by Spencer Howard
Some recent news articles have noted previous Presidents who have faced impeachment, including Herbert Hoover. In a narrow sense this is true – on Dec. 13, 1932 and Jan. 17, 1933, Rep. Louis Thomas McFadden, a Republican from Pennsylvania, offered resolutions on the floor of the House calling for the impeachment of President Hoover. It’s not clear what McFadden hoped to gain, other than perhaps to embarrass the President. At that time, of course, Hoover had already lost the 1932 election and was a “lame duck,” virtually powerless with an opposition Congress. McFadden’s resolutions were tabled, and the impeachment of Herbert Hoover never got off the ground.
Rep. McFadden was a former banker who had chaired the House Committee on Banking and Currency from 1920 to 1931. (The Republicans lost their majority in the House after the 1930 election, so Democratic Rep. Henry Steagall became the new committee chair in 1931.) McFadden was best known for the 1927 McFadden Act, which helped national banks better compete with state chartered banks. McFadden was also a vocal critic of the Federal Reserve System, and blamed the Fed for causing the Great Depression. McFadden’s main complaints against President Hoover centered on Hoover’s handling of the international debts stemming from World War I. It was a complex issue with no easy solution, and McFadden accused Hoover of overstepping his constitutional role in a variety of ways.
To summarize the situation – at the end of World War I, the Allied Powers forced Germany to accept blame for the war and to pay crushing reparations. At the same time, fifteen nations including France and Great Britain owed huge sums that they had borrowed from the United States. The French made the connection official – they would pay their debts to the U.S. with reparations money from Germany. The U.S. never accepted this connection – reparations and debts were two separate issues, and public sentiment in the US was adamant that the Allied nations were obligated to repay the money they had borrowed, regardless of Germany’s reparations. But in reality, without the reparations, the French (and the British as well) could not pay their war debts. By 1924 the German economy was near collapse and threatened to bring down the international financial system. The Allies appointed a commission, chaired by Charles Dawes, an American banker and politician, to resolve the issue. The resulting Dawes Plan reduced German reparations payments and encouraged U.S. banks to loan money to Germany to help rebuild German industry, on the assumption that a stronger German economy would make the reparations payments more manageable.
By 1929, it was clear that additional adjustment was needed and a new committee, chaired by U.S. industrialist Owen D. Young, further reduced Germany’s obligations. But in May 1931, the collapse of the Austrian bank Creditanstalt sent shockwaves throughout Europe and the international financial system again teetered on the brink of disaster. In Hoover’s view, it was this financial storm from Europe that turned what had been a modest economic downturn into the Great Depression. Most critically, a German financial collapse threatened the U.S. in two ways – failing to pay the reparations would mean that France and probably Great Britain would be unable to pay their war debts to the U.S. Government, while at the same time German default on the private sector industrial loans would bring down the U.S. banking system. In June, President Hoover called for a one-year pause in all international debt payments, which saved the international banking system from complete collapse. But the “Hoover Moratorium” only delayed the inevitable, as the world economic situation continued to deteriorate.
Over the next 18 months, Hoover worked feverishly to stave off a default by any of the major economies and prop up the U.S. banking sector, while attempting to address rising unemployment and the collapse of American agriculture at home. Holding office at such a time, said Hoover, was akin to being a repairman behind a dike. “No sooner is one leak plugged up then it is necessary to dash over and stop another that has broken out. There is no end to it.”
Many economists and bankers agreed that the best solution to the debt problem was to cancel much or all of the war debts and reparations – if nothing else, cancellation might stop the vicious spiral of defaults – but public opinion both in the U.S. and abroad still stood in the way. By December 1932, both Britain and France announced they would likely be unable to make their next debt payments, and on December 14, the French Chamber of Deputies made it official.
McFadden had opposed Hoover’s Moratorium from the start, as well as other Hoover policies. McFadden’s impeachment resolution charged President Hoover with endeavoring to illegally cancel the war debts, undertaking secret conversations with foreign bankers, violating the Constitution by seeking to “usurp” Congress’s role in foreign policy and finance, and “inflicting suffering on the American people through the moratorium for the benefit” of the debtor nations. For good measure, McFadden added charges concerning several Presidential appointments he disagreed with, and accused the President of treating the veterans who marched on Washington in the summer of 1932 with “contumely.”
Lawmakers in both parties were appalled. As the clerk of the House droned through a reading of McFadden’s resolution, the House leadership huddled around the Speaker’s desk. When the reading was concluded, Democratic Representative Edward Pou of North Carolina immediately moved to table the resolution, to loud cheers and enthusiastic applause from both parties. The motion to table the resolution passed 361 votes to 8. McFadden was denounced by Republicans for his ‘contemptible gesture.’ One of the seven Democrats who voted with McFadden against tabling the resolution, Rep. Anthony Griffin of New York, noted that he did not necessarily agree with the charges, but thought any such resolution should be reviewed by the Judiciary Committee, and not just tabled.
On January 17, McFadden again offered an impeachment resolution, hoping to be allowed an hour for debate. McFadden’s second resolution repeated most of the same charges and was again immediately tabled by a vote of 344 to 11, and his request for debate was denied by the Speaker. Six weeks later, Franklin D. Roosevelt was President, and Hoover was on his way home to California.
As for the war debts, by 1934, every debtor nation except Finland had defaulted.