The New Deal
Herbert Hoover Speeches
OUR MOST IMPORTANT DOMESTIC ISSUE
Address delivered to the Nebraska Republican Organizations
Omaha, Nebraska
February 12, 1940
PART I
We meet today primarily as Americans to express our gratitude for the birth of Abraham Lincoln. That we do with a full heart for his invisible presence.
It has become customary to mark Lincoln's and Jackson's birthdays by discussion of our great national questions. Public men take time off their other occupations to present their points of view. I shall follow these precedents by taking time off from efforts to relieve the appalling suffering in Finland and Poland for a discussion of the transcendent relief needed for our American people.
We are in the midst of the deepest crisis of civilization since Lincoln's time. Over two-thirds of all the people in the world are at war. There is in reality peace only in the New World. For that we are grateful to Almighty God.
But as tragic as are the conditions abroad, tragedy also stalks our own people. We have need to put our own house in order.
PART II
The outstanding problem in the United States is unemployment. To get our people back to work is the greatest humanitarian action of our day and age.
This unemployment is no symptom of a passing depression. It is the result of something far deeper in the forces of American life.
It is not merely a period of economic adjustment following upon a worldwide depression arising from a World War. It is more serious than that. For mind you we have gone through ten years with seldom less than 9 millions of our fellow Americans out of work. We have 9 millions idle today. Even the economic fillip of European wars has not restored real living for their families. And from this unemployment comes a large part of the palsy to agriculture. To overcome it we must have far more than the mustard plasters of politics. This is an illness in our system more serious than any since Lincoln's time.
There is no measure to the human tragedy of being out of a job. It means men ceaselessly walking the streets in search of work to provide for their families. It means constant fear and anxiety in their homes. It drains their self-respect. It brings understandable discontent with a system under which such misery can come upon millions through no fault of their own.
Pending its solution the government must provide for relief. Americans cannot allow their fellow-citizens to go hungry.
Yet relief cannot go on forever. The current cost of relief -- in all its aspects, Federal, State and local -- is nearly four billion yearly. We are borrowing the money. Taxes which would pay these deficits would asphyxiate the whole productive system. We must restore these people to self-support before relief fails.
And to cure it is the only safety of our Republic. Unless we can do so the America of Abraham Lincoln will perish from the earth. It was mainly chronic unemployment and its impact on the farmers and government deficits that caused a dozen European nations to abandon democracy as incapable of solving their grief and their problems.
Our 9 million idle comprise nearly one-fifth of the productive energies of the American people. They want work. The nation needs for them to work. To get them working and to buying more farm products is the first plank in any real farm relief.
To get them working is the road to balance the budget. For tax-receipts increase with increased national production and the cost of unemployment relief disappears when the unemployed get a job. And it is the way to restore self-respect and faith in America in these people.
PART III
Tonight in the atmosphere of respect for the great founder of our party let us go deeper into this question than partisan criticism. Let us get down to fundamentals of productive life.
We must diagnose before we can find a cure. And first we must eliminate a lot of confused notions as to what does cause our unemployment.
The System of Free Enterprise is not the Cause of Unemployment
First I do not accept the idea that unemployment is a chronic disease in a free system. To accept that is to admit that a free system is impossible. The inevitable alternative is to drive us over to a totalitarian system which creates jobs by force. I do not accept the defeat of human freedom.
The proof that this gospel of despair is false lies in our own record. We have had unemployment before accompanied by all this same pessimism. Yet over the major years of our national life we have had reasonably full employment for all those who wanted to work. Before our economic system ceased firing on all four motors we had won for America the greatest triumph in all history. We had a productivity which brought us into sight of the Promised Land of Abolished Poverty.
We can have a higher aspiration than stabilized depressions.
Our Failure Due to Domestic Policies
And now let us clear another lot of confusions.
We cannot blame our unemployment upon foreign causes. The present war has even contributed something to lessen it.
We can no longer blame it upon the World War of 1914 to 1919. We can no longer blame it on the worldwide crash. The world turned out of that depression in the spring of 1932 and all the great democracies except ourselves marched out of it by 1935. We should have been on the front line. The British had jobs for their people five years ago. Before the present war they had not only recovered their national income but had risen to 25 percent above the high year of 1929. We have lagged along mostly about 20 percent below par. Our national income is about 70 billion. With the growth of population and recovery it ought to be 100 billion.
Thus our plague arises within our borders. And there is a red rash with it.
