Posted: Sat Jul 11, 2009 2:08 am Post subject: How Herbert Hoover Put the “Great” in Great Depression
The following is from an article titled "How Herbert Hoover Put the “Great” in Great Depression"
Rothbard believes (as do I) that the severity of a depression is directly proportional to the amount of government intervention directed at “fixing things.” He contrasts America’s depression of 1920, which lasted less than a year, with the Great Depression, which just about dragged out into World War II.
America used to have depressions all the time. The 19th century and early 20th century were peppered with them. They were always short and sweet, because the US government was not yet large or powerful enough to really do anything about them. So the panics would come and quickly pass…excesses would be removed from the system…and the path would be clear for the next economic upturn.
The last time the US government pursued a mostly laissez-faire policy in handling a recession/depression was 1920-1921. Warren Harding was president - so it’s not hard to imagine he had a difficult time keeping his hands off the levers, because Harding was widely regarded as one of the least qualified presidents in American history. He’s the guy who Republicans believed just looked like a president – so they dressed him up, and sure enough, he was eventually elected into office.
Ironically, the man Harding appointed as Secretary of Commerce in March 1921 was none other than Herbert Hoover, who only accepted the position on the condition he’d be able to meddle in government economic policy. So Hoover quickly set to work in 1921 by mapping out boneheaded designs for public works projects and other central planning types of activities.
Fortunately for the US, the depression ended before Hoover was able enact any of his programs. But the stage was set for the big dance, coming up at the end of the decade.
When the stock market crashed on October 24, 1929, Hoover kicked into gear right away and started “doing stuff”. He ignored the laissez-faire advice of his Secretary of Treasury Andrew Mellon, who said:
"Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people."
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How Herbert Hoover Put the “Great” in Great Depression