by Michael Liss
In the autumn of 1929 the mightiest of Americans were, for a brief time, revealed as human beings. —John Kenneth Galbraith, The Great Crash 1929
Ah, the mighty. The great, and the powerful. Let us take a moment to remember the mightiest of 1929. Among them surely had to be Herbert Hoover, the embodiment of a certain type of American success story, orphaned at an early age, a man who had literally worked in a mine for $2.50 per day, and, through inexhaustible, sustained effort tied to limitless ambition, had become a successful mining engineer, then internationally renowned for his rescue efforts during and after World War I, then, in eight highly impactful years, as Commerce Secretary. Almost by popular demand, he became the 31st President of the United States.
On Monday, March 4, 1929, he took office, declaring, in his Inaugural, these two ringing sentences:
In the large view, we have reached a higher degree of comfort and security than ever existed before in the history of the world. Through liberation from widespread poverty we have reached a higher degree of individual freedom than ever before.
Heady words, heady times, and perhaps just the slightest touch of hubris that wisdom might have suggested should be delivered in a less public way. The Gods have their own ways of seeing things, and of settling accounts, and Herbert Hoover, and the country he now led, were about to experience that.
Let’s scroll forward to December 3, 1929, barely nine months into his term, a bit more than a month after the wrenching horror of Black Thursday, October 24th and Black Tuesday, October 29th. Hoover delivers (literally, in writing, without pomp and circumstance) his first Annual Address to Congress.
It is, like most of its kin from George Washington’s to those of the present day, a ponderous thing. Hoover is a man of duty, and this effort, running to 11,000 words, is encyclopedic in its topics, and replete with dignified praise of both country and self.
I wish to emphasize that during the past year the Nation has continued to grow in strength; our people have advanced in comfort; we have gained in knowledge; the education of youth has been more widely spread; moral and spiritual forces have been maintained; peace has become more assured.
Ah, we are a stronger, more comfortable, more educated, ever-more firmly, morally, and spiritually grounded people. Who could not want that? He goes on from there to discuss international relations (including the delivery of international mail), national defense, government finances, the national debt, tax policy, international debt, reparations in Europe—even Alien Enemy Property. Grave, important topics these may be, but none are exactly “Stop the presses!” material. The elephant in the room seems to be quietly enjoying bananas.
More than 2500 words in, perhaps past the capacity of at least some of his readers in Congress to continue to read, he gets around to it. It’s the economy, stupid, and, in a section called “General Economic Situation,” he manfully plunges forward.
Manfully, but gently, so as not to alarm, he utters some additional soothing words, and then some realism:
The country has enjoyed a large degree of prosperity and sound progress during the past year with a steady improvement in methods of production and distribution and consequent advancement in standards of living. Progress has, of course, been unequal among industries, and some, such as coal, lumber, leather, and textiles, still lag behind.
He’s still not there yet. He still hasn’t put the words “stock” and “market” in proximity to each other. Still talking about “unequal” progress and the “lag” in coal, lumber, leather and textiles. Hindsight is cheap and easy, but you must at least wonder whether Hoover quite recognized that his Presidency was staring into the eyes of a cobra.
He surely recognized something, but he’s going to get to it in his own time, with his own framing, and his own villain.
The long upward trend of fundamental progress, however, gave rise to over-optimism as to profits, which translated itself into a wave of uncontrolled speculation in securities, resulting in the diversion of capital from business to the stock market and the inevitable crash. The natural consequences have been a reduction in the consumption of luxuries and semi-necessities by those who have met with losses, and a number of persons thrown temporarily out of employment. Prices of agricultural products dealt in upon the great markets have been affected in sympathy with the stock crash.
This is classic Hoover, and in multi-part harmony. He has never really trusted the securities market—serious men should build things, not push dollars around. Money tossed into the stock market for speculation diverts it from its primary purpose, the support of those who create and construct so they can build even more. A dollar that chases just dollars has been drawn away from a healthy purpose to unhealthy one. Speculation can inevitably be counted on to lead to distress and liquidation of values. More importantly, it can damage the “real” economy, where goods (durable and agricultural) are produced and consumed and people are employed in delivering them.
The good news is that all is not lost. The Federal Reserve system is stabilizing the banking system generally. A good deal of speculation has just been wrung out of the securities market. There are positive signs regarding inventories, and foreign trade is growing. Really, nothing to worry about—the President and his Administration are on the job.
Still, Hoover is mindful that “unwarranted pessimism and fear” lead to layoffs, wage reductions, and businesses ceasing their maintenance and expansion plans—which:
could in itself intensify into a depression with widespread unemployment and suffering.
It is worth stopping here for a couple of reasons. First, Hoover’s use of the word “depression” implies he is not entirely in denial—he can clearly see a storm ahead—arguably greater than he has let on. The problem is “a” storm is not “the” storm, because that concept might be outside his frame of reference. There hasn’t been a “Depression” since 1885—instead, America by 1929 had gone through a series of recessions, punctuated by occasional “Panics” (including a memorable one in 1907, where J.P. Morgan and some of his peers stepped in to steady markets). Hoover uses the word “depression,” but almost certainly thinks “Panic,” a relatively short, sharp, painful decline which causes a great deal of harm, but is less existential.
