AGD - Chaper XII: The Close of the Hoover Term

Hoover sought reelection with a starting position for the presidential race, that could not be worse (It’s the economy, stupid!). He clearly stated that under his leadership, government had done much more than ever before to fight a depression. Especially, he was proud of having wages kept up while prices and dividends had moved lower and profits had vanished. 

Despite (or because) Roosevelt and the Democratic Party suggesting more of the same measures, Hoover had to leave the office. After the elections, but before Roosevelt took office, uncertainty did raise. Rumors on the US leaving the gold standard led to a loss in confidence in the Dollar and a ‘hoarding’ of gold by foreigners and domestic citizens. Deflationary pressure from the private sector increased, while the FED tried to fight this tendency. The number of bank failures increased dramatically, and bank holidays in different states became regular. 

With the crisis intensifying and the trust in the fractional banking system vanishing, Roosevelt declared a national bank holiday from March 6th to 13th (with the only legal ground to be found being the Trading with the Enemy Act of World War I). While gold was not confiscated momentarily, the Federal Reserve threatened to publish a list of the leading ‘gold hoarders’. 

Conclusions: The Lessons of Mr. Hoover’s Record – Rothbard’s goal of the book was to demonstrate how government intervention created the boom of the 1920s, and how the Great Depression was aggravated by the interference of government. Rothbard ends with: ‘And in any other depression, past or future, the story will be the same.’