Labor-Saving Devices Not the Cause
And there is a further lot of confusions. In reality they are ghosts. The toughest of these ghosts always materializes whenever we have hard times. It is as old as when Eli Whitney invented the cotton gin. It is that laborsaving machinery or new methods are responsible for our unemployment.
As a matter of fact two-thirds of our new inventions produce new articles and new jobs. A study of shifting occupations during the decade of the 1920's showed that in 19 major occupations there was a decline of about 800,00 jobs due to improved methods. But due to new articles and cheaper production from new inventions, there was an increase of 2,300,000 jobs. For every man in the livery stable yesterday there are twenty in the garage today.
I do not disregard the suffering that comes from technological unemployment. It is temporary and we can make provision to carry men over the transition when the nation is marching forward. Then technology makes more and better jobs.
End of National Growth Not the Cause
Some of our confused Jeremiahs explain our plant is overbuilt. That we have come to a dead end. That we shall have no more inventions. That the era of national expansion is over. It is said we have no more frontiers upon which youth can go west and grow up with the country. They say that we must share the existing jobs.
These Jeremiahs forget that electricity and the gas engine, with their train of powerhouses, telephones, automobiles, hard roads and hot-dog stands, are furnishing more jobs at a better standard of living today than the whole of the nineteenth century movement to free land in the West.
They overlook the fact that today new invention is born faster than ever before. Invention is no longer limited to the genius in the garret. At the beginning of the century we had about 30 laboratories devoted to abstract science research. Today we have something like 300. They produce the raw materials of applied science and invention. In twenty-five years we have increased our applied science laboratories from 200 to 2,000. Every one of them is fairly bursting with new ideas, new methods, new products, new vistas of human comfort, and new jobs.
The Confusions that We Do Not Have Capital or Credit
Other economic doctors say we are out of breath for lack of private capital and credit with which to build more houses and power plants and everything. It is not lack of capital that is the matter with us. As a matter of fact our private capital has gone into air-raid cellars. Our surplus bank deposits have piled up above the private demand for them by over 17 billions in six years. We also buried something at Fort Knox.
It is Not Due To Social Advances or Business Reform
Nor is unemployment due to advances in the social field. The advancement of old age pensions, unemployment insurance, the prevention of sweated labor or child labor are necessary parts of a humane civilization. If these reforms are honest and workable they do not create unemployment.
Nor is unemployment due to proper reform in regulation of business. But to keep the patient alive that operation should be performed with a scalpel and not a meat axe. And the surgeon should be a man who wants to keep the patient alive. Also his knife should be made in the U.S.A. But regulation can be misused, and destroy jobs. Regulation which truly liberates competition, which prevents exploitation, which gives full opportunity for new enterprise, adds to employment.
PART IV
The Dynamic Forces of Employment
Now having eliminated a dreary lot of things that are not the cause of unemployment, we must explore what really keeps these millions of people out of jobs and depresses our agriculture.
There are certain dynamic forces which must be combined to make jobs in America. The major forces are:
Intellectual, spiritual, and economic liberty;
The moral strength of a people;
Natural resources;
Constant new scientific discoveries and inventions.
We have all these. And when these great forces are firing on all four motors, they can make employment for all of our people.
Now let me repeat something that is perhaps elementary. The gas which moves these motors is sustained initiative and enterprise of men. Its flow is dominated by a most delicate valve. That valve is the attitude of men's minds. Men act when they have hope and confidence of bettering the condition of themselves and their families. They strive if you will for profit. Or to keep ahead of the Joneses. Or to do good for their fellow men.
They hesitate when they meet discouragement or interference. They slow down when they become uncertain of the future. Their initiative and their enterprise stop when they become fearful. And red ink is no stimulant.
They at once postpone buying something or starting something. And then men lose jobs. And right here we can find the major cause of our unemployment.
There are other causes but they are less important.
PART V
Therefore the dynamic forces in national life are deeply influenced by the thinking of the people, and by attitudes of the government. Abraham Lincoln changed the whole direction and conduct of the nation by changing national thinking on slavery and on the inviolability of the Union.
Wrong ideas are as poison as the germs of a disease. There are three notions which in recent years have brought paralyzing confusion into these dynamic forces of progress. There are others of less importance but these three would be enough.
The first notion or attitude is that the whole system is wrong and must be made over. That is what they call revolution in Europe.
