{"id":29334,"date":"2016-02-14T01:00:07","date_gmt":"2016-02-14T06:00:07","guid":{"rendered":"http:\/\/quotulatiousness.ca\/blog\/?p=29334"},"modified":"2018-09-27T16:47:53","modified_gmt":"2018-09-27T20:47:53","slug":"qotd-president-herbert-hoovers-lasting-economic-legacy","status":"publish","type":"post","link":"https:\/\/quotulatiousness.ca\/blog\/2016\/02\/14\/qotd-president-herbert-hoovers-lasting-economic-legacy\/","title":{"rendered":"QotD: President Herbert Hoover’s lasting economic legacy"},"content":{"rendered":"

Until March 1933, these were the years of President Herbert Hoover \u2014 the man that anti-capitalists depict as a champion of non-interventionist, laissez-faire<\/em> economics.<\/p>\n

Did Hoover really subscribe to a \u201chands off the economy,\u201d free-market philosophy? His opponent in the 1932 election, Franklin Roosevelt, didn\u2019t think so. During the campaign, Roosevelt blasted Hoover for spending and taxing too much, boosting the national debt, choking off trade, and putting millions of people on the dole. He accused the president of \u201creckless and extravagant\u201d spending, of thinking \u201cthat we ought to center control of everything in Washington as rapidly as possible,\u201d and of presiding over \u201cthe greatest spending administration in peacetime in all of history.\u201d Roosevelt\u2019s running mate, John Nance Garner, charged that Hoover was \u201cleading the country down the path of socialism.\u201d Contrary to the modern myth about Hoover, Roosevelt and Garner were absolutely right.<\/p>\n

The crowning folly of the Hoover administration was the Smoot-Hawley Tariff, passed in June 1930. It came on top of the Fordney-McCumber Tariff of 1922, which had already put American agriculture in a tailspin during the preceding decade. The most protectionist legislation in U.S. history, Smoot-Hawley virtually closed the borders to foreign goods and ignited a vicious international trade war.<\/p>\n

Officials in the administration and in Congress believed that raising trade barriers would force Americans to buy more goods made at home, which would solve the nagging unemployment problem. They ignored an important principle of international commerce: trade is ultimately a two-way street; if foreigners cannot sell their goods here, then they cannot earn the dollars they need to buy here.<\/p>\n

Foreign companies and their workers were flattened by Smoot-Hawley\u2019s steep tariff rates, and foreign governments soon retaliated with trade barriers of their own. With their ability to sell in the American market severely hampered, they curtailed their purchases of American goods. American agriculture was particularly hard hit. With a stroke of the presidential pen, farmers in this country lost nearly a third of their markets. Farm prices plummeted and tens of thousands of farmers went bankrupt. With the collapse of agriculture, rural banks failed in record numbers, dragging down hundreds of thousands of their customers.<\/p>\n

Hoover dramatically increased government spending for subsidy and relief schemes. In the space of one year alone, from 1930 to 1931, the federal government\u2019s share of GNP increased by about one-third.<\/p>\n

Hoover\u2019s agricultural bureaucracy doled out hundreds of millions of dollars to wheat and cotton farmers even as the new tariffs wiped out their markets. His Reconstruction Finance Corporation ladled out billions more in business subsidies. Commenting decades later on Hoover\u2019s administration, Rexford Guy Tugwell, one of the architects of Franklin Roosevelt\u2019s policies of the 1930s, explained, \u201cWe didn\u2019t admit it at the time, but practically the whole New Deal was extrapolated from programs that Hoover started.\u201d<\/p>\n

To compound the folly of high tariffs and huge subsidies, Congress then passed and Hoover signed the Revenue Act of 1932. It doubled the income tax for most Americans; the top bracket more than doubled, going from 24 percent to 63 percent. Exemptions were lowered; the earned income credit was abolished; corporate and estate taxes were raised; new gift, gasoline, and auto taxes were imposed; and postal rates were sharply hiked.<\/p>\n

Can any serious scholar observe the Hoover administration\u2019s massive economic intervention and, with a straight face, pronounce the inevitably deleterious effects as the fault of free markets?<\/p>\n

Lawrence W. Reed, “The Great Depression was a Calamity of Unfettered Capitalism”, The Freeman<\/em><\/a>, 2014-11-28.<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"

Until March 1933, these were the years of President Herbert Hoover \u2014 the man that anti-capitalists depict as a champion of non-interventionist, laissez-faire economics. Did Hoover really subscribe to a \u201chands off the economy,\u201d free-market philosophy? His opponent in the 1932 election, Franklin Roosevelt, didn\u2019t think so. During the campaign, Roosevelt blasted Hoover for spending […]<\/p>\n","protected":false},"author":1,"featured_media":35193,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[831,25,84,41,13],"tags":[866,106,1240,817,266,793,118],"class_list":["post-29334","post","type-post","status-publish","format-standard","hentry","category-business","category-economics","category-government","category-quotations","category-usa","tag-fdr","tag-greatdepression","tag-herberthoover","tag-laissez-faire","tag-protectionism","tag-subsidies","tag-taxes"],"jetpack_featured_media_url":"https:\/\/quotulatiousness.ca\/blog\/wp-content\/uploads\/2016\/06\/favicon.png","jetpack_shortlink":"https:\/\/wp.me\/p2hpV6-7D8","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/29334","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/comments?post=29334"}],"version-history":[{"count":1,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/29334\/revisions"}],"predecessor-version":[{"id":29335,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/29334\/revisions\/29335"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/media\/35193"}],"wp:attachment":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/media?parent=29334"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/categories?post=29334"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/tags?post=29334"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}