Selgin on Mellon, Harding, and Hoover

by Don Boudreaux on August 19, 2011

in Great Depression, History, Monetary Policy, Myths and Fallacies, State of Macro

Here’s George Selgin on the 1920-21 economic downturn in the U.S.  His conclusion:

Proponents of Keynesian pump-priming often berate the Hoover administration for its “liquidationist” strategy for dealing with the outbreak of the Great Depression–forgetting that it was Hoover himself who caricatured Andrew Mellon, his Secretary of the Treasury, as someone who wished to “liquidate” the stock market, farmers, real estate, and so forth, and who took pride in not having followed his advice. But Mellon was also Harding’s Secretary of the Treasury; and Harding, unlike Hoover, trusted him. It is one of the greater ironies of economic history that “liquidationist” policies, including government austerity, are blamed for prolonging a depression for which those policies were set aside, while being denied credit for perhaps helping to end one for which they really were put into practice.


33 comments    Share Share    Print    Email

Previous post:

Next post: