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Monday, August 8, 2011

The Hoover Deal

Recently Rachel Maddow, on her MSNBC show, stated the all too often used fallacy that what made the Great Depression so great was Herbert Hoover’s do nothing, free market, approach to policy in the late 1920s. The historical inaccuracies of this claim, as Steven Horwitz points out in open letter to Maddow, are and have been easily debunked. One doesn’t even need to dig deep into revisionist history to see the error, as Hoover, himself and many of his contemporaries have provided plenty of source material for evidence to the contrary.

Just to quote Hoover, “We might have done nothing. That would have been utter ruin. Instead, we met the situation with proposals to private business and the Congress of the most gigantic program of economic defense and counter attack ever evolved in the history of the Republic.” In fact, many of the New Deal’s programs stem directly from Hoover’s efforts.

Despite the obvious evidence that Herbert Hoover was anything but free market, it is not difficult to see why the truth is often blurred. Hoover’s rhetoric, at least leading up to his presidency, was to move towards limiting the regulatory power of the federal bureaucracy, which is common among Republican presidential candidates.

FEE founder Leonard E. Read was an early supporter of Herbert Hoover. When Hoover was elected president, Read organized a large crowd (16 cars large, no small sum in the 1920s) of Californians to travel across the country to participate in the inauguration. And as today’s document is proof of, Read and Hoover occasionally corresponded and saw each other until Hoover’s death in 1964.

Is Read’s early support and subsequent friendship with Herbert Hoover evidence of Hoover’s free market leanings as a president? No, of course not. Read was, of course, an unyielding supporter of free markets, but he did not start out that way. He did not gain a classical liberal/libertarian perspective until he met William Mullendore in the mid-30s. In fact, in the beginning, Read believed in Roosevelt and the New Deal, albeit not completely. Soon, though, thanks to Mullendore, Read became one of the few lone voices of opposition to such policies, which as stated above, clearly have their roots in Hoover.

Once FEE got off the ground Read often sent many of the Foundation’s articles to Hoover, such as today’s document (though what article Read sent is sadly lost), but their correspondence tended to be very brief. There is a story, however, that Hoover once submitted an article for The Freeman, which Leonard Read rejected. Of course we can only speculate why but maybe because, just as his presidency illustrated, Herbert Hoover was not as free market as many like to claim.

Download the March 4, 1950 Letter from Herbert Hoover to Leonard E. Read here.

  • Nicholas Snow is a Visiting Assistant Professor at Kenyon College in the Department of Economics, and previously a Senior Lecturer at The Ohio State University Economics Department. His research focuses on the political economy of prohibition.