in order that, having maintained national credit, we should thrust the full resources of public credit behind private credit of the country and thus reestablish and maintain private enterprise in an unassailable position; that with this backing of the Federal credit, acting through existing institutions, we might protect depositors in savings banks, insurance policyholders, both lenders and borrowers in building and loan associations...

11. Using the RFC to strengthen Federal land banks and other lenders:

In addition to strengthening the capital of the Federal land banks by $125 million we have, through the Reconstruction Corporation, made large loans to mortgage associations for the same purpose, and lately we have organized all lending agencies into cooperative action to give the farmer who wants to make a fight for his home a chance to hold it from foreclosure.

12. Extending authority under the Federal Reserve Act to protect the gold standard:

We extended authorities under the Federal Reserve Act to protect beyond all question the gold standard of the United States and at the same time expand the credit in counteraction to the strangulation due to hoarding and foreign withdrawals of gold.

13. Creation of home loan discount banks:

We created the home loan discount banks with direct and indirect resources of several hundred millions, also acting through existing institutions in such fashion as to mobilize the resources of building and loan associations and savings banks and other institutions...

14. Using the RFC to help depositors in closed banks:

We secured further authorities to the Reconstruction Corporation to assist in the earlier liquidation of deposits in closed banks in order that we might relieve distress to millions of depositors...

15. Using the RFC to subsidize state-level relief:

We secured increased authorities to the Reconstruction Corporation to loan up to $300 million to the States whose resources had been exhausted, to enable them to extend full relief to distress, and to prevent any hunger and cold in the United States over this winter.

16. Using the RFC to fund public works (which are going to pay for themselves!):

We increased the resources to the Reconstruction Corporation by a further $1,500 million for the undertaking of great public works which otherwise would have been delayed awaiting finance, due to the stringency of credit. These works are of a character which by their own earnings will enable disposal of the repayment of these loans without charge upon the taxpayer.

17. Creation of a new system of agricultural banks:

We have erected a new system of agricultural credit banks with indirect resources of $300 million to reinforce the work of the intermediate credit banks and our other financing institutions in the financing of production and livestock loans to farmers...

18. Using the RFC to make agricultural commodity loans:

We have extended the authority to the Reconstruction Corporation to make loans for financing the normal movement of agricultural commodities to markets both at home and abroad.

19. "Mobilization" of banking, industry, business, labor, and agriculture:

We have systematically mobilized banking and industry and business of the country with the cooperation of labor and agricultural leaders to attack the depression on every front...

20. Developing a worldwide economic conference:

...with view to relieving pressure upon us from foreign countries, to increase their stability, to deal with the problems of silver, and to prevent recurrence of these calamities if it can be humanly done.

21. Disarmament.

We have given American leadership in development of drastic reductions of armament in order to reduce our own expenditures by $200 million a year and to increase the financial stability of foreign nations and, above all, to relieve the world of fear and political friction.

Now I ask you: Out of Hoover's full list of 21 policy achievements, how many remotely resemble the "do-nothing" "laissez-faire" stereotype of the history textbooks?  #12, where he says he tried to protect the gold standard, and  #21 - disarmament.*  You might also count part of #5, where he talks about mobilizing private charity (in the same breath as local and state government relief), and parts of #9, where he brags about fighting to balance the budget (and only hinting at his massive tax increase).  

In short, out of 21 measures, we have two matches with Hoover's stereotype, plus two partial matches.  The remaining 17 measures directly contradict the stereotype.  If liberal historians focused on policy instead of party, they would cast Hoover as John the Baptist to FDR's Jesus - not Satan.

* Although Rothbard must have supported Hoover's disarmament policies, America's Great Depression never even mentions the word.

Comments and Sharing

TRACKBACKS (1 to date)
TrackBack URL:
The author at PrestoPundit in a related article titled BUSH IS SOUNDING MORE LIKE HOOVER writes:
    EVERY DAY.  Hoover did everything he could to interrupt the healthy self-coordination of trade and commerce -- and then posed as the poster boy of the "free market."  All in one swoop, Hoover helped to destroy the market -- and... [Tracked on November 13, 2008 9:43 AM]
COMMENTS (14 to date)
Felix writes:

Bryan, did you mean for "21 items on Hoover's list of what he did right" to be "21 items on Hoover's list of what he said he did right"?

James A. Donald writes:

And Bush is the John the Baptist of Obama

dWj writes:

The folks who support a gold standard have their hearts in the right place, but you have to wonder whether even FDR didn't think, when he felt compelled to outlaw the possession of a completely harmless and generally innocuous metal, whether something wasn't kind of strange about the economic structure that would make that seem like an important thing to do.

