"In America today, we are nearer a final triumph over poverty than is any other land." - Herbert Hoover.
Herbert Hoover made his fortune as a mining engineer, made his name as a humanitarian leader, and lost his reputation as a president. Nobody knew the great Depression was coming when they elected Hoover, but the great irony of his presidency is that, after savings millions of lives as a humanitarian during national and global emergencies, he's the first guy most Americans would have turned to if they had known it was coming. He went above and beyond what any previous president had dared try to combat a financial panic, but it wasn't enough.
Follow along as Hoover goes from being an orphan, to a member of Stanford's inaugural class, to the gold fields of Australia and China, and the boardrooms of Britain, only to shed his business identity for a 15-year career as a humanitarian from Belgium to the Mississippi, and ultimately win the White House, only for a series of economic calamities known as the Great Depression to destroy his administration and reputation. By the time Hoover leaves the White House, his name will be a synonym for homeless encampments.
1. Hoover: An Extraordinary Life in Extraordinary Times - Kenneth Whyte
2. FDR – Jean Edward Smith
3. Calvin Coolidge - David Greenberg
4. The Moralist: Woodrow Wilson and the World He Made – Patricia O’Toole
5. Warren G Harding – John W. Dean
6. Truman – David McCullough
7. The President and the Assassin: McKinley, Terror, and Empire at the Dawn of the American Century – Scott Miller
8. Eisenhower in War and Peace – Jean Edward Smith
9. William Howard Taft – Jeffrey Rosen
31.) Herbert Hoover 1929-1933
Herbert Hoover is… almost a tragic figure in American politics.
His efforts to feed the hungry during world war 1 saved millions of lives. His response to the Great Mississippi Flood of 1927 ushered in a new era in what the federal government can do for victims of natural disasters. For more than 15 years, he’d been one of the greatest humanitarian problem solvers in the world.
When Herbert Hoover was elected president in 1929, nobody knew that the great depression would begin less than a year later, but if they had known, Hoover is probably the guy they would have chosen to solve it. As president Calving Coolidge liked to derisively sneer, Herbert Hoover was the wonderboy
And then… Hoover became the greatest failure of a president in the 20th century.
Today, we’ll look at the whole Hoover story. The ruthless businessman, the compassionate humanitarian, the hero who lived long enough to become a villain. It’s a story unlike anything we’ve told before.
Herbert Hoover was born sometime around midnight between Aug 10 and 11, 1874, to a poor quaker family in West Branch, Iowa. And if anyone was born from a background that you’d expect would instill compassion in them for others, it’s this guy. Hoover’s father, a blacksmith, died of a sudden illness when Hoover was six years old, and his mother passed away from pneumonia four years later, making orphans of 9-year-old Hoover and his two siblings, who were split up and raised by a series of aunts and uncles, making Hoover the first orphan president since Andrew Jackson. And yet from these humble beginnings we’ll get a true rags to riches story, as Hoover is going to become a fantastically wealthy businessman. But that compassion you’d expect him to learn from this experience, it will show up inconsistently. Sometimes in grand gestures, sometimes in secret acts of kindness, and sometimes not at all.
In 1891, Hoover got the kind of opportunity that you just don’t hear about anymore. A new university was opening in California with a tuition model that put it within reach of a young man who had nothing - it was entirely free. The university was Stanford. And with enough practice, hard work, and help from the right connected friends - because nobody gets rich without first getting lucky - Hoover was admitted into Stanford’s inaugural class, and his whole life changed.
Everything happened at Stanford
Hoover met his future wife there
Hoover made friends who would open doors for him there.
Hoover discovered his career there, falling in love with geology and getting valuable experience mapping the Ozarks or searching for Ore in the retreating wilderness of the american west.
When it came time to graduate, Hoover expected to land a job with the U.S. Geological survey, but the panic of 1893, which lasted until 1897, sent that job up in smoke. So Hoover spent his first nine months unemployed or working menial labor instead and, as someone who graduated in 2009, boy can I relate.
In 1896, a british mining firm named Bewick, Moreing put out word that it was looking for a 35-year-old engineer for work in Australia. The pay was $5,000 a year, a solid number back then - especially during a recession. Hoover was not 35 nor an engineer, he was 22 and a trained geologist, but that didn’t stop him from lying on his application. In an age when it took weeks for his resume to even reach Bewick, Moreing, Hoover was hired sight unseen. Nobody even interviewed him. He’d been smart enough to include a letter of recommendation from his current manager, who was connected to the firm, and the job was his.
When it came time to actually meet his new employers on a trip to London before heading to Australia, Hoover grew a desperate mustache to try to appear the age he’d said he was, and they likely saw right through it, but nobody seemed to mind. Bewick, Moreing was sending him to the badlands of Australia to search for gold. If he wasn’t good enough, the mines would spit him out the way they’d spit out so many other men more qualified than him - one in nine mining operatives sent to Australia died - and then his employers would just hire someone else to feed to the gold pits.
