In the very first words she uttered reacting to John McCain's speech on the housing market crisis Tuesday, Hillary Clinton evinced part of her appeal to older voters: her frame of reference is theirs.

"It sounds remarkably like Herbert Hoover," Clinton said of McCain's assertion that he is not inclined -- and probably never will be -- to embrace aggressive, sweeping government efforts to confront the problem of rising home foreclosures.

Specifically, McCain opined that "it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers."

By mentioning Hoover, whose tepid response to the Great Depression helped keep the White House in Democratic hands for 20 straight years after he was bounced from office in the 1932 election, Clinton invoked what once was a can't-miss applause line among Democrats.

The premier line in the standard history is that Herbert Hoover was a right-winger whose laissez-faire politics helped convert the 1929 Crash into the Great Depression. But a review of the new president’s actions reveals him to be a control freak, an interventionist in spite of himself. Hoover signed the Smoot-Hawley Tariff Act, which worsened a global downturn, even though he had long lived in London and understood better than almost anyone the interconnectedness of markets. He also bullied companies into maintaining high wages and keeping employees on their payrolls when they could ill afford to do so. Perhaps worst of all, he berated the stock market as a speculative sinner even though he knew better. For example, Hoover opposed shorting as a practice, a policy that frightened markets at an especially vulnerable time.

Prosperity Pledgers

"I WILL APPRECIATE IT IF YOU WOULD MAKE IT CONVENIENT TO ATTEND A SMALL CONFERENCE IN MY OFFICE ON THURSDAY MORNING AT 10 O'CLOCK TO DISCUSS MATTERS CONNECTED WITH MY STATEMENT OF LAST SATURDAY

"HERBERT HOOVER"

Philip H. Gadsden, president of the Philadelphia Chamber of Commerce, received this telegram, hastily "made it convenient" to go to Washington. For "my statement of last Saturday" was, as all the world knows, President Hoover's announcement of a series of conferences to devise means of preventing the Stockmarket decline from affecting U. S. business.

Laissez-faire, then, was the policy dictated both by sound theory and by historical precedent. But in 1929, the sound course was rudely brushed aside. Led by President Hoover, the government embarked on what Anderson has accurately called the "Hoover New Deal." For if we define "New Deal" as an antidepression program marked by extensive governmental economic planning and intervention-including bolstering of wage rates and prices, expansion of credit, propping up of weak firms, and increased government spending (e.g., subsidies to unemployment and public works)-Herbert Clark Hoover must be considered the founder of the New Deal in America...

Franklin D. Roosevelt, in large part, merely elaborated the policies laid down by his predecessor. To scoff at Hoover's tragic failure to cure the depression as a typical example of laissez-faire is drastically to misread the historical record. The Hoover rout must be set down as a failure of government planning and not of the free market.

To portray the interventionist efforts of the Hoover administration to cure the depression we may quote Hoover's own summary of his program, during his Presidential campaign in the fall of 1932:

"we might have done nothing. That would have been utter ruin. Instead we met the situation with proposals to private business and to Congress of the most gigantic program of economic defense and counterattack ever evolved in the history of the Republic. We put it into action. . . . No government in Washington has hitherto considered that it held so broad a responsibility for leadership in such times. . . . For the first time in the history of depression, dividends, profits, and the cost of living, have been reduced before wages have suffered. . . . They were maintained until the cost of living had decreased and the profits had practically vanished. They are now the highest real wages in the world.
Creating new jobs and giving to the whole system a new breath of life; nothing has ever been devised in our history which has done more for . . . "the common run of men and women." Some of the reactionary economists urged that we should allow the liquidation to take its course until we had found bottom. . . . We determined that we would not follow the advice of the bitter-end liquidationists and see the whole body of debtors of the United States brought to bankruptcy and the savings of our people brought to destruction."

...Characteristic of all Hoover's interventions was the velvet glove on the mailed fist: i.e., the businessmen would be exhorted to adopt "voluntary" measures that the government desired, but implicit was the threat that if business did not "volunteer" properly, compulsory controls would soon follow.

...The government was supposed to correct "our marginal faults"-including undeveloped health and education, industrial "waste," the failure to conserve resources, the nasty habit of resisting unionization, and seasonal unemployment. Featured in Hoover's plan were increased inheritance taxes, public dams, and, significantly, government regulation of the stock market to eliminate "vicious speculation."

...So "forward-looking" was Hoover and his program that Louis Brandeis [a prominent socialist and Supreme Court Justice], Herbert Croly of the New Republic [the most prominent liberal-progressive publication from World War I until the 1950s], Colonel Edward M. House, Franklin D. Roosevelt, and other prominent Democrats for a while boomed Hoover for the presidency.