The First New Dealer by Murray N. Rothbard

The First New=20 Dealer

by Murray=20 N. Rothbard
by Murray = N.=20 Rothbard

This review of = Herbert=20 Hoover: A Public Life, by David Burner was first = published in=20 Inquiry magazine on April 16, 1979.

Americans who=20 grew up before World War II remember Herbert Clark = Hoover as=20 the most reviled man in public life. Whenever any of the New = Deal=92s=20 court historians or writers tackled the history of the = 1930s, the=20 country was treated to a thoroughly Manichean interpretation = of that=20 epoch. The more historians and publicists worshipped and = adored the=20 greatness and the majesty of Franklin Roosevelt, the more = they=20 scorned his predecessor as the dour man in the high collar = who tried=20 but failed to thwart the nation=92s ascension to paradise. = Just as=20 Roosevelt was hailed as the compassionate friend of the = common man=20 who brought the new order of government control and planning = to=20 America, so Herbert Hoover stood in the dock as the last=20 representative of the bad, uncaring old order of = individualism and=20 laissez-faire. Their very images seemed to symbolize their=20 respective ideologies: Hoover, terse, unsmiling, outmoded;=20 Roosevelt, the affable patrician with the mellifluous=20 voice.

In = the rush of=20 intellectuals and scholars to embrace New Deal liberalism = during and=20 after the 1930s, it seemed that there was no one to even = attempt to=20 redress the imbalance. Apart from the maverick journalist John=20 T. Flynn, there was no historian to treat FDR as = anything less=20 than (as H.L. Mencken said of Woodrow Wilson) a candidate = for the=20 first vacancy in the Trinity. As for Hoover, his defense was = entrusted to a devoted crew of old reliable aides and = hagiographers=20 who would cluster around his suite in the Waldorf Towers, = refer to=20 him as "The Chief," and laud his infinite wisdom, sagacity, = and=20 lovability. Ironically, by insisting on Hoover=92s undying = faith in=20 individualism and voluntarism, and his opposition to the New = Deal,=20 this group of conservatives reinforced the myth propounded = by=20 Hoover=92s New Deal enemies.

To = his credit,=20 Hoover himself never claimed to be an exponent of = laissez-faire.=20 Indeed, at every Republican convention until his death the = old man=20 would be trotted out to give a speech that no one ever = bothered to=20 listen to: In this speech Hoover would insist that he = himself was=20 the father of numerous measures the New Deal got credit for, = and he=20 would proudly go through the list. But everyone, friend and = foe=20 alike, was too busy making myths to hear him.

There was=20 little that historians could do to penetrate this fog, = however,=20 until Hoover=92s papers were released to the scholarly = public in the=20 1970s. Before that, only friends and loyalists authorized by = Hoover=20 could do much work on his biography. But even under this=20 considerable handicap, the light of historical truth began = to=20 penetrate the mists of the Hoover legend. Apart from such=20 journalists of the day as Flynn and Walter Lippmann, the = first=20 historian to revise the legend was the economist Benjamin M. = Anderson, who, in 1949, wrote a trenchant economic history = of the=20 interwar period, Economics=20 and the Public Welfare. Anderson pointed out that, = far from=20 being the last embattled defender of laissez-faire, Herbert = Hoover=20 founded the New Deal in virtually all of its = aspects.

But = Anderson=20 went unread. Partly because much of his treatment was a = personal=20 memoir, more because he himself was an advocate of = laissez-faire, he=20 was not read by economists; as an economist he was, of = course, not=20 read by historians.

In = the 1960s,=20 however, the fresh and bracing air of New Left = historiography began=20 to hit the historical profession. Led, as in so many other = areas, by=20 William Appleman Williams, these historians pointed out, = from their=20 own particular perspective, that Hoover originated the New = Deal and=20 that he had in fact been one of the leading pioneers of the=20 corporate state in America. Actually, to the New Left, = disenchanted=20 with the welfare-warfare state built by the New Deal, = Hoover=92s=20 relative voluntarism and reluctance to enlist in the great = crusades=20 of World War II and the Cold War looked pretty good = in=20 comparison. Thus, in what they took to be Hoover=92s = emphasis on=20 cooperation among private associations, these historians = began to=20 see a more congenial role model than in the aggressively = centralist=20 big government constructed by FDR and his = successors.

