The Great Depression and Hoover

[Nitrus]

The Great Depression was in my opinion one of the worst periods of time for the American people. Unemployment was soaring, and the Governments "Laissez Faire" policy didn't help. And of course, all of this started with the Wall Street Crash, share prices falling, and countless investors losing everything they owned, some commiting suicide.

Was Hoover and his Government to blame??

Discuss.

-N

[Athena]

I would say no, Hoover was not to blame.Â*Â*The forces that lead to the great depression were far greater than what any man could control.Â*Â*Keep in mind all industrial countries experience economic collapse and went to war.Â*Â*The Great Depression was about much more than the collapse of the US economy.

However, at this time Deming attempted to get industry to accept the democratic model and had they done so, our history would have gone differently.Â*Â*The US is schzoid paranoid.Â*Â*It entered WWI crying, "Democracy and autocracy can not co exist", but from the beginning it had modeled its industry after the English autocratic model.
There are serious economic and social ramifictions to having autocratic instead of democratic industry.Â*Â*

The US government became fascist to deal with the problems of autocratic industry, and as happed in Itally, the workers have not kept control of this movement, and the fascism is working against the workers.Â*Â*But now this is too far from the subject.Â*Â*I will leave it at Hoover designed the Big Government at Roosevelts request, and we know the results of these newly designed government powers as the New Deal.Â*Â*He was a bureaucratic genius.Â*Â*

[Nathan Brazil]

The Great Depression was in my opinion one of the worst periods of time for the American people. Unemployment was soaring, and the Governments "Laissez Faire" policy didn't help. And of course, all of this started with the Wall Street Crash, share prices falling, and countless investors losing everything they owned, some commiting suicide.

Was Hoover and his Government to blame??

Discuss.

-N


Umm....you're sort of arbitrarily defining origins, aren't you? I mean, here you are, blaming an alleged government "laissez-faire" policy for not helping curb the Depression and by implication you're not blaming the government for actually causing the Depression in the first place.

While the causes of the Depression are fairly complex, the key to the collapse was the rapid growth caused easy money policy of...the Federal Reserve, a newly created arm of the government (Wilson, 1916)....the collapse was caused by...the Federal Reserve drastically and rapidly cutting the money supply...oh. So much for blaiming "laissez-faire" on the Depression. If the government hadn't interfered in the first place, there wouldn't have been an economy wide nation-devastating collapse.

And...let's see...FDR manipulated wages and prices and created make work programs and stole gold from citizens and did favors for the unions....and made the Depression worse. Hardly "laissez-faire" there, eh?

The things that Hoover should have done, like telling the Federal Reserve to expand the money supply, didn't happen. Tax rates at the time simply weren't high enough to be an issue, though they certainly rose enough to bec0me one under FDR.

Nope, laissez-faire would have been the best policy overall, if it had been applied in the beginning.

Then again, one of the causes of the Depression was US involvment in WWI, something we had no business at all getting mixed up in.

[Nitrus]

Very good points, I am not as familiar with the subject as you, I was just bringing up the subject for people to discuss, and firing random questions to put thoughts in your mind, not for people to just answer my points, but to open up the discussion.

-N

[Athena]

There are people opposed to the Federal Reserve and perhaps we could discuss the pro's and con's of it. And we might want to know more about why the Federal Reserve tightened the money supply. What could have happened to value of the dollar if they had not?

What about this pre Depression statement- "Given our know oil supply and rate of consumption, we are headed for economic disaster and possibly war".

What about the collapse of all industrial economis, not just the US. Was it the US Federal Reserve decision that caused all industrial economies to collapse?

[Athena]

People were starving to death during the recession, and I do not believe Roosevelt's programs made things worse. but saved people's lives.Â*Â*We tax people much more today, and have far, far greater national debt.Â*Â*It was the fear of over spending and ending the programs that caused things to get worse.Â*Â*Had we stayed with Roosevelt's plan, I think we would have made a more rapid recovery.Â*Â*

Economic collaspe is devastating to people's lives, and I believe government should take a very active role to reduce this as much as possible.Â*Â*If you have something about this, please, explain your experience with economic collaspe, are so many people loosing their homes and business, the city begins to look like a ghost town.Â*Â*The business that do remain post signs saying they are not accepting applications.Â*Â*All charities are over whelmed and can not possibly meet the needs.Â*Â*It takes 5 years professional show shining experience to get a job shining shoes.Â*Â*The number of unwed teen pregnancies is soaring, along with abandoned familes and divorces.Â*Â*This is gone on for so many years, few people have the resources to continue, and many people are experiencing severe mental problems.Â*Â* How was for you when this was happening?Â*Â*

If a government can not respond to this, and correct the problems, then what is the point of having a government?

