With the great Bush/Paulson stimulus package of 2008 working its way through Congress, we are reminded of yet another such effort, the great Herbert Hoover stimulus package of 1929. In late 1929, after the stock market crash but before the Depression had really set in, President Herbert Hoover summoned some of the nation's top industrialists and merchants to Washington to agree on a package of measures to stimulate the economy. Hoover's plan included $160 million in Federal tax relief, promises from the Fed of cheaper credit, promises from leading employers not to reduce wages and promises from labor unions not to seek higher wages, promises from industrialists and railway leaders for capital expenditures, and increased government construction spending.
"Such guarantees that the wheels of business would not slow down under the sudden loads of Loss & Fright could be created only by a powerful force," Time magazine reported Dec. 2, 1929. "To obtain that force President Hoover... summoned the strangest gathering to come to Washington since the 'dollar-a-year' men of the War. Merchants, Bankers, Manufacturers, knocked into the Cabinet Room, heard the President's plea, discussed the situation informally, pledged their support.... In calling the meetings he showed realization that U.S. Big Business, no longer feared, has reached a position where it is looked to as the big benefactor in times of trouble."
We all know how that turned out, with the economy plunging into the deepest depression the U.S. had known, only to be reversed with the election of FDR and his war on the "economic royalists" in defense of the welfare of the general population. Today, we have George Bush in the role of Herbert Hoover and Henry Paulson in the role of Andrew Mellon, which means we'd better find someone to fill the role of FDR pretty damn quick.