Skip to comments.Why You've Never Heard of the GReat Depression of 1920-21
Posted on 02/23/2014 9:46:03 AM PST by Attention Surplus Disorder
Very interesting presentation by Thomas Woods, discussing the GD of 1920-1921, the depression nobody ever talks about. Well worth watching, :41, only a couple of slow spots, otherwise entertaining.
It is never talked about because the US economy rapidly came out of it with NO federal stimulus; indeed, the Fed lowered taxes and decreased spending during this period.
Instead, Warren G. Harding was universally ridiculed for his clumsy speeches; examples of which are given and which sound entirely sensible.
Virtually all historians castigate Harding because he was allegedly slow and stodgy, and during the latter half of his term, the period referred to, he had a stroke and his wife essentially became president. Since she had no power, she could do nothing, and doing nothing is precisely what allowed the economy to exit the depression of the time which was arguably as bad or even worse than GD 1929. And economists, universally, decry the lack of government action/intervention...while asserting that it was impossible to come out of the depression of the time without government intervention, even as they ignore the fact the economy actually did. IOW, they simply cannot accept the fact that their theories are non-functional.
Fascinating, with a very brief recap of Austrian economics at the end.
Worth watching, IMO.
And it's been that way ever since, despite the poor track record.
While we are at it...how about the Bank Crisis of 1914 in London....which was going to shut down every single bank in the country?
I haven’t looked at the video yet but I think you need to reconsider the facts behind your narrative. First off, Wilson was still President in 1920, Warren Harding was elected in 11/20 with inauguration in 3/21. Wilson was the president who had the stroke and his wife isolated him from all advisors who were pressing for decisions. Thomas Woods is cited in the Wikipedia article on this subject:
President Woodrow Wilson’s slow response to the depression was criticized by those in the Republican party, catapulting them into the White House under the banner of Warren Harding. Once in office, he convened a President’s Conference on Unemployment at the instigation of then Commerce Secretary Herbert Hoover as a result of rising unemployment during the recession. About 300 eminent members of industry, banking and labor were called together in September 1921 to discuss the problem of unemployment. Hoover organized the economic conference and a committee on unemployment. The committee established a branch in every state having substantial unemployment, along with sub-branches in local communities and mayors’ emergency committees in 31 cities. The committee contributed relief to the unemployed, and also organized collaboration between the local and federal governments. President Warren G. Harding signed the Emergency Tariff of 1921 and the FordneyMcCumber Tariff.
However, by the time Harding had called his conference, the country’s economy had already shown signs of rebound, and merely allowed for President Harding to claim success.
Interpretations of the end
Some economists and historians argue that the 1921 recession was a necessary market correction, required to engineer the massive realignments required of private business and industry following the end of the War. Historian Thomas Woods argues that President Harding’s laissez-faire economic policies during the 1920-21 recession, combined with a coordinated aggressive policy of rapid government downsizing, had a direct influence (mostly through intentional non-influence) on the rapid and widespread private-sector recovery. Woods argued that, as there existed massive distortions in private markets due to government economic influence related to World War I, an equally massive “correction” to the distortions needed to occur as quickly as possible to realign investment and consumption with the new peace-time economic environment.
Daniel Kuehn’s recent research calls into question many of the assertions Woods makes about the 1920-21 recession. Kuehn argues that the most substantial downsizing of government was attributable to the Wilson administration, and occurred well before the onset of the 1920-21 recession. Kuehn notes that the Harding administration raised revenues in 1921 by expanding the tax base considerably at the same time that it lowered rates. Kuehn also argues that Woods underemphasizes the role the monetary stimulus played in reviving the depressed economy and that, since the 1920-21 recession was not characterized by a deficiency in aggregate demand, fiscal stimulus was unwarranted. Economist Paul Krugman, who is critical of the Austrian interpretation, notes that the monetary base expanded significantly from 1922-1925, and that this expansion was accompanied by a reduction in commercial paper rates. Allan Meltzer suggests that deflation and the flight of gold from hyper-inflationary Europe to the U.S. also contributed to the rising real money stock and economic recovery.
Ping for later
Actually, I had heard of the correction, recession and recovery of 1920-21, because the US government didn't do anything stupid and stayed out of it.
Glenn may wobble back and forth at times but that show was unique.
It still is.
I’ve also learned a lot from his program...and still do. I learned about this Depression from Glenn’s show, too.
He’s on M-F 5p. Eastern. (You can watch online, on DISH or various other cable outlets.)
Farm prices collapsed in 1919. My Grandfather gave up farming and went to work in the mines.
Ping to an extremely interesting 40-minute video on the Harding Administration and Austrian Economics.
Yes they did, and all my grandfather's sons went to work in the cities to save his ranch.
They all lost everything under Roosevelt's "New Deal".
My Grandfather never lost his land but when the mines closed in 1927 he had to scramble like a one armed paper hanger to feed his family.
He survived because of the principle of once burned twice wary, he was a very wise man.
The farm went to my Uncle when he died in 1959, my aunt and father signed over their share.
FDR prolonged the depression and Obama is trying to replicate what he did.
The more people on the dole the more votes they get long term. So they stretch the misery out for as long as they can.
The country’s greatest growth occurred during the Lochner Era. We need to return to that.
Great video. Thanks!
Simply amazing that you would quote Wikipedia in a defense of the communist Wilson. Harding did the unthinkableand reduced government spending rather than increase it as Lord Keynes's precursors were encouraging.
Your history is revisionistic.
So we’ve got three years left of the Obama Depression.
And your reading skills are deficient. I was not defending Wilson or Harding with the quote - I was pointing out to the OP that the “history” related in the original post was incorrect since Wilson was still in office when the post-war recession began. Go back, get the context right (a basic reading skill, BTW.)
As to your extract from the Wiki article, the quote supports the point that Harding continued the laissez-faire approach that came from Wilson’s debilitating stroke. As you note, Harding took it the step further of scaling back government expenditures to match the reduced resources. My posting of the final paragraph from Wiki was to be complete in making that extract, even though I most certainly oppose any thoughts from the risible Krugman. There are always going to be two sides to these types of policy discussions. Assuming I support a particular position when I post info from both perspectives is an unmerited leap of logic on your part, IMO.
Further, the OP was posting a link to a source that is also cited in the Wiki article so I thought that would have value for the OP when considering my post.
I heard about it, my father lost a business in it and didn’t start another one until 1936.
Stick wikipedia up your backside!
When will your next edition of “Winning Friends and Influencing People” be published, Mr. Carnegie? Your skills at logic and rhetoric are just flabbergasting...
New chapter heading perhaps???