Herbert Hoover had been President for about seven months when the stock market crashed in October, 1929. Although there have been many causes attributed to the onset of the Great Depression, the crash generally is viewed as the trigger point for what still rates as the greatest economic downturn in our nation’s history.
However, even as the economy continued to sink in the aftermath of the crash, Hoover adopted a hands-off policy toward the economy. Although Herbert Hoover was a good man with lots of government experience prior to becoming president, he refused to take action of any kind, held back by a combination of a lack of imagination and his rigid, free-market view of the U.S. economy.
Hoover failed to recognize the severity of the situation or leverage the power of the federal government to address it. He was widely viewed as callous and insensitive toward the suffering of millions of desperate Americans.
By the time Hoover left office in early 1933, unemployment in the U.S. had reached 25% and millions of Americans literally were starving. The iconic photos from that era of Americans lined up for handouts from the soup kitchens that were operated by private charities still are seared into our collective memory even today.
What brought to mind the inaction of Herbert Hoover during the Great Depression were comments made this past Sunday by Lawrence Kudlow, the former TV personality who now is one of the chief economic advisers to President Trump.
Basically, Kudlow said the Trump administration is taking a wait-and-see approach before committing to more federal support for Americans as the United States continues to weather the coronavirus crisis and the accompanying economic damage.
“Well, I don’t want to get too far ahead of the story, Jake,” Kudlow said to CNN’s Jake Tapper. “There may well be additional legislation. There’s a kind of pause period right now.”
But “getting ahead” of this crisis precisely is what policymakers need to do. While it certainly is true that the federal government has spent trillions of dollars in various ways to assist Americans, it also is true that the degree of economic assistance — as well as a coordinated plan — that will be necessary simply to keep Americans fed during the ongoing crisis will require additional trillions of dollars as the economy plunges into free-fall without a parachute in the months ahead.
The lesson of the Great Depression is that a national government cannot be a passive bystander during a time of economic collapse. Speedy, forceful, and creative action is required today to prevent an already-calamitous situation from becoming worse tomorrow.