Herbert
Hoover, the son of a Quaker, was born
in West Branch, Iowa, on 10th August, 1874. Orphaned as a child, he
was brought up his uncle in Oregon. Hoover attended Stanford University
and graduated as a mining engineer in 1895.
Hoover worked on industrial projects in several countries and on the
outbreak of the First World War was in London.
Hoover was made head of American Relief Commission (1914-15) and chairman
of the American Relief Commission for Relief in Belgium (1915-19).
When the United States entered the war in 1917, Woodrow
Wilson used Hoover's experience by making him as national food
administrator. This gave him responsibility for distributing 18,500,000
tons of food to the Allies.
In 1920 Warren Harding appointed Hoover
as his Secretary of Commerce. Over the next seven years Hoover was
associated with the successful growth in the American economy. Companies
in the United States began to make full use of what became known as
mass production. This increase in output
enabled America to produce items that were cheaper than those manufactured
by her European competitors. Inflation remained low while incomes
increased by an average of 35% during this period.
When Calvin Coolidge decided not to
run in 1928, Hoover won the Republican
Party nomination. The Wall Street
Crash in October 1929, created the worst depression in American
history. Hoover was slow to provide federal relief to farmers and
stubbornly refused to give help to the unemployed in urban areas.
Hoover vetoed a bill that would have created a federal unemployment
agency and also opposed a plan to create a public works programme.
Many American veterans of
the First World War found it difficult to find
work. An increasing number came to the conclusion that the money would
be more useful to them in this time of need than when the bonus was
due. Congress had voted veterans $3,500,000,000, however, this was
to be spread over 20 years. In May 1932, 10,000 of these ex-soldiers
marched on Washington in an attempt to persuade Congress to grant
immediate payment of the bonus. When they arrived in Washington the
Bonus Marchers camped at Anacostia Flats,
an area that had formerly been used as an army recruiting centre.
Hoover's unpopularity increased when on 28th July, Hoover gave orders
for the camp to be cleared by troops under the command of General
Douglas MacArthur.
Andrew
Mellon was Hoover's secretary of the treasury. Mellon followed
policies that involved cutting income tax rates and reducing public
spending. He also brought an end to the excess profits tax. Mellon's
policies created a great deal of controversy and he was accused of
following policies that favoured the wealthy. The economic depression
that began in 1929 was partly blamed on Mellon's policies.
During the 1932 presidential election, Hoover argued that the role
of government was one of an "umpire" rather than "player".
He believed that America owed its financial
prosperity in the 1920s to this "non-interference" policy
and it was just a matter of time before natural economic forces would
bring about a revival of trade. Hoover's arguments were not accepted
by the American people and he was easily defeated by his Democratic
opponent, Franklin D. Roosevelt.
Out of power, Hoover opposed Roosevelt's New
Deal programme during the 1930s. After the Second
World War, Hoover was involved in several American relief operations
in Europe. He wrote The
Basis for Lasting Peace
(1945) and several volumes of autobiography.
Herbert
Hoover
died on 20th October, 1964.
Franklin
D. Roosevelt to Herbert Hoover: Just leave
them Herb. I'll do it all after March 4th.
Cliff Berryman,
Washington Evening Star (1932)
(1)
Andrew Mellon, Taxation: the People's
Business (1924)
The problem of the government is to fix rates which will bring in
a maximum amount of revenue to the Treasury and at the same time bear
not too heavily on the taxpayer or on business enterprises. A sound
tax policy must take into consideration three factors. It must produce
sufficient revenue for the government; it must lessen, so far as possible,
the burden of taxation on those least able to bear it; and it must
also remove those influences which might retard the continued steady
development of business and industry on which, in the last analysis,
so much of our prosperity depends.
Furthermore,
a permanent tax system should be designed, not merely for one or two
years nor for the effect it may have on
any given class of taxpayers but should be worked
out with regard to conditions over a
long period and with a view to its ultimate
effect on the prosperity of the country as
a whole. These are the principles on which
the Treasury's tax policy is based, and
any revision of taxes which ignores these
fundamental principles will prove merely
a makeshift and must eventually be replaced
by a system based on economic rather
than political considerations.
There is no reason why
the question of taxation should not be approached from a nonpartisan
and business viewpoint. In recent years, in any discussion of tax
revision, the question which has caused most controversy is the proposed
reduction of the surtaxes. Yet recommendations for such reductions
have not been confined to either Republican or Democratic administrations.
