Landslide -- A Portrait of President Herbert Hoover

photo of Amity Shlaes.

Subject: Amity Shlaes
Interviewer: Tracy Dorsey

This interview* was recorded in New York City in January 2008, as part of Landslide - A Portrait of President Herbert Hoover. The documentary is a co-production of The Duncan Entertainment Group and Stamats Communications. Iowa Public Television is the presenter and flagship affiliate for the PBS system. Amity Shlaes is a syndicated columnist for Bloomberg, a senior fellow at the Council for Foreign Relations and the author of The Forgotten Man: A New History of the Great Depression.

(* This transcript has been edited due to length.)

If you could tell us, in your view, who was Herbert Hoover? What comes to mind when you think of Herbert Hoover?
Well the Hoover, the Herbert Hoover you loved best is the Hoover who was Hoover before he was President: the Hoover who was the most successful young man of his generation, a mining engineer at a time when mining was where the wealth was. Luck makes talent look like genius. And today there are people who have luck: the luck of knowing how to make microchips, the luck of figuring out that people want to buy Macs, that's where the luck here is nowadays, the luck of Google or Amazon.

Luck then came to people who knew how to get commodities, especially gold, out of the ground, because the world was on a gold-based monetary standard, the gold standard. And the more gold there was, the faster the world could grow, it was almost that simple. Hoover was a man who learned with the best at Stanford, with the people who were getting the gold out of the ground, those mining engineers who were teaching at this young university. I don't know if we have anything comparable today in the States.

He was in what was called the pioneer class, the first class at Stanford, and he was their best student. When he came out, he knew more about mining than almost anyone in the world. So he went abroad and rationalized all these mines that people thought were dogs. He got gold out of places where people thought you couldn't get any gold anymore. He did it in Australia, he did it in China, and he built up this field that was so important to the world economy and lived in the center economy at that time: London.

So, that was the shining Hoover, the man who was said to be the best-paid young man of his generation in his twenties, the star everyone wanted to hire as a consultant.

Well it's just a shame, almost, that the country couldn't enjoy, couldn't get that man who was the young man. Hoover hardened a bit. He had a wonderful intermediate period as a rescuer, the man who fed Belgium during World War I, the man who helped out in Russia following the rise of the Bolsheviks, the man who organized the rescue in the flood of the Mississippi in the '20s; that was important. The President was a little bit more hardened, he was a little bit easier to hurt, and he didn't like criticism. Herbert didn't like criticism.

We all know someone like that: used to be the smartest person in the room, doesn't like to hear negative things. He didn't like, therefore, to interact with Congress as much as a President must do. He tended to retreat. That was Hoover the President. He was a smart man; he thought other people would follow him. They didn't always, and he pouted.

How is discussion of Herbert Hoover relevant in today's national conversation, or is it?
Oh, Hoover's very relevant for several reasons. The first is, he was a businessman. We're all most enamored of the businessman model; it's almost like the actor model in our view of the president. We have the actors: Governor Schwarzenegger, Governor Reagan before him, and we have the businessmen: Ross Perot, Michael Bloomberg, and in this election, 2008, Mitt Romney. The successful businessman who leads. Maybe that leadership will translate into something for the White House. The American voter is always asking himself that.

Well Hoover was that person. He was the most successful man of his generation in his field. His field was the hottest field, it was like having Bill Gates run for president, or having Steve Jobs, even more, run for president. That guy who has that thing the government envies and the private sector has. That was Hoover. So he came in with that. That's one area that Hoover is relevant. He reminds us of the good and the bad of bringing a businessperson into politics.

The second thing that's relevant is that Hoover kind of liked to bully the economy. He was a Constitutionalist, so he didn't rewrite the laws very easily. In that he differed from FDR who had much more fun and liked to take license with the economy. Hoover was cautious about changing the laws, but would often pull people in in groups, they'd talk together, he'd lean on business, he'd lean on the stock market and tell them through moral exhortation what to do.

You saw that after the crash of '29, he called successive groups to him in Washington. He called the business, he called the stock market, more or less, he spoke with these people and he said, Here's what you've got to do: voluntary agreements. If we pull together, there’s a little bit of cheerleading in that. And the effect of that was not always positive.

For example, he told this business, Maybe now is not the time to lay off, maybe now is not the time to cut wages, even though you're having trouble subsequent to the crash because you're hurting confidence. You'll see executives do that now, and it's sort of inspiring, and maybe all the economy is about confidence. But, also, what it does is it inhibits them. Maybe they need to lay people off in order to keep their business alive; maybe they need to cut labor costs; maybe the choice is live or die. And that is not taken into account by this bossy executive.

So I see some parallels to Hoover, though not in many executives: in Jimmy Carter, in Jerry Ford, in George Bush. The President says, I can work with business and tell it what to do, and therefore steer the economy. A lot of that comes from Hoover.