The second is that government officials can plan, direct or operate the economic life of the people. That is what they call State-ism in Europe. And mark that word; it is full of meaning for us.
The third is that governments can spend and spend and borrow and borrow without thought of tomorrow. That is what we one time believed was the rock upon which liberal governments were wrecked. It did help wreck some twelve democracies in Europe.
Making the System Over
This making of the whole system over is the economic theory that the house must be burned down to kill the rats. We now deal by law with labor as if it were all sweated. We deal with agriculture as if every farmer's judgment is weak. We deal with business reform as if all business is evil. And we settle all things with publicity agents.
Before the Machine Age got out of gear more than 85 percent of our people lived better than any race in history. At least 95 percent of business was honest. Some got too much of the productive pie for the service they gave, some got too little. But both were minorities. They are marginal problems that can be solved without paralyzing the whole economic middle class. And that middle class includes farmers and mechanics as well as lawyers and doctors.
We do have an obligation to the unfortunate, the sick, the unemployed. But these are also minority groups. We have to regulate business but that is a marginal problem.
This country cannot be run for either privilege or damnation of any minority.
State-ism
There is a borderline in the activities of free government. On the right of that line the government is umpire, is commercial traffic cop, chases evil men and solves marginal problems. On the left of that borderline is State-ism with its political bureaucracy, directing, dictating and competing with farmers, labor and business.
State-ism thinks in phrases and slogans rather than in the dynamic forces which make for progress. And slogans do not even pinch-hit for reason.
No one will deny we have injected a huge dose of State-ism into our national system. No one will deny that bureaucracy greatly controls prices, wages, farms, production, industrial output, and investment. It is doing it directly and is doing it indirectly through managed currency, credit, interest rates, pump priming, and taxing power. It has stretched regulation of business from prevention of abuse by bad men over to the dictation to all men. State-ism always corrects its errors by more laws, more coercion. It never dares trust the inherent decency of free men.
Whatever else may be said this has been a movement away from free men. It is a movement away from historic liberalism. For true liberalism seeks the just freedom of men as the basis of all other progress.
The two concepts, one of State-ism and the other of a free enterprise regulated to prevent abuse, cannot be long mixed. The reasons are simple.
The mixture at once foments destructive conflicts. It develops pressure groups each trying to get theirs or else. It stirs violent divisions within labor. It makes war between employers and workers. It generates violent attacks upon business and enterprise. It distorts the income of industrial wage groups against the farmers. It sets up class hate in the most nearly classless country in the world. Indeed it has made up a sadly divided America.
And there are combats among the planners. Some promote monopolies and others strive against them. Some reduce tariffs and others increase them. Some add more land to cultivation and others decrease it. Some advocate the use of laborsaving inventions, others decry them. They all drive left of the center and side-swipe the whole traffic.
Every grasp of government which reaches into free enterprise otherwise than to prevent abuse slackens somebody's initiative, somebody's enterprise somewhere. These conflicts and the unpredictable economic action of bureaucrats muss up men's judgments. Every farmer, every little businessman has every hour to keep his eye on Washington or its agents. It all puts sand in the gears.
Free enterprise regulated to prevent abuse is the most difficult of all systems. But it is everlastingly true that the plain people will make fewer mistakes and are more honest than the politicians. And the people will produce more goods and provide more jobs.
Government Expenditures
And I do not need to expand upon the effect of government expenditures, deficits, debts and taxes. They certainly take the ginger out of new initiative and new enterprise. Spending and taxes are the drinks that make State-ism delirious.
Do you wonder that men worry, hesitate, become uncertain, become fearful? Do you wonder that they lose confidence in the future? Do you wonder that their energies slacken? The name of this disease is anemia in initiative and enterprise.
PART VI
Now someone may say that this is philosophic and theoretical. But I can give you a gigantic example in tragic fact.
If we explore the economic front, we will find that it consists of two parts. These are the consumption goods, with the services, and the durable goods. For this discussion the consumption goods and the services are those we quickly use up. They are not only drinks, but food, clothing, gasoline, cosmetics, lawyers, movies, and such like.
Durable goods are our equipment for living, working and making consumption goods. They are homes, buildings, machinery, railways, factories, schoolhouses and such. We need more of them every time the population gains a single baby.
Now if we examine the functioning of our economic body we will find we are producing about the same volume of consumption goods as we were in 1929 before the worldwide depression. People have to consume to live. With increased population and new invention it should be about 10 percent more today than in 1929. But we will let that fond objective pass.
