Depressions: 1920s v. 1930s

As Ludwig von Mises correctly noted, in the absence of government intervention, unemployment is always voluntary. Yet, over ten million Americans were unemployed in 1938.   Compare that to the eight million in 1931 and 969,069 in 1923.

Depression of January, 1920 - July, 1921

Fact:  Real GNP fell every year from 1919 to 1921 with a total fall of 16% over that three-year period.

Fact:  GNP declined 6.9%.

Fact:  18% deflation.

Fact:  Wholesale prices fell by 36.8% (the worst since the Revolutionary War and worse than any year during the Great Depression).

Fact:  Unemployment spiked to 11.7%.

Fact:  The stock market fell by 47%.

Fact:  Business bankruptcies tripled.

Fact:  Business profits fell by 75%.

Fact:  Automobile production declined by 60%.

Fact: Total industrial production declined by 30%.

Fact:  HARDING AND COOLIDGE CUT TAXES (Revenue Acts of 1921, 1924, and 1926)

Fact:  The combined top marginal normal and surtax rate fell from 73% to 58% in 1922, and then to 50% in 1923 (income over $200,000).

Fact:   In 1924, the top tax rate fell to 46% (income over $500,000).

Fact:  The top rate was just 25% (income over $100,000) from 1925 to 1928, and then fell to 24% in 1929.

Fact:  The GNP averaged 7% from 1924 to 1929.

Fact:  Between 1922 and 1929, real GNP grew at an annualised rate of 4.7% and the unemployment rate fell from 6.7% to 3.2%.

Fact: Between 1922 and 1928, the average income for those earning more than $100,000 increased by 15%, but the number of “rich” quadrupled.

Fact: In the same period, the number of taxpayers earning between $10,000 and $100,000 increased by a staggering 84% and the number of taxpayers reporting income of less than $10,000.

Fact:  By 1923, unemployment was 2.4%.

The Great Depression

Fact:   Hoover expanded civil service coverage of Federal positions.

Fact:  Hoover canceled private oil leases on government lands.

Fact:  Hoover instructed the Justice Department and the IRS to pursue gangsters for tax evasion.

Fact:  Hoover set aside 3 million acres of national parks and 2.3 million acres (9,000 km²) of national forests.

Fact:  Hoover advocated tax reduction for low-income Americans.

Fact:  Hoover closed certain tax loopholes for the wealthy.

Fact:  Hoover doubled the number of veterans' hospital facilities.

Fact:  Hoover wrote a Children's Charter that advocated protection of every child regardless of race or gender.

Fact:  Hoover created an antitrust division in the Justice Department.

Fact:  Hoover required air mail carriers to adopt stricter safety measures and improve service.

Fact:  Hoover proposed federal loans for urban slum clearances (not enacted).

Fact:  Hoover organised the Federal Bureau of Prisons

Fact:  Hoover reorganised the Bureau of Indian Affairs

Fact:  Hoover instituted prison reform

Fact:  Hoover proposed a federal Department of Education (not enacted)

Fact:  Hoover advocated $50 per month pensions for Americans over 65 (not enacted)

Fact:  Hoover chaired White House conferences on child health, protection, homebuilding and home-ownership

Fact:  Hoover began construction of the Boulder Dam (later renamed Hoover Dam)

Fact:  Hoover signed the Norris – La Guardia Act that limited judicial intervention in labour disputes.

Fact:  Hoover raised the tax rate on the "evil rich" from 25% to 63% while arguing for decreases in rates for the lower incomes. See the Revenue Act of 1932 and his speeches on progressive taxation.

Fact:  Hoover increased federal spending by 52 per cent from 1929 to 1933. Adjust to reflect deflation, and the Hoover figure is a disconcerting 88 per cent.

Fact:  Hoover massively increased infrastructure programmes.

Fact:. Hoover recognised measures such as Federal and state and local public works, work-sharing, maintaining wage rates ("a large majority has maintained wages at high levels" as before), curtailment of immigration, and the National Credit Corporation and urged more drastic action.

Fact: Hoover established a Reconstruction Finance Corporation, which would use Treasury funds to lend to banks, industries, agricultural credit agencies, and local governments.

Fact:  Hoover broadened the eligibility requirement for discounting at the Fed.

Fact: Hoover created a Home Loan Bank discount system to revive construction and employment measures, which had been warmly endorsed by a National Housing Conference recently convened by Hoover for that purpose.

Fact: Hoover expanded government aid to Federal Land Banks.

Fact:  Hoover set up a Public Works Administration to coordinate and expand Federal public works.

Fact: Hoover issued an order restricting immigration to increase employment for citizens.

Fact:  Hoover made it a priority to weaken the "destructive competition" (i.e., competition) in natural resource use.

Fact:  Hoover granted direct loans of $300 million to States for relief.

Fact:  Hoover worked to reform the bankruptcy laws (i.e., weaken protection for the creditor).

Fact:  Hoover also displayed anxiety to "protect railroads from unregulated competition," and to bolster the bankrupt railroad lines.
 
Fact:  In addition, Hoover called for sharing-the-work programmes to save several millions from unemployment.

Fact: In 1931, Hoover instituted a massive increase in government spending that included direct relief programmes and public works projects in order to provide jobs and security for the growing population of unemployed workers.

Fact:  Hoover supported the initiation of a national sales tax, a measure that failed in Congress.

Fact:  Hoover encouraged Congress to pass a farm act (the Agricultural Marketing Act), which would help farmers to increase efficiency in selling their goods and grant them loans.

  
Fact: To give farmers some added protection from foreign competition, Hoover also supported raising the agricultural tariffs, though his poor political acumen was not able to convince Congress of his plan, and his tariff ideas failed in Congress.

Fact: To give farmers some added protection from foreign competition, Hoover also supported raising the agricultural tariffs, though his poor political acumen was not able to convince congress of his plan, and his tariff ideas failed in Congress.

Fact:  Hoover granted further rights to Native Americans, preserving national forests, and developing massive construction projects.

Let's recall the words of Josh Marshall, a PROGRESSIVE and contributor at the PROGRESSIVE Talking Points Memo:

"Hoover was part of the 1912 Progressive party and he was in key respects a Republican Progressive in the early 20th century meaning of the term -- which is to say he was a technocrat who believed in scientific management and things like that. It is also true that as the Depression deepened Hoover did take steps in the direction of government intervention in the economy...The straw-man version of Hoover's presidency, in which he sat back and did nothing for four years, waiting on the market to correct itself is a caricature."

 

 Hoover In His Own Words

“We might have done nothing. That would have been utter ruin. Instead we met the situation with proposals to private business and to Congress of the most gigantic program of economic defense and counterattack ever evolved in the history of the Republic. We put it into action...”

- Herbert Hoover, 11 August 1932

   

“No government in Washington has hitherto considered that it held so broad a responsibility for leadership in such times. . . . For the first time in the history of depression, dividends, profits, and the cost of living, have been reduced before wages have suffered.”

- Herbert Hoover, 11 August 1932

“Some of the reactionary economists urged that we should allow the liquidation to take its course until we had found bottom...

We determined that we would not follow the advice of the bitter-end liquidationists and see the whole body of debtors of the United States brought to bankruptcy and the savings of our people brought to destruction.”

- Herbert Hoover, 4 October 1932

“They were maintained until the cost of living had decreased and the profits had practically vanished. They are now the highest real wages in the world.”

-Herbert Hoover, 5 November 1932

"Creating new jobs and giving to the whole system a new breath of life; nothing has ever been devised in our history which has done more for . . . 'the common run of men and women.’”

- Herbert Hoover 22 October 1932