By William E. Leuchtenburg (Times Books, 2009)
As the United States and rest of the world stare the possibility of global depression in the face, it has become common to compare the present day to the late 1920s and early 1930s. But Herbert Hoover, an intense new biography by New Deal historian William E. Leuchtenburg, draws parallels that can take your breath away.
In 1932, the country was facing a credit crisis the likes of which had never been seen. Americans were losing their jobs, their houses, and their life savings as the stock market crashed and banks collapsed. To stymie a plunge that could last years, Hoover OK’d the renewal of the Reconstruction Finance Corporation to recapitalize the financial sector, infusing $2 billion—a “staggering amount” at that time, Leuchtenburg reminds us—into banks, insurance firms, railroad companies, and other finance institutions. Will Rogers wrote that the bankers had “the honor of bring the first group to go on the ‘dole’ in America.”
But efforts to save the banks and stimulate the economy from the top down backfired. Banks were still closing, though at a slower rate, and instead of loosening up credit markets, as the bailout was intended to do, banks found a way to use the millions to shore up their own holdings.
New York Senator Robert Wagner, a progressive critic of the Hoover administration, responded to this blank-check strategy by zeroing in on the fatal flaw of Hoover’s economic ideology: Even in extraordinary times, even in the face of starvation, Hoover believed welfare would impair the character of the needy and rob benefactors of the opportunity to exercise voluntarism and civic duty. Wagner, like many others, was stunned by Hoover’s decision to bail out banks. “We did not preach to them rugged individualism,” he said;
We did not sanctimoniously roll out sentences rich with synonyms of self-reliance. We were not carried away with apprehension over what would happen to their independence if we extended them a helping hand.… Must [the individual] alone carry the cross of individual responsibility?
I don’t think Leuchtenburg intended his biography to reflect so acutely our current hardships. His aim was to paint a not unsympathetic portrait of a hard man to have sympathy for. But as I zipped through this lucid book, I kept trying to think of a good word to describe the feeling of my frequently being taken aback. History repeats itself, sure, but how often does it do so with such vengeance?
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No president had ever fallen from such a great height, Leuchtenburg writes. Hoover was a hero after World War I for feeding millions of Europeans as a food administrator. He organized the recovery of the American Midwest after a devastating flood along the Mississippi River. But his name came to be attached to the shantytowns—the Hoovervilles—where millions of poor and out of work ended up. Millions more lived in empty freight cars derisively called Pullman Hoovers. A couple who had named their son Herbert Hoover Jones eventually changed his name to Franklin D. Roosevelt Jones in order to save him future “chagrin and mortification.”
When he lost a bid for a second term to FDR, Hoover lost badly. In 1928, he won forty (of 48) states. In 1932, he won six. “Not for eighty years had there been such avalanche of Democratic ballots,” Leuchtenburg writes; “1932 marked the worst defeat in the history of the GOP.” These superlatives suggest Hoover’s defeat was more than a referendum on his policies. It was a wholesale rebuke of ideologies that had given Republicans a popular majority since 1853 and that calcified under the reign of Big Bert.
These ideologies concerned the role of government.
Though authoritarian and eager to use executive power to bulldoze legislation, or bypass political debate entirely, Hoover was unwilling to expand government’s role in society. The president believed, Leuchtenburg says, “that one should rely not on government but on civic-minded individuals ‘imbued with the spirit of self-sacrifice in full measure.’” Governor Bobby Jindal of Louisiana cited this position last week in his rebuttal to President Obama’s feux State of the Union address. Jindal said the best thing for post-Katrina New Orleans wasn’t government intervention. It was the spirit of community volunteerism.
Before his presidency, Hoover had even written a widely read book called, appropriately enough, American Individualism, in which he warned against the “tyranny” and “timorous mediocrities” of trade unions. But American Individualism, “a jejune screed” that was “little more than pamphlet,” Leuchtenburg says, showed another side of Hoover that was not ideological but pragmatic, a quality likely rooted in his time as food czar during World War I. Private underwriting of America’s effort to feed war refugees, he said, was of an “uncertain quality.” As philanthropy could only go so far, “we must obtain a regular government subsidy.” Pragmatism returned when he wrote that government regulation of capitalism was necessary because “we have learned that the foremost [i.e., the rich] are not always the best and the hindmost [the poor] are not always the worst.… Fair division [of capital] can only be obtained by certain restrictions on the strong and the dominant.”
This Herbert Hoover, however, didn’t show up for the Great Depression. In the end, ideology won out. At the time when something could have been done, Hoover left almost all responsibility to corporations who suggested consumers add sun porches to their houses to stimulate the economy. Then he gave banks millions. Later, as Americans were losing their savings and queueing up in bread lines, Hoover said they were suffering from “frozen confidence” more than “frozen securities.”
If that doesn’t remind you of Phil Gramm, John McCain’s former economics adviser who callously said we were in the middle of a “mental recession,” you haven’t been paying attention. But you’re not alone. Gramm led the 1999 charge against the Glass-Steagall Act, a law put in place during the Roosevelt administration that kept banks from investing on Wall Street. He also won legislation to deregulate derivatives, the financial instruments that brought down AIG and cost us $150 billion. Apparently, all of us keep forgetting our history. And our money, too.
John Stoehr is the arts editor at the Charleston City Paper.