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Jeebus, really, no, Jeebus onna Pogo Stick

You’ve got to start the analysis with reality:

Everything must go! That, at least, was the Herbert Hoover approach to a banking crisis. In 1929 he was famously advised by his Treasury secretary Andrew Mellon to “liquidate labour, liquidate stocks, liquidate the farmers, liquidate real estate” to purge the system. The ensuing Great Depression and the rampant poverty it unleashed is the reason why, nowadays, with the brief exception of Lehman’s in 2008, we don’t let banks collapse. It is also why, 15 years after the last financial crisis and thousands of pages of legislation later, we are still bailing out banks.

But Hoover didn’t follow Mellon’s advice.

Using the wrong example to gain the wrong conclusion just isn’t going to lead us to good policy now, is it?

14 thoughts on “Jeebus, really, no, Jeebus onna Pogo Stick”

  1. Also note that the reason the “great” depression went on so long is because the gov’t kept trying to fix things. There were other depressions that, without so much gov’t help, ended much quicker.

  2. Esteban + 1

    That said, the very large decline in the US money supply after 1929 did make the Great Plunge greater.

  3. As I understand it, Hoover’s policies were much like a dilute version of FDR’s, and just as ineffective.

    In Britain we didn’t have a Great Depression. It was called The Slump and was indeed much milder than the USA’s. Judging by comments we heard when we lived there Oz had a pretty hard time in the thirties. Anyone here know?

  4. If you read about his life you might well come to the conclusion that Hoover was the most intelligent man ever to be US president. And much good it did him. It’s the serpent FDR who gets the good press.

  5. Dearieme, they did indeed, and they blamed us with some reason, hence maximum outrage over Fast Leg Theory.

    Also,Sydney Bridge is built with Sheffield steel,and the buggers still haven’t paid us!

  6. Juliet Samuel is pretty sound: the Daily Telegraph’s loss and a much improved replacement for David Aaronovitch.

    Whether she got the Hoover story wrong, I don’t know – most of the things we all “know” are usually false – but the article itself isn’t.

  7. Hoover wasn’t a very good Pres. because he was such a big sucker.
    Anyway, yes he got caught between two stools: tried to control money and spend it at the same time.

    Britain had been struggling since the recession of 1920-21, so that when the Depression happened its effects were not so catastrophic.
    The outcome was a shift away from heavy industry to light engineering and electricals, which could be made anywhere. The enormous unemployment was part of this displacement as emphasis shifted to the South.

  8. @ Rowdy
    Middlesbrough was in Yorkshire (and stayed within the catchment area for Yorkshire CC when the bureaucrats decided to redrawcounty boundaries). The true northern boundary of Yorkshire is the river Tees *as you should know*

  9. “Rowdy,

    Not Sheffield but Middlesbrough steel – the builders were Dorman Long & Co.“

    The builders were the Cleveland Bridge & Engineering Company, Darlington Co Durham.

  10. John77,bloody hell,time for me to turn in my Yorkie card. And I should know,because I saw Yorks play cricket in Middlesbrough.

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