From New Era to New Deal: Herbert Hoover, the Economists, and American Economic Policy, 1921-1933

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Cambridge University Press, 1988 - Business & Economics - 237 pages
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In popular imagery, Herbert Hoover is often stereotyped as a 'do-nothing' president who offered only nineteenth-century slogans for the greatest economic catastrophe in twentieth-century American history. Nothing could be further from the truth. This study examines the properties of an innovative approach to economic growth and stability formulated by Hoover and his associates during his years as secretary of commerce (1921-9) and inspects his deployment of this strategy from the White House following the Great Crash in the autumn of 1929. Attention is then focused on Hoover's attempts to reformulate his macro-economic programme as the depression deepened in late 1931 and 1932. Archival materials provide arresting insights into Hoover's aspirations for a new institution - the Reconstruction Finance Corporations - as a vehicle for stimulating investment through a novel form of 'off-budget' financing. To complement the discussion of Hoover's theories of economic policy in their various manifestations, the views of contemporary economists on problems of the day are surveyed.
 

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Contents

The Vision of a New Era in the 1920s
1
The ingredients of a model of a new economics
7
The role of economic information
8
The technocratic aspect of the attack on waste
13
new dimensions of fiscal policy
15
Puzzles over the place of monetary policy in macroeconomic stabilization
23
New era doctrine on wage determination and income distribution
27
Defining Americas position in the international economic system
31
Symptoms of disarray in the banking system
111
Storm clouds from abroad
114
The collapse of official model I
118
Realignments on the outside
120
Shifting course in late 1931 and early 1932
125
step I
126
step II
129
Financial reconstruction and the reformulation of fiscal policy
132

The end of laissez faire in the 1920s?
40
Challenges to the new economics of the 1920s
42
Doubts about the highwage doctrine
46
The special case of agriculture in the income distribution
48
Critiques of the fiscal strategy for economic stabilization
53
Doubts about economic stabilization through monetary management
58
Questions about the neomercantilist component of Hooverism
62
The new economics at center stage in 1929
65
Organizing for action on the unfinished business
69
Concern about the stock market
71
Alternative readings of the stock markets behavior
74
Activating the stabilization model in late 1929 and 1930
78
Demand management Hooverstyle
80
Stabilization through confidence building
82
Bolstering aggregate demand through wage policy
84
The place of tax reduction in administration thinking in 1929
85
The initial responses of economists
87
Preliminary readings of the results of the stabilization strategy
92
Canvassing for further policy options
95
Appraisals from the economics profession
99
The unraveling of the first official model in 1931
104
Presuppositions and realities
105
Fiscal stimulus without design in 1931
108
A reversion to orthodoxy?
135
Renewing the offensive in February and March 1932
139
FebruaryMarch 1932
140
Failure of the antihoarding campaign
142
The anatomy of failure from a White House perspective
144
The economists and their views on policy for 1932
146
Fiscal activism in a new key
147
The economists and a more modest proposal for a public works program in 1932
151
Polling on monetary questions and the statement of the Chicago position
155
Conflicting interpretations from the heavyweights in monetary theory
157
The voice of Alvin Hansen as an exponent of neoclassical orthodoxy
162
Protests against relaxation of the antitrust laws
165
Challenges and responses
167
Official model II as shaped in May 1932 and the aftermath
169
Reformulation of the functions of the Reconstruction Finance Corporation
170
The attempt to promote official model II
174
New tools and their effectiveness or lack thereof
180
Rearguard actions in the final phases of the Hoover administration
185
Transition to the New Deal continuities and discontinuities
189
Notes
197
Selected bibliography
231
Index
233
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