Vacuum

Sunday, Apr 19, 2009

The last 3 years have been a time of unparalleled economic calamity. They have been years of greater suffering and hardship than any which have come to the American people since the aftermath of the Civil War.

...

Before the storm broke we were steadily gaining in prosperity. Our wounds from the war were rapidly healing. Advances in science and invention had opened vast vistas of new progress. Being prosperous, we became optimistic--all of us. From optimism some of us went to overexpansion in anticipation of the future, and from overexpansion to reckless speculation. In the soil poisoned by speculation grew those ugly weeds of waste, exploitation, and abuse of financial power. In this overproduction and speculative mania we marched with the rest of the whole world. Then 3 years ago came retribution by the inevitable worldwide slump in the consumption of goods, in prices, and employment. At that juncture it was the normal penalty for a reckless boom such as we have witnessed a score of times in our national history. Through such depressions we have always passed safely after a relatively short period of losses, of hardship, and of adjustment. We have adopted policies in the Government which were fitting to the situation. Gradually the country began to right itself. Eighteen months ago there was a solid basis for hope that recovery was in sight.

...

Thus beginning 18 months ago, the worldwide storm grew rapidly to hurricane force and the greatest economic emergency in all the history of the world. Unexpected, unforeseen, violent shocks with every month brought new dangers and new emergencies to our country. Fear and apprehension gripped the heart of our people in every village and city.

...

Two courses were open to us. We might have done nothing. That would have been utter ruin. Instead, we met the situation with proposals to private business and to the Congress of the most gigantic program of economic defense and counterattack ever evolved in the history of the Republic. We put that program in action.

...

We have provided methods and assurances that none suffer from hunger or cold amongst our people. We have instituted measures to assist our farmers and our homeowners. We have created vast agencies for employment. Above all, we have maintained the sanctity of the principles upon which this Republic has grown great.

...

In a large sense the test of the success of our program is simple. Our people, while suffering great hardships, have been and will be cared for. In the long view our institutions have been sustained intact and are now functioning with increasing confidence for the future. As a nation we are undefeated and unafraid. And again above all, government by the people has not been defiled.

...

It was in accordance with these principles that at the first stage of the depression I called upon the leaders of business and of labor and of agriculture to meet with me and induced them, by their own initiative, to organize against the panic with all its devastating destruction; to uphold wages until the cost of living was adjusted; to spread existing employment through shortened hours; and to advance construction work against future need.

...

It is in accord with these principles and these purposes that we have made provision for $1,500 millions of loans to self-supporting works so that we may increase employment in productive labor. We rejected projects of wasteful nonproductive work allocated for purposes of attracting votes instead of affording relief. Thereby, instead of wasteful drain upon the taxpayer, we secured the return of their cost to Government agencies and at the same time we increased the wealth of the Nation.

...

It was in accord with these ideas that as the storm grew in intensity we created the Reconstruction Finance Corporation with a capital of 2 billions more to uphold the credit structure of the Nation, and by thus raising the shield of Government credit we prevented the wholesale failure of banks, of insurance companies, of building and loan associations, of farm mortgage associations, and of railroads in all of which the public interest is paramount. This disaster has been averted through the saving of more than 5,000 institutions and the knowledge that adequate assistance was available to tide others over the stress. This has been done not to save a few stockholders, but to save 25 millions of American families, every one of whose very savings and employment might have been wiped out and whose whole future would have been blighted had these institutions gone down.

...

It was in accordance with these principles that we expanded the functions and the powers of the Federal Reserve banks that they might counteract the stupendous shrinkage of credit due to fear and to hoarding and the foreign withdrawal of our resources.

...

It was in accordance with these principles that we have joined in the development of a world economic conference to bulwark the whole international fabric of finance, of monetary values, and the expansion of world commerce.

...

It was in accordance with these principles and these policies that I am today organizing the private industrial and financial resources of the country to cooperate effectively with the vast governmental instrumentalities which we have in motion, so that through their united and coordinated efforts we may move from defense to a powerful attack upon the depression along the whole national front.

...

First: I am squarely for a protective tariff. I am against the proposal of "a competitive tariff for revenue" as advocated by our opponents. That would place our farmers and our workers in competition with peasant and sweated-labor products from abroad.

...

This depression has exposed many weaknesses in our economic system. There has been exploitation and abuse of financial power. We will fearlessly and unremittingly reform these abuses. I have recommended to the Congress the reform of our banking laws. Unfortunately this legislation has not yet been enacted. The American people must have protection from insecure banking through a stronger banking system. They must be relieved from conditions which permit the credit machinery of the country to be made available without check for wholesale speculation in securities with ruinous consequence to millions of our citizens and to our national economy. I have recommended to Congress methods of emergency relief to the depositors of closed banks. For 7 years I have repeatedly warned against private loans abroad for nonproductive purposes. I shall persist in all those matters.

...

My fellow citizens, the discussion of great problems of economic life and of government seem abstract and cold. But within their right solution lies the happiness and the hope of a great people. Without such solution all else is mere verbal sympathy.

Herbert Hoover: Address Accepting the Republican Presidential Nomination, August 11, 1932, http://www.presidency.ucsb.edu/ws/index.php?pid=23198.

Herbert Hoover enacted Keynesian economic policies, like George W. Bush, which did not help the crisis. 6 months after this speech, Franklin D. Roosevelt beat Hoover (on a platform of "change") and continued and magnified the same types of policies. The similarities are striking. The Great Depression lasted 14 more years after the "bold actions" Hoover cites above and of those continued by FDR.