Now what is truly amazing is the response or should I say non-response of President Warren Harding's Administration. Lessons that could be learned in the current economic crisis environment.
But given we have a President who for all intents and purposes is a Marxist, along with like minded people in his Administration, the response needed is not the one that will solve the formidable problems we have.
In any event read on, it is very interesting and a little technical but you will get the gist of it.
Likewise uncanny is how Harding's reputation as a bad president has been so embellished over the years. It would appear from these facts that he was actually one of the better presidents in the first half of the 20th century.
Instinctively, America understood it as well. There's a reason his passing was genuinely mourned by Americans while that of his progressive predecessor, which happened at about the same time, was barely noted.
Instead of "fiscal stimulus," Harding cut the government's budget nearly in half between 1920 and 1922. The rest of Harding's approach was equally laissez-faire. Tax rates were slashed for all income groups. The national debt was reduced by one-third.
The Federal Reserve's activity, moreover, was hardly noticeable. As one economic historian puts it, "Despite the severity of the contraction, the Fed did not move to use its powers to turn the money supply around and fight the contraction."[2] By the late summer of 1921, signs of recovery were already visible. The following year, unemployment was back down to 6.7 percent and it was only 2.4 percent by 1923.
[snip]
The United States, by contrast, allowed its economy to readjust. "In 1920–21," writes Anderson,
we took our losses, we readjusted our financial structure, we endured our depression, and in August 1921 we started up again.… The rally in business production and employment that started in August 1921 was soundly based on a drastic cleaning up of credit weakness, a drastic reduction in the costs of production, and on the free play of private enterprise. It was not based on governmental policy designed to make business good.
The federal government did not do what Keynesian economists ever since have urged it to do: run unbalanced budgets and prime the pump through increased expenditures. Rather, there prevailed the old-fashioned view that government should keep taxation and spending low and reduce the public debt.[4]
This article is an good and important overview of essential economic truth! It really should be read in its entirety. Then we who have educated ourselves need to be out there getting that knowledge into the public debate wherever possible.
Our ManChild president is completely ignorant of even the basic principles of economics. We are at a very dangerous crossroads in our nation's history.
As someone who graduated with a minor in economics and studies it constantly I was amazed that I had never heard of the Depression of 1920 as it is termed in the above article. I was certainly aware that the country had a downturn in the aftermath of World War I ,but not to the extent I read in this article.
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Great article. Bump bump bump. I had a similar sense of amazement the other day. Someone was criticizing Glenn Beck for having used the term “McCarthy” in a negative way . . . that Beck did not know the positives about McCarthy . . . and then Beck did learn some of them and even had someone on his show defending or talking about McCarthy’s positives. Anyway, I had the realization that the left has hidden so much of our true history from us with their control of academia and the media that we are all on a journey of discovery with the internet of our true history. None of us can have correctly identified all of the web of lies told by the left. We have been propagandized more effectively than the Soviet citizens in the days of Pravda . . . by far. I think the Soviet slaves at least knew it was almost all a bunch of lies.
Today is the first time I ever remember reading about Harding’s response to the “depression” of 1920. I majored in econ at a prominent university and specifically took a couple courses on monetary policy.
I would say it was more of a response than a non-response. More specifically, he did the right thing.
Modern politicians at the federal level would prefer a bad economy to a good one. It means more power for them and most get reelected, regardless. This has been going on for decades and bad economic policy has been institutionalized as being good and vice versa.
They deliberately avoid that which made our country stronger, or present it through “revisionist” history which guilts students from ever pursuing such “destructive,” “oppressive,” or “selfish” paths again.
I’d venture to say that it is probably not your degree that has the most bearing on your knowledge of history and your perspective, but the era during which your textbooks were written.
My degree was in English/Education (certified to teach English K-12). The education part of the curriculum was largely a waste and could have been covered in the three well structured courses.
But the benefit of my educational studies is that I got interested in pedagogy and textbooks.
I have a library of app. 4000 volumes. Part of what I collect and study are old textbooks, history and literature and philosophy books that were used in colleges. They range from the 19th through the mid 20th century.
To read a series of books (say, US history) written one decade after another is a study in how “revisionism” came-to-be.
Ginn was one of the major publishers of high school and college textbooks (and still are, I believe). They started out all right, but soon got swept up in Progressivism. And their textbooks reflect this. The change in how they present history, hide history, and change history is alarming.
For a good analysis of how textbooks manipulate, try E. Merril Root’s “Brainwashing in the High Schools” or “Collectivism on the Campus.”
http://en.wikipedia.org/wiki/Wall_Street_bombing
Or did you know that?
This event has gone down the memory hole, IMO, because the truth most times is hard and unpleasant...note Harding's statement: "We will attempt intelligent and courageous deflation". People in debt hate that solution. And today that includes most of us.
Or consider how Sec of Treasury Mellon's stern solution would be recieved today in our feel good, life is a bowl of cherries culture:
“Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate.” He insisted that, when the people get an inflation brainstorm, the only way to get it out of their blood is to let it collapse. He held that even a panic was not altogether a bad thing. He said: “It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people”
Imagine the wailing and crying if someone today said that...but, in truth, that is what is coming, like it or not.
This article’s a keeper. Thanks for posting.
Look, you just mentioned this yesterday! I hadn’t even looked in the library catalog yet ;-).
I actually knew about this but had mostly forgotten it. It is swept under the rug by Democratic and Republican officeholders. Republicans run as far from Harding as they can, for they are uninformed too.
Great article.