Presidents Often Surprise on Economic Strategies

MARKET AFICIONADOS ARE busy digesting the platforms of Barack Obama and John McCain. Who would be a better steward of the economy? How would the stock market fare under either man?

History cautions that voters rarely get the outcome they think they are voting for. Franklin D. Roosevelt, campaigning in the Depression year 1932, criticized the incumbent, Herbert Hoover, for spending too much and promised to balance the federal budget. Once elected, FDR vastly increased the size of the government. Investors expected the economy to prosper under George W. Bush, a self-professed champion of enterprise. But the market and the economy laid an egg.

And Richard Nixon, an archconservative early in his career, governed from the Oval Office as though his brain had been rewired by a communist apparatchik. He signed the bill to create the Environmental Protection Agency, established the Occupational Safety and Health Administration, gave racial quotas their first push within the federal government and even tried to stage-manage the economy by imposing wage and price controls. Though obscured by the political scandal of Watergate, Nixon bequeathed an economic mess to his successor, Gerald Ford. Some of this came down to luck — it was not Nixon's fault that OPEC quadrupled oil prices. And sometimes expediency leads candidates to promise what they should not (see Bush, Herbert Walker: "Read my lips").

Presidents get tested in ways that no one can anticipate. John F. Kennedy was a foreign-policy expert; when he was confronted with a slowing economy, his intuition led him to support a tax cut. It was the right move. His successor, Lyndon B. Johnson, thought the economy could support the Vietnam War as well as his vast social agenda. He was wrong. But Dwight D. Eisenhower, a career soldier with no discernible enthusiasm for economic policy, presided over the golden 1950s.

Hoover was the biggest surprise. In terms of economic policy, he was the best-prepared president the U.S. ever elected. In contrast to Obama and McCain, who have spent their careers in public service, Hoover was an acclaimed crisis manager and a business phenomenon. Orphaned at age nine, he showed resilience, eventually being admitted in 1891 to the first class of Stanford, where he lived in low-rent worker housing. Graduated as a geologist, he secured a job as a mining engineer, which took him to remote Australia. He hit a lode of gold, struck out on his own and amassed a fortune.

His public career began with the outbreak of World War I — when expatriate Americans were stranded in Europe. Soliciting private funds, Hoover, who was living in London, managed to get them home. Then he took on the job of feeding 10 million Belgians and French, who were trapped between the German bayonets and the English blockade. Staking his own wealth to the cause, he implored London and Berlin to hold their fire. Miraculously, his supplies reached Belgium, which was saved from starvation. Hoover became a hero in Europe (streets in Belgium still bear his name). When the U.S. entered the war, Hoover ran the U.S. Food Administration, where he exhorted Americans to suffer "meatless Mondays" and "wheatless Wednesdays" to feed the troops. After the war he organized relief for hungry Poles and Russians and for children everywhere. In 1920, Franklin Roosevelt wanted Hoover to run for president. No one, said FDR, was more qualified.