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Wednesday, March 24, 2010

Herbert Hoover

William E. Leuchtenburg is among the last surviving literary lions who played a major role shaping the reputation of Franklin Delano Roosevelt. His book Franklin D. Roosevelt and the New Deal (1963) stood out amidst the postwar deluge of worshipful works about FDR, including those by James MacGregor Burns, Arthur M. Schlesinger, Jr., Frank Freidel, and Kenneth S. Davis. Leuchtenburg, professor of history emeritus at the University of North Carolina, is an engaging author who knows how to tell a good story.

This new biography of Herbert Hoover is a prelude to the morality tale that Leuchtenburg has already presented—namely, the heroic New Deal narrative. According to Leuchtenburg, the 1920s were a failure, and the worst failure was Herbert Hoover. He was a “heartless” man, a “dogmatic reactionary,” “a right winger of deepest dye” who preached “minimalist” government. Hoover wouldn’t spend enough money on relief because of his unwarranted “faith in voluntarism.” (See “What Caused the Great Depression?“)

Yet Leuchtenburg provides evidence aplenty that Hoover wasn’t quite the laissez-faire champion he has been made out to be. While criticizing Hoover for wanting to balance the federal budget, Leuchtenburg acknowledges that Hoover “was running a historic deficit—nearly a billion dollars.” Leuchtenburg mentions how Hoover’s Grain Stabilization Corporation tried to help farmers by purchasing agricultural commodities at above-market prices, only to find that farmers responded by producing more. Overwhelmed with unwanted surpluses, the Corporation dumped these commodities on the market, driving farm prices even lower than they had been before. Furthermore, Hoover’s Reconstruction Finance Corporation bailed out banks, railroads, insurance companies, and building and loan associations, but still the depression deepened. In 1932 Hoover signed the Norris-LaGuardia Act, giving labor unions immunity from antitrust laws, private lawsuits for damages, and injunctions from federal courts, which enabled union bosses to push aggressively for monopoly bargaining power and forced dues.

I would agree with Leuchtenburg that two of Hoover’s biggest blunders were signing the Smoot-Hawley tariff in 1930 and tax hikes in 1932. The problem is that it’s impossible to square all of this federal activism with the notion that Hoover believed in “minimalist” government.

Nor does Leuchtenburg comment on the striking similarity between the policies of his demon Hoover and his hero FDR. Hoover and FDR both raised taxes. Both spent money on public works that didn’t provide many jobs for unskilled people. Hoover signed the trade-stifling tariff. FDR effectively embraced it; he never spent any of his formidable political capital trying to repeal it, which he might have been able to do soon after he was sworn in, when a desperate nation was at his feet waiting for leadership and inspiration. Powerful protectionist interest groups would have opposed FDR, but he had an appealing personality and formidable communications skills, and was a political genius. I think he could have exploited the deep resentment against Hoover to eliminate his monstrous tariffs and taxes, providing a much-needed stimulus for the economy. Apparently, he was content with Hoover’s anti-trade policy.

FDR, like Hoover, spent much effort trying to prop up wages and prices. This prevented markets from fully adjusting to the severe contraction. Maintaining above-market prices discouraged consumers from buying, and above-market wages discouraged employers from hiring. Also, like Hoover, FDR expanded the power of labor bosses (especially with the 1935 National Labor Relations Act). Unemployment dragged on under Hoover, and it dragged on even longer under FDR—until 1940, when the government began mobilizing for World War II and conscripting young men.

These striking similarities create more than a few problems for the heroic New Deal narrative. If Hoover was bad and FDR was good, then why did FDR adopt Hoover’s major policies? If Hoover’s policies were a reason that high unemployment dragged on for three years of his presidency, then why weren’t FDR’s policies a reason that high unemployment dragged on for seven years of his presidency? If Hoover is viewed as having failed to get America out of the Great Depression, why shouldn’t FDR similarly be viewed as having failed to get America out of it? The main difference between Hoover and FDR might be that FDR went on to win World War II, and probably many people ignore or forgive his depression-era bungling because of that.

The key to Hoover’s and FDR’s failures during the Great Depression was their “progressive” ideas. Both men grew up on those ideas and took them to heart when they served in Woodrow Wilson’s wartime administration. The depressing thing about this book is that instead of debunking the myth that Hoover and FDR were philosophical opponents, it attempts to keep it alive.

  • Jim Powell, senior fellow at the Cato Institute, is an expert in the history of liberty. He has lectured in England, Germany, Japan, Argentina and Brazil as well as at Harvard, Stanford and other universities across the United States. He has written for the New York Times, Wall Street Journal, Esquire, Audacity/American Heritage and other publications, and is author of six books.