Did Laissez-Faire Policies Cause the Great Depression? #shorts

Often, a significant level of blame for the Great Depression has been leveled at the “laissez-faire” policies of President Herbert Hoover, and this theory is partially true. While the Hoover administration’s policies undoubtedly led the recession to extend into a depression, the idea that these were laissez-faire is a bit of a joke.

Watch the full video here: https://youtu.be/q4ZMMH6LxXc

Hoover’s policies were outright interventionist. In 1930, he signed into law the Smoot-Hawley Tariff Act, increasing import tariffs on some 20,000 goods up to 50 percent, with the intended purpose of “protecting American industry.”

Previously, when the House passed the bill in May 1929, the stock market fell by 8 percent. The stock market crash five months later came just days after the Senate had added further tariffs to the bill.

When the Federal Reserve panicked and began a contraction of the money supply, prices were falling. Hoover’s response, in a bid to protect the incomes of American workers, was to strongarm businesses into maintaining wages at existing levels.

Under pressure not to cut wages in response to falling prices, businesses were left with no choice but to lay off workers, thus fueling a crisis that culminated in 25 percent unemployment nationwide.
Regardless of what he may have said in support of free markets, Hoover’s political actions told a different story.

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