When the Economy Collapses, Talk Is Cheap—Just Look What Led Up to the Great Depression

As the United States faces an economic downturn driven by the worst unemployment rates since the Great Depression of the 1930s, it’s natural to make comparisons between how Presidents and the federal government managed that past economic crisis and President Donald Trump’s performance. While President Franklin Delano Roosevelt is the leader most associated with the Great Depression, he wasn’t the only man in the White House in that period—and the Depression is as much a lesson in what not to do as it is in what to do.

Almost a decade before the stock-market crash of 1929, a recession from January 1920 to July 1921 posed a great challenge to President Warren G. Harding, who entered the White House in March 1921. As prices fell—especially in agricultural produce, which tumbled by 50% as a resurgence of postwar European agriculture flooded markets—unemployment doubled as soldiers returning from Europe at the close of World War I looked for jobs. The Dow Jones Industrial Average fell nearly 50%. Harding had no idea what to do. He said he wished there was a book that could advise him on the economy, but even if there were one, Harding acknowledged he wouldn’t be able to understand it. Harding got lucky and the economic downturn righted itself without his intervention. Was Trump hoping for a similar outcome when he said in February that the coronavirus would disappear like a miracle?

Herbert Hoover, who won the election of 1928 and had a reputation as a brilliant mining engineer and highly successful businessman, likewise struggled to respond to the stock market crash of 1929 and economic collapse beginning in 1930. The problem for Harding, Hoover and the Republicans who controlled Congress in the 1920s was an unyielding faith in free market capitalism. Convinced that the markets would automatically turn up, as they had in 1921, Hoover repeatedly urged the country to believe that prosperity was right around the corner. With conditions worse than ever and unemployment reaching 25% of the work force in 1932, Hoover lost the presidency in a landslide to New York Governor Franklin D. Roosevelt.