Coolidge chose to not run for re-election in 1928. The boy wonder from California, and highly popular secretary of commerce, Herbert Hoover, instead took the GOP nomination.
“I do not choose to run for president in 1928,” Coolidge declared to a surprised but highly prosperous America, then enjoying a remarkable string of great years now known as the Roaring ’20s.
What did Coolidge see that prevented the highly ambitious politician to drop out of what was a sure thing?
No one knows, but poor Hoover sure could guess later. A little over a year later, the financial house of cards built around easy credit and Wall Street speculations collapsed, and America entered the dark decade known as the Great Depression. Hoover — not the real culprits: earlier Presidents Wilson, Harding and Coolidge — got the blame and, consequently, nothing good is ever said about poor old Herbert Hoover. When it comes to history and the legacy of a president, timing can sure be crucial.
Hoover actually, despite current claims to the contrary, tried desperately to restore the economy using tactics and policies most credit to Franklin Delano Roosevelt, the “savior” of Great Depression raised Americans. Yet Hoover, at first briefly sticking to his let-the-free-market-work-out-its-problems philosophy, could not resist the temptation of using the government to save or at least salvage his political hide.
It worked later for FDR, but poor Hoover did not have a hated scapegoat to blame everything on, as FDR had in Hoover.
So, what did Hoover try? The beginning was an attempt to ‘save’ American farmers who first felt the economic slide. The newly created Federal Farm Board tried various schemes, but proved a failure in the long haul. Next, Congress increased import taxes — poor timing, but still not the disaster modern “free traders” blame on Smoot-Hawley. Keynesian style “public works” projects, including the famous Hoover Dam, were next. Then the credit-based “federal money” tap was turned on through new government agencies such as the Reconstruction Finance Corporation (RFC). The RFC was soon making loans to railroads, banks, savings and loans, insurance and mortgage companies. State governments, also facing their own budget crises, could come get easy credit money as well. The Glass-Steagall Act was signed by Hoover, lowering collateral standards for loans and greatly expanding commercial credit availability. Federal Reserve banks were allowed to use part of yet unpaid past loans as collateral for new loans.
Next up in the Hoover recovery program was the rescue of homeowners facing foreclosure. The Federal Home Loan Bank Act was passed to help the hundreds of thousands of desperate homeowners who could not make their mortgage payments. The act allowed home loan banks to take over and re-finance mortgages on easier terms and lower interest rates.
Needless to say, the federal budget became dangerously out of balance thanks to this wave of new borrowing and spending. But despite all the pump-priming, the Depression ground on. In 1932, Hoover got creamed by FDR, who actually expanded Hoover’s ideas on deficit spending and government-to-the-rescue financing. But in 1937 unemployment was as high as 1932, and FDR’s political hide was ironically saved by Hitler and Japan as military spending brought America rapidly out of the Great Depression and into World War II.
Will the next president be the 21st century’s Herbert Hoover? Who knows? But Obama or McCain face remarkable economic challenges, many of which are eerie parallels to 1929.
Ira Hansen is a lifelong resident of Sparks, owner of Ira Hansen and Sons Plumbing and his radio talk show can be heard Monday through Friday from 3 to 6 p.m. on 99.1 FM.