History Lessons That Resonate

The most dangerous man to any government is the man who is able to think things out for himself, without regard to the prevailing superstitions and taboos. H.L. Mencken

A recently explored source provides fact and moral from the 1930s.

A superb volume of historical source material called The Great Depression, Opposing Viewpoints is an anthology of speeches and essays from the period of the Great Depression. They were written by those actually involved in making policy or by major commentators.

The book contains pro and con contemporaneous writings by Rex Tugwell (a Roosevelt senior adviser and member of the laughably titled Brain Trust) opposed by H.L. Mencken, the great pro-freedom editorialist of the period. There are entries from Henry Wallace, Secy of Agriculture from 1933-1941 and therefore one of the chief villains of the period, as well as Huey Long on the 'virtue' of redistributing wealth. There are many others, equally well known then.

The following will give you a flavor of the content...


From Mencken's essay Notes on the New Deal:

The turning over to the President, by a subservient Congress, of the powers which, under the Constitution, could only be exercised properly by Congress, upon the plea of the President that the emergency made it necessary, is of such vital importance to the nation that the voters must pass on it.

Written as if it were only two months ago, I for one don't remember voting on HR1424, the Paulson bailout bill which the President urged on the country.

Mencken continues: "...who could have foreseen what use would be made of the powers given in the National Industrial Recovery Act?" This echoes the laments now being made about the lack of oversight provided in the hastily-passed bill.

Henry Wallace took a very different view of the New Deal, arguing it would help farmers. He said of one major component, the Agricultural Adjustment Act (passed by Congress in May 1933, two months after FDR took office): "This act provides for controlled production. Without that, no price-lifting effort can possibly work." About that, Wallace was most decidedly correct.

The aim of the AAA was to reduce production, in order to maintain or increase prices for agricultural products, such as cotton, wheat, and hogs. The method was to legally force reductions in cultivated land and animal output.

What was the result?

Farmers learned to produce more product on less land, valuable efficiency but at a terrible cost. And, in response for their heroic efforts, new legislation was passed in order to control them more directly.

In addition, millions of pigs were slaughtered and given to the unemployed. Or, in less polite language, one group of men were robbed in order to feed others who were hungry, made hungry in part by legislation like the AAA.

Quoting Wallace's Declaration of Interdependence, a speech broadcast May 13, 1933, (the title alone enough to send a chill up the spine)

In adjusting our production of basic foods and fabrics, our first need is to plant and send to market less wheat, less cotton, less corn, fewer hogs, and less of other basic crops whereof already we have towering surpluses, with no immediate prospect of clearance beyond the sea. [emphasis added]

Setting aside the paradox of millions of hungry people in the middle of "towering surpluses," let's ask ourselves why there was "no immediate clearance beyond the sea"? Might that not have something to do with the passage of the Smoot-Hawley Act, enacted in 1930 under Hoover's administration, that raised the price on over 20,000 traded products at least 50%?

The result?

Imports fell from $4.4 billion in 1929 to to $1.5 billion in 1933, a drop of 2/3 (the GDP fell by 50% during the same period). Exports fell from $5.4 billion to $2.1 billion.

The AAA didn't just control agricultural prices and quantity, either. In the words of Henry Wallace, "Second, is an accompanying authorization to refinance and readjust farm mortgage payments."

One has to wonder just how close the parallels have to be in order to wake up those in Washington. They can't claim ignorance of history, either. Several reports have outlined that Obama has been studying the period of the FDR administration. Progressive Paul Krugman of the New York Times has been pushing the idea that the New Deal was fine, except it didn't go far enough.

As if those parallels aren't spooky enough, we can read the words of Huey Long, then-Senator from Louisiana:

The theory of the Share Our Wealth Society is to have enough for all, but not to have one with so much that less than enough remains for the balance of the people.

We can move on without extensive comment on the view that this regards the economy as a static pie (created how and by whom?) to be carved up by the beneficent hand of government for all those millions of hungry stomachs. We simply note here Obama's casual "I think when you spread the wealth around, it's good for everybody."

Among the gems that formed part of Long's program were these:

1. Every family to be furnished by the Government a homestead allowance, free of debt, of not less than one-third the average family wealth of the country, which means, at the lowest, that every family shall have th reasonable comforts of life [to be provided by whom?]... No person to have a fortune of more than 100-300 times the average family fortune... [to be restricted how?]

2. The yearly income of every family shall not be less than one-third of the average family income... [this miracle to be created how?]

The questions in brackets are answerable either by realism or fantasy. In real terms, only robbing the ever-defined-down rich to give to the ever-defined-up poor can offer even a hope of achieving such goals. The fantasy consists of believing that the pie won't continue to shrink while the fantasy is pursued.

Similar fantasies are being considered or pursued today. There are still ongoing discussions in Congress about relieving struggling homeowners of mortgage debt; Paulson has recently given billions to bailout consumer credit debt, etc. All the while, they're worried about a few overpaid dunderheads who managed to con a Board of Directors into overpaying them.

I leave you today with a pair of quotes from David Lawrence's Beyond the New Deal, written in 1934.

"I wonder how many people begrudge Henry Ford his success. Not many. He rose from a mechanic's bench to be the head of a billion dollar industry. He did not float public loans or stock issues. He steered clear of Wall Street. He did not exploit labor — he paid higher wages than his competitors. He made transportation at a price that came with the reach of the average man. He opened up by his low-priced automobile a vast inland territory."

and

"Confiscation of wealth may satisfy the vengeful in us... but it is the path of national suicide."

The lessons of history are alternately enlightening or irritating, or both. But they're always there, inescapable.