Averting The Wall Street Crash Or Dealing With It more Successfully?

Was it possible to avoid this catastrophy or lessen its effects. Did Hoover and his administraion make awful decisions? Could president Al Smith have done any better?
 
Well the first thing not to do is enact any type of FDR style state control economic programs. While the US still lingered in the morass of the depression by 1937 most of Europe's economies were making a come back, even Wiemar Germany was seeing an upswing.Hoover's policies of non intervention would have worked given time.
 
Well the first thing not to do is enact any type of FDR style state control economic programs. While the US still lingered in the morass of the depression by 1937 most of Europe's economies were making a come back, even Wiemar Germany was seeing an upswing.Hoover's policies of non intervention would have worked given time.

Actually there are 2 schools: the one you said ( libertarians and such) and the one that says that precisely those were the necessary reforms ( and in the end of its mandate Hoover try to push forward some very similar ones ) ...

I´m inclined to think that without intervention things would have been quite worse than OTL ... but of course I doubt we will coincide in this ...
 
Well the first thing not to do is enact any type of FDR style state control economic programs. While the US still lingered in the morass of the depression by 1937 most of Europe's economies were making a come back, even Wiemar Germany was seeing an upswing.Hoover's policies of non intervention would have worked given time.

By 1937 the Weimar Republic was called Nazi Germany and his policy in economy was a lot interventionist as in we now rearm like crazy.
Italy was in recovery but Benny policy were very similiar to the new deal.
Hoover policies of non intervention costed him the presidency, his legacy and reputation and frankly the crack was in 29, Roosvelt was elected in 33, how much time is needed for determine that the ortodox solution is not working
 
You forget that England and France also saw the end of the depression in the mid thirties while the progressive USA saw a second decline under FDR's policies at the same time.
 
Well the first thing not to do is enact any type of FDR style state control economic programs. While the US still lingered in the morass of the depression by 1937 most of Europe's economies were making a come back, even Wiemar Germany was seeing an upswing.Hoover's policies of non intervention would have worked given time.

1. This has nothing to do with the Wall Street Crash. Trolling much?

2. The US recovered later than everybody else because it jumped off the Gold Standard and devalued later than everybody else. Period.

...

To prevent the Wall Street Crash, the biggest mistake made by the Fed was cutting interest rates in 1928. It wasn't really until that point that the Stock Market zoomed to insane levels.

Keep in mind that the Crash itself did not really cause the Great Depression. The US went into recession in 1929-1930 and Hoover's responses were fine then. But he did not comprehend the right actions in 1931, when the recovery reversed and the double dip turned into the Great Depression.
 
You forget that England and France also saw the end of the depression in the mid thirties while the progressive USA saw a second decline under FDR's policies at the same time.

Yes, because by that point FDR had decided "maybe it's time to decrease spending on these programs" and after he did that, the US went back into a slump.

Hoover's administration did make bad decisions, but I think Hoover could have reversed it if he'd seen the writing on the wall sooner. More Public Works, bank reform sooner, this would have made the Depression softer.

But no solution would solve anything overnight, so he'll get his arse kicked in 1932 no matter what he does.
 
Well the first thing not to do is enact any type of FDR style state control economic programs. While the US still lingered in the morass of the depression by 1937 most of Europe's economies were making a come back, even Wiemar Germany was seeing an upswing.Hoover's policies of non intervention would have worked given time.

1) There was no Weimar Germany in 1937. Nazi Germany's economy was coming back, due to the government's (unsustainable) policy of massive rearmament.

2) Hoover was an interventionist, in the old way; the Great Depression really got going after Smoot-Hawley (is that how its spelled?).

3) The "World War II saved the US economy" thing is a myth. By 1937 American production and wages were at 1929 levels, while unemployment (always the last hallmark of an economic downturn to go) was decreasing steadily. Then FDR decided to cut the New Deal programs, and the '37 recession began. Nonetheless, things had still recovered to a large exten by 7/12/41, a feat made more impressive when you realize that America's breadbasket was spending most of this time being swept with sand.
 
1. This has nothing to do with the Wall Street Crash. Trolling much?

2. The US recovered later than everybody else because it jumped off the Gold Standard and devalued later than everybody else. Period.

...

To prevent the Wall Street Crash, the biggest mistake made by the Fed was cutting interest rates in 1928. It wasn't really until that point that the Stock Market zoomed to insane levels.

Keep in mind that the Crash itself did not really cause the Great Depression. The US went into recession in 1929-1930 and Hoover's responses were fine then. But he did not comprehend the right actions in 1931, when the recovery reversed and the double dip turned into the Great Depression.

Even if the Fed doesn't cut interest rates that just delays the crash; the speculative fever is well under way by 1928 and will keep right on going until the bubble pops. That might not occur until 1930 or 1931 then, but it will occur.

