The left love to quote President Hoover’s Treasury Secretary, Andrew Mellon, as evidence of Hoover lack of government action during the depression. They then cite Hoover’s failure to prevent the depression as evidence of how misguided Mellon’s approach was. For example:
Hayek’s fellow countryman, Joseph Schumpeter, went further: “Gentlemen!” he announced to his students at Harvard University (there were no ladies). “A depression is healthy! Like a good ice-cold douche!” If depressions did not exist, Schumpeter thought, we would have to invent them. They were “the respiration of the economic mechanism.”
Agreeing with Schumpeter was Herbert Hoover’s Treasury secretary, Andrew Mellon. In his memoirs Hoover was bitter toward many, but bitterest of all toward Mellon, whom he called the head of the “leave it alone liquidationists.” Hoover quotes Mellon: “It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people.” Hoover opposed Mellon’s policies, he said, and worked to undermine them. But what could he do? He was, after all, only the president. And Mellon was Treasury secretary.
The massive interventions by Hoover are part of the historical record. As he says himself:
“These programs unparalleled in the history of depression in any country and in any time, to care for distress, to provide employment, to aid agriculture, to maintain financial stability…..
There are page, after page of interventions detailed in The Memoirs of Herbert Hoover Volume: Vol. Three: The Great Depression 1929-1941:
I believe these extracts from Wikipedia are uncontroversial:
“Roosevelt campaigned on the Democratic platform advocating “immediate and drastic reductions of all public expenditures,” “abolishing useless commissions and offices, consolidating departments and bureaus, and eliminating extravagances” and for a “sound currency to be maintained at all hazards.”
Roosevelt campaigned and won on those grounds because of the extent of Hoover’s economic activism.
Roosevelt certainly helped things go down hill:
“After the election, Roosevelt refused Hoover’s requests for a meeting to come up with a joint program to stop the downward spiral and calm investors, claiming it would tie his hands. The economy spiraled
Roosevelt’s programs probably stopped the economy recovering. His policies were responsible for the duration and depth of the depression. Sadly similarly misguided efforts are looking likely to cause the Greatest Depression.
Bradford DeLong’s and the Left’s attempts to tar Hoover with the Mellon brush and thereby discredit Mellon’s policies is deceptive at best. A dishonest lie may be nearer the mark. Does this, sourced from Hoover’s Memoirs sound bitter? Does this sound like a man claiming he was thwarted by Mellon?
Two schools of thought quickly developed within our administration discussions.
First was the “leave it alone liquidationists” headed by Secretary of the Treasury Mellon, who felt that government must keep its hands off and let the slump liquidate itself. Mr. Mellon had only one formula:
“Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate.” He insisted that, when the people get an inflation brainstorm, the only way to get it out of their blood is to let it collapse. He held that even a panic was not altogether a bad thing. He said: “It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people.” He often used the expression, “There is a mighty lot of real estate lying around the United States which does not know who owns it,” referring to excessive mortgages.
At great length, Mr. Mellon recounted to me his recollection of the great depression of the seventies which followed the Civil War. (He started in his father’s bank a few years after that time.) He told of the tens of thousands of farms that had been foreclosed; of railroads that had almost wholly gone into the hands of receivers; of the few banks that had come through unscathed; of many men who were jobless and mobs that roamed the streets. He told me that his father had gone to England during that time and had cut short his visit when he received word that the orders for steel were pouring toward the closed furnaces; by the time he got back, confidence was growing on every hand; suddenly the panic had ended, and in twelve months the whole system was again working at full speed.
I, of course, reminded the Secretary that back in the seventies an untold amount of suffering did take place which might have been prevented; that our economy had been far simpler sixty years ago, when we were 75 per cent an agricultural people contrasted with 30 per cent now; that unemployment during the earlier crisis had been mitigated by the return of large numbers of the unemployed to relatives on the farms; and that farm economy itself had been largely self-contained. But he shook his head with the observation that human nature had not changed in sixty years.
Secretary Mellon was not hard-hearted. In fact he was generous and sympathetic with all suffering. He felt there would be less suffering if his course were pursued. The real trouble with him was that he insisted that this was just an ordinary boom-slump and would not take the European situation seriously. And he, like the rest of us, underestimated the weakness in our banking system.
But other members of the Administration, also having economic responsibilities—Under Secretary of the Treasury Mills, Governor Young of the Reserve Board, Secretary of Commerce Lamont and Secretary of Agriculture Hyde—believed with me that we should use the powers of government to cushion the situation. To our minds, the prime needs were to prevent bank panics such as had marked the earlier slumps, to mitigate the privation among the unemployed and the farmers which would certainly ensue. Panic had always left a trail of unnecessary bankruptcies which injured the productive forces of the country. But, even more important, the damage from a panic would include huge losses by innocent people, in their honestly invested savings, their businesses, their homes, and their farms.
The record will show that we went into action within ten days and were steadily organizing each week and month thereafter to meet the changing tides — mostly for the worse. In this earlier stage we determined that the Federal government should use all of its powers:
What is it with the truth and the left? Yes I know they don’t necessarily believe there is such a thing as Truth. But even so, surely something else explains their ready resort to lies and deceit. They can’t all be looking for a job with an investment bank, or some fat consultancy or speaker fees.
Could it be cognitive capture? They can’t help but see the world through their pseudo-socialist prism. A horrid mish-mash of politically correct hogwash corrupts their view of reality. If so, then were they not so damaging they would warrant our pity.
Or perhaps it is simply their view that the end justifies the means. Neither people nor facts can be allowed to stand in the way of progress. Their ideology approved the killing of millions of, Kulaks, Cambodians, men, women and children. Why would those in its modern incarnation let the facts and truth stop them?
They just know we need more government. Any lie or act of deception that furthers that aim is not just acceptable, but good. It’s enough to make you sick. Literally sick, there is ample evidence that being poor and unemployed decreases your life expectancy. Nice. Yet more human misery to heap on the immense mountain of Left induced suffering.
By lying about the past the Left are distorting policy in the now and causing misery tomorrow. Do not underestimate the importance of the history wars.