Now, if you’re expecting Hoover to be soft and compassionate because of his background as an orphan, a tiny Tim or Oliver Swift, push that image right out of your head for about the next 10 minutes. Hoover’s going to show a compassionate side eventually, but it’s never going to be clear if it’s sincere or all for show. And when it comes to the world of business, Hoover’s not even going to bother to put on a show.
Hoover was a hard and driven man. Harder than the stone he spent his career digging through.
When he landed in Australia, he was supposed to be a mine scout, but he went way beyond his brief and took charge everywhere he went. Hiring people. Firing people. Changing labor practices - always demanding more hours and effort, and often for less pay. He hired his Stanford friends and then demanded they perform incredible feats or they’d be fired and sent packing to california penniless. Hoover was alienating his friends and family with how he treated them, the rush of success in Australia going to his head. In letters home, he referred to himself as the devil. He saw cost per ton of ore as his only KPI and he drove rapid improvement. Within 2 months, the British firm promoted him to be its #2 man in Australia, and Hoover rewarded them by discovering one of western Australia’s most productive gold mines, Worth millions of dollars.
And then he started submitting false numbers so his great performance looked even greater. Dude was losing it.
When a new #1 was appointed in Australia, a guy Hoover didn’t want to answer to, Hoover tried to organize an engineers coup against the new boss, but was found out. The #1 wanted Hoover dismissed, but Hoover’s results had been so good, the British company gave him another chance elsewhere instead - China.
In 1898, Hoover stopped over in California on his roundabout way to China to marry his college friend Lou Henry. Lou was a fellow outdoors enthusiast and geologist who graduated Stanford only to find nobody wanted to hire a woman in the 19th century. She marched to her own tune, supported women’s suffrage, and frankly seemed a lot of fun. The pair would be married for life and parent two children together. And for Hoover’s next adventure to China, Lou came along for the ride.
In 1899, China was still a land of the emperor, but the Qing dynasty was on its last legs. Nations like Britain, France, Japan, the United States - shoot, all the great powers - had forced China to allow enclaves from which their businessmen could exploit the land around them. And Hoover was one of those men.
Hoover’s Chinese life was wild. Chinese soldiers escorted him everywhere he went. Dozens of servants waited on him at all hours, spreading the rumor his green eyes gave him the power to look into the ground and see where the gold was hiding. Hoover saw the Great Wall and the Gobi desert. And then, in 1900, he saw the Boxer rebellion.
You may remember the boxer rebellion from William McKinley’s episode. All that exploitation upset all the exploited people, and in 1900 great masses of them rose up in rebellion. Those enclaves I mentioned? They were besieged, and Hoover and Lou found themselves trapped in one of those sieges, riding around on bicycles with pistols strapped to their hips as they brought medicine and supplies to their beleaguered defenders. The western response to the rebellion was swift and overwhelming - armies from 8 different nations invaded and crushed the rebels. Hoover was saved, and then he decided to profit from the situation.
When all those foreign armies invaded China, local Chinese leaders could see the writing on the wall - the rebellion would fail and the invaders would win. But what would the cost of that foreign victory be for the people of China? One of Hoover’s Chinese employers, a man named Chang, feared the invading armies would seize his mines. Hoover told Chang the only way to avoid losing his valuable coal fields was to create a new business owned by the British, and to sell the fields to them, for pennies on the dollar, with an understanding Chang would still have influence in the business, because the invaders might seize chinese mines, but they wouldn’t seize British mines. And if you’re smelling a double cross coming, that’s because there’s a double cross coming. Hoover used lies and threats - including threatening to block Chang from visiting his sick wife, and possibly threatening to shoot one of his Chinese employees - to force Chang to sign off on the plan.
Hoover had successfully turned the Boxer Revolt into a massive acquisition of Chinese mining interests that made Bewick, Moreing rich as hell. As a thank you, Bewick, Moreing made Hoover a partner in the firm.
From there, Hoover spent the next decade dodging lawsuits related to his questionable business practices and continuing his climb to the top of the mining profession. In 1908, he faked a severe illness to get out of his partner contract and strike out independently, which was much more profitable. By 1914, Hoover was rolling in money and at the peak of his career. A 20-year rise from obscurity to notoriety built with lies, hustle, and ambition unlike anything we’ve seen in this podcast.
And then, on June 28, 1914, some Serbian shot the heir to the Austrian throne, and Hoover’s entire world turned upside down.
When Hoover first saw news of the assassination in the Balkans, he thought nothing of it. “Just another balkan lapse into barbarism,” he said. And he took his family out of town for a nice weekend holiday.