[Athena]

No response to the statement that the US is fascist?

[Nathan Brazil]

There are people opposed to the Federal Reserve and perhaps we could discuss the pro's and con's of it.Â*Â*And we might want to know more about why the Federal Reserve tightened the money supply.Â*Â*What could have happened to value of the dollar if they had not?

The problem was the Federal Reserve was acting in an amatuerish fashion, and it's expansion of the money supply was ill considered and it's sudden constriction doubly so. A failure to curtail the money supply, or a more sensible restriction, would have fueled inflation...which wouldn't have been as damaging in all likelihood. No matter what, because the Fed over expanded the money, a correction of some sort was bound to happen. But they did the worst possible thing.

What about this pre Depression statement- "Given our know oil supply and rate of consumption, we are headed for economic disaster and possibly war".

There's always been doom and gloomers. With 80 years of hindsight, we know damn good and well that there wasn't any problem with the oil supply in 1926, and any such concern was groundless.

What about the collapse of all industrial economis, not just the US.Â*Â*Was it the US Federal Reserve decision that caused all industrial economies to collapse?

The US trade balance was negligible at the time. We didn't do a lot of importing, and we weren't doing a lot of exporting, either. Also, the foreign governments in question, mostly European ones, were suffering from the costs of the war they just finished enjoying so much.

[Nathan Brazil]

People were starving to death during the recession, and I do not believe Roosevelt's programs made things worse. but saved people's lives.

People starve to death all the time. But today we have millionaires driving around in their limos pointing out how much they care about it and touting their next movie at the same time, too, or their latest fad cult.

Had we stayed with Roosevelt's plan, I think we would have made a more rapid recovery.

Which plan? The first one that didn't work, the second one that didn't work, the third one that didn't work, the fourth one that didn't work, or the let's get in a really huge war with japan and germany plan that didn't do more than get people used to the idea of buying things again?

Know what the war did to fix the Depression? It expanded the money supply. Bullets, bombs, and bombers aren't really much in terms of capital investment, but they did create paychecks.

If a government can not respond to this, and correct the problems, then what is the point of having a government?Â*Â*


Baby-sitting isn't a function of government. The goverment caused the Depression, so it's rather silly to ignore this and then praise the goverment for taking more than a decade to get the country out of it.

[Athena]

People were starving to death during the recession, and I do not believe Roosevelt's programs made things worse. but saved people's lives.

People starve to death all the time.Â*Â*But today we have millionaires driving around in their limos pointing outÂ*Â*how much they care about it and touting their next movie at the same time, too, or their latest fad cult.

Had we stayed with Roosevelt's plan, I think we would have made a more rapid recovery.

Which plan?Â*Â*The first one that didn't work, the second one that didn't work, the third one that didn't work, the fourth one that didn't work, or the let's get in a really huge war with japan and germany plan that didn't do more than get people used to the idea of buying things again?Â*Â*

Know what the war did to fix the Depression?Â*Â*It expanded the money supply.Â*Â*Bullets, bombs, and bombers aren't really much in terms of capital investment, but they did create paychecks.

If a government can not respond to this, and correct the problems, then what is the point of having a government?Â*Â*


Baby-sitting isn't a function of government.Â*Â* The goverment caused the Depression, so it's rather silly to ignore this and then praise the goverment for taking more than a decade to get the country out of it.


I am sorry you really need to be more specific. Please, specify What you think Roosevelts plans were and clarify what happened to each one.

[Churchel]

If rosevelt would have listened to andrew mellon, liquidate everything and then let the market regroup, we would be a different country now, listening to the tales of the great starvation, not great depression.

Roosevelt created the SEC and FDIC.

Rosevelt did regulate and set price contols in 1932, which were repealed in 1935. I believe that provided a cushion to the freefall.

As far as who is to blame, there is plenty of blame to spread around. War reparations comes to mind as a primary cause.

We should look further into these things, with the average consumer living on credit (like in the 1920's), combining with a rising interest rate (the credit payments become more with no additional income) will negatively affect their debt to income. This is one of the factors that led to the depression.

