Quotes of the day

The only period the U.S. economy has grown anywhere near as fast as China’s is today is…was under FDR, sven.

Imagine…government spending money on projects that make all Americans more productive…what a crazy concept.

Social Security is an extremely popular program…remember little Bush getting neutered when he tried to turn it over to his Wall Street cronies?

Gigolo Johnny McCain is gonna get neutered too.

alphie on August 25, 2008 at 2:38 AM

an abject and absolute lie until WW2 led to a revitilization of US industry there chum. FDR jailed men for “charging too little for pressing a shirt”.

You try to run the rounds with me on this I’ll hand your buttocks to you with a bowtie.

Have at thee knave.

sven10077 on August 25, 2008 at 2:40 AM

http://www.newsroom.ucla.edu/portal/ucla/FDR-s-Policies-Prolonged-Depression-5409.aspx?RelNum=5409

FDR used to sit in bed and set the price for specie based on whim over his grapefruit. To argue he was anything more than a pandering fool who wantedt entitlements to become the new mega-patronage is to have a mind capable of the self-delusory muscle of the troofers and the cloudiness of the BDS brigades. FDR coopted the notion of interventionist reform/recovery from Hoover and merely altered the delivery to a more genuine Fascist bent.

sven10077 on August 25, 2008 at 2:48 AM

ah well…Ralphie is either asleep or trying to find a half-arsed graph that he is only using for part of the story.

Here is a post of mine from another place on Smoot-Hawley, Hoover, and the length of the GD and why “reform” when people are unemployed can be a bad idea.

FDR’s policies were very much responsible for the length of the GD.

Prior to the GD no US downturn had lasted more than three years, and NEVER in US history had a “depression within a depression” occured.

Economies are NOT “car motors” subject to a wrench turn here and a minor tweak there….

One of the myths about the “cause”(as if one thing caused it)of the GD is that it was out of control capitalism and the collapse of the stock market over the course of two weeks in October. People who subscribe to this view are ignoring the contraction of money, idiotic overregulation of banks, and increasing of tariffs, and they are WILLFULLY ignorant of the true interventionist nature of Hoover. Hoover has been trasformed by the mythmakers who worship FDR into this cowering icon of laissez-faire and NOTHING could be further from the truth.

The so-called “progressive” movement was sheltered in its infancy by another Roosevelt in another party and Hoover was a TR type Republican. Hoover was the true father of “Alphabet Soup and the new deal” as evidenced by his establishment of the Reconstruction finance Corporation during his admin-hardly the act of either a laissez-faire believer or a ‘lazy do-nothing President’.

The RFC extended loans to smaller town banks and was kept on as a cornerstone of FDR’s admin. The problem is that the RFC was used as a political tool as much as a recovery based one. Jesse Holman Jones was notorious for using RFC assets to extend loans to “persons of interest” in regions and then inform them of what types of legislation would affect the RFC.

Hoover was anything BUT a laissez-faire man. He was responsible for the WW1 version of the “Marshall plan” whereby we aided Belgium through his Commission for the Relief of Belgium. He also arranged for the transport of 120,000 or so Americans back from Europe.

He had seen the Wilsonian war measures not as an indicator of the sacrifices the economy must make during wartime, but as a harbinger of a “better way to do things”. Hoover had intimate dealings and knowledge of the various war boards including(but not limited to) the War Finance Corporation, the War Industries Board, and the war trade Board. Hoover along with many who served in Wilson’s wartime administration were the ultimate believers in the power of the US government towork miracles in the time of emergency.(a shaky proposition given the low percentage of national industrial base that was required to do our part in WW1)

Hoover was also a huge believer in the “high wages can get us out of ANY downturn” school of thought that was prevalent at the time. The fact that this doctrine is now considered akin to a Grimm’s fairy tale makes it hard to grasp how much sway the notion had at that time. For all the Unionite bluff and bluster about “Henry Ford the demon” he was the original proponent of this school of thought in heavy industry always paying at least 75% higher than the prevailing wage and often paying double. The trouble was that these higher wages resulted in higher costs for the product…..(do a google and see how long you could buy a new model-t for under 500 bucks)

Several noteworthy economists of the era defended this notion. Hoover was not the master orator Roosevelt was, but he was far from the crippled foal the FDR legions portray. He called several conferences of industrial leaders and encouraged them to maintain high wages. Hoover believed that the massive money contraction policies of the Fed would and should hit profits rather than wages, and he told this to Henry Ford, Alfred Sloan, and others.

The problem was that Hoover’s efforts to maintain wages above the market was a disaster-as John T. Flynn noted in the Jan 1933 issue of Harpers, “prices must come down to bring goods closer to the size of available income…..income itself must be freed for purchasing by the extinguishments of excessive debts. Whether we like it or not, this is what takes place. Any attempts to hold up prices or save the weaker debtors necessarily prolongs the depression.” The inherent fallacy of the purchasing power school is that it doesn’t increase total purchasing power-it merely concentrates it in the employee base. The employees have more money to spend but the business and investors have less. All the policy accomplishes is an alteration in the distribution of revenue, not in the total purchasing power of an economy.