And then, while he was away, Germany declared war on Russia, issued an ultimatum to Belgium, and declared war on France. By the time Hoover was back to his business, there was no business. Russian laborers had been conscripted into the Czar’s army, ships carrying his ore had been sent to the docks, and order after order had been canceled as buyers realized that all those open borders across europe had just transformed into front lines. Nothing was getting through.
Hoover needed to find a new game. And he found one instantly. Hoover the businessmen, the man he’d been for 20 years, was shed like an old suit. Hoover the humanitarian stepped up to the plate, and his actions over the next 16 years - from occupied Belgium to the flood plains of the Mississippi - were going to save countless lives, and make Hoover incredibly famous in the process.
When World War I broke out in Europe, American paper money - checks and dollars - lost all value as europeans feared the gold that backed them wouldn’t ever make it across the atlantic to give them value. In times of panic, you need hard cash in local currency. Hoover was fine. He’d lived in Britain for years and had his wealth in British currency. But what about the 100,000 American travelers who had just been stranded in Europe by World War I? They had no money, no way home, no where to stay. And the european governments? They didn’t care - they had a war to win. The Americans were up the Thames without a paddle.
Hoover organized his fellow expats in London to come to the rescue, forming what you might call an unofficial ‘bank of the wayward americans.’ The expats made short-term loans to the cash-poor stranded travelers in exchange for IOU’s. Hoover helped find food, shelter, and transit, helping get some 42,000 Americans back home. The effort put Hoover on the map, and teed him up for his next act of charity. The one he’d be most famous for - feeding occupied europe.
When Germany launched World War I, it didn’t attack France head on, it went through the tiny country of belgium - located at the northern-end of the Franco-german border - instead. France, you see, had built a wall of strong fortifications along its german border, but a string of weaker fortifications faced the dutch, so the Germans decided that’s where they would attack. As the Germans invaded and occupied Belgium and large swaths of Northeast France, they confiscated all the food they could find, leaving nothing for the locals. If a relief effort wasn’t organized, Belgium was going to starve.
And that’s when Hoover rose to the occasion by establishing the “Committee for the Relief of Belgium,” more popularly known as the CRB. In just five months, using a combination of lies, hustle, and ambition, Hoover created an operation that was purchasing $1.8 million dollars of food per week from the United States, Australia, and Argentina; transporting it in a dozen cargo ships and some 600 tugs and barges across the ocean and to desperate belgians; employing hundreds of volunteers in London offices and thousands of fundraisers internationally; and issuing its own CRB passports and sailing its ships under its own CRB flags. Hoover had a special pass from the Imperial German government that granted him diplomatic immunity and permission to go anywhere he liked. One scholar called the CRB, quote “A piratical State organized for benevolence.” The modern world had never seen anything like it.
By 1917, the CRB was feeling 9 million French and Belgian citizens trapped behind German lines.
Supporters of the CRB say that, without it, millions would have starved and died. Detractors say that without the CRB, millions would have rebelled and fought the Germans, leading to a quicker end to the war. I’m closer to the first camp. The CRB saved lives. Was Hoover doing this for personal glory? Absolutely. He fired his New York director when the guy didn’t praise Hoover enough in his press releases. But Hoover might have also organized the relief effort because he’d once been that hungry orphan. Both motives can be true at the same time.
On April 4, 1917, the United States entered World War I, and the Germans changed their minds about Hoover having a magic ‘go wherever you like’ passpord. In fact, they said the whole CRB would be unwelcome unless Hoover handed it over to leaders from neutral countries, so Hoover entrusted the CRB to dutch and Spanish authorities, and then he sailed home to lend his services to the American war effort.
He didn’t have to wait long to find a role. On Aug. 10, 1917, Wilson signed a bill to create the U.S. Food Administration with Herbert Hoover at its head. This was a very important role. World War I had been caught in a stalemate for three years, and the Russians had just collapsed. There was no guarantee that American boys would make up the difference and end the war anytime soon. If you want to win a war of attrition, you need food, and Hoover and the American Farmer would play a key role in keeping the allies fed.
To make sure the United States was producing enough food to feed the allies, Hoover was granted dictatorial powers over american agriculture. He set prices for wheat to keep it affordable, and issued licenses to all persons and businesses engaged in american food production. They had to produce what Hoover said, when he said, and sell it for the price he dictated, or their licenses to produce food could be revoked and criminal prosecution could follow
But producing food was only part of the effort. Hoover also had to reduce American consumption so there’d be more surplus to ship to the allies. Hoover turned to marketers who introduced the concept of “Meatless Tuesdays,” “Wheatless Wednesdays,” and “victory gardens.” Housewives signed pledge cards vowing to serve smaller portions and were told “Food is ammunition - don’t waste it!”
Add it all up and Hoover doubled American food exports to Europe in less than a year. The allies would not starve the way the Germans were, where food had become so scarce the winter of 1916 had been called “The Turnip winter” - and not because things were getting turnt up.
