January 12, 2009
President Hoover and the Great Depression
A quick education on the great depression has convinced me that President Hoover has "gotten a bad rap" or, more accurately, is blamed for the wrong thing -- doing nothing-- and should be blamed for the right thing -- starting the New Deal. The effect of blaming Hoover for laissez-faire and extolling the virtues of President FDR for the New Deal is to mount a case for the New Deal. But Hoover was not laissez-faire, as he himself laments later, he established the precedent and foundations of the New Deal -- he just did not put a name on it. Read Hoover's 1931 speech to Congress with his nine point plan -- it is very, very interventionist and statest. Hoover's administration acted to hold up wages (Davis-Bacon act, among other efforts), to lower Fed discount rates, to lower mortgage rates with the Home Loan Bank system, to attack short sellers and stock prices, to reform bankrutcy to facilitate debt forgiveness, to loan money through the RRC to states and local governments, to loan money to banks and railroads, to start multiple public works projects (remember the Hoover Dam?), to restrict immigration, to enact tariffs, to regulate capital requirements in banks (Glass-Steagall Act), and to cartels commodities to fix prices (wheat and cotton). If one wants to compare a laissez-faire government approach to a depression to an activities approach to a depression one should compare the 1921-22 depression with the 1929 to 1940 depression.
January 12, 2009 | Permalink
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