Legacies Revisited: Hoover and The Great Depression

By: Chris Gomez

The 1920s were a turbulent period of economic growth, excess and then ultimately, calamity. In our history books, the severity of the Great Depression is typically laid at the feet of President Herbert Hoover. Is this scarring accusation correct or a misnomer? We will discuss Hoover’s legacy.

Hoover began his career in politics with his assignment to head the Food Administration during World War I under President Woodrow Wilson. This experience had a profound effect on him and did influence his personal views on humanitarian issues which would later gain him acclaim. He became sympathetic to the idea of the state as an instrument to cure poverty and suffering, but did not disregard his view that a free market system centered on individualism and less government intervention was optimal. Hoover’s tenure as Commerce Secretary began in 1920 under President Harding and later Coolidge. This began a period of overall success for the American economy. This success, however, was not to last as we consider some of the unsound fiscal policy that became prevalent throughout the world. To understand President Hoover and his ensuing policy priorities we must examine the pre-existing economic conditions globally and domestically.

When considering the global conditions, prior to World War I, many countries operated on the gold standard where paper currency was linked to and could be exchanged for an amount of gold. The main benefit of this system was that there were checks on inflation due to the limited ability to expand the supply of money. In order to fund the war effort, several of the countries, with the exception of the U.S., temporarily left the gold standard and let their currencies trade without backing, also known as fiat currency. The ensuing period of the 1920’s saw an attempt by Britain to return to the gold standard at a price economically impossible due to the wartime inflation. The idea was to go back to the legitimacy of the gold standard while forsaking the rule of convertibility and breaking the checks on inflation. Britain was attempting to reassert itself as the number one global superpower by enjoying the immediate economic benefits of inflation while pushing off the long term effects onto other countries. Several central banks of the nations were part of this collaborative effort. This, along with several other issues such as Germany being unable to independently pay its excessive war reparations created economic problems in Europe that would create a cycle of unpaid debt that would also impact the U.S. The global economic picture was beginning to appear bleak.

In terms of the domestic context, as Commerce Secretary, Hoover helped promote the deregulation, low tax rates and overall economic freedoms prevalent during the Harding and Coolidge administrations. He also warned of excessive stock speculation in the domestic U.S. and encouraged sound, but not overzealous government policy to monitor the situation. This was a good concept, but unfortunately it was ignored by others in the respective administrations. These administrations failed to adequately address the growing problems that were beginning to take place in the U.S. They did not adequately consider fair regulation of the market system and this would later become a major area of concern. Once Hoover assumed the Presidency, the stock market crash became a reality. The agricultural market in the U.S. was suffering and the years of unregulated stock speculation caught up with the U.S. economy.

In defense of Hoover, he was simply a man in the wrong place at the wrong time. Major global culprits behind the Depression were central banks that helped facilitate unsound European economic policy in addition to overzealous nations placing unrealistic reparation expectations on Germany following World War I. Debts were not repaid and this created an unhealthy economic chain reaction. These factors greatly unsettled the global economic climate. Domestically, there was not fair monitoring of stock speculation during the decade leading up to the crash and the agricultural sector was suffering. In the early stages of Hoover’s presidency, he was greeted with the stock market crash and arguably did not have enough time to fully apply his policy agenda to address it. To claim that he was the cause of the Great Depression, is wholly inaccurate and distorts the historical record. Ironically, as established, in the decade preceding the crash, Hoover was one of the minority voices in two administrations voicing his concern about the direction of the U.S. economy. If his propositions were applied sooner, it may have provided meaningful reforms that may have staved off some of the worst effects of the Great Depression, if not not rebounding from it in a shorter timeframe.

Now let us analyze Hoover’s actions after the crash. Hoover did not create the Depression but a question lingers; did his policies as President make it worse? Overall, the short answer is no they did not, but he was not given enough time to apply all his policy goals which may have shortened its timeframe. Hoover was a man greatly concerned about the effects of overzealous government intervention in the economy believing that it was a gateway toward socialism. Initially, he sought to continue promoting tax cuts as a means to ease the burden on the nation. One of his central focuses was also on state and local governments to work in collaboration with the federal government and private sector to address the economic issues facing the nation. He was adamantly against a central planning big government model to address the issues and post-presidency he would continue to be critical of this philosophy. During his term as he sought to lead the nation out of the Great Depression, he frequently reached out to major business leaders in the private sector and promoted laws that would focus on state centered relief disbursements.