What was his relationship with Calvin Coolidge in the'20s?
Well you want to compare these two gentlemen, because they are so different. Coolidge has a terrible reputation; people use his name for a joke. Coolidge, that's like Coolidge did nothing, he was the do-nothing president. Coolidge did a lot in his way. He withheld. To me, Coolidge is like a windsurfer: it looks easy, but it takes a lot of strength to stay still on the water and move forward. He did not jump in. They had an epic flood in their period, this flood of the Mississippi in 1927 and it was the same question that America had recently with the flood in New Orleans: Should the President jump in? Should the President not jump in? What is the role of the Executive in such a situation?

This is the weakest moment for American Federalism, a geological disaster. It's a terrible moment for federalism. It makes it look bad because somebody ought to jump in, because somebody's going to die or get hurt very badly. Yet our political culture says, Well, you know, Washington doesn't just jump in that easily. It's easier for Washington to jump in to a foreign war, constitutionally for the Chief Executive, than it is for Washington to jump into a certain state's backyard.

So they had all their visitations, and Coolidge said, well, or I don't want to quote him, but Coolidge's general attitude was, I'm going to hold back; that's the role of the states. But I will send my Commerce Secretary, Herbert, down there because, well, Herbert loves to jump in. This was, again, Hoover at his best.

He went down, he commandeered a lot of private sector boats, he rearranged it, he built camps, he saved people. You know, in retrospect, we criticized the rescue of the Mississippi flood. In certain regards there is this racism that ran all the way through it. Did the blacks get as much as the whites; were they saved first? No. Did they man the levees? Yes. That whole story. But, by the standards of his day, which were also high, Hoover saved a lot of lives in cooperation with the Red Cross volunteerism rather than government.

So, here was Hoover, the active and Calvin, the withholding. I won't say the passive, but the withholding. Coolidge had a number of members of his cabinet. He had Hoover, the Commerce Secretary, and he had Andrew Mellon, the Treasury Secretary. Mellon was sort of the Greenspan of his day, very powerful and very austere. Coolidge liked Mellon.

It was said of the two that they were both withholding types. They didn't talk a lot, they cared a lot about not jumping in, letting the market have its way. It was said of Coolidge and Mellon that the two conversed in pauses. They were taciturn men. Whereas Hoover was yap, yap, yap. And Coolidge didn't like that. He said, “That man's given me a lot of advice, bad advice.” He came to play favorites.

And then there was this issue: who would succeed Coolidge? Would Coolidge run again in '28? Would Hoover have a turn? Hoover, who made himself famous with this flood, would he have a turn? Coolidge had to overcome his ambivalence about Hoover. Coolidge also clearly didn't want to run but he was ambivalent about not wanting to run, because he knew that Hoover would get in if he didn't run.

Finally he sort of allowed it to happen. You see these famous ambivalent statements by Coolidge, but he never loved Hoover.

And how did Hoover feel about him?
Hoover respected him. Hoover was a man with a lot of respect, but he was all about the achievements of Hoover. Hoover had achieved a lot. He had done things; Coolidge was just a politician. Hoover had done all these wonderful things in the private sector, and he had that modern ego of someone in a sphere where there's incredible growth. We all know that ego. Someone in this area, that's what I mean. Luck makes talent look like genius, you feel like a genius when you're in a innovating area, and he was an innovator in that area.

So he was used to being the smartest guy, used to everyone following him and used to a serious amount of adulation. So he thought it made sense that he should be President, and one could argue, it did make sense. Coolidge himself had said the business of America is business. Coolidge was admiring of business. Hoover was a businessman. So, from the outside, it seemed like a natural succession, and to Hoover as well.

In addition, there was the factor of the growth of the '20s. The growth kept reaffirming the importance of business. They had strong growth in that decade. Unemployment, we can't imagine, was down to three percent or less. So it seemed that it was the era of the king businessman, so why not crown a businessman, Herbert.

You touched a little bit on the life in the '20s. What was life in the '20's like for American society, for America as a whole?
Well, right now I'm writing a book about the '20s. The standard history of the '20s that we learned in school was that the '20s were great but frivolous, sort of with the emphasis on the frivolity. But what I'm discovering in my research is, the '20s were great full style. The frivolity was interesting, the Gatsby side, but the mansion wasn't empty. It wasn't all a sham and it wasn't all just borrowed on large. There was real growth in the 1920s that we should understand and take seriously.

The '20s were a decade rather like the 1990s, so it went over the top. Everything that was called dot com, couldn't be real. In the '20s, everything that was called electricity couldn't be real, but there was also a lot of solid, important growth. People didn't have telephones at the beginning of the decide, but began to have telephones during that decade.

There's a wonderful book by Lynd: a sociological study of a Midwestern town. The book's called Middletown, but it was really Muncie, Indiana, and these sociologists describe all the advances with the automobile, Henry Ford making cars, and the phone. They said that young people had discovered a new way of being intimate yet distant: the telephone, and older people were interested in that. And it reminded me very much of IMing today. There's the real rush of communicating in a new medium with someone. You IM them, you do something, you're in a network with them, you're in My Face with them, you're linked in, whatever. That special new club, that's what the '20s felt like.