Since the=20 mid-1960s, historians have been able to transcend the fierce = partisanship of the first wave of Hoover studies, and they = have been=20 greatly aided in this task by the opening of the Hoover = papers. We=20 have had the thorough and insightful researches of Ellis W. = Rawley,=20 and, in 1975, the first full-length biography of Hoover to = use the=20 released papers, Joan Hoff Wilson=92s Herbert=20 Hoover: The Forgotten Progressive.

Despite the=20 bitter-end opposition of a few New Deal stalwarts, the = revisionist=20 view of Hoover has pretty well swept the historical = profession. It=20 is now firmly established that, far from being the last of = the=20 laissez-faire individualists, Hoover was an ardent = progressive and=20 the originator of the New Deal.

In = all his=20 years in public office =96 from his post as autocratic food=20 administrator in World War I through his service as = secretary of=20 commerce under Harding and Coolidge and then as President = =96 Herbert=20 Hoover pushed for a corporate state system of cartelized=20 associations in industry and agriculture, all enforced, = governed,=20 and coordinated by big government. Before the great = depression=20 struck, Hoover vowed that in any such economic crisis, he = would=20 immediately deploy the massive powers of government to end = it. He=20 put that vow into effect as soon as the stock market crashed = in=20 October 1929, and he invoked every measure that would become = even=20 more visible in the New Deal: propped-up wage rates, massive = public=20 works, heavy federal deficits, huge federal loans to shaky=20 businesses, unemployment relief, inflationary monetary = policies,=20 etc. There was no need for FDR to install a farm = price=20 support program to combat the Depression; Hoover had already = carried=20 out his pledge to the farm bloc to establish one as a = permanent=20 fixture of the economic scene, a fixture that would generate = huge=20 and unusable food surpluses in the midst of = starvation.

The = major=20 differences in current Hoover studies are over the = significance of=20 his much-trumpeted "voluntarism." How different was it from = the=20 overt coercion exercised by the later New Deal? The answer = is, not=20 very much. Hoover=92s voluntarism was essentially a = rhetorical=20 gimmick, designed to cloak governmental coercion in a = sentiment more=20 suited to traditional American values. Hoover pioneered in = one form=20 of voluntarism in his days as World War I food czar, when he = mobilized volunteer citizens=92 groups to snoop on = neighborhood stores=20 to enforce his price control decrees. Roosevelt=92s NRA = built on this=20 tradition by forcing every store put a blue eagle symbol on = its=20 window and then recruiting neighborhood groups to help in = the=20 enforcement.

Another example=20 of Hooverian voluntarism came right after the crash. Leaders = of=20 industry and finance were corralled into private White House = conferences in which Hoover told them they had to act = "voluntarily"=20 to keep up wage rates even if profits should collapse, = warning that=20 if they failed to obey he would get Congress to force = compliance.=20 Hoover=92s form of voluntarism, in short, was much like the = age-old=20 system the army uses to recruit "volunteers" for unwanted=20 jobs.

David Burner=92s=20 new biography of Hoover is unquestionably the best = and most=20 thorough to date. Although it only goes up to 1933, it = covers all of=20 Hoover=92s official public life and therefore the most = important=20 years. It is impressively researched. In particular, it = provides the=20 only full account in print of Hoover=92s entrepreneurial = years before=20 he emerged as a public figure in 1914. This was a period of = much=20 sharp practice quickly glossed over in Hoover=92s = egregiously=20 self-serving Memoirs=20 and neglected heretofore by biographers.

There are=20 numerous problems with this book, however, and the = definitive Hoover=20 biography remains to be written. Burner=92s viewpoint is = very=20 moderately revisionist, and moderately sympathetic toward = his=20 subject; as a result the analysis is bland and fuzzy, and = the=20 carefully judicious tone is scarcely calculated to fire the = interest=20 of the reader. And since Burner=92s economic insight is = minimal, he=20 often does not know what to look for, or gets confused along = the=20 way.

