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- [00:00]
DSW Advertiser
Where'd you get those shoes? Easy. They're from dsw. Because DSW has the exact right shoes for whatever you're into right now. You know, like the sneakers that make office hours feel like happy hour, the boots that turn grocery aisles into runways, and all the styles that show off the many sides of you, from daydreamer to multitasker and everything in between. Because you do it all in really great shoes. Find a shoe for every YouTube at your DSW store or dsw.com hi, this.
- [00:31]
Freddie Wong
Is Freddie Wong from Dungeons and Daddies, and this episode is sponsored by Rocket Money Blast Houston. We have a savings that's right. Rocket Money is a personal finance app that empowers you to save more, spend less, and take control of your financial life. Basically, you can see all of your checking, savings, credit cards and investments in one convenient place. You can understand your spending trends, and most importantly, you can categorize those expenses and set up a custom budget by identifying top spending categories. Listen, you wanna track bank statements? It's very difficult. Use Rocket Money to help keep track of all your finances. Rocket Money has over 5 million happy members, and it's saved its users over $1 billion across all of the app's premium features. Let Rocket Money help you reach your financial goals faster. Get Rocket money today@rocketmoney.com allinone that's rocketmoney.com.
- [01:16]
ACAST Representative
Allinone its official podcast advertising is transcending audio. Marketers can now tap into audiences across all of a creator's channels, from social media to video, live events and beyond. And ACAST new report proves it works, with 84% of podcast listeners having taken action after seeing brands promoted in a podcast first Omnichannel campaign. Get these insights and more by downloading the Full report at podcastpulse2024.acast.com.
- [01:51]
Podcast Host
It's a scene of stark contrast. We are standing in a gathering of slumped, ramshackle sheds made of corrugated cardboard, tar paper and tin sheet, clustered across the dry, dusty grounds of an empty reservoir. Residents of this hovel community loiter in the lanes and doorways, looking forlorn. All this against the grand backdrop of towering high rises constructed in the boom times just a few years ago. Geographically, we're in Central park in New York City, halfway between the east and west sides of Manhattan, in a spacious area that will one day be called the Great Lawn. Economically, however, it's more like we're being crushed in a vice of poverty and desolation here in a squatter settlement. Like so many Others across this distressed nation, places they call Hoovervilles. It is American history hit. You're listening to. Glad you're here. Let's talk about a president. The next in our series. Herbert Hoover, 31st chief executive of the United States, served one term from 1928 to 1932, taking the baton from Calvin Coolidge, who he had served for two terms as Secretary of Commerce all through the boom times we call the Roaring Twenties the Jazz Age. Hoover was anything but jazzy, a principled man of good Quaker stock. His was a Horatio Alger story. Climbed up from his modest Iowan childhood to attain great wealth in his life. Then took his business acumen to the White House, first in the Harding and then in the Coolidge administration, then to his own presidency, which he won in a massive landslide, only to see the bottom drop out in his first year in office. Black Monday, October 28, 1929. Eight months after Hoover swore his oath. And it only got worse. Demanding visionary leadership, bold new economic ideas and, well, instead we had Herbert Hoover. Today we'll discuss what it all meant with the distinguished professor of history at UC Davis, Eric Rauschway, whose book Winter Hoover, Roosevelt and the First Clash over the New Deal has been my guide. Prepping for this pod. Greetings, Professor Rauschway. Eric, nice to meet you.
- [04:26]
Eric Rauschway
Nice to meet you. Pleasure to be here.
- [04:29]
Podcast Host
Typical take on Herbert Hoover. Quiet, ineffectual, even narrow minded. These are the words that get bandied about when you bring them up at a cocktail party. That reputation is because of the economic disaster which defines his presidency. But Herbert Hoover, the man is a whole other story. I mean, his life is a remarkable rags to riches, man of action tale. Let's start with his upbringing. Born in a small Iowan town to a poor family, father is a blacksmith, and importantly, he is orphaned at a young age, which then leads to him being sent to Oregon. Tell me, what defines this boy's childhood and how does he become very quickly on a new route in life?
- [05:09]
Eric Rauschway
Well, he's a quiet and studious child who ends up being one of what they call the pioneering class at Stanford University. You have to remember that this is the very beginnings of Stanford. It's not the massive research university that it is today, but rather a sort of raw frontier project funded by the railroad magnate Leland Stanford's fortune. And. And Hoover finds his way there to study mining despite not doing very well academically. So he's part of that early class and that's the origin of his education. And then he finds his way into the Mining business.
- [05:44]
Podcast Host
After that, it was really because of losing his parents that he sent to live with his uncle in Oregon. And one thing leads to the next, right? I've already mentioned this in the beginning. I mean, there's a real misconception about this guy. He was a romantic adventurer. He turns out to be all over the world, really. And it's geology that carries him there. He becomes a real skilled mining engineer at a time when I suppose there was a lot of that going on, right?