If, however, we examine the construction and improvement of our plant and equipment -- that is, the durable goods -- we find a different story. These are the things which require special enterprise and initiative. This is the area where men at once postpone action when they become fearful or uncertain of the future. The slowing down in production from this part of the economic body is from 35 percent to 42 percent during most of the last nine years.
And if we calculate in money the amount of this lag in the durable goods over these past few years, and we turn that money into wages, and then add the consumption goods that would be bought by these extra wages, we come out with jobs for all the 9 million unemployed.
And if you want still more concrete figures I may point out that in the ten years of the 1920's we built an average of about 680,000 new family housing units every year. In the past seven years we have built less than 230,000 a year and that with government subsidies. And today we need four million new houses.
There is a Nemesis which catches up with all State-ism. It cannot control the consumer's mind. He at least holds that free will. It cannot control the producer's fears. It is not the effect of these forces of uncertainty, fear and hesitation upon Big Business, or banks, or Wall Street, that shakes our system today. It is its effect upon John Q. Consumer and Mrs. Consumer. Big Business never leads. It always waits for the orders for goods or services or investment from John Q. John Q. and his wife are the only place it can get business from. That is, except from the government. And even that is paid for out of John Q.'s earnings.
John Q. sees all these frights about him. What does he do? If he is conservative he and his wife delay building that house. They delay buying the refrigerator. They postpone buying that farm. They will not make an investment in bonds or stocks which makes new enterprise. They let their savings pile up idle in the banks.
If John Q. is of a more reckless mind he concludes that he might as well spend what he earns. He thinks thrift is futile. Instead of providing for the long-view future he decides to go on a joyride with some sort of consumption goods.
And unemployment becomes chronic.
But all these cold statements and these cold figures are no measure of the stream of frustrated lives and human tragedy. And its hardest impact has been upon youth. To them it means frustration and discouragement.
PART VII
Conclusions
Our national task is to restore productive jobs for these 9 million unemployed men and women. I could at this point debate on the solutions of our many marginal problems. I could outline a series of steps that should be undertaken. I could debate the detailed reforms and reliefs and changes in policies which the nation requires. But there is something more basic that must come first. If changes, remedies, reforms are to be of any value we must first determine our national philosophy, our intellectual approach to their solution. And in this we are facing the same task in national thinking as faced Abraham Lincoln in the Great Debates with Douglas in 1858. We must have a vigorous shift in ideas—of point of view in the nation.
First: We must reverse our national drift toward State-ism with its shackling of men to making a civilization of free men.
Second. We must change from envisaging our problems as requiring transformation of a whole system to an attitude that our faults are marginal around a heart and hearth which are well founded.
Third: We must firmly adopt the concepts that it is only through steadily increasing productivity of the nation that we can make progress. And productivity comes when we free our machines and methods of restraints. We should drive our machines to the utmost; it is men we must conserve, not ideas or methods.
Fourth: We must resolutely turn from government spending to national thrift.
Fifth: We must re-establish morals and intellectual integrity in government.
Sixth: We must reverse our direction from class conflict, pressure groups and disunity and seek unity. That was the spirit of Lincoln.
Seventh: And we must keep out of war.
Suppose we shift our ideas, our attitudes, and our direction in these fashions, what will be the result?
These powerful forces of united minds will instantly regenerate confidence and hope. That will abolish hesitation, uncertainty, fear and pessimism. They we must confirm these great purposes by a detailed program of action.
And to do it we do not need to abandon any real reform or any security to the young or the old or any constructive action.
Truly science and invention are ready with new frontiers, new inventions and new opportunities. We have gigantic national resources. The virility of our race is still in our bones. The cravings for liberty are still strong in our souls.
An alert, alive and free people, primed with confidence, filled with dynamic initiative and free enterprise, will quickly increase the productivity of the nation. That will bring immediate relief to the farmer. And that will balance the budget. That will give jobs to the 9 million unemployed.
Out of the confused forces today we can make a pattern of American life, preserving all that is good. A pattern can be strengthened by which men can look forward with confidence to plan their own life; to get a job; to do creative work; to prove their own worth; to speak freely; to secure promotion and achievement; to undertake their own adventures and to receive their own reward; to champion justice and right for the down-trodden; to raise a family in better circumstances than they themselves enjoyed. That sort of life can be built only in a land of live moral and physical dynamic forces.
And that will assure the America of Abraham Lincoln.