Herbert Hoover spent his entire presidency miserable.
First, he has no doubt that the economy is going to crash. It’s been too good for too long. He frantically tries to cool down the market, begs moneylenders to stop lending and bankers to stop banking. It doesn’t work, and the Federal Reserve is less concerned than he is. So he sits back and waits glumly for the other shoe to drop.
Second, he hates politics. Somehow he had thought that if he was the President, he would be above politics and everyone would have to listen to him. The exact opposite proves true. His special session of Congress comes up with the worst, most politically venal tariff bill imaginable. Each representative declares there should be low tariffs on everything except the products produced in his own district, then compromises by agreeing to high tariffs on everything with good lobbyists. The Senate declares that the House of Representatives is corrupt nincompoops and sends the bill back in disgust. Hoover has no idea how to solve this problem except to ask the House to do some kind of rational economically-correct calculation about optimal tariffs, which the House finds hilarious. “Opposed to the House bill and divided against itself, the Senate ran out the remaining seven weeks [of the special session] in a debauch of taunts, accusations, recriminations, and procedural argument.” The public blames Hoover, pretty fairly – a more experienced president would have known how to shepherd his party to a palatable compromise.
Also, there are crime waves, prison riots, bootlegging, and a heat wave during which Washington DC is basically uninhabitable. Also, at one point the White House is literally on fire.
… and then the market finally crashes. Hoover is among the first to call it a Depression instead of a Panic – he thinks the new term might make people panic less. But in fact, people aren’t panicking. They assume Hoover has everything in hand.
At first he does. He gathers the heads of Ford, Du Pont, Standard Oil, General Electric, General Motors, and Sears Roebuck and pressures them to say publicly they won’t fire people. He gathers the AFL and all the union heads and pressures them to say publicly they won’t strike. He enacts sweeping tax cuts, and the Fed enacts sweeping rate cuts. Everyone is bedazzled […] Six months later, employment is back to its usual levels, the stock market is approaching its 1929 level, and Democrats are fuming because they expect Hoover’s popularity to make him unbeatable in the midterms. I got confused at this point in the book – did I accidentally get a biography from an alternate timeline with a shorter, milder Great Depression? No – this would be the pattern throughout the administration. Hoover would take some brilliant and decisive action. Economists would praise him. The economy would start to look better. Everyone would declare the problem solved – especially Hoover, sensitive both to his own reputation and to the importance of keeping economic optimism high. Then the recovery would stall, or reverse, or something else would go wrong.
People are still debating what made the Great Depression so long and hard. Whyte’s theory, insofar as he has one at all, is “one thing after another”. Every time the economy started to go up (thanks to Hoover), there was another shock. Most of them involved Europe – Germany threatening to default on its debts, Britain going off the gold standard. A few involved the US – the Federal Reserve made some really bad calls. The one thing Whyte is really sure about is that his idol Herbert Hoover was totally blameless.
He argues that Hoover’s bank relief plan could have stopped the Depression in its tracks – but that Congressional Democrats intent on sabotaging Hoover forced the plan to publicize the names of the banks applying. The Democrats hoped to catch Hoover propping up his plutocrat friends – but the change actually had the effect of making banks scared to apply for funding and panicking the customers of banks that were known to have applied. He argues that the “Hoover Holiday” – a plan to grant debt relief to Germany, taking some pressure off the clusterf**k that was Europe – was a masterstroke, but that France sabotaged it in the interests of bleeding a few more pennies from its arch-rival. International trade might have sparked a recovery – except that Congress finally passed the Hawley-Smoot Tariff, the end result of the corruption-plagued tariff negotiations, just in time to choke it off.
Whyte saves his barbs for the real villain: FDR. If the book is to be believed, Hoover actually had things pretty much under control by 1932. Employment was rising, the stock market was heading back up. FDR and his fellow Democrats worked to tear everything back down so he could win the election and take complete credit for the recovery. The wrecking campaign entered high gear after FDR won in 1932; he was terrified that the economy might get better before he took office, and used his President-Elect status to hint that he was going to do all sorts of awful things. The economy got skittish again and obediently declined, allowing him to get inaugurated at the precise lowest point and gain the credit for recovery he so ardently desired.
Scott Alexander, “Book Review: Hoover”, Slate Star Codex, 2020-03-17.
