Myth: President Herbert Hoover sent America into the agonizing economic downturn known as the Great Depression by reducing government intervention in the economy, and adhering to laissez-faire capitalism … Or as Democratic Senator Chuck Schumer summed up, “just sitting back and doing nothing.”
Fact: The exact opposite is true. Hoover’s policies did anything but lack in government action. Ironically though, Hoover has been forever portrayed by supporters of his successor, Franklin Delano Roosevelt – such as the aforementioned Senator Schumer – as a “do nothing” President; in reality, Roosevelt based most of his New Deal on policies that Hoover had already envisioned and tenacted. In effect, it can be said that FDR’s New Deal was created by Hoover; Hoover set the stage for FDR’s big government policies and unprecedented amount of economic intervention. As Rexford Guy Tugwell, a member of FDR’s Brain Trust and chief architect of the New Deal once said: “We didn’t admit it at the time, but practically the whole New Deal was extrapolated from programs that Hoover started.”
The awful lie of Herbert Hoover’s adherence to small government, laissez-faire economics is so widespread that it’s nearly accepted as common knowledge. It goes entirely uncontested in most interviews, political speeches, and worst of all, school textbooks. In recent months, there’s been a great deal of critique of the ongoing pressure from Republicans to reduce federal spending and cut the size of government. With that critique has come the inevitable comparison of fiscally conservative Republicans to Herbert Hoover. Among those who make this comparison in addition to Senator Schumer include New York Times columnist Nicholas Kristoff, Nobel Prize winning economist Paul Krugman, and Vermont politician Peter Welch. (I provide the links to their claims at the end of this article.)
All this deserves nothing but a flatout laugh-out-freaking-loud. Tea Party Republicans favor lowering taxes, cutting spending, and small government economics overall. Herbert Hoover, lowering government spending? And more laughable still: Herbert Hoover, a Tea Party conservative? Far more accurate would be: Herbert Hoover, market interventionist, government-spender galore, and forgotten Progressive. Here are 5 proofs of this far more accurate depiction:
1) FDR focused much of his 1932 campaign on blasting Hoover for the unprecedented amount of government intervention he had enacted. He blasted Hoover for “reckless and extravagant” government spending, excessive taxing, driving up the national debt, stifling free trade, and for “presiding over the greatest spending administration in peacetime in all of history”. John Nance Garner, FDR’s running mate, charged that Hoover was “leading the country down the path of socialism.” Though FDR would later champion the policies he so fervently critiqued in 1932, both he and Garner were completely right: Herbert Hoover had proven himself to be a big government market interventionist, and thus an enemy of the laissez-faire capitalism that he is so falsely criticized for defending.
2) Following the crash, the Hoover administration went into spending overdrive. Excessive government spending is, of course, a staple of liberal economics and has been since FDR’s reign from 1933 to 1945. But FDR wouldn’t have had the opportunity to implement the New Deal had Hoover not planted its foundations for him. Federal expenditures climbed by 4.7 percent between 1928 and 1929, and over the next three years they rose 8 percent, 17.2 percent, and 15 percent, respectively. Excluding military expenditures, spending under Hoover exploded by an enormous 259 percent. By the end of his term in 1933, federal expenditures had climbed more than 50 percent in dollar terms – the biggest increase in federal spending ever recorded during peacetime. In percentage terms, federal expenditures grew more during Hoover’s one term than they did during the first seven years of FDR’s presidency. Take note, progressives: it didn’t work then, and it isn’t going to work now.
3) Public works projects are also a key component in any liberal or “progressive” plan to get the country working again. Lo and behold, public works projects undertaken by Hoover include the San Francisco Bay Bridge, the Los Angeles Aqueduct, and Hoover Dam. In late 1929, Hoover contacted all forty-eight state governors to make a similar appeal for expanded public works. He went to Congress with a $160 million tax cut, but it was coupled with a doubling of resources for public buildings and dams, highways, and harbors. Even after this massive increase in public works, Hoover proposed in 1932 to set up a Public Works Administration to coordinate and expand even more Federal public works. (Once again, progressives would do well to recognize the similarity of Hoover’s plan to that of the current administration, and the similarly abysmal results they produced.)
4) Within a month of the 1929 stock market crash, Hoover refused to accept the natural economic cycle in which a market crash is followed by cuts in business investment, production and wages. He convened conferences with the nation’s business leaders in order to urge them to keep wages artificially high, even though profits and prices were both falling. These businessmen were told by Hoover that they had to act “voluntarily” to keep up wage rates even if profits should collapse (warning that he would get Congress to force compliance if they failed to comply “voluntarily”). Hoover said at the time, “No president before has ever believed that there was a government responsibility in such cases… We had to pioneer a new field.”
5) In June 1930, President Hoover signed the Smoot-Hawley tariff into law. It was the most protectionist legislation in American history, and as a result the average tariff rate soared to 59.1 percent. As Professor Barry Poulson describes:
“The act raised the rates on the entire range of dutiable commodities; for example, the average rate increased from 20 percent to 34 percent on agricultural products; from 36 percent to 47 percent on wines, spirits, and beverages; from 50 to 60 percent on wool and woolen manufactures. In all, 887 tariffs were sharply increased and the act broadened the list of dutiable commodities to 3,218 items.”
Hoover signed it into law despite the protest of over 1000 economists, and even with international trade in collapse, he defended the legislation against FDR’s critiques, saying in 1932 that Roosevelt would have Americans compete with “peasant and sweated labor abroad.”
In the spring of 1930, the New York Times accurately concluded that “no one in his place could have done more.” Indeed, no one could have, and Hoover proudly touted this fact during his campaign for re-election and throughout the rest of his life. During his campaign in the fall of 1932, Hoover himself summed up his progressive efforts to cure the depression:
“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… No government in Washington has hitherto considered that it held so broad a responsibility for leadership in such times.”
Hoover was clearly a champion of big government, anti-laissez faire market intervention. He was nothing short of the last President of the “Progressive Era” from which modern liberalism gains so much of its ideology. But in attempting to counteract the depression, Hoover’s rejection of conservative economics – characterized by his propping up of artificial wages, public works projects, and massively increased government spending – didn’t stop the Depression and only made it worse. As the current President continues with a plan remarkably influenced by FDR’s (and thus by Hoover’s as well), Republicans and Democrats alike would do well to recognize that.
Sources – The Common View Of Herbert Hoover:
 Chuck Schumer – http://www.msnbc.msn.com/id/21134540/vp/29581124#29581135 (Schumer’s comments on Hoover begin at around 4:50; note how the Republican senator doesn’t argue with him on the subject)
 Nicholas Kristof – http://www.post-gazette.com/pg/11098/1137745-109.stm?cmpid=news.xml
 Paul Krugman – http://www.nytimes.com/2011/03/18/opinion/18krugman.html
 Peter Welch – http://www6.lexisnexis.com/publisher/EndUser?Action=UserDisplayFullDocument&orgId=574&topicId=100007220&docId=l:1470474779&start=1