He did, however, sign into law the enactment of the Reconstruction Finance Corporation, a government organization that was meant to invest in railroads, insurance companies and other large businesses as a way to limit the fallout. This was one of his few major legislative initiatives that sought to create a strong federally infused boom to the economy. His (mostly) non-interventionalist policy priorities, however, led to him being ostracized by the people and not re-elected for a second term. After President Franklin D. Roosevelt was elected, the Depression would continue for eight more years leading up to the dawn of WWII. The Roosevelt era would usher in the New Deal and a large scale government infusion into the economy.

Hoover represents an important figure in history. Hoover’s overarching vision was to rebuild the economy with policy encouraging the federal government to serve a collaborative, rather than central role. If he was able to fully integrate this into action, it could be argued that the Great Depression may have been significantly shortened. It could also be argued that Roosevelt’s actions that created a greater expansion of government into economic matters may have slowed the recovery. Hoover saw the New Deal as the road into socialism for the United States and spoke out against the efforts of Roosevelt. Politically ruined as he was, this did not garner much attention but his ideals have survived into today.

Today, the Hoover Institution stands at Hoover’s alma mater Stanford and promotes the ideas of free markets and individualism. It continues to carry out his legacy. Hoover was not a perfect President, yet there is a lot to be gleaned from his policy views and a large sense of unknown regarding what would have become of his policies if they had been given more time to work. His free market goals with an intent to reign in overzealous government intervention were optimal and continue to be considered today. To conclude, Hoover is a misrepresented President and contributed a lot to the intellectual forum that considers sound free market economic policy.

Pack the Court? Don’t Pack the Court, Baby

By: James West

Hamilton wrote in Federalist No. 71, “When occasions present themselves, in which the interests of the people are at variance with their inclinations, it is the duty of the persons whom they have appointed to be the guardians of those interests, to withstand the temporary delusion, in order to give them time and opportunity for more cool and sedate reflection.” While many modern progressives would jump at the chance to quote a fictionalized version of Hamilton, it may behoove them to maintain a stricter adherence or understanding of his words.

To say that the fabric of our nation is under attack is not hyperbolic, though the sentiment needs some clarification to make it more well understood. What do I mean by “fabric of the nation?” An answer in two parts: first, Federalism. The delegation of powers and responsibilities between the Federal and State governments in order to ensure a more even-keeled spread of power. This has, of course, been “under attack” – and perhaps even partially destroyed – by the 17th Amendment and progressive agendas dating back to Wilson. That being said, the philosophical martyr that is Federalism is not the subject of this writing.

The second part of the “fabric of the nation” is the Separation of Powers, the delegation of powers and responsibilities between the three branches of government. It is an unfortunate reality that this foundation of our country’s government has been relegated to, essentially, a footnote in the American education system. We learned the branches, but never why they were separated in the first place, the philosophy behind why they were given the responsibilities they were and the dangers in blurring the lines between them. And so therein lies a major contributing factor as to why our fabric, as described above, is “under attack.” Now, perhaps there is some nefarious agenda to pool power in a massive oligarchical scheme. Perhaps there is a coordinated attack by outside parties to dismantle and disrupt how we operate in order to make us weaker. And, perhaps, there are elected officials and influential policy makers who know the risk of what the say and say it any way, not for a benevolent goal, but for selfish ends. While I am sure there is no shortage of the latter, Hanlon’s Razor presents a simpler explanation: never attribute to malice that which is adequately explained by stupidity. The “attack” is not like a line of missiles aimed at the front line, but more akin to a bear aimed at a screen door when it smells a fresh baked pie. The screen door is collateral damage to the bear’s end, and the bear knows not what it does – only the reward of pie.

With one party heading the Executive Branch, controlling (though less so than a few months ago) the House, and now the Senate, one obstacle poses a threat to the only bastion of objectivity blocking their agenda: The Supreme Court. The knob on the screen door. The pie is the agenda, and the claws and snout with which they rip through the screen like a less-competent Winnie the Pooh is court-packing. To quote a colleague, “I can’t believe we’re actually talking about that in 2020.” And we should not be – court-packing is logically incoherent, futile at best, and antithetical to American principles.

