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laissez-faire canons. As a consequence, he left office with the econ-
omy at the depths of an unprecedented depression, with no recov-
ery in sight after three and a half years, and with unemployment at
the terrible and unprecedented rate of 25 percent of the labor
force.
Hoover s role as founder of a revolutionary program of govern-
ment planning to combat depression has been unjustly neglected
by historians. Franklin D. Roosevelt, in large part, merely elabo-
rated the policies laid down by his predecessor. To scoff at
1
For an appreciation of the importance of this fact for American monetary
history, see Vera C. Smith, The Rationale of Central Banking (London: P.S. King
and Son, 1936).
Prelude to Depression: Mr. Hoover and Laissez-Faire 187
Hoover s tragic failure to cure the depression as a typical example
of laissez-faire is drastically to misread the historical record. The
Hoover rout must be set down as a failure of government planning
and not of the free market.
To portray the interventionist efforts of the Hoover adminis-
tration to cure the depression we may quote Hoover s own sum-
mary of his program, during his Presidential campaign in the fall
of 1932
we might have done nothing. That would have been
utter ruin. Instead we met the situation with proposals
to private business and to Congress of the most gigantic
program of economic defense and counterattack ever
evolved in the history of the Republic. We put it into
action. . . . No government in Washington has hitherto
considered that it held so broad a responsibility for lead-
ership in such times. . . . For the first time in the history
of depression, dividends, profits, and the cost of living,
have been reduced before wages have suffered. . . . 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.
Creating new jobs and giving to the whole system a
new breath of life; nothing has ever been devised in our
history which has done more for . . .  the common run
of men and women. Some of the reactionary econo-
mists urged that we should allow the liquidation to take
its course until we had found bottom. . . . We deter-
mined 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.2
2
From his acceptance speech on August 11, and his campaign speech at Des
Moines on October 4. For full account of the Hoover speeches and anti-depres-
sion program, see William Starr Myers and Walter H. Newton, The Hoover
Administration (New York: Scholarly Press, 1936), part 1; William Starr Myers,
ed., The State Papers of Herbert Hoover, (New York. 1934), vols. 1 and 2. Also see
Herbert Hoover, Memoirs of Herbert Hoover (New York: Macmillan, 1937), vol. 3.
188 America s Great Depression
THE DEVELOPMENT OF HOOVER S
INTERVENTIONISM: UNEMPLOYMENT
Hoover, of course, did not come upon his interventionist ideas
suddenly. It is instructive to trace their development and the simi-
lar development in the country as a whole, if we are to understand
clearly how Hoover could so easily, and with such nationwide sup-
port, reverse the policies that had ruled in all previous depressions.
Herbert Clark Hoover was very much the  forward-looking
politician. We have seen that Hoover pioneered in attempts to
intimidate investment bankers in placing foreign loans. Character-
istic of all Hoover s interventions was the velvet glove on the
mailed fist: i.e., the businessmen would be exhorted to adopt  vol-
untary measures that the government desired, but implicit was
the threat that if business did not  volunteer properly, compul-
sory controls would soon follow.
When Hoover returned to the United States after the war and
a long stay abroad, he came armed with a suggested  Reconstruc-
tion Program. Such programs are familiar to the present genera-
tion, but they were new to the United States in that more innocent
age. Like all such programs, it was heavy on government planning,
which was envisaged as  voluntary cooperative action under  cen-
tral direction. 3 The government was supposed to correct  our
marginal faults  including undeveloped health and education,
industrial  waste, the failure to conserve resources, the nasty habit
of resisting unionization, and seasonal unemployment. Featured in
Hoover s plan were increased inheritance taxes, public dams, and,
significantly, government regulation of the stock market to elimi-
nate  vicious speculation. Here was an early display of Hoover s
hostility toward the stock market, a hostility that was to form one
of the leitmotifs of his administration.4 Hoover, who to his credit
3
See Joseph Dorfman, The Economic Mind in American Civilization (New York:
Viking Press, 1959), vol. 14, p. 27.
4
Hoover, Memoirs, vol. 2, p. 29. Hoover s evasive rhetoric is typical:  I insist-
ed that these improvements could be effected without government control, but
the government should cooperate by research, intellectual leadership [sic], and
prohibitions upon the abuse of power.
Prelude to Depression: Mr. Hoover and Laissez-Faire 189
has never pretended to be the stalwart of laissez-faire that most
people now consider him, notes that some denounced his program
as  radical  as well they might have.
So  forward-looking was Hoover and his program that Louis [ Pobierz całość w formacie PDF ]

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