The old people were going to church. The young people were riding around in cars on Sunday; that was their club. They were creating a new space to exist in: the automobile. This is a wonderful, exhilarating decade.

Was that prosperity and that exhilaration shared across the population, or, for example, was the agriculture community on the same par with the industrial urban centers?
No, it was not. There was one sector of the economy that, we say, was in depression before the Depression. That was agriculture, and it had seen prices fall in the '20s. So, the bad things that happened in the '30s were just foreshadowed for farmers in the '20s. That's why farmers tended to think, in the 1930s, that John Steinbeck feeling: this is permanent, this is permanent despair, because agriculture in the U.S., for a variety of reasons did well right around World War I, but then went down rather steeply in the '20s. It seemed like commodity prices wouldn't go up, like what they had to sell would never go up.

Maybe it was like the Wizard of Oz. You think a lot of the Wizard of Oz, Dorothy, and Kansas. It doesn't seem like it's ever going to get bright in Kansas, but that's the way it felt in the '20s to the farms.

There's all this prosperity under Coolidge, under the Republican administration, going into the elections in 1928. What were the key issues that Hoover and his opponent faced during that election?
Well, one was the farm. Hoover's party, which is the Republican Party, is a pro-tariff party. They want to protect. They don't like prices being driven down in any area. So that's important. Another was Prohibition. It wasn't very interesting, you see. Prohibition all through the '20s and the '30s, and we don't really get that issue, but it was there. Another issue was continuing the growth. Hoover was saying chickens in pots and things like that. There's some debate about what he actually said, but, overall, Hoover represented the continuation of prosperity.

I want to say a sort of heterodox thing here too that's important. On the one hand, one could argue that the farms were in trouble so we needed to save the farms; now on the other hand you could argue, however, that the farms were in trouble because too many people were there. More of those people should have been in the city, and they were going to the city. So maybe that should have just been accelerated.

The question of whether you support the farms through subsidy, as we have done since the '20s and right through to today, or whether you simply allow the people to leave, as they would anyway when it's too dark on the farms. That is a question that people looking at that period will ask.

So what position did Hoover take in that question?
His party was tariff party, so they were protectionists, and he supported the tariff.

Why is that important? Because Hoover was an international guy, and this does have a parallel today. He had experience being overseas. He'd been in London; he'd been in China. He had seen the value of trade. He could sit in London and order things from all over the world before World War I. He was a modern man in our sense. He would go from New York to London, well, a little more slowly, because it was by ship, but the same-- no question, not hard, international guy. Yet he supported a tariff. He supported building wall around America-economic walls.

What people say now is, why did he do that when he knew better? I think he thought it was the political trade he had to make to be supported by that party, the Republican Party, the tariff party. We don't think of it that way today too much, but the Democrats were the party of the income tax then, and the Republicans were the party of the tariff.

So they had different mechanisms that they favored for getting revenue for the federal government. The Republicans wanted that tariff there; it was on their platform. He was going to be for it too.

So in 1928, why did Americans respond so favorably to him as a candidate? Was it because of his tariff position? Was it because of any policy? Was it his personality? What was it?
I think it was because we have success. Let it last longer, let it last longer. Bring us a businessman who can manage things well and then it will last longer. This magical period, please let it last a little longer. That's what they were saying with their Hoover vote.

You said something interesting earlier. You said that Hoover, when he looked at Coolidge, was just a politician in Hoover's eyes. Any, idea of what Hoover thought of politicians as a whole and as a profession?
I don't see a lot of disdain. I just think that's just part of it. From his point of view, he had done so much. He tended to believe he knew the answer and the politicians should go along with that. For example, there was this famous rescue that he did around the end of World War I, feeding the Belgians who were behind German lines, and he was doing it through neutral aid agencies. This was the Quaker in him too: I will help. I will be there to help. I will find a way to help around the politics.

But there was a political consequence to his action that he was being disingenuous about by ignoring. That consequence was that, because the Germans did not have to feed those Belgians, they had more resources to wage their war against us. So it's not just that our side was cruel and let the Germans starve the Belgians. That's war. You try to deprive your enemy of resources so you can win faster to end the suffering. He went around. Herbert Hoover's solution was feed the Belgians, don't worry about the Germans, look away, think about the children.

That, I would say, was his own diplomacy. It wasn't the diplomacy of his government. So he angered some people by doing that. He very much disapproved of the tendency to forgive Soviet Russia, and here, I'd say he wasn't just thinking back, but also looking forward with a lot of wisdom.

He had business in Russia before the revolution. He had interests in a place called Kyshtym and elsewhere. He was like a merchant banker who went in, bought parts of businesses, rationalized them, and he saw through the businesses what was going on there. He saw the tyranny of the tsars, so he saw that Russians could be tyrannical. He talks about seeing these figures being sent off to dark places, seeing them at the train station well before he's President, in Russia and thinking how dark this place is.

