RELIGION or POLITICS ??? Rules for Economic Recovery ......cont'd.

Hi midweekers, How's it going with y'all for this week, some good, some not so good??? Yeah, well that's life, eh?  I am going to continue with the present topic, which is after the scene in the court case of the Schecters, butchers in the chicken market from Brooklyn, N.Y.,  in 1935, represented by Louis Spatz. (This article was written by Amity Shlaes, senior fellow in economic history at the Council on Foreigh Relations. As published by Hillsdale College in their montly newsletter, IMPRIMIS.


More on the ARROGANCE AND DISCRETION section.

      Regarding monetary policy, it is clear that there wasn't enough money in the early 1930s.   So Roosevelt was not wrong in trying to reflate.   But though his general idea was right, the discretionary aspect of his policy was terrifying.   As Henry Morgenthau reports in his diaries, prices ser set by the president personally.   FDR took the U.S. off the gold standard in April 1933, and by summer he was setting the gold price every morning from his bed.   Morgenthau reports that at one point the president ordered the gold price up 21 cents.  Why 21, Morgenthau asked.   Roosevelt replied, because it's 3 x 7, and three is a lucky number.   "Of anyone knew how we set the gold price," wrote Morgenthau in his diary," they would be frightened."

      Discretionary policies aimed at cleaning up Wall Street were destructive as well.   The New Dealers attacked the wealthy as "money changers" and "Princes of Property."   In l937, after his re-election, Roosevelt delivered an inaugural address in which he described government as an instrument of "unimagined power" which should be used to "fashion a higher order of things".   This caused business to freeze in its tracks.   Companies went on what Roosevelt himself resentfully termed a "capital strike".

      These capital strikers mattered because they were even more important to recovery than the Schecters.   Consider the case of  Alfred Lee Loomis, who had the kind of mind that could contribute significantly to Gross Domestic Product and job creation.   During the First World War, he had improved the design of firearms for the U.S. Army.    In the 1920s, he became wealthy through his work in investment banking.   He moved in a crowd that was developing a new form of utility company that might finally be able to marshal the capital to bring electricity to the American South.   But when Loomis saw that the Roosevelt administration washauling utilities executives down to Washington for hearings,  he shut down his business, retreated to his Tudor house, and ran a kind of private think tank for his own benefit.   We have heard a lot about a labor surfeit in the 1930s.  Here is a heresy:  What if there was a shortage of TALENT brought on by declaration of class warfare?

      Another challenge to the Depression economy was tax increases.   While these increases didn't achieve the social equality at which they were aimed, they did significant damage by confiscating too much individual and corporate property.   As a result, many individuals and businesses simply reduced or halted production -- especially as teh New Deal wore on.  In the late 1930s, banker Leonard Ayres of the Cleveland Trust Company said in teh New Times:   "For nearly a decade now the great majority of corporations have been losing money instead of making it."

      As for big labor, the Wagner Act of 1935 proved to be quite destructive. It brought on drastic changes at factories including the closed shop -- the exclusion of non-union members.   Another innovation it helped bring about was the sit-down strike, which threatened the basic property right of factory owners to close their doors.   Most importantly, it gave unions the power to demand higher wages -- and they did.   A wage chart for the 20th century shows that real wages in the 1930s were higher than the trend for the rest of the century.   This seems perverse, considering the economic conditions at the time.   The result was high paying jobs for a few and high unemployment for everyone else.   The reality of overpriced labor can be seen in several stock phrases coming out of the Great Depression-- "Nice work if you can get it," for example, was  the refrain of a Gershwin song performed by Fred Astaire in THE DAMSEL IN DISTRESS, a film released in 1937 at the zenith of union power. 

      To return to the Monopoly board metaphor, the problem in the 1930s was not that there was no bank.   It was that there was too much bank -- in the form of the federal government.    The government took an argitraty approach to the money supply and made itself the most powerful player.   It shoved everyone else aside so that it could monopolize the board.   Benjamin Anderson, a Chase economist at the tiem, summed it up in a book about the period:   "Preceding chapters have explained the Great Depression of 1930 to 1939 as due to the efforts of the governments and very especially the government of the United States to play God.


OK, this will close for hump day and will finish this topic on friday by explaining the RELEVANCE FOR TODAY in its regard.   This should give some of the younger ones an idea of this 1930s age and what set the stage for the Progressive movement to take off and get this country setup for socialism, which you Must agree is fast approaching reality unless Americans wake up. I heard a statement today that sort of fits, that Americans have become a bunch of cowards.  And I guess you could make a case for it, but I will hold on to the thought, that when it boils down to push and shove, Americans will rise up to the occasion and show the world the real "who we really are... "Tough and proud."   Cheers CJ