My own recommendations on this subject were in line with similar ones
made by Secretaries Houston and Glass, both of whom served under a
Democratic President. Tax revision should never be made the football
either of partisan or class politics but should be worked out by those
who have made a careful study of the subject in its larger aspects
and are prepared to recommend the course which, in the end, will prove
for the country's best interest.
I have never viewed taxation
as a means of rewarding one class of taxpayers or punishing another.
If such a point of view ever controls our public policy, the traditions
of freedom, justice, and equality of opportunity, which are the distinguishing
characteristics of our American civilization, will have disappeared
and in their place we shall have class legislation with all its attendant
evils. The man who seeks to perpetuate prejudice and class hatred
is doing America an ill service. In attempting to promote or to defeat
legislation by arraying one class of taxpayers against another, he
shows a complete misconception of those principles of equality on
which the country was founded. Any man of energy and initiative in
this country can get what he wants out of life. But when that initiative
is crippled by legislation or by a tax system which denies him the
right to receive a reasonable share of his earnings, then he will
no longer exert himself and the country will be deprived of the energy
on which its continued greatness depends.
This condition has already
begun to make itself felt as a result of the present unsound basis
of taxation. The existing tax system is an inheritance from the war.
During that time the highest taxes ever levied by any country were
borne uncomplainingly by the American people for the purpose of defraying
the unusual and ever increasing expenses incident to the successful
conduct of a great war. Normal tax rates were increased, and a system
of surtaxes was evolved in order to make the man of large income pay
more proportionately than the smaller taxpayer. If he had twice as
much income, he paid not twice but three or four times as much tax.
For a short time the surtaxes yielded a large revenue.
But since the close of
the war people have come to look upon them as a business expense and
have treated them accordingly by avoiding payment as much as possible.
The history of taxation shows that taxes which are inherently excessive
are not paid. The high rates inevitably put pressure upon the taxpayer
to withdraw his capital from productive business and invest it in
tax-exempt securities or to find other lawful methods of avoiding
the realization of taxable income. The result is that the sources
of taxation are drying up; wealth is failing to carry its share of
the tax burden; and
capital is being diverted into channels which yield neither revenue
to the government nor profit to the people.
(2) Herbert Hoover, letter
to Reed Smoot (18th February, 1931)
I have given thought to your request that I should express to you
and the Senate Finance Committee my views upon the bill passed by
the House of Representatives, increasing the loans to World War veterans
upon the so-called bonus certificates. In view of the short time remaining
in this session for its consideration I shall comply with your request.
The proposal is to authorize
loans upon these certificates up to 50% of their face value. And to
avoid confusion it must be understood that the “face value”
is the sum payable at the end of the 20 years period (1945) being
based on the additional compensation to veterans of about $1,300,000,000
granted about six years ago, plus 25% for deferment, plus 4% compound
interest for the 20 year period. As the “face value” is
about $3,423,000,000, loans at 50% thus create a potential liability
for the Government of about $1,172,000,000, and, less the loans made
under the original Act, the total cash which might be required to
be raised by the Treasury is about $1,280,000,000 if all should apply.
The Administrator of Veterans' Affairs informs me by the attached
letter that he estimates that if present conditions continue, then
75% of the veterans may be expected to claim the loans, or a sum of
approximately $1,000,000,000 will need to be raised by the Treasury.
I will not undertake to
enumerate all of the grounds for objection to this proposal. There
are a number of most serious objections, some of which are matters
of method and some of which are matters of fundamental principle affecting
the future of our country and the service men themselves.
I have supported, and the
nation should maintain, the important principle that when men have
been called into jeopardy of their very lives in protection of the
Nation, then the Nation as a whole incurs a special obligation beyond
that to any other groups of its citizens. These obligations cannot
be wholly met with dollars and cents. But good faith and gratitude
require that protection be given to them when in ill health, distress
and in need. Over 700,000 World War Veterans or their dependents are
today receiving monthly allowances for these reasons. The country
should not be called upon, however, either directly or indirectly,
to support or make loans to those who can by their own efforts support
themselves.
By far the largest part
of the huge sum proposed in this bill is to be available to those
who are not in distress.
The acute depression and
unemployment create a situation of unusual economic sensitiveness,
much more easily disturbed at this time than in normal times by the
consequences of this legislation, and such action may quite well result
in a prolongation of this period of unemployment and suffering in
which veterans will themselves suffer with others.
