Learning from History 

 

When I listen to the sophomoric statements and conclusions from the so-called educated young in this country, it makes me wonder if what they receive in the institutions of higher learning can actually be called an education.  It seems their constricted view is that nothing of any importance happened before 1980.  I often have drawn the same conclusion about our national administration and the congress, as many of them talk past their own history.

 

For sure there is some validity in the cliché “Desperate times call for desperate measures” but before we enact them it might just pay to review whether they have worked in the recent past and the record of those who monitored their progress might just be the first considerations.

 

Grass roots protests to how our leadership deals with the massive economic reversals of the last 5 years have moved into another phase that we might characterize as the second populist revolt.  Sit-ins on Wall Street and elsewhere are not as organized or structured as the Tea Party movement that had a major affect on the last election of U.S. Congressmen, but it does have a familiar ring if you only page back to the early 1930s where these kind of loosely organized rallies led to what were known as “tent cities”. The largest of them being the “Bonus Army” protest of 1932 during a period of 25% national unemployment. That ended very badly with the U.S. military taking aggressive action against its own citizens (mostly former veterans) and burning their campsite in Washington. But those folks were protesting the same thing that we are facing today and that is how the Washington-Wall Street relationship is dealing with the plight of the average U.S. Citizen.

 

Roosevelt’s New Deal was and still is the most revolutionary economic and social reform movement this country every tried.  History has proven that some of what they implemented stopped what might have been a second civil war and others did little and missed the mark by quite some distance.  It can be argued that the stabilization of the currency, protection of the deposits of the average citizen in banks, and the SEC and other regulations on the merging of banking and speculation were the foundation of the most effective government programs in history that very quickly returned some stability to a system that has been characterized as a Wall Street Wild West Show that began with industrialization.

 

We should note that the government regulations then were not directed at saving the banks themselves, only the deposits that citizens made in those banks.  Compare this with how the current and previous administrations handled what has been characterized by many as a potential second Depression. Roosevelt’s smart economists and planners saw no value in propping up the banks and securities traders as “too big to fail” but did what they could to protect those who may have been victimized by unsound practices; while forcing those who wanted to continue in those industries to live up to transparency and fair competition.  We have done the opposite here, beginning with the 1999 repeal of the last significant regulatory controls (The Glass-Steagel Act of 1933) and then setting up the Washington/Wall Street Cabal that even a Democratic administration saw as a romance made in heaven.

 

From the point of view of the very Democratic leadership of the New Deal, what has been done and is being done is worthless, self-serving for the few, and very undemocratic. In a reversal of what some may call traditional posturing, it is some Republicans in leadership and a wide band of citizens who are calling out the government on its relationship with the financial industry. Possibly the smartest and most creative of the New Deal planners was Secretary Treasury Henry Morganthau.

 

Morganthau monitored every experimental step taken during the new deal and did his best to separate through recommendation and policy those that worked from those that were failing.  He was personally opposed to many of the Keynesian precepts of the time regarding government spending, and said so publically. His reflection at the time on broad government spending to relieve unemployment can be summed up in this quote almost never reported these days: “We have tried spending money.  We are spending money more than we have ever spent before and it does not work — after 8 years of this administration we have just as much unemployment as when we started — and an enormous debt to boot”. 

 

In a 1937 speech focusing on balancing the national budget and deficit spending he stated: ‘We want to see private business expand . . . We believe that one of the most important ways of achieving these ends at this time is to continue progress toward a balance of the federal budget.”  He later drew up the plan to finance World War II through the sale of war bonds to the public rather than print money as other countries were doing at the time.

 

No, those were not the comments of the financially conservative Republicans, Libertarians, or Tea Party of today, but they could be.  They could also be the news bytes from the Occupy Wall Street and now Main Street crowds reacting to bad public policy from Washington; but maybe they are in the wrong cities and in front of the wrong buildings.  No one walks away from a government handout these days, whether banker, broker, manufacturer, secretary or laid-off factory worker.

 

I would suggest the White House, Congress, and the Federal Reserve as their next stop.

 

Jim Foster

Editor/Publisher

Germantown Newspapers Inc.

215-438-5171