- [06:09]
Eric Rauschway
That's right. This is a very critical period in the history of gold mining. The gold mining industry developed some new techniques for pulling ore out of old seams. And also, there are a number of new gold strikes in the late 19th century. And Hoover is in the middle of this. He works for a very large British firm. He works in China and in other places. So as you say, he's sort of a globetrotter and somebody who is introduced very early on in his life to other cultures and other peoples and is tremendously successful, Becomes possibly one of the richest men in the world by the early 20th century.
- [06:44]
Podcast Host
Incredible. He meets his wife, Lou Henry, at Stanford, and they have two boys throughout this time that they're. I mean, let me be clear. They go to China, they go to Australia, they work in Russia, they are all over the planet. And they eventually land in London, where he creates this international mining consultancy that has its headquarters in London. While in London, he is part of an effort to get the Americans out of Europe. It's at that time he becomes very concerned with the starvation of Europeans in Belgium. He starts this whole effort to create this thing called the Belgian relief. And it is enormously successful. It's a huge fleet of 600 ships which ends up sending food into theirs. He becomes quite the hero in Europe throughout this thing. And this will become part of his whole life, this whole effort to kind of feed the starving masses.
- [07:37]
Eric Rauschway
Yeah, this is right. The commission for the relief of Belgium is Hoover's baby during the Great War. And, you know, remember, Belgium was a neutral country that was invaded by the Germans. This is what drew Britain into the war in the first place was sympathy for Belgian civilians. So there's a lot of this going around at the time. And Hoover is involved in this effort. He knows that he's a great organizer and that he's good at mobilizing capital and resources for transportation, for working with charitable organizations like the Red Cross. And he demonstrates his talents, you know, in a wonderful way during this period. It is the foundation, as you correctly say, of the rest of his career. The people who work with him, particularly the young men who work with him at this time, remain with him for decades afterwards, even as they become important figures in American politics themselves. They always have a loyalty to Herbert Hoover. They refer to him as the Chief. He's their guy. There is this sort of informal fraternity of these people who loved the kind of work they did with Hoover. He was notoriously hard to work for, but also notoriously hardworking himself. He could cuss in a variety of languages, owing to his mining background, and frequently did. And he had this sort of admirable personality to these young men who had drawn this kind of admiration from their support for Theodore Roosevelt in 1912, who believed in the strenuous life, who believed in sort of meeting the world's challenges with vigor. And they saw in Hoover that kind of progressive Republicanism.
- [09:10]
Podcast Host
Yeah, exactly. Yeah. He's called the Master of Emergencies, which will be an ironic term later on his handle.
- [09:17]
Eric Rauschway
It's hard to do this without heavy foreshadowing. Right.
- [09:21]
Podcast Host
How is it that he's pulled into politics? He has become quite famous as this American abroad doing this extraordinary thing in Europe, feeding the masses. I guess word has gotten back and he could be useful in a new administration. Right, right.
- [09:34]
Eric Rauschway
Well, it's particularly his talents at mobilizing these kind of resources that relief that attracts him to the Wilson administration. Remember, the United States enters the Great War quite late. It's in April of 1917 that the United States declares war. So the war is, you know, well underway at this point for almost three years. The United States is really only drawn in by German sinkings of American ships. Right. So it's a gamble that the Germans are making to try to win the war swiftly. And what they gamble is that they will be able to do it before the United States really mobilizes. So the Wilson administration is making the converse gamble that they're going to mobilize quicker than the Germans can win the war. And Hoover is an integral part of that, because to do this, you're going to have to get a million men in uniform and sent over to Europe. And to do that, you're going to have to divert the resources of the peacetime economy to a massive military effort. And part of that is going to be conserving resources that would otherwise be dedicated to peacetime use. Hoover is the food administrator, so his job is to ensure that Americans on the home front don't consume more than what they conceive of as their fair share, so they can be sure to feed that army which is about to go into the field, that's Hoover's main role.
- [10:52]
Podcast Host
Yeah, I mean, it had huge economic consequences, this whole food issue, because there was a huge inflation, I mean, remarkable inflation in America at that time. Right. 40%, I read somewhere, was going on as a result of losing supplies to the European effort.
- [11:07]
Eric Rauschway
Right. There's massive inflation, there's warping of the American economy in part because of just the unseemly haste, I suppose, in which the United States has to mobilize again. The war is already going on, so every second matters. Once they decide to send troops to the front, that means that without a lot of what we now call state capacity, they have to rely on private enterprise and the owners of corporations and folks like Hoover who have experience and contacts and the knowledge. Because that contacts and knowledge and experience doesn't exist in the federal government itself. The result of this is that, you know, the heads of corporations, as one steel executive says, make a lot more money out of the war than any decent person has a right to because, you know, there's just tremendous scarcity and it's a sore temptation to make a profit out of that.
