Wars and ConflictsΒ permalink
Wall street crash?
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Message 1.Β
Posted by i_love_pudsey (U14230157) on Sunday, 22nd November 2009
How did America recover from the wall street crash?
How did these actions affect Germany's buisnesses, and therefore why people turned to the Nazi's for help?
what's your opinion -
Message 2
Posted by shivfan (U2435266) on Monday, 23rd November 2009
I'm not an expert on this period of history, but I am a little confused by your questions....
Are you focussing on America's recovery, or the rise of the Nazis in Germany?
This is my broad understanding in a nutshell....
1) Germany's economy was in a shambles ever since the end of WWI. The Versailles treaty didn't help matters, with the huge repayment burden put on the German nation. the country was in an economic quagmire long before the 1929 Wall Street crash.
2) The president at the time of the Crash - was it Hoover or Coolridge? - seemed to have allowed events to overwhelm him. FDR came along and implemented the New Deal. It is debatable about whether it was a success or not, but it certainly lifted the spirits of Americans, and made them feel much better about the economy, and gave them hope. It can also be argued that WWII actually helped the Americans, who stayed neutral for the first half of it, and they made a lot of money from the war, thanks to the lease-lend policy that they pursued, while the European nations continued to ravage each other. -
Message 3
Posted by cmedog47 (U3614178) on Tuesday, 24th November 2009
The war.
The low point of the depression came years after Roosevelt's election--he only made things worse. By the time the war started, congress was starting to stand up to him and kill some of his radical proposals. The people still voted for him--but the opposition party was in shambles, he had no stong opponent from the right.
Even more than the war, it was the aftermath of the war that really brought the stock market back. Full recovery wasn't for more than 20 years after the crash, and was due to the US being the only intact major industrial nation at war's end and having assess to more of the world's markets. Even so, it wasn't until John Kennedy got congress to drop tax rates from their confiscatory Rooseveltian levels that capitalism really got going again. -
Message 4
Posted by suvorovetz (U12273591) on Wednesday, 25th November 2009
To add to what Kurt has quite eloquently put here, FDR had quite an involvement in the mentioned here hyper inflation ripping Germany in the 20s. He directly participated in speculation of German assets at the time, as Anthony Sutton described in his well researched book Wall Street and FDR.
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Message 5
Posted by nastychestycough (U13796779) on Saturday, 28th November 2009
Couldn't the American War effort in fact have been Keynesian economics in action before the fact? Massive public works programmes(Armaments)and employment mobilisation( Military recruitment).
Incidentally I don't feel Roosevelts New Deal, described by one poster as radical, was necessarily failure. -
Message 6
Posted by suvorovetz (U12273591) on Saturday, 28th November 2009
Massive public works programmes(Armaments)and employment mobilisation( Military recruitment)Β Interesting thought. But the fact is that, at the start of the war in 1939, the US Army had a park of whopping less than 400 crappy M-series tanks, compared to thousands of Wehrmacht and well over ten thousand and counting Red Army tanks at the time. So, at that time the war program did not seem to be part of the economic recovery package.
Incidentally I don't feel Roosevelts New Deal, described by one poster as radical, was necessarily failure.Β It was not a failure, if the stealth goal had been to create a welfare state - which seems interely plausible from where I stand. But it was a failure in regard to its stated goal of economic recovery. Roosevelt's treasury secretary, Henry Morgenthau, reported to have said in 1939, "We are spending more money than we have ever spent before, and it does not work. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. I say after eight years of this administration, we have just as much unemployment as when we started and an enormous debt, to boot." -
Message 7
Posted by Mutatis_Mutandis (U8620894) on Saturday, 28th November 2009
FDR's New Deal will forever remain controversial, as a substantial part of the American right have never ceased to oppose this president, despite the fact that he is long dead and that even during his lifetime he tried to reach out during the other party.