Jayson Virissimo writes:

Bryan, is there a good scholarly article documenting the public policy of Hoover that you could refer me to? This Hoover myth desperately needs to be exploded. I fear this misunderstanding of history has dire consequences for the present and future.

CannedHeat writes:

I've always been under the impression that it was Coolidge that was the true laissez faire President and that Hoover was an engineer that flailed mightily and wrongly during the early part of the depression. Check the Wikipedia entry:..mining Secretary of Commerce under Coolidge... he promoted government intervention under the rubric "economic modernization". He sounds like an inverterate tinkerer that couldn't leave anything alone. Also, note his support of prohibition. Libertarian this man was not.

Bob Murphy writes:

Awesome post, Bryan. Do you know if Hoover really did do all these things? I mean, just the fact that he was claiming he did these things, is good enough to refute the stereotype. But what if a liberal die-hard said, "So what, the guy is a crook and a liar. He was making up stuff because FDR was beating him in the polls." ?

Charlie writes:

To me you have lots of little policies, mostly bad mixed in with a couple of humongous policies. Since many (most?) macroeconomists since Milton Friedman think that the great depression was caused by the great monetary contraction from working to maintain the gold standard, and adding to that harm by managing counter-cyclical fiscal policies, is it so misleading he is remembered for that?

Frank Howland writes:


Do you have particular liberal historians in mind? I think it's quite possible that Hoover was more activist than the stereotype of him as President (almost everybody knows he was an activist during his war relief efforts), but his summary of what he did during an election campaign strikes me as rather weak evidence. It is colored by his retrospective effort to put his actions in the best possible light, given what had happened in the intervening disastrous months and years.

I also think that the history of things like the Reconstruction Finance Corporation is very much worth investigating, especially in our current situation.


Lance writes:

I think the common conception is that Hoover did something, but it was far too little to be meaningful, and was far too out of touch to 'care'. This was exemplified by his interaction with the Bonus Army.

Amity Shlaes in her 'The Forgotten Man' narrates the historical record of Hoover implementing public works programs, pressuring railroad executives to sustain construction, and so on.

Bryan Caplan writes:
Jayson Virissimo writes:

Bryan, is there a good scholarly article documenting the public policy of Hoover that you could refer me to? This Hoover myth desperately needs to be exploded. I fear this misunderstanding of history has dire consequences for the present and future.

Other than Rothbard's work, none of which I'm aware.
ionides writes:

Regarding documentation, George Reisman discusses Hoover's policies in "Capitalism".

But relating this to Kling's Lecture 4 on macro: doesn't it appear that Kling is supporting the idea of keeping wages up during a depression?

Brian Lee writes:

Until George W Bush came to his rescue, Herbert Hoover was widely regarded as the worst President of the last 100+ years. I have always thought this unfair to a man with many progressive instincts, who came to the presidency better qualified than most presidents - and who hit the worst luck of any president, perhaps ever.

At the Paris Peace Conference of 1919, for example, Herbert Hoover was a champion of international economic cooperative efforts, including famine relief which he organised (saving millions of lives), and supporting J M Keynes in his opposition to excessive and counter-productive reparations demands against Germany. Read Markwell’s “Keynes and International Relations” on all this.

Matthew Holbrook writes:

The first time I read this revisionist view of Hoover was in Paul Johnson's history "Modern Times," which used Rothbard for its analysis of Hoover and his depression policies.

Regarding liberal historians, Arthur Sschlesinger provides the classic stereotype of Hoover as rugged individualist. See "The Crisis of the Old Order." I found it amusing when Schlesinger lets the cat out of the bag, and shows how much of an interventionist Hoover was:

Yet the same man who could invoke the healing powers of nature and warn with passion against centralization could also, in another mood, boast of "the most gigantic program of economic defense and counterattack ever evolved in the history of the Republic." For all his faith in individualism, he brought great areas of the economy - the banks, the railroads, the insurance companies, the farmers, even, toward the end, the unemployed - into the orbit of national action. No doubt, he entered on these programs grudingly, and did as little as he could to develop their possibilities. Yet he breached the walls of local responsibility as had no President in American history. (The Crisis of the Old Order, p. 246)

This "grudging" interventionist increased federal spending such that by the time he left office it had doubled in size in terms of percent of GDP from where it was in 1929.

Joseph Somsel writes:

Milton Friedman did a book on the monetary origins of the Depression that lays much of the blame on the Federal Reserve Board that deliberately REMOVED liquidity from the money supply. Supporting the gold standard didn't help either.

Here's a book on Coolidge that sets the stage for Hoover although the author doesn't know his head from a hole in the ground when it comes to economics:

Comments for this entry have been closed
Return to top