- [11:55]
Podcast Host
Sure.
- [11:56]
Eric Rauschway
Hoover is very much on the public spirited side of that though, Right. He is trying to get people to economize in their use of otherwise scarce food resources. And here he shows one of his really great talents, which is persuasion through early public relations programs. In the broader context, the Great War really is this kind of crucible for the modern public relations and advertising industry. Again, this is how a state that doesn't have a lot of bureaucracy mobilizes. It's by propaganda, by persuading people that they ought to do the right thing. And so there's this organization called the Committee on Public Information, and they just bang away at the idea that it is your patriotic duty to do X or Y to buy bonds, or if you're not particularly rich, to buy war savings stamps, which are small bonds, or again, to avoid bread and meat so that it can go to the troops at the front. That's Hoover's particular area. And Hoover crafts. This message helps to craft this message. So specifically targeting American, as they would have said then, House wives. Right. So that you can get the women of the country to be patriotic and to conserve. And that's where Hoover really shines in this era.
- [13:08]
Podcast Host
It's important to understand this as a, as a sort of introductory idea of how he behaves in the Depression. You know, when that all hits his, his presidency, this messaging, this way that he handled the food issues really becomes a big part of how he deals with the Depression issues as well. He gets into the administration, he's invited into the Harding administration. This guy's a big star at that point, becomes the Secretary of Commerce, a pretty new agency in those days. Of course, Harding dies. That's how he ends up in the Roaring Twenties as the Secretary of Commerce with Calvin Coolidge. America is changing in leaps and bounds at this point. There's a tremendous amount of cash that has come into this country in various ways that is fueling this economic boom that goes on for several years, for many years, all throughout Calvin Coolidge's days. And, and so it's, it's no surprise that someone from his administration who's a big star in the media is easily elected in 1928 to basically continue this boom time onward, right?
- [14:09]
Eric Rauschway
Yeah, that's correct. I mean, Hoover wanted to be president in 1920, but as the journalist H.L. mencken pointed out, a lot of people thought of him as somebody who wasn't even American because he'd spent so much time outside the United States. He really wasn't going to. Going to qualify at that point. So as you say, Harding wins with Hoover's backing in addition to everybody else, and Hoover becomes Secretary of Commerce. The Department of Commerce and labor had been created under Theodore Roosevelt. Right. And it was again a sort of progressive, you know, kind of measure to try to regulate corporations. And Hoover, you know, occupied that role through both the Harding and Coolidge eras, through, as you say, this tremendous boom time for American industry and finance and indeed almost everything except agriculture, which I guess we will talk about before long. But every other major industrial and financial power had literally blown itself up in the course of the Great War. They had spent all of their money buying war material and resources and set it on fire on the Western Front on the other parts of the Great War. So France and Britain to Germany, all of these countries which had been the major industrial powers, were now in terrible straits. Moreover, they had gone into tremendous debt to the United States or to lenders in the United States in order to further this war once they had run through their own resources. So much so that by the end of the Great War, the United States flips from being the world's largest borrower to being the world's largest lender as a result of this event. So all of these countries have had their industrial plants destroyed. They've seen tremendous losses in terms of their young men at the front getting killed. Many of the most fertile lands of Europe have Been, you know, sort of dug up for trenches and poisoned with the chemicals that are used on the front. And the United States is largely untouched. It's this immense breadbasket that has put lots of acres under the plow to sort of meet the needs of the war. Its industrial economy shoots off. It becomes this titan of consumer borrowing and spending almost overnight as a result of the impact of the Great War.
- [16:18]
Podcast Host
When he accepts his nomination at the 1928 Republican convention, he says this. In America today, we are nearer a final triumph over poverty than ever before in the history of this land. The poorhouse is banishing from among us. We have not yet reached the goal, but given a chance to go forward with the policies of the last eight years. We shall soon, we, with the help of God, be in sight of the day when poverty will be banished from this nation. That's how ebullient this place was. That's how buoyant this nation was at this point. Little did they know, little did he know what was about to happen. He is elected. It is eight months, I think, at the time when all the speculation that has been going on, I mean, along with this boom time has been a very, very hot stock market, which usually goes hand in hand. And there are many reasons for the Great Depression, which we will talk about, but certainly Hoover did not see this coming. Should he have seen it coming?
- [17:11]
Eric Rauschway
There were people who saw it coming, let's put it that way.
- [17:13]
Podcast Host
Yeah.