Thus, in=20 creating the Federal Farm Board, the precursor of New Deal = schemes=20 to prop up farm prices, Hoover appointed leading farm group=20 representatives to the board, and named Alexander Legge, = head of=20 International Harvester, as its chairman. To Burner this was = an=20 anomaly, and he writes in some wonderment of the altruism = Legge=20 displayed in his new job: "Although he was an important = businessman,=20 Legge=92s sympathy lay with the farmers," and he pushed = aggressively=20 for farm price supports. The fact that International = Harvester was=20 the country=92s largest manufacturer of farm machinery and = therefore=20 benefited from these supports does not seem to register with = Burner.=20

Historians=20 trying to justify their image of Hoover as a "voluntarist" = have a=20 difficult time explaining his role as secretary of commerce = in=20 driving through the Radio Act of 1927, which nationalized = the=20 airwaves and set up a Federal Radio Commission. This = commission =96=20 which later became the FCC =96 had the right to assign and = license=20 frequencies, in this way establishing a powerful censorship = over=20 radio and later over television. The usual excuse for this = crucial=20 piece of statism is the one given by Hoover himself: There = would=20 have been a "chaos" of stations interfering with one another = if the=20 airwaves had remained in private hands.

Yet = Hoover=20 then, and almost all historians since, ignore the fact that = the=20 courts were rapidly reducing such chaos by establishing = common law=20 "homesteading" property rights in the airwaves for whichever = station=20 first used a given frequency in a given geographical area. = In fact,=20 it was precisely because the courts were adopting = such a=20 homesteading position (especially in Tribune Co. = v. Oak=20 Leaves Broadcasting Station, Cir. Ct., Cook County, = Ill., 1926)=20 that Hoover rushed to push through the Radio Act to prevent = private=20 rights from being established.

How = does Burner=20 handle this complex and highly important question? He does = it in one=20 paragraph. He begins by pointing out that Hoover as = secretary of=20 commerce held four annual government-industry conferences on = radio=20 regulation, and "cooperated" with industry by setting up a=20 commercial wireless news service. He then notes the = illuminating=20 fact that Hoover worked closely with his old friend Owen D. = Young,=20 head of the Morgan-affiliated General Electric Company, to = rush=20 through "the completion" of national radio = networks.

Burner could=20 have used this fact to explain Hoover=92s promoting the = Radio Act as a=20 way of preventing free competition and of cartelizing radio = by=20 imposing national networks. But no. Instead, he proceeds to = create=20 confusion all around, first by claiming that Hoover "did not = want=20 the new instrument of communication in the hands of the = government"=20 and that instead he wanted industry "to regulate itself"; = and then=20 by writing in the next sentence that "the Radio Act of 1927=20 established ultimate public ownership and limited regulation = of the=20 airwaves" and neglecting to point out that the driving force = in=20 passing the Radio Act was Herbert Hoover. Nor does Burner so = much as=20 mention the Illinois court case nor the researches of Ronald = H.=20 Coase that brought it to light.

It = becomes even=20 more difficult to maintain a pro-Hoover stance when faced = with the=20 role of the "Great Humanitarian" (as he liked to be called) = in=20 starving post-World War I Europe, where he served as = American relief=20 administrator and President Wilson=92s proconsul: He = threatened to and=20 actually did withhold food from starving countries that = failed to=20 adopt the centrist governments demanded by Wilson, using = food as a=20 weapon against "reactionary monarchist" as well as Bolshevik = or=20 radical regimes.

Burner=20 preserves his admiration for Hoover by minimizing the = importance or=20 extent of such practices. Thus, Hoover=92s forcing of the=20 Polish-American pianist Ignace Paderewski on the Pilsudski=20 government as premier of Poland is disposed of in a few=20 mealy-mouthed sentences. Burner doesn=92t mention that = Hoover did so=20 because Pilsudski was a revolutionary socialist and = Paderewski and=20 his cabinet were Wilsonian tools; nor does he mention that = Hoover=20 won his way by threatening to withhold food from that = starving=20 country if the Poles did not accept Paderewski. And Burner = says not=20 one word about the dramatic saga in which Hoover employed = Allied=20 warships to crush the revolutionary Bolshevik government in = Riga,=20 and to impose upon Latvia the government of a particular = Hoover=20 favorite, Karlis Ulmanis, who in the thirties was to come to = power=20 again by a coup d=92=E9tat and to impose a fascist=20 regime.