I understand how a “slippery slope” argument could easily become fallacious, and so I hold myself from saying “What are we going to have? A million Supreme Court justices?” But the argument holds that simply adding more justices leads to an incoherent outcome. The problem with court-packing is that it does not solve a problem of “not enough justices,” but solves a problem of “not enough justices that rule how we want, right now.” It is a permanent solution to a temporary problem (“problem” being used loosely). It does not address that there will always inevitably be some sort of inequity within a court – any court – with regard to the judicial philosophy being applied when rendering decisions. The closest mechanism for eradicating that inequity can be found in the Delaware State Constitution, which requires that no more than a “bare majority” – a “one-seat advantage” – may be held by the same political party on any given Delaware court. This mechanism (which made its way to the Supreme Court in December in Carney v. Adams, but was remanded based on standing of the plaintiff) ensures that on a five-member court, for example, there can only be a 3-2 majority. However, therein still lies some inherent inequity in the judicial philosophies of the judges. This inequity is impossible to eradicate, only to swing in the other direction. Like any pendulum, it will inevitably swing back.

The incoherence of idea of court-packing is supplemented by its futility – as stated above, the result of the endeavor would only be temporary until judges die or retire and new judges are appointed and the pendulum swings again (or worse, that precedent for packing is established and each cycle we add more judges – maybe not a million, but 15? 17?). But moreover, court packing assumes that each judge is going to rubber stamp an opinion and will inevitably rule one way every single time. To the unenlightened, this would assumedly be accurate and happen all the time. Fortunately, it’s not true. Justice Breyer often spoke in his debates and discussions with Justice Scalia however the Supreme Court rules unanimously – *unanimously* –  about 40% of the time. That’s 9-0 opinions, 40% of the time. It speaks nothing of the unexpected 8-1’s or 7-2’s, or even 6-3’s. We’ve been led to believe that the Court ruled 5-4 on everything, with a liberal wing and a conservative wing and one or two swings in the middle, and that that’s way it has to be and should be. The narrative now is that “balance” has been thrown off by the Court’s alleged 6-3 inequity, and that must be resolved. The facts dictate this is an exercise in futility. Not only is there no *guarantee* that the Court will rule 6-3 on the issues, but history suggests that they would not. We have seen that in action – Gorsuch, Kavanagh, and Barrett have issued rulings contrary to Trump’s interests. It’s almost as if they believe they are an independent, neutral branch of government.  

Court packing has no pragmatic end – except one. The threat of court packing is more combustible than the packing of the court itself. That much is historically true – see, FDR’s plan to add a justice every time one reached 70 and would not retire (a switch in time that saved nine, indeed). It was antithetical to American principles then, and its antithetical now. There is always going to be an inequity in the court, but in the same way attempts to remove that inequity are futile, the line is fine between a natural inequity over the progression of time and an inequity as a result of one Executive’s undue influence over a completely separate branch of government. Court packing – especially FDR’s plan – is a complete blurring of the separation of powers. It would grant undue influence from one branch over the other, and it would cause the judiciary to be a tool of the Executive to effectuate the rulings that they want. You may ask, “But James – isn’t that already the case? Doesn’t the President appoint who sits on the Supreme Court, and so the influence is Constitutionally based?” Yes and no. The problem is not the *influence* of the President on the Supreme Court. That influence is always there, just as each branch influences the other as they keep themselves in check (or are supposed to). But packing the Court would lead to an *undue* influence, and influence so great that it can only be called control. Many on the Left already view the Supreme Court as a Plan B Legislature, a way to get things done when the pesky Democratic process just will not move quickly enough. That is not what it is, and it is what it can never be. The sanctity of the Court’s objectivity must be maintained.  

And, of course, the undue influence would be shifted once a President from a different party was elected. The pendulum swings. What makes our country our country, or our Union our Union, has been eroded for decades. Mobs burn and torch small businesses, mobs storm the Capitol building, and the trust in our electoral system is at an all time low. Our division is stark, social media is making it worse, and everyone has opinions, but no one has convictions. After years of calling Trump a fascist and a dictator, the same people will be complacent or supportive of power continuing to centralize and acquiesce in the Executive. Court packing now would be just as if not more dangerous than when it was threatened by FDR. It’s a danger to the Separation of Powers and I implore all to think twice, especially Majority Leader Chuck Schumer, before suggesting it further.