But when the revolution came, he didn't like that either, because he saw through that revolution, which was presented as so idealistic. He said, ‘It's just a bunch of dilettante and intellectuals and murders, they're pretending they're higher, but a lot of them are murderers. He was right and the Soviet Union was a very rough place in that period. Even before these brutal collectivations, he said, well maybe we shouldn't recognize the Soviet Union.

He was a little bit more suspicious of the Soviet Union, or a lot more suspicious than many of his colleagues, certainly more suspicious than FDR. So that's a big distinction. When Roosevelt would come along, Roosevelt tended to favor Russia over Germany. Hoover liked Germany.

But they ultimately fed the Soviet Union?
He fed the Soviet Union, but he didn't want recognition of the Soviet Union, so that's different. He fed it because he felt those poor people were being victimized, and he was right—by the bad Communists really simply. So we can help them. That's more the Hoover line of thought. Let's help those people. It reminds me a little bit of Andrew Mellon who bought a lot of art from the Soviet government. On the other hand, you could argue Mellon was stealing from the Soviet people by buying their art from the Hermitage for his collection. What a rat. Right.

On the other hand, you could say Mellon was saving the art from the bad criminals who happened to be momentarily in charge of Russia. That's what Mellon would have said. He said, ‘Better with me in my museum in Washington where every man can see it than with them, who use that wealth to oppress their people.’ So, this whole view of, of the Soviet Union was just very controversial topic. We can't imagine how controversial.

We assume that recognizing the Soviet Union was inevitable and so on. It wasn't inevitable. People were quite concerned, as well, about the way the Soviet culture treated religion, that it suppressed religion. There were protests in our American churches about Soviet repression of religion that had been kind of wiped out from our memory, but were real and contributed to the U.S. hesitation about recognition, which didn't happen, of course, until Roosevelt.

You mentioned Hoover's observation of the Russians, the tsarists, and the communists. He traveled to China and had personally observed that government. He spent a lot of time in London and France; he was all over the world. How did that inform his own philosophy, what came to be known as American Individualism?
I think it had more to do with, he understood, there are people who were inherently importers. They'd say, there's this idea-- I mean the Soviet Union was much romanticized in the '20s. There's some wonderful ideas over there, maybe I like fascist Italy. Mussolini, he knows how to make a country modern. As in the film Modern Times with Charlie Chaplain he knows how to make it go faster. This famous phrase, ‘He made the trains run on time.’ Maybe that's interesting, you know. We forgot now, but the business magazines loved Mussolini and they put him all over their covers.

The evils of Mussolini were not clear yet, and the kind of U.S. model of the 50 states seemed so discombobulated and uncoordinated, unstandardized and chaotic to an observer. They say, well, the U.S. has researched a certain plateau, but it can only grow more, economy of scale. If it unifies, becomes one country with one standard, more like those ones over there, Europe, Italy, maybe the German cartel system, that sort of seemed efficient. And there was a romance with Soviet Russia as well.

Well, they know how to be modern in the Soviet Union. The famous phrase, I've seen the future and it works. Many people believed that the Soviet Union might be a good thing to emulate. There were lots of time zones there, and yet they made their economic decisions so quickly; they farmed on a big scale, they would take U.S. farmers over there, and see how much faster they could work; U.S. engineers went over there at certain points.

So, that was not Hoover. He was not an importer; he was an exporter of the American idea. What he did was take American know-how as he had learned it so well at Stanford; about engineering and also kind of interning, being a journeyman with the great mining engineers of his period, the guys who had experience with getting the gold out of the great West were his teachers. He exported that know-how, he went to London, and he went to big firms, and he says, I know how to do this. And they said, yes, you do. And he took that know-how all over the world.

So, his view was, use American know-how everywhere. That was an exporting culture.

You mentioned his Quaker background and you mentioned getting corporations, businessmen, and even in his relief efforts, various organizations to volunteer. Can you discuss his volunteerist philosophies at all?
Well there are different kinds of volunteering. The volunteerism that I'm speaking of subsequent to the crash of '29 was that business would voluntarily take certain economic measures without a law forcing them to do it. Then there's volunteerism where you give food to poor people, and it's the latter volunteerism that was so important, because, for example, he liked to blame Wall Street for the crash; the thought was Wall Street was bad, like a child. He didn't really trust Wall Street very much.

You remember he's a commodities person. He liked real things, the real economy. He thought trading was kind of ephemeral and fake-just numbers, sort of like the derivatives discussions today. Those numbers aren't real, those derivatives aren't real, they're just numbers on a paper, they can disappear overnight. There's no growth in there. That's what he really thought.

So he didn't like short sellers-those players in the market who bet that the market is going to go down with their contracts. He thought that was sort of immoral and bad, and maybe there shouldn't be short sales, forgetting that in every short sale contract on the other side, there's someone who's along who thinks the market is gonna go up, and that such a contract expresses the reality of the sentiment on the street at the moment that it's written, and is, therefore, good, because it gives everyone an idea of where their parameters are.

