- Feb 4, 2007
Quite honestly -- I would have likely done the exact same thing that Hoover did.
Quite honestly -- I would have likely done the exact same thing that Hoover did.
So you would have stupidly raised taxes and tariffs and continued government intervention? Because that's exactly what Hoover did. He was an economic liberal or collectivist.
Most people have been duped into believing the Great Depression was caused by a free market. Nothing could be further from the truth. It was government intervention in the market that set the stage for the Great Depression and made it much worse than it would have been otherwise. Here's a brief list of some of the government intervention and regulation in the economy prior to 1929:
The first labor unions, then called federations were active in 1820. National labor union - 1866. American Federation of Labor - 1886. Dept. of Labor, 1913. Dept. of the Interior 1849. Dept. of Agriculture - 1862. Anti-Trust Acts 1902. Dept. of Commerce 1903. Shift from private to state-funded education began in the 1800's. Interstate Commerce Act of 1887. Federal Highway Act of 1916. Air Commerce Act of 1926. The Income Tax and Federal Reserve Act- 1913 (the graduated income tax and centralized bank are both planks of The Communist Manifesto). Also had the estate tax act in 1916. Corporate Tax Act of 1909. Zoning laws and regulations, which the Supreme Court ruled constitutional in 1921. And we had federal ownership of land throughout the history of our country. Contrary to what some might say, this constitutes a heavily regulated and unfree market. This is anything BUT unregulated capitalism.
The Great Depression was caused by government influence in the economy, not unregulated capitalism. Primarily, the Smoot-Hawley Tariff Act - which even a liberal like Al Gore admits was a major factor, the increase of the income tax (the top rate went from 25% to 63%), and the manipulation of credit, specifically the shrinking of the money supply, through the government central bank, the Federal Reserve:
"And, of course, there was the political regime of Franklin D. Roosevelt. To finance government expenditures to pay for his beloved New Deal welfare programs, Roosevelt and his cohorts began printing massive amounts of government notes. To ensure that gold would not expose what they were doing, legal-tender laws were enacted. But that wasn't the worst of it. The Roosevelt people next canceled — nullified — extinguished — every single gold clause in every single contract, public and private.
And even that wasn't the worst of it. Roosevelt and his cronies nationalized — confiscated — the gold coins of the American people and then made it illegal for Americans to own gold. Imagine — after 150 years of the strongest monetary system in history — a system free from government assault — a system that was a bulwark for American liberty — the American people became subject to serving time in a U.S. federal penitentiary for owning a gold coin!
What about the Constitution? What about enumerated powers? Unfortunately, Roosevelt had sufficient cronies on the Court to sustain his policies, especially after his infamous and shameful court-packing scheme."
I see we have a libertarian on the boards.
You are slightly misinformed on Hoover's policies and the causes of the Great Depression.
Hoover's first steps were:
(1) formed the Farm Board that lent some $500m to farmers to keep their homesteads, and a commission bought up commodity surpluses.
(2)tax cuts (1930) by 15%
(3) inflate the money supply
(4) and the Hawley-Smoot Tariff that you mentioned where Hoover raised the tariff with a 52.8% ad valorem rate
The first three seem like logical responses to the Depression, but personally, as a free trader, I wouldn't have passed the Hawley-Smoot tariff. My feelings are that he didn't really want to support the tariff increase, but he had to for political reasons.
At any rate, when his initial attempts at solving the Depression failed, he made a last gasp effort with the RFC which lent $2 billion to banks, insurance companies, etc. and the Emergency Relief and Construction Act which gave some $2 billion for direct relief and construction projects.
If you put yourself in Hoover's shoes, I think he made good decisions. Obviously, 80 years later, it's a lot easier to judge and be critical, but honestly, I probably would've taken the same measures he did in the same order.
I like your philsophies, but disagree with you on the causes of the Great Depression.
Here's my take:
(1) Overproduction where supply well outstripped demand which caued a self-perpetuating deflationary spiral that drove down prices, which drove down profits, both of which drove down wages and employment. In my opinion, this was caused by new technologies that overdeveloped, the wage gap and inequitable distribtuon of wealth ("social statification") and buying on credit.
(2) the international situation where (a) the U.S. market sucked up all the capital (not putting it in banks or overseas) (b) Europeans had less buying power (another cause of overproduction) and (c) American companies seeking protectionism.
(3) sector weakenesses in agriculture. housing, cars, and mining/lumber.
(4) bank failures
Glad to have you around here, Truth.
Drought and climate were issues, no doubt about it, but this bailout still probably wouldn't have been necessary if the Federal Reserve hadn't totally mismanaged the monetary situation. That was the root cause of the Depression in my opinion.
The new chairman of the Federal Reserve has admitted that it did indeed cause the Great Depression. I'd say such an admission qualifies as "conclusive":
If that's accurate, I honestly wasn't aware of it. I'd like to see your source just out of curiousity.
However, that doesn't counter my argument because his tax increase totally reversed this action. He made the increases based on liberal/collectivist reasoning, that a tax increase would reduce the deficit, but it just doesn't work like that.
What he did was scare the living bejesus out of the producers and entreprenuers in this country. Can you imagine having your tax rate suddenly go from 25% to 63%???? That would put most people into panic mode, even if they were doing well financially. That is a massive tax increase.
Yes, but it was really just a drop in the bucket compared to the later levels during WW2 that finally actually did bring us out of the Depression.
This was a terrible, terrible policy. I prefer tariffs to taxes, and that is the way our government was intended to operate nnder the original intent of the Constitution, but anything over 15% is going to create problems - especially in a world with rapid transit, such as ours.
Well, then what good is he as a principled leader if he compromises his principles? Answer - not much good.
Hoover is certainly not entirely to blame, as the real culprits were enacted under Wilson in 1913 - the Unholy Trinity of the Income Tax, the Federal Reserve Act and an interventionist foreign policy(the last of the 3 was still not much of a factor at that time though).
Those were factors, but I don't think they were the major ones.
As for the bank failures, yes, we definitely had an issue with that, but it was a situation in which corruption in government was preventing the proper authorities from taking action and cleaning the mess up before it became a problem, which is one of government's legitimate roles. For more details of that banking history see:
I'll try to find a source for it and get back to you.
It's true, he did raise taxes. I wouldn't make it up. The only reason that I said I would've done the same things as Hoover was because of his initial tax cuts.
I see we're coming to a consensus on most of this, but still, raising taxes as much as he did killed the benefit of any tax cuts he enacted previously. Tax increases don't help an economy - they hurt it. Government always talks in terms of "deficit reduction" but what they always need to do is stop spending and wasting so much.
I agree. But I think that after the economy continued its downward spiral after two years of tax cuts, it was a fair move to raise them again.
If you don't mind, I'd like to know how you, a libertarian, feel about Keynsian economics.
It's flawed because it's not based on root logic. Again, go back to "other people are not your property." The government has no legitimate authority to infringe on the rights of people who are engaged in peaceful, honest or voluntary transactions/activities. The only time the government has a legitimate role to step into human affairs is if fraud, coercion or violence occur and one person or group of people deprive another person or group of people of their inalienable rights to life, property or liberty.
You make good points, but I was referring more to the countercyclical spending aspect of Keynsian economics, where he Keynes advocated a policy of deficit spending your way out of depressions.