We have two factors currently that will cause purchasing stagnations, the cost of utilities and fuel. What is currently offsetting this is a trade deficit of 800 billion. When that corrects itself, we will have a similar snowball effect.

my $.02

[Nathan Brazil]

If rosevelt would have listened to andrew mellon, liquidate everything and then let the market regroup, we would be a different country now, listening to the tales of the great starvation, not great depression.

Roosevelt created the SEC and FDIC.

Rosevelt did regulate and set price contols in 1932, which were repealed in 1935.Â*Â*I believe that provided a cushion to the freefall.

As far as who is to blame, there is plenty of blame to spread around.Â*Â*War reparations comes to mind as a primary cause.

We should look further into these things, with the average consumer living on credit (like in the 1920's), combining with a rising interest rate (the credit payments become more with no additional income) will negatively affect their debt to income. This is one of the factors that led to the depression.

We have two factors currently that will cause purchasing stagnations, the cost of utilities and fuel.Â*Â*What is currently offsetting this is a trade deficit of 800 billion.Â*Â*When that corrects itself, we will have a similar snowball effect.

my $.02





No, Roosevelt didn't do anything useful, unless you think prolonging the Depression is a useful thing, for example, if you're a socialist intent on destroying the Constitution, you implement any number of programs that make the people dependent on the government and keep 'em that way. You take gold away from the people, though clearly there's absolutely nothing in the Constitution permitting this. With people starving in the cities, you destroy farm produce to artificially raise prices because the farm vote is important to you, to hell with the people in the cities that now have to pay more money, which they don't have much of (Depressoin, remember?) for food, not to mention the fact that the government doesn't have any business regulating prices either, check out that Constitution thing again.

Fact of the matter is, if the Constitution had been obeyed in the first place, there wouldn't have been a "Great Depression" at all.

That's the key issue.

[Athena]

One of the first things Roosevelt did was declare a bank holiday.Â*Â*The banks, examined and reopened if found sound.Â*Â*This ended the bank panic.Â*Â*I think that was a good thing.

I think the Glass-Steagall Banking Act which created the Federal Deposit
Insurance was a good thing.

I think the Truth in Securities Act, which required firms issuing new stocks to give investors full and accurate financial information was a good thing.Â*Â*

I think the National Youth Administration, that provided jobs for youth was a good thing.

I think the Public Works Administration, which provided work through construction of useful public works was a good thing.Â*Â*Some of the fine work done then is beautiful historic buildings today, such as the O of U Knight Library.Â*Â*The university is a major sorce of income for Euegen, Oregon, and makes the city more cosmetpolitan.Â*Â*

Development of dams and electricity was certianly helpful.

I am strongly in favor of Social Security and if you want to argue this, please start a thread for that arguement.Â*Â*

Those are just some of the programs that had a long term positive impact.Â*Â*If industry had accepted Demings democratic model for industry, we might have avoided the government invention.Â*Â*Or we can go futher back in time to the conflict between Hamiliton and Jefferson.
There is so much to talk about.Â*Â*

[Athena]

"Fact of the matter is, if the Constitution had been obeyed in the first place, there wouldn't have been a "Great Depression" at all."Â*Â*I think you need to support this argument.Â*Â*Hamilton and modeling our industry after England's autocracy is problematic.Â*Â*I would like to see our limited industrial land reserved for those who use Deming's democratic model.Â*Â*I think this would improve our economy, and our families, and it sure would make our democracy stronger.Â*Â* I think we are now fascist and that this could have been avoided if industry had accepted the democratic model.Â*Â*

I am quite sure things would not have righted themselves without government intervention.Â*Â*Not everything Roosevelt did worked, but those things that did work, established a strong foundation for later success.Â*Â*However, these new government powers also opened a can of worms. I do not believe fascism is better than democracy without without this government control, but it sure was easier for the government to take control than to replace autocratic industry with democratic industry. Even though the war cry in WWI was "Democracy and autocracy can not co exist". We remained blind to the fact that the US had imitated England's autocracy.

[Athena]

"There's always been doom and gloomers. With 80 years of hindsight, we know damn good and well that there wasn't any problem with the oil supply in 1926, and any such concern was groundless."

I believe you are wrong. Later technology increased our ability to access oil, and increased the use of every barrel a hundred times. However, before this technology was developed, we could not produce oil fast enough to meet world demand, and we were the world's supply of oil. Oil is by far our greates export, flooding our banks with money which was later loaned out, increasing our wealth even more. But in the 1920's shortly after the warning, gasoline prices soared. It was pretty much as today, with gas prices soaring and economic problems developing.