When the war ended in late 1918, France and England abruptly cut their contracts and the Americans were faced with the prospect of a food surplus that could tank prices, but Hoover was again quick to pivot and find opportunity. Instead of letting the food spoil or flood the domestic market and crater prices, Hoover sold it at bargain prices to European communities that moments ago had been starving behind enemy lines. Hoover hoped this infusion of cheap food would bolster fledgling democratic governments that he feared would collapse if they couldn’t put food on their peoples’ plates. This was about combating the spread of communism, which had already taken Russia with the promise of peace, land, and bread. Food was politics.
As the dust settled and life returned to normal, there must have been a moment when Hoover briefly considered returning to the world of private business, but he quickly dismissed it. He’d tasted government power, and he wanted more.
After flirting with a run for president in 1920, Hoover began courting president elect Warren Harding for a role in his administration. Harding probably looked at Hoover, saw that he’d just been serving in a Democrat administration, and wasn’t sure where Hoover’s loyalties lay, so he gave Hoover what was then the least important role in the cabinet - commerce secretary. And Hoover grabbed it and ran with it.
Just like in the gold fields of Australia, Hoover … never really troubled himself with sticking to his brief. It was joked that he was the secretary of commerce, and undersecretary of everything else. He helped negotiate the Colorado River compact between 7 southwestern states, advocated for greater collection of economic data to guide government decisions, and advocated for the purchasing and sending of grain to starving citizens of communist Russia. When questioned why he’d support sending aid to the communists, he replied “20 million people are starving. Whatever their politics, they shall be fed.”
In 1927, Hoover was tapped by president Calvin Coolidge to coordinate relief for victims of the Great Mississippi Flood, which displaced hundreds of thousands of americans and which I spoke about in greater detail during the Coolidge episode. Hoover cut through red tape to try to get whatever aid he could raise to whoever he could reach, but this cutting of tape meant oversight was minimal. Aid rarely made it to African American communities. And camps propped up by Hoover’s aid used forced african american labor. Hoover didn’t really do much about this. His relief was great news for the white people impacted by the Mississippi flood, but it didn’t mean much to African Americans.
In 1928, Calvin Coolidge announced he wouldn’t seek reelection. Hoover, the heir apparent, threw his hat into the ring.
Hoover had never been a warm and cuddly man. Nor friendly. Nor charismatic. He’d always found success with some combination of lies, hustle, and ambition. But while these three things may work well in business and bureaucracy, they don’t work great in popular politics. So Hoover had obstacles to overcome, and those obstacles were mostly Hoover. He hated campaigning for one. He preferred to be courted rather than do the courting. Hoover didn’t want to go stumping or kiss babies. So, to avoid all that stuff and still win, he hired the country’s greatest marketers, relied on his strong resume, and then wrapped his campaign message around the roaring 20’s economy. And, you have to admit, he did have a heck of a resume, so he won the GOP nomination without much trouble, declaring in his acceptance speech, “We in America today are nearer to the final triumph over poverty than ever before in the history of any land.”
Which… was going to look really naive about 12 months later.
Hoover’s opponent was New York Governor Al Smith, a gregarious and charming man who had no chance against Hoover and the GOP’s economic record.
Hoover won a smashing victory in the general election, 444-87 in the electoral college, and 21.4 million to 15 million in the popular vote. Wonderboy had reached the white house.
And so, on March 4, 1929, 54-year-old Herbert Hoover, the ruthless businessman and merciless humanitarian, the technocrat who brought an evidence-based approach to solving problems, the bipartisan patriot who had served Wilson, Harding, and Coolidge, was sworn in by former president-turned-Chief Justice William Howard Taft, as the 31st president of the United States. But what did the world, and the country, look like when Hoover became president? Let’s look around.
Internationally, a scottish scientist named Sir Alexander Fleming had recently left some culture plates of bacteria out on a bench at his lab during a weekend out of town and when he returned, he noticed a mold had grown in one of the dishes that killed any bacteria it came in contact with. “That’s funny,” he said - he’d just discovered penicillin, the world’s first antibacterial drug. This discovery is one of the greatest life-saving discoveries of all time, saving as many as 200-million lives by some estimates.
In the United States, the Federal Bureau of Investigation, also known as the FBI, was founded under J Edgar Hoover in 1924. J Edgar would use the FBI’s secrets to accrue tremendous personal power in the decades that followed; In 1927, the first “talking” motion picture - imagine that, a movie with spoken dialog - called “The Jazz Singer” hit the silver screen; and in 1929 the first academy awards were presented shortly after Hoover’s inauguration.
It was a wonderful and promising time to be an American. And it was all about to come crashing down.
On Oct. 28, 1929, a day known as Black Monday, the stock market crashed hard, falling 13 percent in a single day. The following day, Black Tuesday, it fell another 12%. By mid-november, the DOW had lost nearly half its value. Three years later, it was down 89%. It wouldn’t fully recover its lost value until 1954.