By our expansion of public
construction for assistance to unemployment and other relief measures,
we have imposed upon ourselves a deficit in this fiscal year of upwards
of $500,000,000 which must be obtained by issue of securities to the
investing public. This bill may possibly require the securing of a
further billion of money likewise from the public. Beyond this, the
Government is faced with a billion dollars of early maturities of
outstanding debts which must be refunded aside from constant renewals
of a very large amount of temporary Treasury obligations. The additional
burdens of this project cannot but have damaging effect at a time
when all effort should be for the rehabilitation of employment through
resumption of commerce and industry.
There seems to be a misunderstanding
in the proposal that the Government securities already lodged with
the Treasury to the amount of over $700,000,000 as reserve against
these certificates constitute available cash to meet this potential
liability. The cash required by the veterans can only be secured by
the sale of these securities to the public. The legislation is defective
in that this $700,000,000 of Government securities is wholly inadequate
to mend either a potential liability of $1,280,000,000 or approximately
$1,000,000,000 estimated as possible by the Administrator of Veterans'
Affairs, and provision would need to be made at once for this deficiency.
The one appealing argument
for this legislation is for veterans in distress. The welfare of the
veterans as a class is inseparable from that of the country. Placing
a strain on the savings needed for rehabilitation of employment by
a measure which calls upon the Government for a vast sum beyond the
call of distress, and so adversely affecting our general situation,
will in my view not only nullify the benefits to the veteran but inflict
injury to the country as a whole.
(3) Herbert Hoover, statement
(11th December, 1931)
In my recommendations to Congress and in the organizations created
during the past few months, there is a definite program for turning
the tide of deflation and starting the country upon the road to recovery.
This program has been formulated after consultation with leaders of
every branch of American public life, of labor, of agriculture, of
commerce, and of industry. A considerable part of it depends on voluntary
organization in the country. This is already in action. A part of
it requires legislation. It is a non-partisan program. I am interested
in its principles rather than its details. I appeal for unity of action
for its consummation.
The major steps that we
must take are domestic. The action needed is in the home field, and
it is urgent. While reestablishment of stability abroad is helpful
to us and to the world, and I am confident that it is in progress,
yet we must depend on ourselves. If we devote ourselves to these urgent
domestic questions we can make a very large measure of recovery irrespective
of foreign influences.
That the country may get
this program thoroughly in mind, I review its major parts:
1. Provision for distress
among the unemployed by voluntary organization and united action of
local authorities in cooperation with the President's Unemployment
Relief Organization, whose appeal for organization and funds has met
with a response unparalleled since the war. Almost every locality
in the country has reported that it will “take care of its own.”
In order to assure that there will be no failure to meet problems
as they arise, the organization will continue through the winter.
2. Our employers are organized
and will continue to give part-time work instead of discharging a
portion of their employees. This plan is affording help to several
million people who otherwise would have no resources. The government
will continue to aid unemployment over the winter through the large
program of Federal construction now in progress. This program represents
an expenditure at a rate of over $60,000,000 a month.
3. The strengthening of
the Federal Land Bank System in the interest of the farmer.
4. Assistance to homeowners,
both agricultural and urban, who are in difficulties in securing renewals
of mortgages by strengthening the country banks, savings banks, and
building and loan associations through the creation of a system of
Home Loan Discount Banks. By restoring these institutions to normal
functioning, we will see a revival in employment in new construction.
5. Development of a plan
to assure early distribution to depositors in closed banks, and thus
relieve the stress amongst millions of smaller depositors and smaller
businesses.
6. The creation for the
period of the emergency of a Reconstruction Finance Corporation to
furnish necessary credit otherwise unattainable under existing circumstances,
and so give confidence to agriculture, to industry and to labor against
further paralyzing influences and shocks, but more especially by the
reopening of credit channels which will assure the maintenance and
normal working of the commercial fabric.
7. Assistance to all railroads
by protection from unregulated competition, and to the weaker ones
by the formation of a credit pool, as authorized by the Interstate
Commerce Commission, and by other measures, thus affording security
to the bonds held by our insurance companies, our savings banks, and
other benevolent trusts, thereby protecting the interest of every
family and promoting the recuperation of the railways.
8. The revision of our
banking laws so as better to safeguard the depositors.
9. The safeguarding and
support of banks through the National Credit Association, which has
already given great confidence to bankers and extended their ability
to make loans to commerce and industry.
10. The maintenance of
the public finance on a sound basis. (a) By drastic economy. (b) Resolute
opposition to the enlargement of Federal expenditure until recovery.
