In an episode of Jeopardy last week, one of the categories was “One-Term Presidents.”
Here was the “answer:”
Britannica: He “was blaming the depression on events abroad & predicting” his foe’s win” would only intensify the disaster”; it didn’t.
The question that Jeopardy was looking for was “Who was Herbert Hoover?
The Jeopardy fact checkers were arguably wrong. The depression did intensify under FDR. Unemployment reached its peak of 25% in FDR’s first term. Of course, you could argue that with lags in the effect of policies, this was on Hoover. That argument seems reasonable because FDR was elected on November 8, 1932 and inaugurated on March 4, 1933. But one of the big things people wondered about during those 4 months, given that bank failures were a huge part of the story, was whether FDR would take the United States off the gold standard. He wouldn’t answer.
Here’s what Gene Smiley writes in his entry “Great Depression” in David R. Henderson, ed., The Concise Encyclopedia of Economics:
The Fed’s expansionary monetary policy ended in the early summer of 1932. After his election in November 1932, President-elect Roosevelt refused to outline his policies or endorse Hoover’s, and he refused to deny that he would devalue the dollar against gold after he took office in March 1933. Bank runs and bank failures resumed with a vengeance, and American dollars began to be redeemed for gold as the gold outflow resumed. As financial conditions worsened in January and February 1933, state governments began declaring banking holidays, closing down states’ entire financial sectors. Roosevelt’s national banking holiday stopped the runs and banking failures and finally ended the contraction.
It is true that output started picking up in the second quarter of 1933, as Smiley elaborates. But then FDR’s National Industrial Recovery Act, which cartelized hundreds of U.S. industries, slowed things down and caused the Great Depression to last longer than otherwise. So if “intensify the disaster” means make the depression deeper, Jeopardy is not clearly right or clearly wrong. But if “intensify the disaster” means make the depression last longer, indeed, much longer, then Jeopardy is clearly wrong.
READER COMMENTS
TGGP
Jan 29 2024 at 4:32pm
There is the modifier “only”. So if it was intensified, and then ameliorated, that would not be “only” intensified.
David Henderson
Jan 29 2024 at 4:47pm
True. Odds that that’s what they meant? 1 in 100.
Vic Volpe
Jan 30 2024 at 4:45pm
https://fred.stlouisfed.org/graph/?g=1eXol
Wonderful fiction, David. As you can see from the data, Hoover’s “Recovery” in 1932 was short lived, peaking out in October/November before the election and then going back into a dive just like his previous recoveries in January 1930 and April 1931. As was said of Hoover’s efforts during those times, “It was too little, too late”.
David Henderson
Jan 30 2024 at 7:10pm
This certainly doesn’t address what I wrote.
Mike Burnson
Jan 30 2024 at 7:34pm
While it is true that government actions taken in the wake of the 1929 crash aggravated what should have been a recession (Smoot-Hawley being perhaps the worst), the “recovery” under FDR was nothing other than federal government profligacy. As Amity Shlaes and others have long pointed out, FDR turned the recession into the Great Depression by ill-conceived explosion of government with myriad three-letter-acronym programs and labor “protections” that put companies out of business and people out of work.
https://usgovernmentspending.com/spending_chart_1920_1940USm_25s1li111mcny_F0f
Joy Schwabach
Jan 30 2024 at 9:40pm
Great summary, Mike Burnson. Great indictment of Jeopardy, David Henderson.
Joel Arndt
Jan 30 2024 at 10:43pm
For decades, the history books have presented the narrative thusly: Hoover’s destructive policies plunged the country into the Depression, then FDR rode in on his white horse and reversed it, saving the day. Any serious student of U.S. economic history knows that rather than revolk his predecessors bad policies, Roosevelt in fact perpetuated many of Hoover’s economic policies, and in some cases, even put them on steroids. The American economy eventually righted itself–in spite of the bad Hoover/Roosevelt policies; but by continuing and/or strengthening Hoover’s policies, FDR actually prolonged the Depression longer than it otherwise would have been, while also worsening its severity.
It is long time that the history books and educational curricula start teaching the truth on this and countless other matters.
Audrey Cannon
Feb 3 2024 at 2:09pm
Absolutely agree that the policies of Roosevelt and the Democrats pursuing their excessive spending further exacerbated the recession leading to the ” great depression”.
Adam Smith
Jan 30 2024 at 7:22pm
There are plenty of academic studies indicating the the New Deal lengthened and deepened the Depression. More specifically, the Depression within the Depression in 1937 precipitated by a fresh wave of New Deal regulation and central planning.
Government intervention and central planning (by both Hoover and FDR) caused, deepened the Depression. The rest of the world had largely recovered by 1934-35 (if not sooner) while the US did not until rearmament and then WWII began in 1938-39.
E.Patrick Mosman
Jan 30 2024 at 8:39pm
George Santayana wrote “Those who cannot remember the past are condemned to it repeat it .”
In 1939, ten years after the crash on Wall Street, FDR’s Secretary of the Treasury, Henry Morgenthau,Jr., wrote in his diary and told the HouseWays and Means Committee:
“We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong…somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises…I say after eight years of this administration we have just as much unemployment as when we started…And an enormous debt to boot.
Does history repeat itself? Yes, it does. And there is every indication
that the we might be doing the same thing again
Thomas Major
Feb 4 2024 at 11:02am
As a child the whole story that the U.S. had no money and had to borrow from China and other countries in order for our country to operate, made little sense to me. We were being taught that China had their hand on the plug of the machine that ran the entire U.S. If the U.S. didn’t pay back the loans, China could pull the plug out, and our country would stop working. This included shutting down supposedly the world’s most powerful military that we needed to be operational in case one of the U.S. biggest enemies, China, decided to attack us. As an adult the story still sounds, and is, as fictional, and untrue as it ever was!
In short, Member countries of the IMF must follow rules to remain in good standings. One rule, as long as the govt’s of member countries spend more money than they take in, they must sell govt treasury securities to raise funds. Countries like the U.S. , where the gov’t is the sole source of the currency, will obviously always run a deficit. The U.S. doesn’t use the money. It’s put in a simple interest earning savings account at the fed.
We live in a resource based world, as long as there are enough resources necessary to function (food, bldg materials, etc) there’s absolutely no reason for people to go without. Unless it’s permitted, and created!
The sad part of this is there are people living incredibly comfortable lives promoting and peddling this lie. The worst part of this is the commoners down here at the bottom choose to not use their inherent ability to think for themselves, and continue to believe the lie and enable the criminals to profit off of it!
David Henderson
Feb 6 2024 at 5:17pm
How does this comment relate to anything I wrote in the post?
Thomas Major
Feb 7 2024 at 9:49am
Seriously?
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