Just as in our current housing crisis, everyone feels better when we know exactly how much something has lost value rather than not knowing at all. So he berated Wall Street about that. He treated it like, indeed, like a bad child. And there were bad children on Wall Street. There were some significant bad apples on Wall Street in that period at the Chase Bank, at the National City, those people didn't do the right thing, and they needed to be blamed. Some of them were criminals. But Hoover generalized it to the industry and that was probably counterproductive.

Because Wall Street was going to help pull the economy out if it was going to be helped, and to have the President against it was a little bit frightening.

There’s a lot of controversy over what actually caused the Depression. What are your views on what actually caused the Depression?
It's not so controversial anymore. Historically people thought that it was a frothy stock market that happened to cause the Depression, you hear that a lot. Back in the olden days of John Kenneth Galbraith, the market went too high and, sort of a moral tale, and we deserve to crash. So we did, and it was dark.

Well it was dark, but the cause of that darkness was not the stock market. Indeed, by some math, the stock market wasn't even especially high. The Nobel Prize winner, Prusket, has done a study that that says these valuations aren't even that high. What caused the Depression to be a depression and not just a downturn or a routine crash was monetary policy. We thought we were in inflation and we were in deflation.

The deflation was so severe that we literally ran out of money. In The Forgotten Man, I talk about towns that made their own money, their own scrip and traded that money, the play money, the Monopoly money, because they couldn't get the real money. The stories you hear about the banks, the suffering, the hunger are all real. The cause was mostly monetary in the beginning.

Can you talk a little bit about the banking system at that time? I've read statistics where, you know, it wasn't out of the question for 600 banks to fail in a given year, and that was during the '20s.
Well banks were not connected as they are today. We didn't have the modern fed law that we have, the Federal Reserve System as we know it. We had a Fed, but it was a much different law. Banks were not clear as to whether they ought to be rescued by such a big system or not. There wasn't a lot of clarity about who was supposed to jump in, and that hesitation helped to cause many banks to fail. Should the state jump in? Should the federal system jump in? Should other banks jump in? Nobody quite knew. And that was one of the reasons the credit crises of the period were so bad.

In my book I talk about the Bank of U.S., a very compelling bank. It was the immigrant’s bank. If you would think of it today it would be the Mexico Remittances Ban; it was sort of the edifice of hope. It had no article. So it was the Bank of U.S., or Bank of United States, not bank of The United States. Sounded like something really formal, part of the government. It was a private bank and it served the immigrants of New York. It had many, many branches. When it failed, that was a trouble thing, because the hope of all the people of New York, especially the lower earners, the first generation, the people that thought they might begin to be making it into the middle class, was dashed.

So, you'll see a lot of Jimmy Stewart scenes where banks crashed and people did lose their money. In my book I also talk about Mariner Echols, who was from Utah, from a banking family there, a Mormon family, and how he stood at his bank, like Jimmy Stewart and said, count the money out slowly, to the tellers. Be calm and the community will be calm, and there won't be a run on the bank, and we won't have to close the doors.

No banks have all the money in them all the time, and that's the way banking works. All the money isn't in there, so there's always the danger of a rush. But then, because of this immature fed law, and also because we had no deposit insurance, that's one of the areas of the New Deal that is valuable and praiseworthy because it stabilized the banking system. We know nowadays that we'll probably get the money back that we have, at least some of it in a bank. There was no deposit insurance from the Federal Government at that point.

What was the kind of national reaction? And how did Hoover then decide that he was going to handle the crash?

Well Hoover comes out and he makes a number of fundamental mistakes. The first is that he misinterprets the monetary situation. This is not at all the job of the executive at that point to do monetary. Just as now, it's the Fed that does it, not the White House. But he sees inflation where there is deflation very often. And so, by the way, does his eventual opponent, Roosevelt, who says, I see an inflationary orgy, and criticizes Hoover about it. So Hoover was not alone.

Second, he supports a tariff: the famous Smoot-Hawley Tariff Act. It's a funny name, Smoot-Hawley. To us it seems distant. If anyone's ever seen Farris Buhler's Day Off, you'll recall the dreary scene in the schoolroom where the teacher talks about economic history. That's Ben Stein, the actor, and he's talking about the Smoot-Hawley Tariff.

But it was a real tariff; it was a powerful tariff. It would slow business, gum up the works at the time when we needed business, and Hoover supported that, not withstanding the fact that over a thousand economists wrote a letter to the New York Times saying please don't sign this tariff, bad things will happen, Mr. President, if you do sign that tariff, Including professors from his own university, from Stanford, saying, please don't sign this. Hoover still signed it. So that's a bad one.

Berating the Wall Street-that was another bad one. Not a good idea, supporting a tax increase. We know now that in a downturn a tax increase is probably not a good idea. So he was doing pro-cyclical work when he should have been countercyclical. We needed to speed up the economy and he was slowing it down with this tax increase. Those were just the beginning of a lot of wrong things for Herbert Hoover.