Hoover was also the Godfather of governmental spending as a panacea to boost the economy out of a downturn. He urged Gubenatorial and Municipal governments to engage in as many public works projects as he could. The governor of New York pledged his support-his name Was franklin delano roosevelt.(the funny thing is not a lot came of this because the majority of state and city budgets had other duties but the point here is that Hoover was hardly the “lapdog of the wealthy” people like to remember him as-also public works require folks with construction skills not unskilled laborers who were the hardest hit sector)

Hoover seldom met a farm subsidy he didn’t like, but the root of the matter was that too many farmers were tilling too many acres and the traiff warfare the politicos of both sides engaged in in that day meant that we had no ability to shunt excess production. This happened because of alteration to the European market made by WW1-Russia was not in the farming business and the wheat had to be made up by the US, Oz and Canada. This market condition was given a bodyblow as European production came back online as the recovery from WW1 progressed, the result of many European nations erecting massive tariffs to “protect our domestic farmers” was that their markets were now effectively closed to the overproduction of the nations that had fed them during the war.

Farmers are a powerful lobby and they exerted pressure for subsidization to avoid as many cutbacks as possible. They continued to be burdened with overproduction and low price structure throughout the 20s. In 1926 Coolidge agreed to have the US purchase excess cotton in order to maintain the high price of cotton-the guy who did it for him? hissecretary of commerce Herbert Hoover. By 1930 Congress was was authorizing the Federal Farm Board to increase subsidiztion by about 100 million-hardly the act of a laissez-faire champion of unfettered capitalism.

In 1929 Hoover asked for higher Tariffs on agricultural tariffs and the House way and means men listened. Of course it was becoming increasingly evident that you couldn’t isolate such high tariffs to one sector of the economy. EVERY sector wanted higher tariffs on their products.(now why is this ah yes it allows the artificial boosting of higher prices for inferior product) As a lobbyist for Big Silk said in his testimony, “I have never felt that it was a consistent position for one man to try and advocate duties for his own products and object for duties for another person.” by the time the hearings were over the record had 20,000 pages of testimony.

The result of this was the famed Smoot-Hawley Tariff which raised import duties an average of about 60% on more than 25,000 agri commodities and manufactured goods-happy days are here again! The US stock market took a plunge the day after it was signed on June the 18th(remember Black Tuesday and Thursday were a half year old but the market had recovered to 85% of peak at the time) It seems that 60 countries decided that Smoot-Hawley was two steps shy of an act of war and retaliated by targeting those goods that they felt would impact America hardest, and that was not the reciprocal goods of the tariff but other products thus damaging random and disparate businesses here in the US.(a panic set in)

Nothing like pissing off neighbors who are in debt to you and denying them a market to attain the wealth they needed to make the payments on their war debt eh?

We decided that Canada needed to take a hit in EVERY major export they had. Halibut, Potatoes, cattle, wheat, and lumber. Hoover managed to deliver body blows to every province in Canada, but why stop there let’s screw the English too(who at that time were the ultimate champions of free trade and free markets not us). The British unleashed the Import duties Act(of 1932) that was their first general tariff in 100 years, and part II specifically penalized nations with penalties on British goods by a 100% duty(like the US).

Thing was….the stupidity that led to the worldwide implosion of economies was largely a bipartisan effort…..

sven10077 on August 25, 2008 at 4:00 AM

Ralphie would LOVE what FDR did to Jacob Maged I suspect as long as Barry was the perp of the “police state”.

Died. Jacob Maged, 54, Jersey City tailor who in 1934 was jailed for three days because he charged 35¢ instead of 40¢ to press a suit of clothes, thus violating an NRA code; of cancer; in Jersey City.

http://www.time.com/time/magazine/article/0,9171,761031,00.html

Jacob Maged was thrown in jail for months because he charged 35 cents to press a suit when the federal government demanded a minimum price of 40 cents. Roosevelt’s planners were convinced that traders, middlemen, small businessmen, and independent entrepreneurs were the problem because they made aplphabet soup central’s balance sheets so messy.

“We are no longer afraid of bigness,” proclaimed Rex Tugwell. “Unrestricted individual competition is the death, not the life of trade.”
http://en.wikipedia.org/wiki/Rexford_Tugwell
Lou Nebbia was jailed for charging too little for milk, at the very same time we were destroying food surpluses on a scale that inspired The Grapes of Wrath.(Nebbia was Jailed during FDR’s governorship of New York on a state charge)

In the Long March toward the New Deal and a planned economy, Leo Nebbia became an early, celebrated casualty. The state of New York, in advance of the New Deal, had fixed the price of milk at nine cents a quart as part of a scheme of social uplift. What would be lifted, or kept aloft, would be the income of the producers. The superstition, widely shared at the time, was that the economy would be kept buoyant in this way, by preserving the purchasing power of the producers and vendors. Nebbia ran afoul of this scheme through a modest act tinged with calculation: He would give a loaf of bread free to any customer who would buy two quarts of milk for 18 cents. For that minor flexing of imagination, or for that retrograde motive of seeking a bit more business for himself by offering more value for the money, Nebbia could be stamped a “criminal.”

Yessiree what this nation is in DIRE need of is MORE Federal control on a scale not seen since then….

to quote Saint Frank….

“‘I don’t mind telling you in confidence,I am keeping in fairly close touch with that admirable Italian gentleman’”

Rexford Tugwell had difficulty containing his enthusiasm for Mussolini’s program to ‘modernize’ Italy. “It’s the cleanest … most efficiently operating piece of social machinery I’ve ever seen. It makes me envious.”

sven10077 on August 25, 2008 at 4:30 AM