- [17:14]
Eric Rauschway
Notably, the British economist John Maynard Keynes had basically called these shots as far back as 1919 when he said that the failure of the Treaty of Versailles and the other treaties to come out of the Paris Peace Conference to provide for a readjustment of the global economy after the war was going to lead to a depression of the standard of life so severe that men would overthrow civilization. Right. So props to Keynes, although it's no fun to be right in these kinds of circumstances, he foresaw it. There were various American economists who saw a problem in the borrowing that had occurred amongst consumers and amongst farmers in the 1920s, and especially because farm prices, that is to say, the prices for farm goods, had peaked in about 1926 and then had begun to fall. And this is a time when farmers and farm workers account for 20 to 25% of the American economy. So if the farm sector is in bad shape, that's people who aren't buying the goods that are being made by the industrial sector. And you have this drop in purchasing power. And people had begun to foresee this in the late 20s. Still, you know, the way people talked about the economy in 1926, 27, 28 was that this was a new economy, that there were new rules, that consumers were taking on new debt to buy automobiles, to buy radios, to buy mechanical washing machines and refrigerators and all these new appliances, and that this was going to sort of feed off itself and keep this boom going. And that's the optimism that Hoover is expressing in that speech that you quote where he says, we're going to see the poorhouse banished from among us in 1928 again. It's the kind of thing that if you were a novelist, your editor would say, this is very heavy handed.
- [19:01]
Podcast Host
You can't do this.
- [19:02]
Eric Rauschway
But, you know, that's the nature of history sometimes.
- [19:10]
Podcast Host
I'll be back with more American history after this short break.
- [19:17]
DSW Advertiser
Where'd you get those shoes? Easy. They're from dsw. Because DSW has the exact right shoes for whatever you're into right now. You know, like the sneakers that make office hours feel like happy hour, the boots that turn grocery aisles into runways, and all the styles that show off the many sides of you from daydreamer to multitasker and everything in between. Because you do it all in really great shoes. Find a shoe for every you at your DSW store or dsw.com hi, this.
- [19:47]
Freddie Wong
Is Freddie Wong from Dungeons and Daddies and this episode is sponsored by Rocket Money Blast Houston. We have a savings. That's right. Rocket Money is a personal finance app that's empowers you to save more, spend less, and take control of your financial life. Basically, you can see all of your checking, savings, credit cards and investments in one convenient place. You can understand your spending trends and most importantly, you can categorize those expenses and set up a custom budget by identifying top spending categories. Listen, you want to track bank statements? It's very difficult. Use Rocket Money to help keep track of all your finances. Rocket Money has over 5 million happy members and it saved its users over $1 billion across all of the app's pro premium features. Let Rocket Money help you reach your financial goals faster. Get Rocket money today@rocketmoney.com allinone that's rocketmoney.com allinone.
- [20:46]
Podcast Host
Eric Black Monday what happens? What was the reason for that drop?
- [20:50]
Eric Rauschway
There's a massive crash in the New York Stock Exchange. The value of the New York Stock Exchange. And a lot of people had seen this coming, including investors like Joseph Kennedy and including members of the Federal Reserve System who thought that Americans had come to invest in the stock market. Basically, as A giant casino, rather than a sober assessment of the future value of American business. And at some point, people are going to start taking their profits and getting out. And that's sort of what starts to happen sometime in the latter part, really, the late summer, and then all of a sudden in the early fall of 1929.
- [21:23]
Podcast Host
And then it just keeps rolling because there aren't the corrective measures that have been taken in our time that can put a stop to it. Right, right.
- [21:31]
Eric Rauschway
I mean, this is the thing is if you watch a documentary on television about the Great Depression, you will see footage of the stock market crash or an image of the stock market people milling around Wall street not knowing what to do. And then there will be sad clarinet music, and all of a sudden it'll be the dust bowl. And the connection between those two things is not always clear. Right. You really need to kind of pick this apart. And the way you have to show this is that the crash in the stock market begins to be reflected in a loss of consumer confidence very quickly. People see the stock market crash, they see the end of what they thought was this new economy, and they stop borrowing to buy stuff. So Americans, for the first time in the 20s, had been going into debt to buy things in a large way other than houses. Right. So cars and home appliances. And this stops. You can see this new car registrations just plummet almost right away at the start of 1930. And that, of course means that there's no longer any call to manufacture those things. That means that's where you get unemployment. That's where you again have a further drop in consumer demand and you begin to have a downward cycle.
- [22:39]
Podcast Host
The images of the Great Depression are so iconic. How much was that the true picture of what was happening, or was that just happening to one sector of this society?
- [22:50]
Eric Rauschway
Well, again, it's a question of at which point we want to talk about this, right. Early in the slump, early 1930. You know, it might be a remoter problem for many Americans, but by the time you get later into 1930, 31, when unemployment gets up into the double digits, it's definitely becoming a problem where if you aren't unemployed, then certainly somebody you know or are related to is unemployed by the time you get into 1932, where unemployment is getting close to 25%. And again, these are all retrospective figures. They are not quite as good as the ones we have nowadays. But I mean, looking back, we can say it's close to 25%. Moreover, everyone who does have a job, but taking just those folks about half of them are only part time employed. So by then it's really a systemic problem by the time you get into 1932. So it grows over time and there's this kind of increasing sickening awareness that it's going to affect everyone.