Keep in mind all industrial economies fell, not just the US. Does anyone know why the other industrial economies also collapsed?

[Nathan Brazil]

One of the first things Roosevelt did was declare a bank holiday.Â*Â*The banks, examined and reopened if found sound.Â*Â*This ended the bank panic.Â*Â*I think that was a good thing.

I think the Glass-Steagall Banking Act which created the Federal Deposit
Insurance was a good thing.

Oh? There's some reason why private industry couldn't underwrite bank accounts? What did we discover in the 1980's? That the government didn't insure things properly and the tax payer got stuck with the burden of paying for yet one more unconstittuional government screwup, the so-called Savings and Loan Bailout....AND...FDIC covers only the first hundred grand of savings, mere peanuts. A private policy could cover the whole pile.


I think the Truth in Securities Act, which required firms issuing new stocks to give investors full and accurate financial information was a good thing.

Prevention and punishment of fraud is one of the few proper functions of government.

I think the National Youth Administration, that provided jobs for youth was a good thing.

Of course it wasn't. Jobs "provided" by government are simply non-productive pockets of waste that take money away from employers that could be hiring people to be productive. The minimum wage also reduces the number of youngsters entering the job market.

I think the Public Works Administration, which provided work through construction of useful public works was a good thing.Â*Â*Some of the fine work done then is beautiful historic buildings today, such as the O of U Knight Library.Â*Â*The university is a major sorce of income for Euegen, Oregon, and makes the city more cosmetpolitan.

And the money taken from the taxpayers to finance that boondoggle was money those taxpayers couldn't use to improve the economy of their own region.

Development of dams and electricity was certianly helpful.

Could be. Of course, the same corporations and people the left are always busy railing against as greedy profiteers were the ones making all the money from the inside knowledge of where the dams would be and where the new shorelines would level out. Oh, wait. That was government doing a "good" thing, so that's okay. Nothing wrong with speculators making money when government power is expanding also.

After all, Clinton had his Whitewater, GW Bush had his Rangers Stadium. Stealing land from the people is always good, if you're a big government kind of guy.

I am strongly in favor of Social Security and if you want to argue this, please start a thread for that arguement.Â*Â*

Oh, no. There's no need of that. The argument against ponzi schemes is well documented and separate thread to list the faults of any pyramid scheme doesn't seem necessary.

Those are just some of the programs that had a long term positive impact.

You haven't named any.

If industry had accepted Demings democratic model for industry, we might have avoided the government invention.

ummm....just because industry does accept some sort of model, that doesn't give government any magic right to interfere. Companies are privately held entitities, and it's not the public's business how they're run. If they're run crappy, non-competitively, or just inefficiently, they're eventually superseded by efficient competitive companies. That's a law of nature.

[Nathan Brazil]

I believe you are wrong.Â*Â*Later technology increased our ability to access oil, and increased the use of every barrel a hundred times.Â*Â*However, before this technology was developed, we could not produce oil fast enough to meet world demand, and we were the world's supply of oil.Â*Â*Oil is by far our greates export, flooding our banks with money which was later loaned out, increasing our wealth even more.Â*Â*But in the 1920's shortly after the warning, gasoline prices soared.Â*Â*It was pretty much as today, with gas prices soaring and economic problems developing.Â*Â*

Keep in mind all industrial economies fell, not just the US.Â*Â*Does anyone know why the other industrial economies also collapsed?Â*Â*

Germany destroyed itself to take it's domestic money and pay reparations required by the Treaty of Versailles.

Italy turned fascist, embarked on imperial ambitions in Africa, and well, hell, the country's run by Italians, what can one expect?

Russia turned commie, not that it had much industry anyway.Â*Â*Getting the foreign capital to build industry was one of the reasons Stalin stole the food and starved the Ukrainian peasants.

France was France, it's economey surrendered without a fight.

England nearly beggared itself to pay for the war.Â*Â*It's empire hung by a thread.

Japan wasn't that much of an industrialized country, and it spent most of it's treasure in imperialist adventures in China.

Does anyone consider Spain industrialized?Â*Â*Whatever, they decided to have an entertaining civil war instead of building their economy.

The US ecomony collapsed because the government was busy violating the Constitution and mucking about with the economy.

