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Images and Words on the Great Depression

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(Originally published in October, 2008)

The 16th Amendment and the Federal Reserve can be traced to the so-called Progressive movement that was taking place around the turn of the 20th century. While this movement has been portrayed as workers and intellectuals rising up against ruthless corporations, the simple fact of the matter is that it was John D. Rockefeller and J.P. Morgan who supported it. Indeed, much of the political history of the United States from the late nineteenth century until World War II may be interpreted by the closeness of each administration to one of these sometimes cooperating, more often conflicting, financial groupings: Cleveland (Morgan), McKinley (Rockefeller), Theodore Roosevelt (Morgan), Taft (Rockefeller), Wilson (Morgan), Harding (Rockefeller), Coolidge (Morgan), Hoover (Morgan), or Franklin Roosevelt (Harriman–Kuhn–Loeb–Rockefeller).

“All the factors which make for a quick and speedy industrial and economic recovery are present and evident. The Federal Reserve System is operating, serving as a barrier against financial demoralization. Within a few months industrial conditions will become normal, confidence and stabilization in industry and finance will be restored.” William Green, AFL-CIO, November 22, 1929

“We developed cooperation between the federal, state, and municipal governments to increase public works. We persuaded employers to “divide” time among their employees so that as many as possible would have some incomes. We organized the industries to undertake renovation, repair, and, where possible, expand construction.” Herbert Hoover

“The newspapers were full of news about bankclosings, business failing, and people out of work…We were in debt with no way out” Carmen Carter

“There was much hardship. Many people sold pencils on the street for 1 penny. Others were so devastated, they committed suicide by jumping out of windows of a skyscraper in New York City.” Thomas Johnston

“I remember standing in the welfare line somewhere on Michigan Avenue where they were passing out sweaters for children” Richard Waskin

On October 29, 1929, also known as “Black Tuesday,” 16.4 million shares of stock were sold, compared to 4 to 8 million on a normal day.

In 1932 at least 200,000 young people and 25,000 families roamed through the country looking for food, clothing, shelter, and a job.

The unemployment rate was as high as 25% (not including women and minorities which likely would have been closer to 40-50%). Unemployment would remain in double digits until 1943.

“Until the 1960s, historians had established the myth that Progressivism was a virtual uprising of workers and farmers who, guided by a new generation of
altruistic experts and intellectuals, surmounted fierce big business opposition in order to curb, regulate, and control what had been a system of accelerating monopoly in the late nineteenth century. A generation of research and scholarship, however, has now exploded that myth for all parts of the American polity, and it has become all too clear that the truth is the reverse of this well-worn fable. In contrast, what actually happened was that business became increasingly competitive during the late nineteenth century, and that various big-business interests, led by the powerful financial house of J.P. Morgan and Company, tried desperately to establish successful cartels on the free market. The first wave of such cartels was in the first large-scale business—railroads.” Murray Rothbard, The Quarterly Journal of Austrian Economics

“From 1926 to 1929 the attention of the world was chiefly focused upon the question of American prosperity. As in all previous booms brought about by expansion of credit, it was then believed that the prosperity would last forever, and the warnings of the economists were disregarded. The turn of the tide in 1929 and the subsequent severe economic crisis were not a surprise for economists; they had foreseen them, even if they had not been able to predict the exact date of their occurrence. The remarkable thing in the present situation is not the fact that we have just passed through a period of credit expansion that has been followed by a period of depression, but the way in which governments have been and are reacting to these circumstances. The universal endeavor has been made, in the midst of the general fall of prices, to ward off the fall in money wages, and to employ public resources on the one hand to bolster up undertakings that would otherwise have succumbed to the crisis, and on the other hand to give an artificial stimulus to economic life by public works schemes. This has had the consequence of eliminating just those forces which in previous times of depression have eventually effected the adjustment of prices and wages to the existing circumstances and so paved the way for recovery. The unwelcome truth has been ignored that stabilization of wages must mean increasing unemployment and the perpetuation of the disproportion between prices and costs and between outputs and sales which is the symptom of a crisis.” Ludwig von Mises, The Theory of Money and Credit

“The reasoning of the authorities involved was as follows: if the Federal Reserve pumped excessive paper reserves into American banks, interest rates in the United States would fall to a level comparable with those in Great Britain; this would act to stop Britain’s gold loss and avoid the political embarrassment of having to raise interest rates. The “Fed” succeeded; it stopped the gold loss, but it nearly destroyed the economies of the world, in the process. The excess credit which the Fed pumped into the economy spilled over into the stock market, triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in braking the boom. But it was too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed. Great Britain fared even worse, and rather than absorb the full consequences of her previous folly, she abandoned the gold standard completely in 1931, tearing asunder what remained of the fabric of confidence and inducing a world-wide series of bank failures. The world economies plunged into the Great Depression of the 1930’s.”
Alan Greenspan, Gold and Economic Freedom, 1966

Written by chrisforliberty

June 29, 2010 at 11:48 am

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  1. […] “recession” began in December 2007. So we are actually looking at closer to 20%-25%. The last time the rate was this high was in the 1930′s.  Of course, keep in mind that only wh… if women and minorities were counted. The unemployment rate was in double digits every year between […]

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