(c) A temporary increase in taxation, so distributed that the burden
may be borne in proportion to ability to pay amongst all groups and
in such a fashion as not to retard recovery.
The maintenance of the
American system of individual initiative and individual and community
responsibility.
The broad purpose of this program is to restore the old job instead
of creating a made job, to help the worker at the desk as well as
the bench, to restore their buying power for the farmers' products
- in fact, turn the processes of liquidation and deflation and start
the country forward all along the line.
This program will affect
favorably every man, woman, and child - not a special class or any
group. One of its purposes is to start the flow of credit now impeded
by fear and uncertainty, to the detriment of every manufacturer, business
man and farmer. To reestablish normal functioning is the need of the
hour.
(4) Herbert Hoover, statement
(28th July, 1932)
For some days police
authorities and Treasury officials have been endeavoring to persuade
the so-called bonus marchers to evacuate certain buildings which they
were occupying without permission. These buildings are on sites where
Government construction is in progress and their demolition was necessary
in order to extend employment in the District to carry forward the
Government's construction program.
This morning the occupants
of these buildings were notified to evacuate and at the request of
the police did evacuate the buildings concerned. Thereafter, however,
several thousand men from different camps marched in and attacked
the police with brickbats and otherwise injured several policemen,
one probably fatally.
I have received the attached
letter from the Commissioners of the District of Columbia stating
that they can no longer preserve law and order in the District.
In order to put an end
to this rioting and defiance of civil authority, I have asked the
Army to assist the District authorities to restore order.
Congress made provision
for the return home of the so-called bonus marchers who have for many
weeks been given every opportunity of free assembly, free speech and
free petition to the Congress. Some 5,000 took advantage of this arrangement
and have returned to their homes. An examination of a large number
of names discloses the fact that a considerable part of those remaining
are not veterans; many are communists and persons with criminal records.
The veterans amongst these
numbers are no doubt aware of the character of their companions and
are being led into violence which no government can tolerate.
(5) Herbert Hoover, statement
(29th July, 1932)
A challenge to the
authority of the United States Government has been met, swiftly and
firmly.
After months of patient
indulgence, the Government met overt lawlessness as it always must
be met if the cherished processes of self-government are to be preserved.
We cannot tolerate the abuse of Constitutional rights by those who
would destroy all government, no matter who they may be. Government
cannot be coerced by mob rule.
The Department of Justice
is pressing its investigation into the violence which forced the call
for Army detachments, and it is my sincere hope that those agitators
who inspired yesterday's attack upon the Federal authority may be
brought speedily to trial in the civil courts. There can be no safe
harbor in the United States of America for violence.
Order and civil tranquillity
are the first requisites in the great task of economic reconstruction
to which our whole people now are devoting their heroic and noble
energies. This national effort must not be retarded in even the slightest
degree by organized lawlessness. The first obligation of my office
is to uphold and defend the Constitution and the authority of the
law. This I propose always to do.
(6) Herbert Hoover, speech
in New York (October, 1932)
The proposals of our opponents will endanger or destroy our system.
I especially emphasize that promise to promote "employment for
all surplus labour at all times." At first I could not believe
that anyone would be so cruel as to hold out hope so absolutely impossible
of realization to these 10,000,000 who are unemployed. And I protest
against such frivolous promises being held out to a suffering people.
If it were possible to give this employment to 10,000,000 people by
the Government, it would cost upwards of $9,000,000,000 a year. It
would pull down the employment of those who are still at work by the
high taxes and the demoralization of credit upon which their employment
is dependent. It would mean the growth of a fearful bureaucracy which,
once established, could never be dislodged.
(7)
Charlie Chaplin My Autobiography
(1964)
The
lugubrious Hoover sat and sulked, because his disastrous economic
sophistry of allocating money at the top in the belief that it would
percolate down to the common people had failed. And amidst all this
tragedy he ranted in the election campaign that if Franklin Roosevelt
got into office the very foundations of the American system - not
an infallible system at that moment - would be imperilled.
(8) Herbert Hoover, interview
quoted in the New York Times (31st
October, 1936)
I rejected the schemes of economic planning to regiment and coerce
the farmer. That was born of a Roman despot 1400 years ago and grew
into the AAA. I refused national plans to put government into business
in competition with its citizens. That was born of Karl Marx. I vetoed
the idea of recovery through stupendous spending to prime the pump.
That was born of a British Professor (John Maynard Keynes).
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