Economist John Maynard Keynes said of the disaster, “I am told that the view is held in Moscow that this is the last, the culminating crisis of capitalism and our existing society will not survive it.”
Theoretically, the value of a stock is supposed to be based on a sound formula, reflecting how much stock exists, the value of the company’s assets, and forecast future sales.
But… I’m in the camp that thinks that’s all bullcrap.
Stock is worth whatever you can convince someone it’s worth. Think about it. If I own a share of stock, it might, maybe, possibly pay dividends at penny’s on the dollar from time to time, but probably not. I can’t eat stock. I can’t take shelter under stock. I can’t fuel my car with stock. I can’t purchase food, shelter, or fuel in exchange for stock. I can’t go to the company I own stock in and tell them to give me money or change the way they do things. That piece of stock is entirely worthless, unless I can get someone else to buy it from me for more than I paid to acquire it. And that’s why people buy stock. Not because it’s worth anything, but because they hope it’s perceived value will go up and someone else will buy the worthless piece of stock at a profit to the seller - it’s actually scary how much stock is like bitcoin when you think about it, and I say all this as someone who invests in the stock market.
So, we all buy stock hoping it will go up in value. And in the 1920’s, Americans knew it was going up in value. And they were positive it could never go down. And that blind confidence resulted in a stock market that went up and up and up for increasingly no logical reason. Banks were making loans with 20% interest rates to speculators, and speculators were taking those loans and buying stock with them because they were positive the stock market would beat a 20% annual return - and it was! Remember how I said some folks will tell you there’s a formula you can use to calculate what stock should be worth? That got thrown right out the window in the late 20s.
And the thing is, Hoover had looked at this and seen a train wreck in the making.
As early as the mid 1920s, Hoover had been banging on the door of his neighbor, the chair of the federal reserve, and urging him to do something about the surging stock market, concerned it was turning into a bubble that would pop and, quote, “land us on the shore of depression.” The fed chairman ignored him and did the opposite, lowering interest rates in 1927 to make it even easier to borrow money that could then be thrown into the stock market, sending it surging ever higher.
Why was the fed chairman doing this? Did they not see it risked a bubble? The answer is they did see it risked a bubble, but they didn’t think that was their problem. The chair of the fed was worried about problems that could benefit from lower interest rates, such as the economy in europe, the gold standard, German reparations and allied war debt. The fed chairman just felt the stock market was one too many things to worry about, asking rhetorically, “must we accept parenthood for every economic development in the country?”
And so, in 1927, the interest rates were cut, the loans were made, and the stock market surged ever higher. Over the following six months, the DOW industrial index surged 33%, even as corporate profits declined, which is just silly. The following 15 months, corporate profits went up a decent 10%, and the DOW nearly doubled, which is just… crazy.
When Hoover became president in 1929, he tried to gently tap the breaks - he didn’t want to pop the bubble, he wanted to slowly let the air out. He talked to reporters about the risks of speculation, he had his treasury secretary encourage investors to buy government Bonds instead of Stock, and he pressured new york banks to stop lending money to stock speculators, but it was too little, too late.
In September, 1927, a large british bank collapsed when a monumental case of fraud and cooking the books caught up with it - If you remember the enron collapse of the early 2000’s, think that, but a bank in England. $120 million dollars - the equivalent of $2 billion today - vanished from the economy in a moment, and the stock market began to gradually slide.
The gradual slide turned into panic on Black Thursday, October 24, 1929, when a frenzy of selling plunged the DOW 11%. New York’s most powerful bankers tried to meet the crisis like they had in 1907. They met in a closed off room and pledged vast sums of money to buy the sagging stocks and restore confidence in the market - and it briefly worked. One of their representatives bought $130 million dollars worth of blue chip stocks and the market rallied from a low of 11% down to close just 2% down. The press hailed the bankers as heroes of the hour, having saved the economy from a panic.
But the panic wasn’t over.
Four days later, Black Monday, the bottom dropped out when the DOW fell 14%, wiping out $14 billion dollars from the economy. The market dropped another 12 percent the following day. The nation’s eyes turned to the bankers to save them again, but this time they did nothing. The bankers felt financially exposed enough as it was. Only the action of the relatively new federal reserve, which had been created in 1913 to combat a crisis like this, selling government bonds to inject money into the economy, brought something resembling stability to the market
Once again, Americans thought the crisis had been averted. Sure, the stock market had lost 40% of its value in two months, but the market had been overvalued anyway. This was just the bubble popping, right? Wall street had lost money, but main street would be ok, right?
Wrong. While most thought the worst was over, some raised the question - if consumer buying had been driven up by stock market gains, how much would consumer buying be driven down by stock market losses?
