Hoover Believed in Soundness of the Economy

Excerpts from Herbert Hoover's Gridiron Club Speech, 1930 

Years ago the railways were so tainted with sin that they became
national campaign cries throughout the land. To be against the 
railways was the final test of morals in political life. The 
scientist, however, brought onto our highways the gas engine, 
the automobile, the truck, and onto our waterways the diesel tug,
and as a result the Government regulation of the railways as a 
means for holding down rates has been turned into a device for 
holding them up so the railways can live. They have become
tainted with poverty and, therefore, with respectability.

It is scarcely five years since the anthracite coal industry was,
in the view of many people, so infected with the sin of monopoly 
that it demanded instant Federal action. In the meantime the 
scientists have found so many substitutes for anthracite that 
the industry is now struggling for existence.

Today, it is possible to burn anthracite in one's grate without 
any feeling of participation in wickedness.

Today the primary evil is electrical power. We must all agree 
that especially the electrical current developed from water has 
become mortally sinful. That sort of electricity is supposed to 
come like manna from heaven and consequently can be produced 
and distributed free. And yet the busy scientist and engineer 
have steadily discovered methods by which power can be made more
cheaply from fuel than by water. They have gotten so far on this
line that today probably 80 percent of the waterpower in the 
country has no possible economic value at all and has been 
permanently returned to the lovers of scenery.

But do not derive from this that I am opposed to Federal 
regulation of interstate monopolies. I am strongly of the belief
that during the period when the scientist must labor in his 
laboratory inventing relief the Government must have restraint 
against excessive sin. I am merely saying that science and
initiative of our people cure many national headaches.

For instance, not long ago it was demanded that the miseries of 
unemployment from speculative crashes should be cured by 
Government doles or unemployment insurance, yet today we see 
them being cured before our eyes by voluntary cooperation of 
industry with the Government in maintaining wages against 
reduction, and the intensification of construction work. Thereby,
we have inaugurated one of the greatest economic experiments in 
history on a basis of nationwide cooperation, not of charity.

Editor's Note: This was a year after the 1929 Crash. By then, 
the market seemed to be recovering.

Below are remarks from Hoover's 1930 State of the Union Address.

The worst of the depression
was yet to come, yet businessmen 
were committing suicide, just as they now are in several Asian
nations. Unemployment was sharply up. The "deflation" was modest.
There appeared to be only a 10% to 15% economic decline.

Herbert Hoover, December 2, 1930- 
Annual Message to the Congress on the State of the Union.

To the Senate and House of Representatives:

I have the honor to comply with the requirement of the 
Constitution that I should lay before the Congress information 
as to the state of the Union, and recommend consideration of 
such measures as are necessary and expedient.

Substantial progress has been made during the year in national 
peace and security; the fundamental strength of the Nation's 
economic life is unimpaired; education and scientific discovery
have made advances; our country is more alive to its problems of
moral and spiritual welfare.

During the past 12 months we have suffered with other Nations 
from economic depression. The origins of this depression lie to 
some extent within our own borders through a speculative period
which diverted capital and energy into speculation rather than 
constructive enterprise. Had over-speculation in securities been
the only force operating, we should have seen recovery many
months ago, as these particular dislocations have generally 
readjusted themselves.

Other deep-seated causes have been in action, however, chiefly 
the world-wide overproduction beyond even the demand of 
prosperous times for such important basic commodities as wheat,
rubber, coffee, sugar, copper, silver, zinc, to some extent 
cotton, and other raw materials. The cumulative effects of 
demoralizing price falls of these important commodities in the 
process of adjustment of production to world consumption have 
produced financial crises in many countries and have diminished
the buying power of these countries for imported goods to a 
degree which extended the difficulties farther afield by creating 
unemployment in all the industrial nations. The political
agitation in Asia; revolutions in South America and political 
unrest in some European States; the methods of sale by Russia 
of her increasing agricultural exports to European markets; and 
our own drought-have all contributed to prolong and deepen the 
depression.

In the larger view the major forces of the depression now lie out
side of the United States, and our recuperation has been retarded 
by the unwarranted degree of fear and apprehension created by
these outside forces.

The extent of the depression is indicated by the following 
approximate percentages of activity during the past three months
as compared with the highly prosperous year of 1928:

* Value of department-store sales 93%

* Volume of manufacturing production 80%

* Volume of mineral production 90%

* Volume of factory employment 84%

* Total of bank deposits 105%

* Wholesale prices-all commodities 83%

* Cost of living 94%
Various other indexes indicate total 
decrease of activity from 1928 of from 15 to 20 percent.

There are many factors which give encouragement for the future. 
The fact that we are holding from 80 to 85 percent of our normal
activities and incomes; that our major financial and industrial
institutions have come through the storm unimpaired; that price 
levels of major commodities have remained approximately stable 
for some time; that a number of industries are showing signs of
increasing demand; that the world at large is readjusting itself 
to the situation; all reflect grounds for confidence. We should 
remember that these occasions have been met many times before, 
that they are but temporary, that our country is today stronger 
and richer in resources, in equipment, in skill, than ever in 
its history. We are in an extraordinary degree self-sustaining, 
we will overcome world influences and will lead the march of 
prosperity as we have always done hitherto.

Economic depression can not be cured by legislative action or 
executive pronouncement. Economic wounds must be healed by the 
action of the cells of the economic body - the producers and
consumers themselves. Recovery can be expedited and its effects 
mitigated by cooperative action.

That cooperation requires that every individual should sustain 
faith and courage; that each should maintain his self-reliance; 
that each and every one should search for methods of improving 
his business or service; that the vast majority whose income is 
unimpaired should not hoard out of fear but should pursue their 
normal living and recreations; that each should seek to assist 
his neighbors who may be less fortunate; that each industry 
should assist its own employees; that each community and each 
State should assume its full responsibilities for organization 
of employment and relief of distress with that sturdiness and 
independence which built a great Nation.


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