For President Herbert Hoover, the election year of 1932 would be a rough one. It opened with weak equities markets, declining commodities prices and intensifying anxiety about both economics and politics.
Benjamin Roth, a lawyer from Youngstown, Ohio, noted in his diary: "Even those who invested after 1930 -- after the crash -- at what they considered bargain prices, now find their 'bargains' selling at half price or lower." He added: "Business shows no sign of pick-up. People are already looking toward the next presidential election when a Democrat will probably replace Hoover. In the meanwhile, Hoover adds to his long list of artificial stimulants."
The president's next big idea would be: Americans, bring out your cash.
Hoover addressed the nation on Feb. 3. He asserted that releasing the estimated $1.3 billion in cash that had been hoarded by worried Americans in stockings, coffee cans and basements would be "a patriotic move toward loosening credits and restoring economic stability."
This effort differed from earlier appeals for citizens to resume spending to boost production. Now, the president was asking Americans to put funds back into banks so as to increase loans and thus speed the circulation of money through the economy.
On Feb. 4, the New York Times agreed with Hoover editorially: "In this effort to restore confidence in the banks and to remove from the minds of many people what has become almost a dangerous obsession, the President deserves and will receive the heartiest approval and support."
Not so fast. Representative Fiorello LaGuardia, a Republican from New York, promptly suggested the administration provide a list of "conservative investments" and "sound banking institutions in which the hoarders may put their money." Given the thousands of bank failures already recorded, "a great many Americans might yet be timid and skeptical" without official guidance. Others claimed this initiative was just a "bankers' relief proposal."
The White House responded that purchasing government bonds or "other high-class securities" would be sufficient, although how this could do anything more than boost prices on the exchanges remained unclear. A grand anti-hoarding committee was created -- including 39 national organizations, ranging from the Grange to the Retail Credit Association -- but the effort generated more pledges than practical results.
The U.S. correspondent for the Economist magazine was unimpressed. "While no one defends hoarding, in serious quarters in Wall Street it is felt that it were better to make less of a stir over the matter," the author wrote on Feb. 20. "To begin with, it is felt that the figure of approximately $1300 millions used by President Hoover is much too high." Half that sum would be closer to the mark, he continued, and "in any event, hoarding is on the wane."
The actor and humorist Will Rogers added that when he met with Hoover on Feb. 10, the president asked him to "write a joke against these hoarders. That might show 'em how foolish they are." Rogers announced the formation of his one-man "anti-hoarding joke commission," but asked readers to send in jokes, as he had none on hand.
Hoover's confused campaign would end up being the real joke -- particularly as the banking crisis worsened.
(Philip Scranton is a Board of Governors professor of the History of Industry and Technology at the University of Rutgers at Camden and the editor-in-chief of Enterprise and Society. He writes "This Week in the Great Depression" for the Echoes blog. The opinions expressed are his own.)
To read more from Echoes, Bloomberg View's economic history blog, click here.
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
To contact the author of this story:
Philip Scranton at firstname.lastname@example.org
To contact the editor responsible for this story:
Timothy Lavin at email@example.com