Let's talk about Smoot-Hawley for a second, because if I am correct, that's not the weakest moment. You think it's one of the weakest moments. But Smoot-Hawley was by almost unanimous acclaim, a huge mistake on Hoover's part. He was an internationalist; he was for international trade. Why did he pass this and, and what direct impact did it have?
Well it was in his party's platform. So he felt he had to go along with it. But here you see the control freak personality at its worst. Here was something he didn't like, maybe. Maybe. And the Smoot-Hawley Tariff Act, he didn't really like tariffs, or maybe he knew that maybe they weren't good. But he was going to take it because it was standard economic philosophy, it came with his party, and what was he going to do to deal with his own hesitation. He was going to get a compromise, which was a commission, some little reform of the way tariffs are structured. That was Herbert's project.

And he said, look, I won, because I got my little reform of the tariff structure, but he gave away the whole game by signing the tariff for this little bitty part that thrilled him. That was the problem with Hoover: he would tend to satisfy himself, tell himself it was all right when it wasn't all right, and went along with that. And, yes, you do see some downturn from the tariff. The tariff alone did not bring on the Depression, however.

It was an adjustable tariff, which had authority to the executive. So, the little bitty part that was Herbert's was the adjustable tariff that gave discretion to the executive. Again, I'm the control freak; this gives me some say. It also had a culture of reform. The executive could get away from the log rolling of Congress, they had their earmarks, but I am fair. So this adjustable component is very pleasing to me. I or other fair people will do what is right.

So he liked the gizmo, he liked the fairness, he liked the uncorrupt reforming sound of it, and he was enraptured with that, and therefore overlooked the darkness of the general project.

Do you have any idea how that affected him politically in terms of his standing with the country and his standing with Congress?
Well he did what his party wanted, so it's hard to say it was a disaster for him politically. It's only much later that we, those of us in the political world, see how negative it was. At the time economists thought it was negative, but his party didn't think it was negative.

How did his inability to really control the economy the way he wanted to affect him personally?
One of the interesting things you see is that Hoover likes to retreat. He built his own pre-Camp David, Rapidan, up there in the mountains where he and Lou would go. And he liked to fly-fish. He later wrote a book called Fly, about fly-fishing. He liked to fly-fish there, he spent time there, he spent quite a bit of time there, as things got darker. He talked to the people there. They were very poor. He made some little structures for them, built up their civic places, and built himself an audience that seemed appreciative at a time when the country did not seem appreciative.

So he's hiding the way we do with people who like us when we're being hurt, and that's so natural, but it's not good in an executive. The President has to be able to go out there and interact with the people who hate him in Congress and reduce their hate, get rid of their hate, and find good compromises to pull the country forward. So you'd see Hoover retreating a lot, and that was counterproductive for the country. It's a little bit narcissistic, we would say in modern lingo.

You mentioned Lou, and we haven't talked about her very much. Any thoughts that you want to add about Lou Henry and who she was?
Lou was a classmate of his. She was a scholar as well. They did a lot of wonderful things together. They had a great life. They did mining book projects when they were younger, in China, and they worked on things in London together. She was active in scouting. So she was a wonderful woman, as was Mrs. Coolidge, before her who was respected as a First Lady.

Well you also you talk about him retreating, but in 1931, unemployment's rising, deflation's growing worse, there's no money to be had, and you wrote in your book that Hoover began to stir. What kinds of changes were being made? Why was he stirring now and what was he doing?
Well, on the international front around this time, he's thinking there's a real problem with the mechanism, with the monitoring mechanism, and he liked mechanisms. Let's have a debt moratorium for these incredibly troubled countries overseas whose countries are giving up. These countries are giving up on democracy because of the Versailles Treaty, the consequences of that. The governments have their own fragility. So that was an important measure and was greeted very warmly overseas.

He begins to think about helping people with their homes, just as politicians begin to today, when you see a lot of foreclosures. In the Great Depression there are periods where four in ten families were in trouble in the big cities. You'll see that in Chairman Bernanke's, the current Fed Chairman's own work, that he studied this; that when the housing went down, the White House began to stir and address it.

He tried to develop mechanisms to deal with troubled loans, clearing houses.

In this period you see a sophisticated brain at work. In the Reconstruction Finance Corp, he wants to supply liquidity where liquidity is missing to these smaller businesses. That's an acknowledgement that we need liquidity. But he's at the same time thinking about the international financial mechanism, that's the moratorium, and he wants longer-term soundness. He's saying, we can't be sound in the long-term unless our budget is balanced.

In those days they were operating in a gold standard culture. You did see your economy shrink if your budget wasn't balanced for quite a long period, then you saw your, the gold leave your economy, and therefore your economy shrank. So it was just a different world from what we live in now. He was concerned about that, and that was the cause for the tax increase.

You touch on the gold standard. Why was he so committed to maintaining the gold standard? He seems to be thinking internationally not just domestically in his monetary policy.
Well we forget it now, but the gold standard was a wonderful thing at many points, especially in the period he had lived, going up before World War I. It made us international because we could all trade, and we could all count on the money being worth what we knew it to be worth. It didn't change a lot, and that's important to markets too. Uncertainty is bad for markets.