- [23:47]
Podcast Host
It's amazing. I mean, I was raised by depression era of parents. I'm the youngest of five. So I got these, these guys, my parents, you know, World War II era, we ate things that they had eaten when we were, when they were young. They had a mentality that was forged in those impoverished years. They weren't themselves impoverished that badly, but they saw it all around them. So yes, it had a cultural impact as well as an economic one.
- [24:09]
Eric Rauschway
My grandmother always had sugar packets in her purse that she had liberated from diners and restaurants because why would you spend money on those things? Right?
- [24:17]
Podcast Host
Well, at least you didn't have to eat chipped beef, the worst dish of all time.
- [24:22]
Eric Rauschway
No, no, I was spared that.
- [24:24]
Podcast Host
I suppose I mentioned before, his approach to crises is his reputation. You know, that's what he's built his career on really. That and mining. So when there is this crisis, his approach will be to similar in the way that he talked about things before in World War I. Let's pull up our bootstraps, let's work this out. An important element of this to discuss, it doesn't get enough attention, is that this kind of thing happened on a regular basis in America, you know, throughout the 19th century for sure. These panics, bank panics of 19, 18, 76, and they go all the way back. So someone like a Hoover would see this as a repetition of a cycle, you know, so he sees America going through this the way it has in the past. What is different about this particular depression or this crisis than others?
- [25:15]
Eric Rauschway
Yeah, well, the macroeconomics of business cycles were new at this time and Hoover was associated with the kinds of people who were studying this. And so there was a general understanding that in capitalism these things happened, that the economy would be in a boom and then somehow people would overextend, there would be an excess of optimism, or as Cain said, of animal spirits, and then there would be a bust and things would get worse until they bottomed out and again people started to reinvest and this happened. And the downturns would usually last 12 to 18 months, not terribly long. There had been severe depressions going back in people's living memories, such as the one in the 1890s, but that was more the exception than the rule. So there was no reason necessarily to believe, I suppose, in 1929 that this was not going to be a normal business downturn.
- [26:10]
Podcast Host
Right.
- [26:11]
Eric Rauschway
So when you saw the stock market fail, when you saw the stock market begin to fall and people begin to sort of pull back on their borrowing, you might think, oh, this is going to be a normal business downturn. And the thing to do would be the kind of thing that Hoover had done in the Great War, which was to mobilize public opinion, say, you know, we need everybody to get together and to do the right thing here and to not despair, and that there should be no failure of confidence, as Hoover repeatedly says, in the ability of the American people to weather this particular economic storm. You know, the Treasury Secretary in the Great War had nicely capitalized. This kind of strategy, which again, Hoover pursued then, is we're going to capitalize on the emotion of the people. And that's what Hoover's basically doing in the early days of the crash and the Depression is say, we're going to rally round and come through this relatively swiftly.
- [27:10]
Podcast Host
Sure, he does gather business leaders together and warn them this could be a particularly bumpy recovery. He is aware of the hill they're about to climb. But one of the things he asks for is for them to keep wages up. He requests the business leaders to keep wages up as a stopgap measure, I suppose. Right, right.
- [27:28]
Eric Rauschway
He understands that the real threat here is deflation, the falling of prices. I mean, again, this is something where the understanding of macroeconomic activity at this time is in its infancy. But largely speaking, people understand that inflation can be inconvenient because rising prices can create a cycle where wages go up and prices keep rising. And this can be bad, especially for people who have lent money. But deflation is even worse because deflation can discourage even people who have money from buying things, because if prices start to fall and then continue to fall, then if you have money, you have no incentive to buy anything that you don't need because you know it's going to be cheaper later. So you have an incentive to hold onto your money and just watch prices fall and buy that optional purchase sometime later. And so Hoover tries to fight deflation by telling these large employers to do their best to keep wages up so that workers will be able to continue to buy things at prices as they stand. So he's trying to aim at what will be the big problem of the Depression. Now, it doesn't succeed, because the kinds of things he's asking of a relatively small number of employers are not going to be able to have the kind of effect that are going to be needed to move this entire economy.
- [28:51]
Podcast Host
And the upshot of that is that they have to fire people. Right. They got to keep their books in balance.
- [28:56]
Eric Rauschway
Right. If they're going to keep their wages up and they don't have the revenues that support the wages with that number of employees, the thing to do is to let some employees go, which again is going to contribute then to deflation because those folks are not going to buy as much as they would have.
- [29:09]
Podcast Host
There are many chapters to the Great Depression, obviously, but these days we think of it as one, you know, terrible era that just happened all at once. Of course, it just gets unfolds slowly but surely one of the next aspects of it is the banks failing. I mean, of course they're going to because there's no money coming into them. Right, right.
