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This sort of thinking drove government policy at the start of the Great Depression. President Hoover tried to maintain high wage rates seeing them as the cause

This sort of thinking drove government policy at the start of the Great Depression. President Hoover tried to maintain high wage rates seeing them as the cause of prosperity and not the effect of greater productivity. Henry Ford was probably the most influential person in this camp but most of American business at the time was on board with it as well. Murray Rothbard's "America's Great Depression" has probably the best analysis of Hoover's proto "New Deal" policies. It's very enlightening if you were taught as I was that Hoover did nothing while the depression ravaged the nation.

jbooth 16y ago
"proto-New Deal policies?" As I understand it, Hoover was preoccupied with maintaining a balanced federal budget through budget cuts and tax increases. That's the opposite of countercyclical spending, which along with some welfare state components made up the new deal. Maybe he was on board with the welfare state and the idea of people having high wages (who isn't?), but the government doesn't cut the majority of paychecks in the country, and those it does cut, he was, well, cutting. In regards to the Depression, he was pretty diametrically opposed to what the New Deal became. You might have a book that says otherwise, but I've read several books that disagree with you. You've got a pretty high burden of proof to make that statement.
- kiba 16y ago
  So there are several books that said the same thing about Hoover, but does that mean it is more likely that these historians are more accurate than the historians who provided a renegade viewpoint? I have read another book that said that the early new deals program and regulatory framework were essentially made by insider players, who wrote the rulebooks to fit their business operations. Suddenly, you would have a few entrepreneurs and businessmen, jailed because they do a few things differently. For example, from my fallible memory, a businessman who sold tires has to compete with Goodyear, who have locations around the country. In order for his business to survive, he must sell his tries cheaper than Goodyears does. However, he got fined because Goodyear wrote the regulation rules for the tire industry. Which one is more likely in your opinion? The image of government programs being an entirely benevolent operation put forward by FDR, or political machines benefiting some people more than others, sometime at the expenses of one another? If I got a job with the work progress administration, I might be inclined to vote for FDR because he gave me a job, not whether or not if the work progress administration benefit the economy.
  - jbooth 16y ago
    > Renegade viewpoint? Yeah, in absence of better proof provided, I'll stick with the opinion of the majority of historians. The rest of your points haven't had anything to do with government finances or the attitudes of both presidents towards countercyclical spending vs balanced budgets. They seem like some blindly-applied-backwards-80-years modern republican simplifications about the nature of "government programs". Some dude got screwed by Goodyear at some point in history? Huh? There's been a lot of scholarship on this topic. You've got to do better than that if you're going to make an overarching claim like in your original point. To start with, here's a google search for "herbert hoover balanced budget": http://www.google.com/search?hl=en&q=herbert+hoover+balanced+budget&aq=f&aqi=&aql=&oq=&gs_rfai= http://www.google.com/search?hl=en&q=herbert+hoover+bala...
    - kiba 16y ago
      Yeah, in absence of better proof provided, I'll stick with the opinion of the majority of historians. What is your rationale for sticking with whatever the majority of historians said? The rest of your points haven't had anything to do with government finances or the attitudes of both presidents towards countercyclical spending vs balanced budgets. They seem like some blindly-applied-backwards-80-years modern republican simplifications about the nature of "government programs". Some dude got screwed by Goodyear at some point in history? Huh? Sorry about non-sequitur here. I was talking about the effects of FDR's New Deal programs and regulations, and Goodyear was just one data-points amongst many(presumably). Even so, why you think mine is a Republican simplification of government programs?
      - jbooth 16y ago
        Because, respectfully, the entire thought process displayed by your post seems to consist of "government = bad, therefore new deal = bad". It shows very little effort to understand what was actually happening, it boxes a huuuuuge range of possibilities into a simple black/white viewpoint, and it's a silly oversimplification that has high correlation with modern republicans. As far as what the majority of historians said, if it's them or you, and you're not saying something very very persuasive, I'll tend to believe them. No offense intended.
- yummyfajitas 16y ago
  Hoover didn't balance the budget, he doubled the national debt. http://en.wikipedia.org/wiki/File:Debt1929-50.jpg http://en.wikipedia.org/wiki/File:Debt1929-50.jpg It is true, however, that he raised taxes on the rich. Sound like anyone we know?
  - jbooth 16y ago
    Yes, the debt went up. Tax revenues collapsed in this period, remember. But Hoover was trying to balance the budget. He saw it as a goal, an end to itself that would reassure credit markets and do a bunch of good. FDR saw stimulating demand as more important in the short term. That's the difference between them. Hoover was raising taxes to try and balance the budget, and only increased government spending very slightly considering he had 25% unemployment. FDR threw it all to the wind for a few years and massively increased deficits as a deliberate policy.
