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percent). The average part-time proportion for the entire sample
was 56.1 percent.19
CONCLUSION: THE LESSONS
OF MR. HOOVER S RECORD
Mr. Hoover met the challenge of the Great Depression by act-
ing quickly and decisively, indeed almost continuously throughout
his term of office, putting into effect the greatest program of
offense and defense against depression ever attempted in America.
Bravely he used every modern economic tool, every device of pro-
gressive and enlightened economics, every facet of government
planning, to combat the depression. For the first time, laissez-faire
was boldly thrown overboard and every governmental weapon
thrown into the breach. America had awakened, and was now
ready to use the State to the hilt, unhampered by the supposed
shibboleths of laissez-faire. President Hoover was a bold and auda-
cious leader in this awakening. By every progressive tenet of our
day, he should have ended his term a conquering hero; instead he
left America in utter and complete ruin a ruin unprecedented in
length and intensity.
What was the trouble? Economic theory demonstrates that
only governmental inflation can generate a boom-and-bust cycle,
and that the depression will be prolonged and aggravated by infla-
tionist and other interventionary measures. In contrast to the myth
19
Monthly Labor Review 35 (1932): 489ff. and 790ff.
The Close of the Hoover Term 337
of laissez-faire, we have shown in this book how government inter-
vention generated the unsound boom of the 1920s, and how
Hoover s new departure aggravated the Great Depression by mas-
sive measures of interference. The guilt for the Great Depression
must, at long last, be lifted from the shoulders of the free-market
economy, and placed where it properly belongs: at the doors of
politicians, bureaucrats, and the mass of enlightened economists.
And in any other depression, past or future, the story will be the
same.
Appendix: Government and the
National Product, 1929 1932
n footnote 21 of Chapter 9, we explain how we arrive at our
estimate of the degree of government depredation on the pri-
vate national product. The critical assumption is the challenge
I
to the orthodox postulate that government spending, ipso facto,
represents a net addition to the national product. This is a clearly
distorted view. Spending only measures value of output in the pri-
vate economy because that spending is voluntary for services ren-
dered. In government, the situation is entirely different: govern-
ment acquires its money by coercion, and its spending has no nec-
essary relation to the services that it might be providing to the pri-
vate sector. There is no way, in fact, to gauge these services. Fur-
thermore, every government-conscripted dollar deprives the citi-
zen of expenditures he would rather have made. It is therefore far
more realistic to make the opposite assumption, as we do here, that
all government spending is a clear depredation upon, rather than
an addition to, private product and private output. Any person who
believes that there is more than 50 percent waste in government will
have to grant that our assumption is more realistic than the stan-
dard one.
To estimate the extent of government depredation on private
product, we first find private product by deducting product or
income originating in government and government enter-
prise i.e., the payment of government salaries from Gross
National Product. We now have the Gross Private Product. Gov-
ernment depredations upon this GPP consist of the resources that
339
340 America s Great Depression
government drains from the private sector, i.e., total government
expenditures or receipts, whichever is the higher. This total sub-
tracted from the GPP yields the private product remaining in pri-
vate hands, which we may call PPR. The percentage of govern-
ment depredation to gross private product yields an estimate of the
burden of government s fiscal operations on the private economy.1
If government expenditure is larger than receipts, then the
deficit is a drain on private resources whether financed by issuing
new money or by borrowing private savings and therefore the
expenditure figure is chosen as a measure of government depreda-
tion of the private sector. If receipts are larger, then the surplus
drains the private sector through taxes, and receipts may be con-
sidered the burden on the private sector.2
One significant problem created by the vagaries of the official
statistics fortunately, again, a problem not significant for our
period is that the official statistics lump together the bulk of the
spending of government enterprises (roughly, the government
agencies that charge fees) in the private, rather than the govern-
mental, sector. There are, therefore, no figures available for the
1
It is conventionally argued, e.g., by Professor Due, that we should not
include government transfer payments, e.g., relief payments, in any such expendi-
tures deducted because transfer payments are not included in the original GNP
figure. But the important consideration is that taxes (or deficits) to finance trans-
fer payments do act as a drain on the national product, and therefore must be sub-
tracted from GPP to yield PPR. Due claims that, in gauging the relative size of
governmental and private activity, transfer payments should not be included
because they merely shift purchasing power from one set of private hands to
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