So when you have a politician adjust the dollar’s value in order to help one industry, or for a short-term political gain, there's always a negative consequence. It's the unpredictability of the dollar. Maybe someone won't want to invest in the dollar if they can't say what the dollar will be worth in the future. Hoover came out of that culture where he liked stability; that's what he'd been brought up with. He would defend it. He wasn't a post-gold standard person, so he wasn't used to the post-gold standard culture.

How is that discussion about the stabilized markets relevant today?
Well it's enormously relevant. A politician can take a measure that sounds good and help some people and ignore how it hurts the general welfare because of the uncertainty that it generates. That's true today and it was true then. Roosevelt often said, I'm doing this for one group, and it sounded great; but another group would be very upset and therefore, recovery would be that much slower in coming.

Hoover understood that a bit. He didn't just charge in.

It’s interesting because in 1932, FDR enters the race for President. Things are going very, very poorly for Hoover. He's raised taxes. What was the national reaction to raising taxes at that time?
FDR was not saying, I'm going cut taxes. He didn't sound like Ronald Reagan. FDR was challenging Hoover from the right. He was saying, well maybe Hoover isn't giving us a serious, sound currency, at least in certain points.

There was a wonderful tension between FDR and Hoover. It was subtle, but I think it's wonderful to observe. FDR is known as the happy candidate. He spoke of a happy warrior and we regard him as having been a happy warrior, but when you go back and look at some of his speeches, they were downright dark.

He gave out West, some important speeches around September in the campaign, 1932, where he essentially said, you know what, the frontier is closed. We have to redistribute now, because we're not going to grow so much anymore. I'm paraphrasing, but that's the basic idea. At the Commonwealth Club in San Francisco, another speech out West, it was about redistribution. It was about finding a way to share out stuff, and Hoover was quite appalled at that, and he said, I see America as a place with a lot of growth in its future. Maybe the geographic frontier is closed, but there are other frontiers for us.

He took great pains later in his writings to recapitulate that he had expressed that during a campaign. Well, who was right? You know what, Hoover was right in that instance. Roosevelt was winning, but Hoover was right; America did have an economic future.

Reading about that election, I was a little surprised about the things that were coming out of FDR's mouth. He was bashing Hoover.
That's right, and I think you see the word inflation there; the phrase inflationary orgy somewhere, or orgy of inflation, or something like that, coming from FDR. FDR was a governor. He was the Governor of the biggest state. So he was the Governor of the state with the most electoral votes. He was the California Governor, the equivalent of that period.

He had won wow; he was definitely a winner. So, he was a powerhouse politically. When you looked at what he did stand for though, it wasn't that clear. The speeches contradicted one another; he had a progressive reputation in the State of New York. Frances Perkins, the lady who would later be the Labor Secretary, was doing progressive things in the State of New York, including with aid to the unemployed. She was trying to quantify the unemployed. A lot of the unemployment story is counting how many people are unemployed. You can't make a political case to help the unemployed unless you know how many there are.

At that time, hard as it to imagine, there was no big Washington mechanism that every month spat out a precise number, and then the bond market reacted, and then, Friday morning, the world altered because of that unemployment number. That number didn't exist. Frances Perkins was working on that at the state level in New York. So that's who FDR was; but he was also, you know-- Wall Street people had his ear.

He talked about sound currency. He wasn't exactly radical. Later, one of Roosevelt's, allies broke up with him, Jimmy Warburg. He was so mad he wrote a book called Hell-bent for Election, and he listed all of the things in a platform that Roosevelt had done. This platform wasn't Roosevelt's platform in 1932; it was the platform of the socialist party. Roosevelt ran as a moderate, but as a President, he seemed like a socialist, and I'm angry with him for that. That was Warburg's line and his rage, Hell-bent for Election.

That's what Roosevelt seemed like to some other Democrats and also, of course, some Republicans. Hoover was very irritated at Roosevelt's success, and Roosevelt was a great politician. Hoover actually wasn't a great politician, and he could see that Roosevelt was doing better than he was, and that people liked Roosevelt, and that Roosevelt would recalibrate. Roosevelt would enter a room with one set of ideas, and then he would find that people in the room had another set of ideas, and he would adjust. Hoover had much more trouble adjusting.

It's the essential work of a politician to take in what the people are saying. Roosevelt was able to do that and Hoover was not. In the face of a downturn, he just felt guilty and got really brittle.

How did his tendency to pull back, his tendency not to be able to take in what people are in the room are saying and recalibrate, how did that affect the perception of him among the nation at large in comparison with Roosevelt?
Well you have a certain scapegoating phenomenon-- somebody had to be blamed for this. It was unbelievably terrible. It didn't go away. Let's see, two, three in ten men unemployed a year into it-- maybe things wouldn't get better. Nature was also a factor. Maybe God was against us, this natural disaster, this Wizard of Oz feeling. Nature was conspiring to tell us we are bad and wrong.

So people began to really worry two or three years in. And that was part of the story.