    - kiba 16y ago
      Hoover, a one-time business whiz and a would-be all-purpose social problem-solver in the Lee Iacocca mold, was a bowling ball looking for pins to scatter. He was a government activist fixated on the idea of running the country as an energetic CEO might run a giant corporation. It was Hoover, not Roosevelt, who initiated the practice of piling up big deficits to support huge public-works projects. After declining or holding steady through most of the 1920s, federal spending soared between 1929 and 1932 -- increasing by more than 50%, the biggest increase in federal spending ever recorded during peacetime. --Totally biased source, http://online.wsj.com/article/SB122576077569495545.html http://online.wsj.com/article/SB122576077569495545.html
      - nerfhammer 16y ago
        It's deliberately misleading. "between 1929 and 1932" is a misleading way of saying "in 1932". Almost all of the deficit increase and public works spending occurred in 1932 (due to a single bill: the Emergency Relief and Construction Act) near the end of Hoover's presidency, but by saying "between 1929 and 1932" it makes it sound like it was a consistent policy throughout the downturn. In reality by that time in 1932 the depression was already near its worst lows and Hoover had tried keeping the budget balanced prior to that and only had a few months left in office.
- jswinghammer 16y ago
  With all due respect that's because you haven't read more on the subject. Lord Keynes himself is quoted in Rothbard's book as approving of the United States government's response to the crisis. The notion that depressions are caused by a fall in aggregate demand is looking totally at the symptoms of the crisis and not the causes. Rothbard might be one person but he's not a minor figure in 20th century economics by any means. He's not really on the level of Hayek, Friedman, Keynes, or Mises in terms of influence but he's no joke either. Hoover was the main force in the Harding administration to respond to the crisis of 1920-21 which Harding wisely ignored. The contraction in the economy was very severe but we recovered quickly and no one remembers it--except Austrian economists like Rothbard. And considering the lengths Roosevelt was willing to go to I'm not surprised Hoover didn't like all of The New Deal. I'm not sure Hoover or anyone else saw the seizing of all gold coming. I'm not sure why history forgives him for that act of theft.
  - jbooth 16y ago
    You were doing awesome until "seizing of all gold" -- obviously had a viewpoint but were giving credence to other viewpoints as well.. then that doozy. History forgives him because he ended the depression, won WWII and not everyone agrees with you about abolishing the gold standard being equivalent to quote "seizing of all gold".
    - steveplace 16y ago
      Gold standard and gold seizure are two different things. Executive Order 6102 required U.S. citizens to deliver on or before May 1, 1933 all but a small amount of gold coin, gold bullion, and gold certificates owned by them to the Federal Reserve, in exchange for $20.67 per troy ounce. Under the Trading With the Enemy Act of October 6, 1917, as amended on March 9, 1933, violation of the order was punishable by fine up to $10,000 ($166,640 if adjusted for inflation as of 2008) or up to ten years in prison, or both.
    - euccastro 16y ago
      [Edit: steveplace beat me to it. I'll leave this comment around for the reference.] Abolishing the gold standard is not "equivalent" to "seizing of all gold". Both things just happened concurrently: http://www.greatdepressiononline.com/gold-and-the-great-depression.htm http://www.greatdepressiononline.com/gold-and-the-great-depr... First, in 1933, at the height of the Great Depression, the U.S. Government, under the Gold Confiscation Act, confiscated gold money from its citizens and replaced it with paper Federal Reserve Notes. It became illegal for individuals to own gold, except for small quantities that coin collectors and dental practitioners could hold. This alone eliminated the public’s capacity to hold government inflation of the money supply in check; they could no longer redeem inflated paper money for gold.
- anamax 16y ago
  > As I understand it, Hoover was preoccupied with maintaining a balanced federal budget through budget cuts and tax increases. You got it backwards. In fact FDR campaigned against Hoover's deficit spending. Once in office, FDR reversed course and doubled-down on Hoover's approach. Hoover and FDR shared a belief that excess production was the problem - that's why both pushed govt programs to restrict it. That's what put the "Great" in "Great Depression". (Previous panics didn't last nearly as long.) FDR didn't back off until the approaching WWII made it obvious that an "Arsenal of Democracy" had to actually produce massive amounts of stuff. FWIW, Congressional Repubs at the time voted overwhelmingly for Social Security.
  - nerfhammer 16y ago
    Hoover began deficit spending only near the end of his presidency. Prior to that he drastically raised taxes and tried to balance the budget.
brc 16y ago
I think we can all pretty much agree that both Hoover and Roosevelt (and the administration in general) made things worse. The biggest problem we have is the obsession with GDP instead of trying to measure things like wealth creation - which is precisely what Henry Ford was in the business of.
rjurney 16y ago
You read a visionary interview about the fundamental labor reforms that made the pursuit of happiness a reality, from three years before the depression started, and your comment is to start the old saw debate about the causes of the great depression? And it's top comment? Are we voting for goodness or troll points? I get confused.