- [29:27]
Eric Rauschway
We have to kind of unwind our understanding of the federal government as it is today and remember that this is a time when its capacity is much, much smaller. Specifically, there is no federal deposit insurance, which of course there is today. And the Federal Reserve Board doesn't have the same powers to kind of step in to rescue banks as it does today. The understanding is that if a bank doesn't have money coming in because the people to whom it has lent money are failing to pay it, this is because the bank made bad decisions and the bank is going to simply have to suffer those decisions. And as a knock on effect of that, that means that the people who have deposited money in the bank are also going to have to suffer as well as anybody to whom the bank owes payments. And the idea is that this, this kind of thing will eventually work itself out, that there will be banks that will close, there will be people who will lose money, they made bad decisions. That's just part of the price of capitalist vigor is the general idea.
- [30:30]
Podcast Host
And so Hoover is at this pivotal moment when a brand new view of America is necessary. And he's a bit old school for this, isn't he?
- [30:37]
Eric Rauschway
He's a bit old school. He has tremendous confidence in the ability of private enterprise and of the spirit of the people to kind of come through with, you know, encouragement. He's always been a great believer in this power of public relations. If you might, if you were feeling a little bit uncharitable, saying he's seeing himself as a cheerleader.
- [30:59]
Podcast Host
Yeah.
- [31:00]
Eric Rauschway
For the economy more than anything else, rather than actually somebody who does things to it, which is more of a later view.
- [31:07]
Podcast Host
But that's not to diss the guy. I'm trying to explain that this is a really tough time. Yeah, this is a tough turn in America that requires a gigantic mind to really wrap itself around. And he's just on this side of that change. I mean, of course we're foreshadowing everything that happens under fdr, which is just a few years later. But at this particular moment, there was reason to believe that this thing would work itself out.
- [31:31]
Eric Rauschway
There was certainly reason to believe that this would work itself out in, let's say, October of 1929 and even November or December of 1929. There probably comes a point when the balance shifts and one should realize, especially if one is sitting in the White House, that this is a different kind of economic downturn than the United States has seen before. Where you put that point, I don't know exactly. I think that's a judgment call.
- [31:57]
Podcast Host
Yeah, that's a good.
- [31:57]
Eric Rauschway
But certainly many people begin to change their minds before Herbert Hoover does.
- [32:01]
Podcast Host
Right. Well, he would have been getting the reports and it's just getting worse and worse and worse over a period of time. One of the things that you hinted at before was the agricultural collapse, which was due to falling prices and overproduction. That's going to play out in a Grapes of Wrath sort of way. But it's a gigantic story that has a lot to do with the shift in demographics.
- [32:20]
Eric Rauschway
Right, right. Again, a lot of Americans have only just moved away from farms and into cities. And one of the effects of the Great Depression is that for the last time in American history, Americans will move back from the cities to the farms to try to lean on their meager ability to get food out of the land. But as you say, this comes to be very clearly a time when the farm sector is broken. I mean, they had put a lot more acres under the plow to try to meet the needs of the Great War. So they had more crop growing capacity going on than could feed the number of folks who were involved in it. By the time you get sometime into the middle 1920s, especially once the European farming sectors recover, sometime around again, 1926, and at that point, commodity prices start to fall and it becomes harder and harder to make a living as a farmer in the United States, which means that a lot of those farmers who have borrowed money to finance equipment or to finance the purchase of the farm stop making those payments. And that puts pressure on the banking system. Again, this is again 20 to 25% of the American economy that is faltering at this point as a result of the farm crisis.
- [33:30]
Podcast Host
Yeah. Add to this the choice to use tariffs in 1930. He signs the Smoot Hawley tariff, which is designed to stimulate, you know, as all tariffs are, to stimulate US Economic growth. It totally backfires. It just makes things worse. And I'm just trying to sort of create a little checklist here of the various things which now we look back on and say, gee, Herbert, please, you know, at some point you should have turned the corner here real fast. But it is a time in America when this is difficult. And he has had a lot in his life to confirm that the choices he's making and the messaging he's giving is correct. This man has been very successful in his life at this sort of thing. So it's a lot to ask to imagine that this guy could suddenly wake up one day and say, woo, this is tough. I got to go to Keynesian stuff here and, you know, to sort of change his entire strategy is, is impossible.
- [34:20]
Eric Rauschway
Well, I think you have to remember that there are a couple of tools that the Republican Party in particular had long supported for managing economic crises. One of them is tariffs. Right. This is like the Republican Party's signature issue. The idea is that you put a tax on imports and you do that so that the American manufacturer can charge more for their product and then they can invest in research and development and improve their ability to manufacture whatever it is they're making. And this is to the advantage of the people who own factories. Right. That's, that's, that's who benefits from this. Maybe they'll pay their workers higher wages and a sort of trickle down effect, but it's immediately to the advantage of people who own factories. And farmers don't participate in this because the United States makes so much in terms of farm goods.