So as it got darker, they were looking for a scapegoat, and Hoover was the obvious one. Confidence is not the answer to a deflation; monetary policy is the answer to a deflation; banking reform is the answer to a deflation. So the confidence lines that had seemed insufficient, they were insufficient, and people said, it's time for a change.

Let me ask you about this too: Hoover had the reputation for feeding Belgium and for his humanitarian effort during the Mississippi flood. He did all of these great things in feeding people, and when it came to the Depression, as it got worse and worse, he even quipped at one point, “Well, no one's actually starving.”

Why do you think that he went from this reputation as the great humanitarian to the great scrooge on a personal level among people? Why do you think that was?

He didn't believe that it was the job of the government to save everyone, and yet, now it was a Katrina moment. It was a moment where people said, all bets are off, we're dying, save us. Let's forgot about all the economic philosophy. There is a sort of suspension of disbelief when you have a disaster, and it felt like a natural disaster.

So what Hoover was saying, some of it was accurate and some of it was just wrong, and they just didn't want to hear him anymore. He clearly wasn't saving them, and the fact that he had been Mr. Rescuer before all this, made them all the more bitter against him. I think that, in a way, they expected him to be Chief Executive domestically, Commander in Chief domestically and, again, forgot that the President can't be Commander in Chief. He couldn't tell the Congress all what to do. He had to compromise with the Congress. That's the way our system works. He had to compromise with the courts.

So they were expecting, in a way, too much of him. But the areas where they were all misjudging it, I think, were the monetary and the international. So they weren't stopping the Katrina, because they didn't understand that it came form the deflation, it came from the international troubles, and, therefore, they were to blame.

Who are they?
The leadership, and I would include in there Roosevelt, who thought it was inflation when it was deflation. They just didn't understand the power of the deflation, the extent of the suffering, the limits of the banks.

And can you contrast the philosophy that FDR had about government's role in aiding individuals with Hoover's idea of government's role?
They both believed that the individual should be aided. Hoover was more comfortable with the states. He worked on the Hoover Dam, which was an agreement among states, in part. He liked the state level. He was very respectful of the Constitution. FDR thought, well, maybe the Constitution could be changed a bit, or at least construed in new ways. He was more comfortable with that. So FDR was happy with the Federal Government doing rescues in areas where it historically had not been permitted to be a rescuer. They were both rescuers, just different styles.

In the summer of 1932, the Bonus Army converges on Washington. Can you give us a little bit of background on the Bonus Army and what actually happened that summer, that July?
Well the Bonus Army were World War I veterans, and my book is called The Forgotten Man. They were the emblems of the forgotten man, because they had been promised a bonus, sort of an early version of Social Security. Some money toward the end of their lives, for their service in World War I. Remember, this is before Social Security, and they wanted it now.

They were in trouble, they were hungry, they were undersized, and they went and camped all around Washington Anacostia to make their case. Hoover was ambivalent about that. He kind of turned his back on them. He did quiet things to help them and that's rarely discussed, but he generally presented as ambivalent, and certainly didn't want to be bullied by a crowd.

So this was depicted as heartless, and Eleanor Roosevelt said, you know, I would have gone and talked to the Bonus Marchers, I would have reached out to them. There wasn't enough reaching out. Roosevelt has much more of a reaching out personality, and then when he ran for President, he said, I will help the forgotten men at the bottom of the economic pyramid. He was definitely referencing the Bonus Marchers.

So Rapidan was their little America that they had to pretend with, because the big America wasn't cooperating at the moment. The big America was too dismal, so they hid in that little Rapidan America, with the schoolhouse.

Regarding Roosevelt and the Bonus Marchers, the picture isn't all that clear, however, because Roosevelt did later veto help for veterans. That thing you would expect him to have been for, given his reputation of magnanimity. The tradeoff was he supported Social Security, so he created a pension. But the picture is more nuanced than the history says, which is Hoover was mean and cold and Roosevelt, warm and giving.

Well that actually happened. Here's where you wrote that it was Hoover administration's weakest moment, one of their weakest moments. What happened that Hoover came off seeming so cold?
I think he just shut out the reality of how hungry they were. They weren't rebels; they were hungry, and frankly, in the reality of World War I, you have a war where people lost their limbs, where there were no antibiotics, where, it was bitter, where the rest of their lives were affected. We see also what happened in Britain, and the reality of that war was pretty close.

Remember, World War I, it was just the end of the teens. It was kind of like us being close to the Korean War in the early '60s, where no one ever really acknowledged how bad the Korean War was, how many people died, how cold it was. That was World War I. And Hoover didn't seem to care. Plus the Depression, plus droughts, plus whatever else was going on, he just didn't seem to care; and perception is not reality.

Of course he cared, but I think he shut out the reality of their suffering and of the need for a return to growth of the economically. And that just was something a snapshot Roosevelt, in turn, was able to capture of the uncaring Hoover. It's ironic that Hoover's presented as Mr. Free Market, because he wrote that laissez-faire economics was a fetish.