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Post Herbert Hoover
Created by Ronald Hilton on 07/13/04 2:32 AM

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Herbert Hoover (Ronald Hilton, USA, 07/13/04 2:32 am)

Jon Kofas writes: "While the effects of Hoover's fiscal and trade policies certainly exacerbated the severe domestic and global economic dislocation, a closer analysis of his assumptions clearly demonstrate that he had too much faith in the private sector to pursue enlightened self interest, a rationalist and optimistic assumption on his part. The problem with such assumptions about human nature is that they do not factor the underlying irrational traits in human behavior, especially when it comes to money. As far as Smoot-Hawley is concerned, the fact is that the U.S., Europe, and Japan had been fighting a sort of a tariff war since the end of WWI. The Great Powers agreed on the League of Nations, but they failed to put together an international system like Bretton Woods to manage the world economy when it was needed most. His increase in public spending was a wise move in my view, but too little, too late to have much of an effect in comparison with FDR's spending program. In the last analysis, Hoover was caught completely off guard and made some bad decisions, but the villain was not the White House, but the Congress, and especially Wall Street and the big banks with their hyper-speculative investment mentality and risky foreign loans to Latin America that every banker knew were not going to be recovered".

Cameron Sawyer writes: "How can anyone mention Hoover's presidency without mentioning the Smoot-Hawley Tariff? Hoover signed this poison pill, ignoring a petition signed by over 1,000 economists warning of exactly those dire consequences which then soon came to pass. And that's not all, by any means. In 1932, Hoover signed one of the biggest tax increases in history, raising the top marginal income tax rate from 25% to 63%. Hoover also increased public works spending, farm subsidies, and started the first unemployment relief program.

I wouldn't say that his presidency was "inept", nor can anyone deny that he was a decent, intelligent man. But precisely in the area of the economy, Hoover's policies were a disaster. Follow up this with the even more awful economic policies of Roosevelt, and you have the very recipe for the Great Depression which lingered until well into World War II.

As to Hitler's economic policies, these were essentially collectivist and based on four-year plans and central planning -- in other words, Soviet. An illustrative tidbit I picked up with a brief Google search is the following: in 1938, 50% of all industrial orders in Nazi Germany were placed by the state; 80% of all building projects were initiated by the state (Time, 2 January 1939). The supposed economic recovery in Germany is similar to the supposed economic expansion in the USSR in the same period. It is visible in statistics, and indeed the state sector grew stronger. But the statistics, based on unmeasurable soft currency, were deceptive. Ordinary people in both Soviet Russia and Nazi Germany lived slave-like existences, paying for the state's military-industrial and heavy industrial capabilities.

Speaking of the Soviet and Nazi economic models: a fascinating, and perhaps untold story (well, I did find one interesting article: http://www.feldgrau.com/econo.html), is the economic contest between the USSR and the Third Reich during the war, which is in fact what ultimately decided that conflict. Centrally planned economies are actually well adapted for fighting wars, as the state can easily concentrate all of the nation's resources on the struggle in a way which is impossible in a free country. We all know how awful the Soviet economy was, because it survived long enough to show its real nature (unlike, obviously, the Nazi economy). But the Soviet economy outperformed and outproduced the Nazi economy, with the result that, for example, the Soviets were able to achieve a production rate of over 20,000 tanks per annum (16,000 of which were the excellent T34's). During the entire war, the Germans produced only 24,000 tanks of all types. In fact it was Soviet success at military production (augmented by Lend-Lease which added about 10% to materiel produced domestically) which enabled the Soviets to gradually overwhelm the Germans on the Eastern Front, overcoming the fact that the Soviet Army had been nearly incapacitated by Stalin's purges of the officer corps during the 1930's. Inept leadership of the Soviet military during most of the war was the direct result of this. And the Soviets did not only produce lots of tanks -- the Red Army was nearly totally mechanized (with the important help of 700,000 Lend-Lease trucks), while the Reichswehr relied largely on horse-drawn transport right up to the end of the way.

As to the T34 -- it is a good symbol of the success of the Soviet war economy. The Soviets not only produced it in huge numbers; it was the most advanced tank in the world when it was introduced (Feldmarschall von Kleist called it the "finest tank in the world"). It was diesel powered, giving it more speed and more range than the thirsty gasoline powered German tanks (which were constantly running out of gas), and it had a greater resistance to bursting into flames when hit by enemy fire (because diesel fuel is less easily inflammable than gasoline, and the tanks were better protected). It had sloped armor, an important Soviet innovation, making it more resistant to enemy fire. And it had a bigger gun -- 76.2mm at first and then 85mm, compared to the 50mm guns predominate among German tanks at the time. It was so good that the Germans formed brigades of captured T34's, and then simply copied it -- the Panzer V "Panther", the Germans' best tank, was an improved T34".

James Tent writes: "References to Herbert Hoover, the presidential election of 1928, and the origins of the term "yellow dog" Democrat remind me that memories of that man will always be skewed by his luckless presidency. Hoover had built a distinguished career in public life after a remarkable career as a mining engineer. In World War I, the term "Hooverizing" was used to describe efforts to increase efficiency in production for the war effort. After World War I, Hoover led largely privately supported American humanitarian relief efforts in Europe and also in the infant Soviet Union. His actions and those of his dedicated coworkers saved the lives (literally) of millions of people. But as President, Hoover's luck evaporated. Less than a year in office, he faced the ravages of the Great Depression of October 1929. Steeped in orthodox economic doctrine, he accepted the advice of economists like Andrew Mellon (liquidate labor, liquidate stocks, liquidate the farmers..." then wait out the hard times), and as we all know Hoover went down to overwhelming defeat in the 1932 elections. He was hardly unique in this respect. Chancellor Heinrich Bruening in Germany followed the same economic advice, and the fall of his government ultimately led to the seizure of power by the Nazis. FDR and Hitler, although polar opposites in most ways, had one policy, innovation, in common: both tried unorthodox methods of economic recovery. This is hardly to say that the New Deal and Hitler's policies (secretly and then openly favoring rearmament) were identical, but they did involve heavy government expenditure on public projects. Both were proto-Keynesian programs involving deficit-spending and pump-priming before Keynes was even widely known. As for poor Hoover, he became a non-person from 1933 until 1946. Then, Harry S Truman enlisted him for another urgent public service program. Hoover returned to Europe to invigorate charitable-relief operations once again, and in the process he saved the lives (literally) of millions more Europeans. Hoover as president had not caused the Great Depression, but he certainly reaped its political consequences. We remember his inept presidency but forget that he was one of the greatest humanitarians who ever lived".

RH:We live almost across the street from the president's house at Stanford, and I knew Hoover in the 1942-46 period when he was terribly embittered and almost a social outcast. It was very sad. John Maynard Keynes died in 1946. He presumably was dismayed by Hoover's policies. His Economic Consequences of the Peace (1919) made him famous; events, including the rise of Hitler, bore him out. However, it was his General Theory of Employment,Interest and Money (1936) which established what came to be known as Keynesian economics. By then Hoover was history. Christopher Jones makes much of degeneracy under the Weimar Republic. We should be fair to Chancellor Heinricb Brüening, a devout Catholic and a respected economist, He left Germany in 1933 and taught at Harvard.

Hank Greely asked for a bibliography on Herbert Hoover's foreign policy: Jon Kofas provides one:

William Appleman Williams, THE TRAGEDY OF AMERICAN DIPLOMACY (great overview of U.S. foreign policy)

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