Far from being the relentless economic interventionist of some people's dreams (and other people's nightmares), FDR was still a child of the "laissez faire" era. He was not a Keynesian and certainly no socialist. New Deal economists still expected the economy to pick up itself. Therefore New Deal legislation only aimed to mitigate the impact of the Crash and prevent a repetition of it. The first by talking measures to fight impoverishment and give workers a larger stake in the economy, and the second by allocating blame and creating a new legal framework to prevent a repeat of the crash. (Nil novi sub sole.) They were not trying the spend their way out of the crisis.
The exceptions were made not in the industry, but in America's rural backyard, where big government investments were made -- most famously by the Tennessee Valley Authority. These government-funded programmes aimed to stop the alarming desertification of the farmland and improve the economic conditions for the farmers. This could be seen as an attempt to save the "traditional" American way of life as much as anything else. (In reality most Americans are city-dwellers who live among skyscrapers, but they are sentimentally attached to a self-image of being simple farmers.)
Yes, it could be argued that it was finally the pre-war and wartime boost, with a massive injection of government (deficit) spending into the economy, that lifted the USA out of the crisis. (Despite Morgenthau's criticism of it.) However, high wartime spending on armaments has its own risks, and in 1945 the USA was confronted with a painful transition to a peacetime economy and more normal levels of government spending. If the economic framework had not been strong enough to bear the stress, the end result might have been another depression.
Probably the most significant long-term effect of the New Deal was that over the long run, its social legislation gave the working classes more power and therefore more money. Thus it helped to create, no doubt unintentionally, the consumerist economy. The US consumer still is -- despite the emergence of China and other BRICs -- the big driver of the global economic cycle; when Joe Sixpack spends less money on Christmas presents, the effects are felt all over the world. -
Message 8
Posted by suvorovetz (U12273591) on Saturday, 28th November 2009
Far from being the relentless economic interventionist of some people's dreams (and other people's nightmares), FDR was still a child of the "laissez faire" era. He was not a Keynesian and certainly no socialist.Β It is beyond me how anybody can claim that NRA had anything to do with "laissez faire," for example. The Supreme Court certainly did not think so, when it unanimously ruled that NRA is utterly incompatible with free enterprise. What did FDR do? It went after the Supreme Court justices. So much for the "laissez faire," not to mention the Constitution.
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Message 9
Posted by Mutatis_Mutandis (U8620894) on Saturday, 28th November 2009
The Supreme Court certainly did not think so, when it unanimously ruled that NRA is utterly incompatible with free enterprise.Β
That seems a very free interpretation of the Supreme Court's ruling. The SC is concerned with the Constitution, not with economic theory, whatever the justices may have felt privately about the New Deal.
The Court ruled against NIRA because it considered that the act violated the principle separation of powers, as by passing it the legislative branch had essentially authorized the executive branch to create law. That was a very sensible objection -- although perhaps not one of which modern presidents like to be reminded, any more than FDR.
The court is also felt that with NIRA, the federal institutions trespassed on areas of economic policy that rightly belonged to the states, which is more contentious because this is an eternally shifting borderline. But that is not an argument against government regulation, but a statement of which government might do the regulation. -
Message 10
Posted by Mutatis_Mutandis (U8620894) on Saturday, 28th November 2009
But the fact is that, at the start of the war in 1939, the US Army had a park of whopping less than 400 crappy M-series tanks, compared to thousands of Wehrmacht and well over ten thousand and counting Red Army tanks at the time. So, at that time the war program did not seem to be part of the economic recovery package.Β
The isolationist USA of the 1930s had little interest in tanks because it did not want to send an army abroad. Some money did go to armaments, but for sensible political and strategic reasons -- and perhaps because FDR was a former Secretary of the Navy and continued to love it all his life -- it was spent on the fleet, not the army. -
Message 11
Posted by Frank Parker (U7843825) on Sunday, 29th November 2009
in 1945 the USA was confronted with a painful transition to a peacetime economy and more normal levels of government spending.Β
MM - didn't the cold war with its accompanying arms race and then the space race compensate by ensuring the continuation of significant government spending?