Sure enough, other sectors of the economy began to feel the hit. Industrial production fell 5% in October and another 5% in November. Unemployment - keep track of this number - doubled from 1.5 million in the summer of 1929 to 3 million in the spring of 1930. Americans simply had less money to spend on goods and the economy contracted as spending went down.
It began to dawn on people that this was not going to end soon. And the funny thing about the economy is that it’s largely a self fulfilling prophecy. When people think times are going to get bad, they spend less, and when everyone spends less, the economy gets worse, and over the next three years, it got a LOT WORSE.
As the depth of the disaster became apparent, Hoover tried to help.
To address the growing depression, Hoover got the federal reserve to lower interest rates - and you might be thinking, didn’t low interest rates cause this mess? The answer is yes. The economy is complicated. To keep it short, the lower rates are, the more willing banks are to make loans. When the economy is really good, low rates encourage banks to make loans to everybody, which was the problem in 1927 - banks were making risky loans to stock market speculators, fueling the stock market bubble, which popped in 1929.
After that bubble popped, the economy went into free fall and suddenly banks didn’t want to loan money to anybody, because they didn’t have confidence anyone could pay them back. This is bad, because when the economy is crashing, your income might not be what you expected, and you ironically need to borrow more money to pay old debts, if a bank won’t make you a new loan to cover your obligations, you’re going to lose the house, the business, the farm - whatever. Nobody wants that! So to encourage lending, the fed drops rates.
Hoover then summoned the nation’s business and union leaders to D.C. and got the businesses to pledge not to cut wages and he got the union leaders to promise they’d cause no labor issues. This was basically Hoover saying ‘let’s not pour anymore fuel on the fire.’ It was a truce that lasted as long as it took for the businesses to realize, ‘well, we promised not to cut wages, but we didn’t promise not to fire anyone.’ And oh boy were they going to fire people.
Knowing that confidence was key to recovery, and a lack of confidence would deepen the panic, Hoover tried a bit of word play. Every economic crisis prior to this one had been called a panic - I may have called them recessions or depressions on this podcast, but at the time they struck, everyone called them panics. And when you tell people they’re in a panic, they panic! So, to prevent everyone from panicking, hoover said, ‘Let’s call this a depression instead’ and that’s where the term depression comes from. This isn’t just the greatest depression, it’s kind of the only one. After this, folks said “depression is a scary word. Let’s call them recessions instead.”
Hoover also encouraged local governments to increase spending - build roads, parks, renovate old buildings, etc - He hoped this local development would boost the economy without requiring any money from the federal government.
This was all pretty novel stuff at the time. Quite progressive. Never before done. But it wasn’t enough.
And then Hoover started making some pretty big mistakes.
On June 17, 1930, 9 months after the stock market crash that started this whole thing, Hoover signed the Smoot Hawley Tariff. The Smoot Hawley tariff raised prices on just about everything right at a moment when the economy, and every day americans, were teetering on the brink. Almost everyone knew it was a terrible idea, but Hoover thought the tariff would increase profits for american businesses and be good politics. He was wrong. This made the depression worse.
As the winter of 1930 neared, and newsmen noticed more and more once-middle class americans joining the breadlines and losing their homes, Congress tried to pass three large public works projects to give work to the unemployed and put money into the economy, and Hoover vetoed all three. When unemployment doubled again to 6 million jobless americans in 1931, Hoover just started to lie and began cutting all government unemployment statistics in half before publication.
Which, well, didn’t really help.
In 1931, another haymaker hit the U.S. economy, one that really laid it flat. On Sept. 20, 1931, Great Britain abandoned the gold standard. The Gold standard! How many episodes have we spent talking about the gold standard. Aside from a brief global abandonment of the gold standard during World War I, Great Britain, and the world, had long pegged the value of their currencies to the price of gold. A british pound, a franc, a U.S. dollar - any currency could be taken to any bank and be redeemed for a predetermined quantity of gold. It was an understanding the global economy had been built on for generations. And in a day, Great Britain dropped it. The value of the pound fell 20% relative to the dollar, which meant the value of UK assets held by US banks collapsed. Basically, US banks basically thought they had a bunch of british money in the vault, and now that money was all worth less.
It was the last straw. US banks started to fail at a rate of 125 a week. Runs on the bank became endemic. It was clear someone had to give money to the banks to keep them open, the only question was who. Hoover wanted the nation’s richest bankers to bail the struggling banks out, as JP Morgan had done during the panic of 1907, and as the banks had tried to do that first day of the stock market collapse. The federal reserve chairman wanted the government to bail the banks out - something that would have been new. And Treasury Secretary Mellon - remember him? Yes, the rich bank owner who’s been on the job since Warren Harding - Mellon opposed aid for the struggling banks from any direction because, well, his family owned one of the big banks, and the deaths of his rivals stood to enrich him greatly - a holy-shit callous, greedy, and corrupt decision that infuriated Hoover.
