Could Herbert Hoover have prevented the Great Depression?
Andrew Ross Sorkin on the 1929 crash, the Depression, and Hoover’s legacy
Most people know Andrew Ross Sorkin from his book-turned-movie, Too Big to Fail. Now, he’s gone to the archives to tackle the OG financial crisis with his latest book called “1929” — an exceptionally readable narrative history that traces the lead-up to and the fall-out from the crash that led to the Great Depression.
It’s a human story told through the eyes of some of the most powerful players at the time: Charles Mitchell, CEO of National City Bank; Senator Carter Glass, a Democrat from Virginia who co-founded the Federal Reserve; and of course, President Herbert Hoover, who, as viewers know, I tend not to miss an opportunity to point out where the historical narrative has been inaccurate or unfair.
At one point I joked with Sorkin that no other interviewer would question him so thoroughly through the lens of Hoover’s legacy— my great-grandfather’s contributions to humanitarian food relief, not to mention a 50 years devoted to public service has been too much obscured by a partisan narrative crafted by his political opponents who sought to unfairly and inaccurately tether his reputation to America’s most profound economic crisis.
While we get into today’s market precariousness and the possibility of the next crash, I hope viewers find Sorkin’s assessment of Hoover and the era eye opening, as he tackles the tired conventional thinking about the Great Depression and the strengths and weaknesses of the Hoover response.
Sorkin’s archival research and documentation of the hyper-partisan attacks aimed at Hoover even before the market crash that culminated in Hoover being personally tethered to the unique economic calamity are worth considering as part of the totality of Hoover’s grade as a crisis President.
Sorkin says the false narrative surrounding Hoover’s reputation was one of the discoveries that surprised him the most. Over the course of eight years of archival research, Sorkin gained a deeper understanding of what really happened, including the role of John Raskob, the DNC chair who launched a propaganda campaign to undermine Hoover, and Charlie Michelson, the partisan journalist who did his bidding.
Those attacks had “a demonstrable impact” on Hoover’s reputation, Sorkin says, but the president chose not to engage with the press to defend himself.
“He thought there was a dignification of what it meant to be the president, that you kept everybody at arm’s length,” Sorkin explains.
Sorkin also questions whether anybody in Hoover’s position could have averted a stock market crash that occurred less than nine months after he took office.
“Here’s where my sympathies lie with President Hoover. He shows up on the scene on March 4th of 1929. The crash happens October 1929, but it’s not a lot of time to jump in front of the train. Now, the question is, if you could have jumped in front of the train, how would you have jumped in the front of the train?” says Sorkin. “I think it would have been very, very hard to do such a thing.”
In its later chapters, “1929” explores the tensions between Hoover and his successor, Franklin Delano Roosevelt, after Roosevelt’s victory in the 1932 election. Sorkin says Hoover “deserves credit that he does not get” for urging Roosevelt to act to save failing banks before his inauguration, but FDR didn’t listen.
“He would effectively lie to Hoover and say, I’m not doing any of these things. And then, of course, the second he becomes the president, what does he do? He does everything that Hoover told him to do.”
When it comes to lessons learned from the 1929 financial crash, Sorkin says that the economy “won’t” automatically recover. “The lesson is that you have to do perhaps the most politically unpopular thing in a moment of a crisis, which is you actually have to pursue bailouts,” says Sorkin. “You have to flood the system with money.”
Against the backdrop of a frothy AI bubble, Sorkin shares his advice for how to prepare for the next financial crisis.
“The truth is, you will be much more successful as a professional optimist than as a professional skeptic or Cassandra…if you had kept your money under your mattress, you would have lost,” he says.
The primary challenge of today is lack of transparency from the private credit markets. “Today, most corporate loans are coming through these private credit vehicles that don’t have the same kinds of disclosure,” says Sorkin. “And so we don’t know the full extent of where all of the leverage is. And that, living in the shadows, is one of the things that I worry about.”
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Andrew is awesome! Everyone needs to get his book!