- [35:09]
Podcast Host
Right.
- [35:10]
Eric Rauschway
That cutting off imports isn't going to matter. The problem is domestic production right here. And so the farmers are crying out for some kind of similar benefits to what the industrialists are getting from the tariff. And that's where the initiative for Smoot Hawley comes from is. You know, you could start to try to adjust the tariff structure, but once you sort of open that box, then everyone starts to put their hands in and say, well, we want this and we want that. You end up with tariff that benefits not the kinds of people you were trying to benefit in the first place.
- [35:38]
Podcast Host
Yeah.
- [35:38]
Eric Rauschway
And that's what happens with Smoot Hawley. I think that there does come a time when more intervention seems to be asked of the White House. And that's a time when Hoover reaches for a tool that was also sort of at least since 19, 20 or 21 anyway. Also a standard Republican tool which was to try to restrict immigration.
- [35:58]
Podcast Host
Yeah.
- [35:58]
Eric Rauschway
The view being that, you know, that creates comment competition for jobs. And so if you restrict immigration, well, then you will have less competition for American jobs. So he does do those things. But, you know, there, there are not a lot of other tools that he's willing to use. He's specifically very reluctant to try to support the banks, and he's even more reluctant to try to directly employ Americans, although they do begin to do those things towards the end of his term.
- [36:31]
Podcast Host
I'll be back with More American after this short break.
- [36:38]
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- [37:09]
Freddie Wong
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- [38:07]
Podcast Host
Had we crossed the point of no return by 1931? I mean, unemployment is 25% at this point. Hoovervilles are all over America. These shanty towns that, you know, former bank executives are living in. It's just a crazy thing. Municipalities and state governments are failing. At what point was there no way back except to kick him out and start anew?
- [38:29]
Eric Rauschway
Well, I mean, the only reason that there was no way back is because Hoover wasn't doing what needed to be done, right? Yes, There comes to be a point, probably sometime in 31 or 32, where he's certainly getting advice. And to be clear, this is advice from within the Republican Party. So he's not hearing from commie labor leaders or long haired academics that he needs to do something. He's hearing this from bankers and business leaders and otherwise sober conservative figures in the United States that he's being told you need to do something extraordinary to relieve unemployment. The great historian William Luchtenberg at one point counted the number of commissions that Hoover established to study the unemployment problem. And it's in the dozens. I can't remember the exact number. All of them said you need to do more. And Hoover ignored all of them. Right. I mean, so at some point he becomes the bottleneck, right? It's, there is pressure to do stuff and he won't do it. Ultimately, you know, it's even coming from his own appointee to run the Federal Reserve System. Eugene Meyer is telling him you need as a matter of emergency to take special action to rescue the banks. And Herbert Hoover refuses to do that too.
- [39:44]
Podcast Host
Right. Eric, it's a non historian question, but why was this man so stubborn? What's the psychology behind all this? Was he afraid of undercutting American self reliance?
- [39:54]
Eric Rauschway
I think it's a really interesting question when you think about American presidential politics because you know, ideally the personality of the President doesn't matter, right. You know, there are institutions, there are checks and balances, there are parties there, you know, various appointed officials. But you do get to a point, and this is one of them clearly where the President is the thing that's stopping everyone else from doing what they think ought to be done. And so as you correctly say, why is he so stubborn? And I think there are at least two things going on. One of them is political and you might say principled, right. That Herbert Hoover was a conservative person, right. Somebody with conservative beliefs. And that's conservative in the sense that we would understand it. Right. Somebody who believed that for the government to help people would erode their moral character at some fundamental level and that therefore you would do it as little as possible. Layered on top of that concern was at this time, remember we're only 10 years out, 11 years out from the Bolshevik Revolution and there's a great concern that that kind of thing could happen elsewhere, that indeed it was happening elsewhere, that the trend towards socialism was going to be a trend towards communism and that these kinds of revolutions were going to dramatically change, Hoover believed, for the worse. Right. Governments throughout the world. So there is that sort of characterological thing. There's that political thing. I would throw one more thing on there, which is that, you know, his entire life, Herbert Hoover had been right, you know, and, golly, he should still be right, was the general belief. And you can really see this in, you know, the diaries of his aides who, you know, have these personal conversations with him late in his presidency. He's just very, very, very frustrated that people aren't giving him the chance to fix this because he knows if anyone can fix it, he can. Right?
- [41:55]
Podcast Host
Yeah. Yeah. And was he respected by those immediately around him? Did they believe in his cause?