Actually, allow me a moment more on Mellon. This guy was SO USELESS during the crisis - when the global economy started collapsing, instead of working to fix it, he spent his time secretly purchasing $7 million of Russia’s most valuable art from a cash-strapped communist government for pennies on the dollar and smuggling it out of the Soviet Union and into the United States. This is what he was focused on as people starved. Mellon would eventually be removed from his position when Congressional investigators found he had corruptly used his position to benefit businesses his family owned, and Hoover, realizing Mellon was a liability, shifted him to Ambassador to England to get him safely away.
I really can’t stand this guy. But back to Hoover.
When Hoover gathered the nation’s largest bankers together and said, ‘You’d better bail the struggling banks out or the federal government will do it for you,’ he expected them to step up to the plate as a matter of pride. Instead, he was shocked when they said ‘by all means, you bail them out.’ A half-measure compromise of limited federal and private funds was agreed too, but it was far too little to make any impact. And it certainly didn’t help when Hoover then raised taxes and cut government spending, apparently having convinced himself that the economy would recover if the government balanced its budget - wrong. As thousands of banks died, their last desperate acts were often to call in their loans to try and generate the cash their depositors demanded, sucking farms, homes, and businesses they’d loaned to down the drain with them.
By 1932, unemployment had doubled for a third time. 12 million Americans were out of work - that’s 23% of working-age Americans out of a job, and up from 1.5 million unemployed just three years earlier. In some places, unemployment was 50%. Out west, the famous drought known as the dust bowl had taken hold. When economist John Maynard Keynes was asked if something like this had ever happened before, he said. “Yes, it was called the dark ages and it lasted 400 years.” Americans began to ask, hey, why are we just talking about bailing out the banks. Didn’t they get us into this mess? Why don’t we give money to hard-working American families instead? Hoover refused, delivering such gems as “If we depart from the principles of local responsibility and self help, we have struck at the roots of self government.”
Or the more colorful, “Nobody is actually starving. The hobos, for example, are better fed than they have ever been.”
American Journalist Heywood Broun retorted, “The only mistake starving unemployed of this country have made is that they did not march on Washington with banners reading ‘we are belgians.’”
And then… and then someone did march on Washington.
Thousands of someones.
In the summer of 1932, more than 15,000 World War I veterans descended on Washington D.C. to petition Congress for an early payment of their World War I bonuses.
Remember the bonuses? This was the World War I bonus from the Coolidge episode that I said would be important later. In 1924, Congress had passed a bill that provided each World War I veteran a life insurance policy valued at a dollar a day for each day of home service plus a buck 25 for each day served overseas. The average payout would have been $1,000, equivalent to $22,000 today. The policies were supposed to pay out in 1945, or at the veteran’s deaths, whatever came first.
Well, in 1932, those veterans wanted the great depression to come first. They couldn't wait til 1945, they needed that money now, or a whole lot of policies were going to be paying out early when unemployed veterans started dying of hunger and malnutrition.
This was a reasonable ask. But it also would have been an expensive ask. $3.3 billion dollars would have had to be borrowed to pay it all out instantly. So you know Hoover was a no. But the veterans still came, and petitioned, and set up camp in Washington D.C.
And then the feds started getting nervous.
Rumors began coming up the food chain that communist infiltrators planned to turn the march into a coup. You know how today some nut jobs think everything is a George-Soros-funded plot to overthrow the government? Yeah, it’s antisemetic trash, and it existed back then, too, but the jewish movie producer Metro Goldwyn Mayer was the boogeyman. FBI Director J Edgar Hoover - who was not related to the president - even told the army that some marchers carried dynamite to blow up the white house. It was all hogwash. But people started getting jumpy. The veterans occupied several abandoned federal buildings and set up shanty-towns - also known as Hoovervilles - in the mud flats of the Anacostia river. Hoover wanted them out. When the D.C. police tried to clear one of the buildings and some veterans resisted, shots were fired and two veterans were killed.
And that’s when the army came in.
George S Patton, who would become a famous tank commander during World War II, led troops supported by tanks and machine guns across a bridge to clear the veterans’ Hooverville on the mudflats with bayonets, gas, and fire. Hoover had expressly said Patton shouldn’t cross that bridge, but commander of the army Douglas MacArthur - who we’ll hear from more down the road, I promise - told Patton to go ahead anyway. The veterans’ tents were torched. 11,000 may have been driven off. The nation was shocked. The GOP-leaning Washington Daily News wrote “What a pitiful spectacle. The mightiest government in the world chasing unarmed men, women and children with army tanks. If the army must be called out to make war on unarmed citizens, this is no longer America.”
Up in New York, the democratic nominee for the white house turned to an aide and said, “Well, Felix, this will elect me.”