You are right in saying that the Depression did not occur all at once, like flipping a light switch; it actually started in 1926 when the housing market topped out and began to decline. It didn't reach full strength until 1932, when the stock market bottomed out. Too many people think the crash of 1929 caused the Depression, like some sort of financial earthquake levelling the economy, when in reality the symptoms had started appearing three years before.
 

BlondieBC

Banned
The 1920's saw a huge increase in debt in the United States. Stocks could be bough on 90% margin. You could buy a house on an interest only mortgage. There were few rules on how companies reported earnings. Accounting fraud was common. A huge asset bubble developed, that crash in 1929.

Things that reduce the severity of the great depression have to be done in the Harding/Coolidge administration.

1) Limit leverage in the financial system.
2) Ban buying of stocks on margin.
3) Implement the financial reforms of the 1930's, in the 1920's
4) Accept that the debts of WW1 will never be fully repayed, and deal with the issue.

By the Hoover administration, it is too late to avoid the bust, the bust can only be reduced in severity by busting the bubble earlier. Whichever week eliminates they buying of new positions on margin will be the week the market crashes.
 
The 1921 crisis was solved by Hardin and Coolidge liberal policies. 1929 crisis could probably have been solved with the same recipe. Less liberal policies led the 1929 crisis to last until the second world war and probably if no war has taken place...
 
Hoover's non-intervention is a myth. Here, in Hoover's own words in a 1932 stump speech, is Hoover's policy responses to the crash and the Depression:
http://www.presidency.ucsb.edu/ws/index.php?pid=23333&st=&st1=#axzz1aP0f4ll2

And summary and analysis (by a libertarian economist), if you'd rather not wade through the whole thing:
http://econlog.econlib.org/archives/2008/11/hoover_sings_hi.html

By and large, Hoover's policies went in the same direction as FDR's. The key differences were:

  1. FDR went further in the same direction on fiscal policy.
  2. Hoover paid for his increased spending entirely with tax increases (raising tariffs rates from 38.5% to 59.1%, and raising top-bracket income tax rates from 25% to 63%), whereas FDR used a mix of taxes and borrowing.
  3. FDR's reversed Hoover's monetary policies. Hoover pushed the Fed to tighten banking regulations in hopes of restoring confidence in the financial system, with the effect of contracting the money supply and causing deflation which perversely lead to more defaults and bank failures. FDR instead instituted deposit insurance (making good the debts of insolvent banks out of the public treasury) and devalued the dollar relative to gold (greatly expanding the money supply).
Keynesian economics points towards #2 being the key factor: in the Keynesian framework, deficit spending is the crucial aspect of a fiscal stimulus, since tax increases depress the economy further and counteract any beneficial effect from new spending.

Monetarist/Neoclassical economics points towards #3 being the key factor: suddenly contracting the money supply is a really, really effective way to wreck the financial system, and the economy can't really recover until the bank failures have worked themselves out and people have set up new ways to connect projects with investments.

Austrian economics points towards all the policies of both Hoover and FDR to being useless at best and counterproductive at worst. Under the Austrian framework, the problem was that monetary policy during the 20s had made investment capital artificially cheap, so a lot of projects got funded that really shouldn't have. The Depression was the hangover from the excesses of the 20s as unsound investments failed, and any attempt of government intervention to mitigate the effects in the short term would just make things worse in the long term by creating new unsound investments to replace the old ones.

There's also a new theory of the Depression that's been emerging under the Patterns of Sustainable Specialization and Trade (PSST) framework. Under this theory, the Depression was inevitable and the 1929 stock market crash was a symptom, not the cause. The cause was the major economic shift of the early 20th century, from a semi-agrarian society where half or more of the population were sharecroppers or yeoman farmers and much of the rest of society was engaged in providing tools and services that directly supported agriculture, to an industrialized/commercial society where only a tiny percentage of the population was engaged in agriculture and most of society's energies were directed towards the manufacture and distribution of consumer goods. The Depression was an inevitable painful period of adjustment where half or more of the jobs people were doing became obsolete and it took time for new patterns of specialization and trade to develop. Under PSST theory, some Hoover and FDR policies (particularly NIRA and AAA) were entirely counterproductive since they aimed to prop up what was left of an obsolete economic model, while others (mainly poor relief programs and public infrastructure programs) were a mixed bag that mitigated the short-term pain and may have helped facilitate long-term economic development by improving infrastructure, but may also have impeded long-term economic development by pouring tons of government money into temporary projects and distorting price signals from the private sector.
 
This thread is inevitably going to end up in the Chat section soon. Very soon.

It is impossible to discuss the causes of the Great Depression without getting political.
 
While Canada was much worse than the USA was it not?
Very much, because of Canada's heavy dependence on exports, mainly to the U.S. (Not much different now.:rolleyes:)

I've read the argument FDR's inflation of wages contributed to the slow recovery. (From the same source, IIRC, tho, was the argument there was no overproduction...:rolleyes:)
 
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