Hoover and the economy
Herbert Hoover is one of the least understood and most maligned presidents in American history. Charges by partisan critics that he was a laissez-faire, “do nothing” president persist to this day despite the historical evidence to the contrary. Due to his experiences in World War I, Hoover strongly believed that the government had the power to change people’s lives for the better. As a result, Hoover not only worked with Congress to initiate and pass legislation to improve America’s struggling economy, he also used his powers as chief executive to implement various programs and reforms.
The following is an outline of just some of the actions Hoover, often called ‘the forgotten progressive,’ took to end the Great Depression and alleviate the sufferings of the American people.
1) Signed the Emergency Relief and Construction Act, the nation's first Federal unemployment assistance.
2) Increased Public Works Spending. Some of Hoover's efforts to stimulate the economy through public works are as follows:
- a) Asked congress for a $400 million increase in the Federal Building Program
- b) Directed the Department of Commerce to establish a Division of Public Construction in December 1929.
- c) Increased subsidies for ship construction through the Federal Shipping Board
- d) Urged the state governors to also increase their public works spending though many failed to take any action.
3) Signed the Federal Home Loan Bank Act establishing the Federal Home Loan Bank system to assist citizens in obtaining financing to purchase a home.
4) Increased subsidies to the nation's struggling farmers.
5) Established the President's Emergency Relief Organization to coordinate local, private relief efforts resulting in over 3,000 relief committees across the U.S.
6) Urged bankers to form the National Credit Corporation to assist banks in financial trouble and protect depositor's money.
7) Actively encouraged businesses to maintain high wages during the depression. Many businessmen, most notably Henry Ford, raised or maintained their worker’s wages early in the depression in the hope that more money into the pockets of consumers would end the economic downturn.
8) Signed the Reconstruction Finance Act. This act established the Reconstruction Finance Corporation which made loans to the states for public works and unemployment relief. In addition, the RFC made loans to banks, railroads and agriculture credit organizations.
9) Raised tariffs to protect American jobs. After hearings held by the House Ways and Means Committee generated over 20,000 pages of testimony regarding tariff protection, Congress responded with legislation that Hoover signed despite some misgivings. Instead of protecting American jobs, the Smoot-Hawley tariff is widely blamed for setting off a worldwide trade war which only worsened the country’s economic ills. This is a classic example of how government actions, despite good intentions, can trigger negative, unintended consequences.

In order to pay for these and other government programs, Hoover agreed to one of the largest tax increases in American history. The Revenue Act of 1932 raised taxes on the highest incomes from 25% to 63%. The estate tax was doubled and corporate taxes were raised by almost 15%. Hoover also encouraged Congress to investigate the New York Stock Exchange and this pressure resulted in various reforms.
Despite these actions and the massive intervention by his successor, FDR, the economy did not improve. A severe recession occurred in 1937-38 (a contraction labeled a depression by some economists) and the economy continued to struggle until the 1940’s (unemployment did not drop below 9.9% until 1942).
World War I veterans and their families demonstrated in Washington, DC, during June 1932, seeking immediate payment of a "bonus" that had been promised by the Bonus Law of 1924 for payment in 1945. Hoover used military force to remove the campers from the capitol and was criticised as this was a possible violation of the Posse Comitatus Act of 1878.
Post-Presidency
His opponents in Congress, whom he felt were sabotaging his program for their own political gain, painted him as a callous and cruel president.
Hoover was badly defeated in the 1932 presidential election. After Franklin Roosevelt assumed the presidency, Hoover became a critic of the New Deal, warning against tendencies toward statism. His misgivings are in the book The Challenge to Liberty where he talks of fascism, communism, and socialism as enemies of traditional American liberties.
In 1947, President Harry S. Truman appointed Hoover to a commission, which elected him chairman, to reorganize the executive departments. He was appointed chairman of a similar commission by President Eisenhower in 1953. Many economies resulted from both commissions' recommendations. Over the years, Hoover wrote many articles and books, one of which he was working on when he died from intestinal cancer at the age of 90 in New York City on October 20, 1964.
Quotes
- "True American Liberalism utterly denies the whole creed of socialism". The Challenge to Liberty, pg 57.
Writings of Hoover
- The Challenge to Liberty, l934.
- Addresses Upon The American Road, 1933-1938, Charles Scribner's Sons, NY, l938
Related articles
External links