Because, that’s right, it was July 28, 1932 - an election year. And you can bet your britches that Hoover, the one-time boy wonder whose name was now a synonym for homeless camps, was in for a heck of a challenge.
The Democrats had nominated Franklin Delano Roosevelt, the handsome, affable, and crippled New York Governor, less than a month earlier. And the irony is that Roosevelt was the Democrat Hoover most hoped to face, as Hoover was confident Roosevelt was all fluff and no substance. But Roosevelt had provided vision and inspiration to his followers, and Hoover was the guy who had just deployed the army against homeless veterans. In hindsight, it wasn’t a hard choice.
On Nov. 8, 1932, 40 million americans went to the polls and voted Hoover out by a landslide - 472 to 59 in the electoral college, and roughly 23 million to 16 million popular votes. Hoover spent the next several months a lame duck president, and then he left office for good on March 4, 1933.
The Great Depression was Roosevelt’s problem now. Hoover was headed to retirement.
So how had America changed during the four years of the Hoover administration?
Well, aside from everyone being a whole lot poorer, there were also a whole lot fewer mexican-Americans around. In 1929, Hoover had used a minor provision in immigration law to order the rounding up and deportation of somewhere between one and two million mexicans, who he accused of taking jobs from american laborers. And when I say mexicans, I’m using that term very loosely. This roundup was executed by sheriffs and vigilantes who weren’t exactly checking papers. There are stories of them just grabbing families from parks, throwing them in cars, and driving them to the border. It’s estimated that 60% of those deported may have actually been U.S. citizens.
So, not great.
In other domestic developments, the star spangled banner became the national anthem in 1931 - that’s right, we’ve only had our current national anthem since 1931 - and, in 1930, American astronomer Clyde Tombaugh discovered Pluto, which was considered a planet when I was a kid, but Neil Degrasse Tyson tells me I need to get over that one and let it go.
Internationally, the first FIFA world cup was held in 1930 in Uraguay, and in 1931, a rogue Japanese Lieutenant exploded some dynamite near the Japanese held Manchurian railroad in northern china. The explosion didn’t damage the rails, but that didn’t stop the Japanese army from blaming chinese dissidents and launching an invasion of china entirely without the permission of Japan’s ruling political class. You may think of Germany’s invasion of Poland as the start of World War II, and that may be true in Europe, but World War II in Asia started with this incident right here in 1931. Japan would be at war non-stop from here to september 2, 1945.
Back to Hoover.
After leaving the white house as one of the greatest pariahs since Andrew Johnson, Hoover… actually tried to run for president again four years later. I don’t know what he was smoking, but he quit the race shortly before the convention when he realized a snowball has a better chance in hell than he did at the convention
And then he just descended into bitterness and yelling at clouds.
Hoover compared the new deal to communism, fascism and Nazism, which, well, it’s an impressive thing when your program is fascist and communist at the same time.
When World War II broke out, FDR twice tried to recruit Hoover to return to what he did best - lead a massive relief effort in europe. But Hoover said no. His pettiness overcoming his compassion.
Toward the end of the great war, Hoover’s wife Lou died on January 7, 1944, of a heart attack at their residence. Hoover showed no outward reaction to his wife’s death at all.
When the war ended, Hoover called for a return to American isolationism. He opposed NATO, opposed foreign aid, opposed anything that reminded him of FDR, the man who had defeated him.
On October 20, 1964 - 31 years after leaving the white house - Hoover died of cancer with his sons at his side in New York City. He was 90 years old.
It was a hell of a life.
If you’re going to remember three things about Herbert Hoover, I’d recommend:
So what can we learn from Herbert Hoover? To paraphrase Mike Ehrmantraut from Breaking Bad, “The Moral of the story is Hoover chose a half measure when he should have gone all the way.” It’s an odd lesson to apply to a man who certainly went all the way in business and other relief efforts, but he faltered when he reached the great depression. At that great challenge, one of the greatest, to be fair, that any president has ever faced, he wanted only to help the banks and the businessmen, not the common people. He only wanted local spending, not federal stimulus; He only endorsed half measures, when he needed to go all the way.
The president who followed Hoover would learn this lesson - no more half measures.
Thank you for listening to today’s episode of Abridged Presidential Histories.
If you enjoyed it, please subscribe and leave a 5-star review on your podcast-listening platform of choice and then encourage your friends and family to check out the show.
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The music in today’s podcast is a public domain recording of the United States Army Old Guard Fife and Drum Corps. The intro music was a recording of Oscar Brands from Smithsonian Folkway Records.
The primary biography for today’s episode was Hoover, an extraordinary Life in Extraordinary Times, by Kenneth Whyte.
In our next episode, I’m actually still lining up my interviews as I record this, but we will probably be talking to some historian about how Hoover’s experiences in business shaped his presidency, or dive deeper into the causes of the great depression and Hoover’s attempts to end it.
That’s next time, on Abridged Presidential Histories.