Hoover played role in current economic crunch
Sat Apr 26, 2008 at 08:34:30 PM PDT
When it comes to the Great Depression, Herbert Hoover probably gets a bad rap. The fact that he shares a surname with W.H. "Boss" Hoover, whose eponymous firm helped popularize the vacuum cleaner, has only further cemented his reputation as an economic scapegoat. (We had a Hoover in the White House and the economy sucked!)
But however clean Hoover’s hands may be when it came to the stock market crash of 1929, there’s no getting around the fact that he helped pave the way for the current economic downturn.
How did it all go so wrong? Some history is in order.
Before becoming the nation’s chief executive, Hoover had accrued a portfolio of progressive credentials that would have had members of today’s Republican Party frothing at the mouth. For one thing, he specifically spoke out against the free-market philosophy that helped contribute to the worst economic times the United States has ever known.
In fact, as Secretary of Commerce in the Harding and Coolidge administrations, Hoover promoted the idea of government intervention in the economy as part of the Efficiency Movement.
John McCain, meet a real maverick.
By the time Hoover entered public life, he already had demonstrated personal bravery and professional competence –- two traits which place him head and shoulders above members of the current administration. Trapped in China during the Boxer Rebellion, Hoover once risked his life to rescue some Chinese children.
Hoover’s concern for his fellow man continued during World War I. He headed the Committee for Relief in Belgium. His capable action there, and later, as chief of the American Food Administration made him a hero across the globe. He was so competent, in fact, that when the Mississippi River flooded in 1927, the governors of six states asked for Hoover by name.
Health units organized by Hoover succeeded in eliminating malaria, pellagra, and typhoid fever from many flood-stricken areas.
Imagine if Hoover had been in the Bush administration after Hurricane Katrina. The president might have said, "Heckuva job, Hoovie," and meant it.
Alas, Hoover’s term as president was not to be as distinguished. Fear factored into the election of 1928. Somehow, it always seems to when Republicans win. In this case, the Catholicism of Democrat Al Smith sent many voters to the GOP.
Then the bottom fell out of the stock market, and Hoover’s economic ideology betrayed him.
Throughout his public life, Hoover had pushed the idea that government and business should work cooperatively to solve problems. It was a strategy that had worked well in the past.
"I suppose I could have called in the Army to help," he said regarding the 1927 flood, "but why should I, when I only had to call upon Main Street."
One of Hoover’s first responses to the Depression was to ask employers to keep workers on the payroll. But most firms were unable or unwilling to keep paying workers for that amount of time.
Many of the tools that Franklin Delano Roosevelt’s administration used to combat the Depression were tried first by Hoover, albeit on a smaller scale. It seemed that Hoover couldn’t grasp the enormity of the problem confronting him.
But what role did Hoover play in the current economic mess?
It happened while he was serving as Commerce Secretary. Hoover worked with bankers and the savings and loan industry to promote a newfangled financial instrument called the long-term home mortgage.
The rest, as they say, is history. Aided and abetted by today’s conservative mantra of deregulation, the once-benign mortgage industry now stands at the center of the current financial crisis. "Liars’ loans," subprime mortgages and dubious investment packages have spread financial woe into such diverse segments as plastic surgery, truck sales and retail sales.
But remember. It’s not a Hoover thing. It’s a Republican thing.
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