Ed Driscoll

Hoover-Era Ghost Stories No Longer Apply

As Jonah Goldberg writes, “The specter of Herbert Hoover is conjured every time there’s an economic calamity, large or small”:

But you know what? Specters are ghosts. And ghosts aren’t real. 

The Herbert Hoover of popular imagination was a laissez-faire lickspittle of Adam Smith. But this idea began as Rooseveltian propaganda and endures as the creation myth of modern liberalism.

William Leuchtenburg, possibly the greatest authority on the FDR era, wrote some time ago, “Almost every historian now recognizes that the image of Hoover as a ‘do-nothing’ president is inaccurate.”

After the stock market crash of 1929, Hoover browbeat business leaders to keep wages and prices high. He invested heavily in public works projects. He pushed for an international moratorium on debts. He created the Reconstruction Finance Corporation, which later became a home for many of FDR’s Brain Trusters. Hoover increased farm subsidies enormously.

Some of Hoover’s interventions were good but ineffectual. A few were very, very bad and very effective.

In 1932, Hoover in effect repealed Calvin Coolidge’s tax cuts, increasing the rates for the poorest taxpayers by more than 100 percent and hiking the top rate from 25 percent to 63 percent. Worse, contrary to his own better instincts, Hoover signed the disastrous Smoot-Hawley trade bill that raised protectionist walls at precisely the moment the world needed trade the most.

Then there’s this idea that FDR rode to the rescue, saving the day by untying the American people from the railroad tracks of runaway capitalism. Former Clinton Treasury Secretary Lawrence Summers, now a surrogate for Barack Obama, recently said on NPR: “It’s very tempting to always think that the government should just stand back and let the private sector sort these problems out. That’s the kind of thinking that made the Depression ‘Great.'”

Summers should know better (in fact, I’m sure he does). The Great Depression was not made “Great” by government inaction. Indeed, FDR’s New Deal may have been wonderful in some mytho-poetic sense, and maybe some of its reforms can be defended in some broader context, but as an effort to end the Great Depression, the New Deal was a failure. As my colleague Mark Steyn writes, “Lots of other places — from Britain to Australia — took a hit in 1929 but, alas, they lacked an FDR to keep it going till the end of the Thirties. That’s why in other countries they refer to it as “the Depression,” but only in the U.S. is it ‘Great.'”

Which is why the great Amity Shlaes reminds us in her recent column that “The stock market crash of October 1929 and the Great Depression were not the same thing“. The late Robert Bartley of the Wall Street Journal titled a nifty economic history of the 1980s The Seven Fat Years. FDR turned the Depression into seven very, very lean years:

Two UCLA economists say they have figured out why the Great Depression dragged on for almost 15 years, and they blame a suspect previously thought to be beyond reproach: President Franklin D. Roosevelt. 

After scrutinizing Roosevelt’s record for four years, Harold L. Cole and Lee E. Ohanian conclude in a new study that New Deal policies signed into law 71 years ago thwarted economic recovery for seven long years.

Read the rest, here.

Meanwhile, Hugh Hewitt brings it all up to date with the omnious-sounding, “President Barack Hoover.”