jbooth 16y ago

"proto-New Deal policies?" As I understand it, Hoover was preoccupied with maintaining a balanced federal budget through budget cuts and tax increases. That's the opposite of countercyclical spending, which along with some welfare state components made up the new deal. Maybe he was on board with the welfare state and the idea of people having high wages (who isn't?), but the government doesn't cut the majority of paychecks in the country, and those it does cut, he was, well, cutting. In regards to the Depression, he was pretty diametrically opposed to what the New Deal became. You might have a book that says otherwise, but I've read several books that disagree with you. You've got a pretty high burden of proof to make that statement.

kiba 16y ago
So there are several books that said the same thing about Hoover, but does that mean it is more likely that these historians are more accurate than the historians who provided a renegade viewpoint? I have read another book that said that the early new deals program and regulatory framework were essentially made by insider players, who wrote the rulebooks to fit their business operations. Suddenly, you would have a few entrepreneurs and businessmen, jailed because they do a few things differently. For example, from my fallible memory, a businessman who sold tires has to compete with Goodyear, who have locations around the country. In order for his business to survive, he must sell his tries cheaper than Goodyears does. However, he got fined because Goodyear wrote the regulation rules for the tire industry. Which one is more likely in your opinion? The image of government programs being an entirely benevolent operation put forward by FDR, or political machines benefiting some people more than others, sometime at the expenses of one another? If I got a job with the work progress administration, I might be inclined to vote for FDR because he gave me a job, not whether or not if the work progress administration benefit the economy.
- jbooth 16y ago
  > Renegade viewpoint? Yeah, in absence of better proof provided, I'll stick with the opinion of the majority of historians. The rest of your points haven't had anything to do with government finances or the attitudes of both presidents towards countercyclical spending vs balanced budgets. They seem like some blindly-applied-backwards-80-years modern republican simplifications about the nature of "government programs". Some dude got screwed by Goodyear at some point in history? Huh? There's been a lot of scholarship on this topic. You've got to do better than that if you're going to make an overarching claim like in your original point. To start with, here's a google search for "herbert hoover balanced budget": http://www.google.com/search?hl=en&q=herbert+hoover+balanced+budget&aq=f&aqi=&aql=&oq=&gs_rfai= http://www.google.com/search?hl=en&q=herbert+hoover+bala...
  - kiba 16y ago
    Yeah, in absence of better proof provided, I'll stick with the opinion of the majority of historians. What is your rationale for sticking with whatever the majority of historians said? The rest of your points haven't had anything to do with government finances or the attitudes of both presidents towards countercyclical spending vs balanced budgets. They seem like some blindly-applied-backwards-80-years modern republican simplifications about the nature of "government programs". Some dude got screwed by Goodyear at some point in history? Huh? Sorry about non-sequitur here. I was talking about the effects of FDR's New Deal programs and regulations, and Goodyear was just one data-points amongst many(presumably). Even so, why you think mine is a Republican simplification of government programs?
    - jbooth 16y ago
      Because, respectfully, the entire thought process displayed by your post seems to consist of "government = bad, therefore new deal = bad". It shows very little effort to understand what was actually happening, it boxes a huuuuuge range of possibilities into a simple black/white viewpoint, and it's a silly oversimplification that has high correlation with modern republicans. As far as what the majority of historians said, if it's them or you, and you're not saying something very very persuasive, I'll tend to believe them. No offense intended.
yummyfajitas 16y ago
Hoover didn't balance the budget, he doubled the national debt. http://en.wikipedia.org/wiki/File:Debt1929-50.jpg http://en.wikipedia.org/wiki/File:Debt1929-50.jpg It is true, however, that he raised taxes on the rich. Sound like anyone we know?
- jbooth 16y ago
  Yes, the debt went up. Tax revenues collapsed in this period, remember. But Hoover was trying to balance the budget. He saw it as a goal, an end to itself that would reassure credit markets and do a bunch of good. FDR saw stimulating demand as more important in the short term. That's the difference between them. Hoover was raising taxes to try and balance the budget, and only increased government spending very slightly considering he had 25% unemployment. FDR threw it all to the wind for a few years and massively increased deficits as a deliberate policy.
  - kiba 16y ago