History, except for the revisionist type emitted from conservative think tanks and writers like Amity Shlaes, has been unkind to Hoover. On this point, we should recognize it is asking a great deal for anyone to have the kind of insight (or foresight) to recognize that this downturn would be the great monster that devours everything in sight.
Second, Hoover’s warning against “unwarranted pessimism and fear” is evocative of FDR’s own words at his Inaugural in 1933: “The only thing we have to fear is fear itself.”
Of course, this convergence point is a brief one, as we get one President at a time. In December 1929, it is Hoover who occupies the Oval Office and has access to the Resolute Desk. It’s Hoover setting the tone, and Hoover standing in the dock of public opinion.
For a moment, he seems to display empathy—this is the man who fed literally millions, saving lives and even civil institutions—the man the public thinks it knows. But then, if you are listening closely, watching him describe his government’s actions, you might have some concerns as he describes what he has done, and how he will act.
I have, therefore, instituted systematic, voluntary measures of cooperation with the business institutions and with State and municipal authorities to make certain that fundamental businesses of the country shall continue as usual, that wages and therefore consuming power shall not be reduced, and that a special effort shall be made to expand construction work in order to assist in equalizing other deficits in employment.
While this is not everything that Hoover and the government is doing, it is the intellectual spine of it, and, while there are some similarities (such as expanding construction work), there is a key inflection point between Hoover and FDR—a fundamental difference in a type of activism. Let’s leave Roosevelt and the New Deal for next month, because Hoover has the here and now. In 1929, it is his country to run, his economic crisis, his unemployment crisis, his farm crisis, his banking crisis, his foreign-trade crisis, etc., and it will continue to be his for three-plus more years. Here, in this first Annual Message, is a primer on how he will govern, and in that primer, there is cause for concern by all.
Hoover emphasizes “voluntary” action, with his chairing meetings with heads of industry and Labor. November is “meeting month” and Galbraith describes those meetings in words that imply modern-day photo-ops. Come in, shake hands, look serious, observe the rituals, offer something non-binding, shake hands again, and on to the next platoon of big wigs for the same treatment. Let’s be heretical and say that Hoover manages to make mistakes that both sides of the ideological spectrum might dislike. First, voluntary is just voluntary. There is no legislation, no regulation, nothing to give uniformity of treatment or action. Hoover wants labor peace, steady production, job security, and wage stability, and he’s jawboning all sides to get it.
Is that wise? Perhaps this is just a bit of Kabuki, where leadership plays assigned roles—strong men deferentially visit the President bearing gifts, and, in return, get freedom from mandates. Transactional politics occur every waking hour all over the globe. What harm is done by this version?
Actually, quite a bit. To the extent the “gifts” offered deviate from what the market, on its own, might have produced, you are elevating Hoover’s judgment over a “crowd sourced” one. Hoover is benchmarking the status quo, but it’s here where his more philosophical ruminations find their internal contradictions. Asking business, in effect, to pay more than the market will bear, employ more men than can be gainfully assigned, and produce more than the market can absorb is not exactly laissez-faire economics, and there will be a real-world price paid in profits and even viability. The same is true for Labor—asking unions to put aside their roles as advocates for work-related issues renders them entirely without purpose…and weakens them when businesses revisit the “voluntary” aspects of Hoover’s grand bargain and close plants or split jobs to retain promised headcounts while halving salary outflows.
Of course, more Dickensian is Hoover’s insistence that the Federal Government should play little or no role in aiding the individual who falls into destitution. From the same Annual Address, he rejects Social Services to the individual, saying:
Any other attitude by the Federal Government will undermine one of the most precious possessions of the American people; that is, local and individual responsibility. We should adhere to this policy.
“Individual responsibility” is Hoover’s guiding credo, and, when taken to the extremes that he intended, it guaranteed more suffering. In his second Annual Address, given in December 1930, he uses the phrase “deserving person,” and that brings you to a much narrower definition of who should be worthy of help. There has always been a fascinating dichotomy between the younger, seemingly immensely humanitarian Hoover, and his Depression-Era persona. Hoover is the man who tirelessly worked to help house and feed the distressed and displaced in shellshocked Europe, the man who managed, in 1927, to do spectacular work with the victims of an epic flood of the Mississippi. In 1929, he is also the man who categorically rejects help for the worker whose plant has closed and who can’t put food on the table. Hoover has a tidy intellectual construct when it comes to who is “deserving.” Victims of natural and humanitarian disasters are deserving innocents in need of assistance. Men who lose their jobs and can’t get another are simply deficient…in drive, in motivation, in willingness to work hard, or at a more menial task, if the situation demands it. In short, they cannot eat because they cannot earn, and they cannot earn because they lack the character to see the job search through to a favorable conclusion. Hoover was by no means the only person who held to that definition—it was prevalent among the more monied classes and certainly among many of the great manufacturing barons—but his unique ability to act on it through his position extended the suffering.