Finally, we=20 come, as in so many other areas of modern American = historiography,=20 to Arthur M. Schlesinger, Jr. Reviewing the Burner book in = the=20 august pages of the New York Review of Books (March = 8, 1979),=20 this dean of ultra-New Deal historians does not presume to = stick to=20 the old line that Herbert Hoover was a paladin of = laissez-faire.=20 (But he does refer to the recent work of the last of the=20 bitter-enders, Elliott Rosen, in typical terms as = "stimulating and=20 combative.") Instead, Schlesinger performs a shrewd = salvaging=20 operation, in two parts. First, he plays up the associative = and=20 supposedly "voluntary" parts of Hoover=92s cartelizing = program. Thus=20 he stresses Hoover=92s one veto of a government dam while = ignoring all=20 of his previous encouragement and support for such dams. And = second,=20 he claims that while Hoover may have been some sort of = corporatist,=20 Schlesinger=92s hero Franklin Roosevelt was not a = corporatist or=20 cartelist at all.

Heavens, no:=20 Instead of the "business syndicalism of which Hoover = dreamed,"=20 opines Schlesinger, Roosevelt took us into "a system of = democratic=20 control based on law." And so, when the National Recovery=20 Administration (NRA) and the Agricultural Adjustment = Administration=20 (AAA) demanded by the higher business circles brought = us the=20 fully cartelized corporate state, and when World War II = entrenched=20 the military-industrial complex in permanent control of = American=20 life, there was nothing left to do but cheer. After all, we = are the=20 government, aren=92t we? It was elected by the people, = wasn=92t it?=20 Despite his seeming sophistication and the cleverness of his = rescue=20 operation, it=92s clear that in the ultimate analysis Arthur = Schlesinger, like the Bourbons, learned nothing and forgot=20 nothing.

If = Hoover was=20 the real founder of the New Deal, how did he come by his = reputation=20 as champion of laissez-faire? Because, like so many other = pioneers=20 of revolutions, Hoover was overtaken and cast adrift by the = speed=20 and extent of the changes that occurred. All his life, = Herbert=20 Hoover had pushed for cartelization of industry promoted and = coordinated by government. But in 1932, in the depths of the = Depression, business leaders began to call for an = accelerated and=20 more thorough revolutionary change in this direction than = Hoover was=20 willing to accept. What they wanted was the NRA, a plan that = was=20 simply too coercive and too candidly statist for Hoover=92s = taste. The=20 times were such that business leaders could no longer be = content=20 with the Hooverian trappings of voluntarism. When Henry I. = Harriman,=20 head of the U.S. Chamber of Commerce, came to Hoover and = said that=20 big business would support Roosevelt in the election if = Hoover did=20 not accept what would later become the NRA, Hoover = astonished=20 many of his progressive supporters by drawing back in = horror,=20 rejecting it, and calling it "fascism."

Edging back=20 from an abyss that was to a great extent his own creation = was=20 perhaps Herbert Hoover=92s finest hour. But this trauma did = not, alas,=20 bring him any awareness of the logical consequences of what = he=20 himself had wrought. For the rest of his life, Hoover = believed that=20 all of what he had done to take us down the corporate-state = road was=20 wise and justified to the last iota, but that Roosevelt had = gone too=20 far in some respects. Hence much of the confusion about = Hoover on=20 the part of both the public and the historians. Even though = our=20 knowledge of Herbert Hoover has come very far since this = confusion=20 first arose, he still awaits his definitive=20 biographer.

Murray N.=20 Rothbard (1926=961995) was the author of Man,=20 Economy, and State, Conceived=20 in Liberty, What=20 Has Government Done to Our Money, For a = New=20 Liberty, The=20 Case Against the Fed, and many other books = and=20 articles. He was also = the editor=20 =96 with Lew Rockwell =96 of The=20 Rothbard-Rockwell Report.

Murray=20 Rothbard Archives=20 =