In an interview in Business 2.0, Peter Drucker recalls this story of responsibility:
The Depression in this country was totally unnecessary. The country was recovering from a mild recession when Europe crashed, and that started a run on American banks. Eugene Meyer (President Hoover's chairman of the Federal Reserve Board) happened to be a friend of my father's. And during World War II, when I was in Washington and quite lonely, he had me to dinner often. He told me this story.
He knew perfectly well how to stop a run on the banks. You just pay out, just print money. One night they put it under their mattresses, then the next day they have to deposit it again. Meyer knew he should just pay out. He went to Hoover after the 1932 election, and Hoover said, "I'm just a lame-duck president. Immediate action has to be sanctioned by the president-elect." So Meyer went to Roosevelt. But Roosevelt said, "This is Hoover's watch."
I asked Meyer, "Why didn't you just pay out?"
He said, "My boy, you couldn't possibly do that in 1932 without the president's approval."
If he had paid off the banks and stopped the run, there would have been no bank holiday and no Depression, except perhaps in the farm sector.
Hoover and Roosevelt never met in those four months. They hated each other. Meyer said, in hindsight, he should've gone ahead without the president's approval.
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