There is a tragic dimension to Hoover, who, in many respects, was a great man who attained the highest office at the precise moment when his skills were entirely mismatched for and eventually unequal to the task that moment demanded. From 1930 to 1933, the U.S. economy shrunk by 43%, an astounding, unsustainable decline. Unemployment reached 25%, and on June 8, 1932, the Dow Jones Industrial Average bottomed out at an unthinkable 41.22, 89% (not a typo) below its high.
Such is the nature of being President—you inherit whatever your predecessor (and the world) left for you—and then you create your own legacy. Hoover inherited many structural problems that his predecessor, Calvin Coolidge, was fortunate enough to see contained—and Coolidge went off a hero. But Hoover wasn’t just unlucky, he was unwise, and sometimes that lack of wisdom stemmed from his adopting a set of rigid ideas that felt like an extended scolding.
That’s the thing about Hoover. He’s the coldly competent stepfather ready to take command. He becomes the center of the drama. Things are improving because he and his unique abilities are at the helm. They will be concluded successfully because he says, “[t]he fundamental business of the country, that is, the production and distribution of commodities, is on a sound and prosperous basis.” This, first uttered shortly after the crash, is repeated constantly, as are other comforting words. On March 8, 1930, he tells the public the crisis will be over in 60 days. To the business and labor leaders who attend his conferences in November and communicate with him thereafter, it is always “stick to the plan, I know what I’m doing.”
The problem with this approach is that it requires communication skills that Hoover lacks—he’s too distant. He has spent his adult life ordering people around, been extraordinarily successful at it, and, now, having reached the apex of power, finds he needs another tool—persuasiveness that requires a degree of emotional resonance. He doesn’t have it, and he’s rejected. The public doesn’t see someone who, in his gut, cares enough about them to merit the gamble of patience.
What they do see is failure on the ground. Under Hoover’s watch, through either active policy or ideologically trussed-up inaction, roughly 5,000 banks fail, a tight money policy is adopted at a time when credit is desperately needed, and a sharp increase in income-tax rates is passed. Also, perhaps most notoriously, the Smoot-Hawley Tariff Act of 1930 becomes law, leading to retaliatory tariffs by trading partners, essentially freezing international trade and, in particular, rendering Europe helpless, unable to pay debts owed to the United States.
So, he begins to fail, becomes a man apart, so committed to his credo, so dismissive of alternatives, that he appears detached and unfeeling, and finally tone-deaf. He is right, he is following the proper course of action. How galling it must be to see his name plastered on homeless camps now called “Hoovervilles.” How angry he must feel when World War I veterans undertake a “Bonus March” to Washington to demand pre-payment of modest pensions and camp out within sight of the White House. What must he be thinking when he authorizes the Army to evict the marchers by force, in the process destroying their shelters and their meagre possessions? All he has left is the authority of his office and his sense of virtue mixed with grievance.
You can see it his Annual Addresses, given each year in early December. They are formulaic: Hoover identifies a problem (Europe is a constant one), claims progress thanks to his leadership, but then rationalizes visible failures by deflecting blame before finally pivoting to what amounts to a homily.
In December 1930, he offers:
Economic depression can not be cured by legislative action or executive pronouncement. Economic wounds must be healed by the action of the cells of the economic body—the producers and consumers themselves. Recovery can be expedited, and its effects mitigated by cooperative action. That cooperation requires that every individual should sustain faith and courage; that each should maintain his self-reliance….
In December 8, 1931:
Business depressions have been recurrent in the life of our country and are but transitory. The Nation has emerged from each of them with increased strength and virility because of the enlightenment they have brought, the readjustments and the larger understanding of the realities and obligations of life and work which come from them.
On December 6, 1932, his last, given less than month after he was routed by FDR:
The unparalleled world-wide economic depression has continued through the year. Due to the European collapse, the situation developed during last fall and winter into a series of most acute crises. The unprecedented emergency measures enacted and policies adopted undoubtedly saved the country from economic disaster.
In his valedictory, Herbert Hoover has done all he can. He leaves having “undoubtedly saved the country from economic disaster.”
Hoover sticks to that self-image for the rest of his long life. He writes, he gives speeches, he evangelizes, he tinkers with the idea of running again, he is an honored speaker at subsequent Republican Conventions. Most importantly, he believes, and what could be more human than that?
Author’s notes: There is a lot of material out there. I’m going to suggest Galbraith’s entertaining The Great Crash 1929 and. for contrast (ideologically and in tone), Amity Shlaes’s The Forgotten Man, Gorownwy Rees’s The Great Slump (which includes more detail about political and economic issues in Europe), Studs Terkel’s Hard Times (for on the ground grittiness), and Richard Hofstadter’s The American Political Tradition. The texts of Hoover’s speeches come from The American Presidency Project.
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