- [41:59]
Eric Rauschway
Oh, absolutely. I mean, even as they thought maybe he was wrong about this public policy issue, which increasingly they did. Right. Even as they thought his personality was possibly in the way, as indeed a lot of his closest aides did, one of his aides wrote that he had the answer hit back complex, worse than anybody I ever saw. That he was very defensive, in other words. Right. And that really he ought to take more time and be more considerate and less reactive. But they nevertheless loved him. They thought of him as a great boss, as an honorable person, someone with tremendous energy who was bearing up under obviously terrible circumstances.
- [42:37]
Podcast Host
He must have lost terribly in the midterms, didn't he? It had to have been bad for the Republicans.
- [42:42]
Eric Rauschway
Oh, yeah, the Republicans. I mean, the Democrats won a very narrow majority actually in the house in the 1930 elections. And, you know, it took a while to sort this out, but ultimately there's a very narrow Democratic majority, which leads to John Garner of Texas being the speaker of the House for the latter part of Herbert Hoover's turn.
- [43:03]
Podcast Host
Yeah, the needle is starting to move. But ironically, I think it's very ironic. He thinks he's gonna win. He's pretty confident in the 1932 election that he will take. That he will win a second term, despite all of what has happened here. He does not believe in what he hears from fdr. He doesn't believe in this kind of New Deal idea that's being promoted. He actually doesn't like FDR at all, does he?
- [43:26]
Eric Rauschway
No, he doesn't. He's known FDR since the Wilson administration, at least when Roosevelt was Assistant Secretary of the Navy under Woodrow Wilson. He thought Roosevelt was fundamentally unserious person. There were a couple of episodes that reinforced this for Hoover. He thought Roosevelt liked to do an imitation of the accent of his boss, the Secretary of the Navy, Josephus Daniels, a Southerner, segregationist, newspaper editor, and then became Secretary of the Navy. And Roosevelt would do this kind of imitation of him, which Daniels knew about and was tolerant of, but Hoover thought was too disrespectful and, you know, called Roosevelt, got in a big fight with him about this. And then later, during the peace negotiations after the war, Roosevelt led a group of Americans to carouse about the town. And they were very rowdy coming back to the hotel and woke Hoover, among other people, up in the middle of the night. And Hoover never really forgave him for that either.
- [44:20]
Podcast Host
I think Hoover remains a great influence in this nation even after he loses to fdr. Throughout FDR and beyond, he advises Goldwater. It's amazing.
- [44:34]
Eric Rauschway
Yeah. Hoover's ideology, which was already pretty conservative, really becomes fixed on the New Deal was wicked, it was treasonous, it was socialist, it was warmongering. It needed to be stopped, and the Republican Party's agenda ought to be to stop it. That kind of message, of course, becomes the core message of the Republican Party over that era, with Goldwater being the main avatar of it in that contest with Johnson in 1964. Hoover doesn't quite live to see the outcome of that election. But long before that, it's clear that he's had a tremendous influence on the development of the Republican Party. And when he's asked about that, how he achieved that, somebody said, well, he said, I just outlived the bastards. He just had this tremendously long life. Thirty years or so after losing the election.
- [45:18]
Podcast Host
Yeah. And remained very healthy. But who would have been around in that 64 election or all those years but Ronald Reagan? So, I mean, in a way, Herbert Hoover resonates through Reagan and through to Trump. Today, we are still living with much of what Hoover promoted.
- [45:33]
Eric Rauschway
It's really sort of Hoover, Nixon, Reagan. That is, the great threat is the three great Californian presidents of the 20th century really do have a kind of common view of the New Deal and things like it, its descendants, as being the great threat to American ness as they think of it.
- [45:51]
Podcast Host
But I maintain that there is lots to admire about this man. You cannot write this man off. He's an extraordinary individual with a humongous life. And despite misfires and bad choices and stubbornness throughout the Great Depression, his is a biography worth understanding. Eric Rashway, thank you so much for joining us on this episode. We'll see you again in a future episode, hopefully to talk about fdr.
- [46:14]
Eric Rauschway
All right, I'm looking forward to it. Thanks for this one.
- [46:25]
Podcast Host
I hope you enjoyed this episode of American History Hit. Please remember to, like, review and subscribe. Follow us wherever you get your podcasts. And I'll see you next time.
- [46:45]
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- [47:15]
Freddie Wong
Hi, this is Freddie Wong from Dungeons and Daddies and this episode is sponsored by Rocket Money Blast Houston. We have a savings. That's right. Rocket Money is a personal finance app that empowers you to save more, spend less, and take control of your financial life. Basically, you can see all of your checking, savings, credit cards and investments in one convenient place. You can understand your spending trends and most importantly, you can categorize those expenses and set up a custom budget by identifying top spending categories. Listen, you want to track bank statements? It's very difficult. Use Rocket Money to help keep track of all your finances. Rocket money is over 5 million happy members and it's saved its users over $1 billion across all of the app's premium features. Let Rocket Money help you reach your financial goals faster. Get Rocket money today@rocketmoney.com allinone that's rocketmoney.com allinone.