Oh, and today we know where nearly two trillion barrels of untapped oil reserves are...in North America. Half that can be accessed via processes costing less than $30 per barrel. It's a certainty the environazis will do everything they can to prevent our tapping that resource. They'll join hands with the other terrorists, the one's wearing the diapers and the fan belts, to prevent the US from tapping this.

[Athena]

I believe you are wrong.Â*Â*Later technology increased our ability to access oil, and increased the use of every barrel a hundred times.Â*Â*However, before this technology was developed, we could not produce oil fast enough to meet world demand, and we were the world's supply of oil.Â*Â*Oil is by far our greates export, flooding our banks with money which was later loaned out, increasing our wealth even more.Â*Â*But in the 1920's shortly after the warning, gasoline prices soared.Â*Â*It was pretty much as today, with gas prices soaring and economic problems developing.Â*Â*

Keep in mind all industrial economies fell, not just the US.Â*Â*Does anyone know why the other industrial economies also collapsed?Â*Â*

Germany destroyed itself to take it's domestic money and pay reparations required by the Treaty of Versailles.

Italy turned fascist, embarked on imperial ambitions in Africa, and well, hell, the country's run by Italians, what can one expect?

Russia turned commie, not that it had much industry anyway.Â*Â*Getting the foreign capital to build industry was one of the reasons Stalin stole the food and starved the Ukrainian peasants.

France was France, it's economey surrendered without a fight.

England nearly beggared itself to pay for the war.Â*Â*It's empire hung by a thread.

Japan wasn't that much of an industrialized country, and it spent most of it's treasure in imperialist adventures in China.

Does anyone consider Spain industrialized?Â*Â*Whatever, they decided to have an entertaining civil war instead of building their economy.

The US ecomony collapsed because the government was busy violating the Constitution and mucking about with the economy.

Oh, and today we know where nearly two trillion barrels of untapped oil reserves are...in North America.Â*Â*Half that can be accessed via processes costing less than $30 per barrel.Â*Â* It's a certainty the environazis will do everything they can to prevent our tapping that resource.Â*Â*They'll join hands with the other terrorists, the one's wearing the diapers and the fan belts, to prevent the US from tapping this.


It didn't matter how much oil is under ground in the 1920's but the technology to access that oil and increase the use of each barrel was just beginning and there was a wild rush for it, sort of like an international gold rush.Â*Â*An energy based industry with fuel demanding military technlogy (airplanes and tanks) made oil vital to economies and military defense.Â*Â*Keep your mind in the past when discussing the past, or what you say is distorted by what we know now and didn't know then, what we can do now, but couldn't do then.Â*Â*The world was rapidly shifting to this new energy and this shift caused economic problems and war.Â*Â*

Technology to increase the use of each barrel was being developed and this was shared with Germany.Â*Â*This is one of the things that enabled the Germans to enter a war with military technology dependent on oil.Â*Â*Tanks and airoplanes require oil, and without the help of American oil companies, Germany couldn't have dared a war.Â*Â*As it was, one of the first targets for Germany was oil fields.Â*Â*And it was for want of oil that Japan bombed Pearl Harbor, hoping that by sinking the US navy it could access oil without the US navy preventing it from doing so.Â*Â*Â*Â*

However, what you have to say about all the other countries is interesting.Â*Â*I think if you look deeper into the matter you will see somethings happening globally.Â*Â*The production made possible by energy, gave a new meaning to mass production.Â*Â*Mass production requires mass resources and mass markets.Â*Â*This made national leaders very aware of the rush to grab resources and markets.Â*Â*

The US had more resources than any other country besides the USSR, and only the US had the developed technology to take full advantage of the resources.Â*Â*Different decisons may have prevented the US from economic collapse, but I am not sure of that, because of the massive global change at the time.Â*Â*

[firefox]

I just read a good book on the topic, called America's Great Depression (http://www.mises.org/store/Americas-Great-Depression-P63C18.aspx), by Murray N. Rothbard of the Austrian School of economics. In a nutshell, he agrees that Herbert Hoover was a strong factor in the Great Depression, but for different reasons, namely that he was not laizzez-faire (spelling) at all, as he may have wanted people to assume, but was rather very involved in controlling the economy, making a minor economic downturn explode into a huge recession and depression. The Federal Reserve System also had a lot to do with this. Finally, FDR was also responsible, but his problem was that he allowed the grow-the-state, screw-the-economy trend to continue, rather than trying to stop it.

A very good read that's interesting and not too hard for laymen to understand. It's also very inexpensive for what it is ($30).