    Hoover, a one-time business whiz and a would-be all-purpose social problem-solver in the Lee Iacocca mold, was a bowling ball looking for pins to scatter. He was a government activist fixated on the idea of running the country as an energetic CEO might run a giant corporation. It was Hoover, not Roosevelt, who initiated the practice of piling up big deficits to support huge public-works projects. After declining or holding steady through most of the 1920s, federal spending soared between 1929 and 1932 -- increasing by more than 50%, the biggest increase in federal spending ever recorded during peacetime. --Totally biased source, http://online.wsj.com/article/SB122576077569495545.html http://online.wsj.com/article/SB122576077569495545.html
    - nerfhammer 16y ago
      It's deliberately misleading. "between 1929 and 1932" is a misleading way of saying "in 1932". Almost all of the deficit increase and public works spending occurred in 1932 (due to a single bill: the Emergency Relief and Construction Act) near the end of Hoover's presidency, but by saying "between 1929 and 1932" it makes it sound like it was a consistent policy throughout the downturn. In reality by that time in 1932 the depression was already near its worst lows and Hoover had tried keeping the budget balanced prior to that and only had a few months left in office.
jswinghammer 16y ago
With all due respect that's because you haven't read more on the subject. Lord Keynes himself is quoted in Rothbard's book as approving of the United States government's response to the crisis. The notion that depressions are caused by a fall in aggregate demand is looking totally at the symptoms of the crisis and not the causes. Rothbard might be one person but he's not a minor figure in 20th century economics by any means. He's not really on the level of Hayek, Friedman, Keynes, or Mises in terms of influence but he's no joke either. Hoover was the main force in the Harding administration to respond to the crisis of 1920-21 which Harding wisely ignored. The contraction in the economy was very severe but we recovered quickly and no one remembers it--except Austrian economists like Rothbard. And considering the lengths Roosevelt was willing to go to I'm not surprised Hoover didn't like all of The New Deal. I'm not sure Hoover or anyone else saw the seizing of all gold coming. I'm not sure why history forgives him for that act of theft.
- jbooth 16y ago
  You were doing awesome until "seizing of all gold" -- obviously had a viewpoint but were giving credence to other viewpoints as well.. then that doozy. History forgives him because he ended the depression, won WWII and not everyone agrees with you about abolishing the gold standard being equivalent to quote "seizing of all gold".
  - steveplace 16y ago
    Gold standard and gold seizure are two different things. Executive Order 6102 required U.S. citizens to deliver on or before May 1, 1933 all but a small amount of gold coin, gold bullion, and gold certificates owned by them to the Federal Reserve, in exchange for $20.67 per troy ounce. Under the Trading With the Enemy Act of October 6, 1917, as amended on March 9, 1933, violation of the order was punishable by fine up to $10,000 ($166,640 if adjusted for inflation as of 2008) or up to ten years in prison, or both.
  - euccastro 16y ago
    [Edit: steveplace beat me to it. I'll leave this comment around for the reference.] Abolishing the gold standard is not "equivalent" to "seizing of all gold". Both things just happened concurrently: http://www.greatdepressiononline.com/gold-and-the-great-depression.htm http://www.greatdepressiononline.com/gold-and-the-great-depr... First, in 1933, at the height of the Great Depression, the U.S. Government, under the Gold Confiscation Act, confiscated gold money from its citizens and replaced it with paper Federal Reserve Notes. It became illegal for individuals to own gold, except for small quantities that coin collectors and dental practitioners could hold. This alone eliminated the public’s capacity to hold government inflation of the money supply in check; they could no longer redeem inflated paper money for gold.
anamax 16y ago
> As I understand it, Hoover was preoccupied with maintaining a balanced federal budget through budget cuts and tax increases. You got it backwards. In fact FDR campaigned against Hoover's deficit spending. Once in office, FDR reversed course and doubled-down on Hoover's approach. Hoover and FDR shared a belief that excess production was the problem - that's why both pushed govt programs to restrict it. That's what put the "Great" in "Great Depression". (Previous panics didn't last nearly as long.) FDR didn't back off until the approaching WWII made it obvious that an "Arsenal of Democracy" had to actually produce massive amounts of stuff. FWIW, Congressional Repubs at the time voted overwhelmingly for Social Security.
- nerfhammer 16y ago
  Hoover began deficit spending only near the end of his presidency. Prior to that he drastically raised taxes and tried to balance the budget.

brc 16y ago

I think we can all pretty much agree that both Hoover and Roosevelt (and the administration in general) made things worse. The biggest problem we have is the obsession with GDP instead of trying to measure things like wealth creation - which is precisely what Henry Ford was in the business of.

rjurney 16y ago

You read a visionary interview about the fundamental labor reforms that made the pursuit of happiness a reality, from three years before the depression started, and your comment is to start the old saw debate about the causes of the great depression? And it's top comment? Are we voting for goodness or troll points? I get confused.