There are even those today who take the view that the "war on terror" with the activity in Iraq and Afghanistan is a modern continuation of the government's policy of sustaining a large "military industrial complex" as Eisenhour once described it. -
Message 12
Posted by suvorovetz (U12273591) on Sunday, 29th November 2009
The SC is concerned with the Constitution, not with economic theory, whatever the justices may have felt privately about the New DealΒ The Constitution's purpose is to preserve the people's liberty, which is inevitably linked to the preservation of private property rights and free enterprise. The NIRA was ruled unconstitutional based on Schechter v. U.S case, whereas NIRA fixed the maximum number of hours a poultry employee could work, imposed a minimum wage for poultry employees, and banned certain methods of "unfair competition" based on the alleged effect of a butcher's hours and wage practices on interstate commerce. So, the Supreme Court ruled that the government abused the Commerce Clause to interfere with the market, not the other way around. In the words of Bastiat, "...when [the law] has exceeded its proper functions...it has acted in direct opposition to its own purpose...It has been applied to annihilating the justice that it was supposed to maintain; to limiting and destroying rights which its real purpose was to respect. The law has placed the collective force at the disposal of the unscrupulous who wish, without risk, to exploit the person, liberty and property of others. It has converted plunder into a right, in order to protect plunder. And it has converted lawful defense into a crime, in order to punish lawful defense."
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Message 13
Posted by Frank Parker (U7843825) on Sunday, 29th November 2009
Suv, far from preserving "the people's liberty, which is inevitably linked to the preservation of private property rights and free enterprise", this judgement seems to be favouring one group of people's liberty (the farmer and the butcher) over that of another (the workers). True justice demands that all citizens have equal rights and freedoms except where one person's rights impinge on another's freedom. Thus the farmer's right to determine the hours and rates of pay of his employees inevitably restricts the freedom of those employees enjoy the fruits of their labour. And the butcher's trade practices in one state denies freedom to butchers elsewhere to obtain a fair price for their produce. What the SC upheld here, it seems to me, is a brutally destructive form of anarchy.
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Message 14
Posted by suvorovetz (U12273591) on Sunday, 29th November 2009
True justice demands that all citizens have equal rights and freedoms except where one person's rights impinge on another's freedom. Thus the farmer's right to determine the hours and rates of pay of his employees inevitably restricts the freedom of those employees enjoy the fruits of their labour.Β Market preserves the liberty of all its participants. Government encroaches on these liberties when interfering with the market. What you're preaching is statism, Marxism being one of its forms. I know that the word Marxism does not make you cringe - like it makes me cringe, - but that is because you either do not understand the quote from Bastiat I cited above, or you don't want to understand it.
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Message 15
Posted by Mutatis_Mutandis (U8620894) on Sunday, 29th November 2009
didn't the cold war with its accompanying arms race and then the space race compensate by ensuring the continuation of significant government spending?Β
Significant, yes. At the levels of World War II, not at all. US military spending in 1944 ran at 37% of GDP. It fell ten-fold to 3.5% in 1948 and only ever exceeded 10% again in the 1950s.
Wartime spending patterns are different because fighting wars consumes so much materiel, and changes in technology in the last war years at first add to the effect instead of mitigating it. For example, at the end of World War II the US cancelled orders for tens of thousands of fighter aircraft. They had not only become unneeded, but also obsolete at a stroke. With minor exceptions, the air force already had every piston-engined fighter it would ever need, and new orders would be for jet aircraft, and in small numbers. The same was true in many other areas; there was no point in continuing to produce wartime products and the military could easily live on its existing stocks until it could buy new designs.
The same had happened after WWI. The stock of Liberty V12 engines build during that conflict lasted for decades -- I think it still hasn't run out -- and was a handicap to manufacturers of new engines until the exasperated authorities banned their further use.
There are even those today who take the view that the "war on terror" with the activity in Iraq and Afghanistan is a modern continuation of the government's policy of sustaining a large "military industrial complex" as Eisenhour once described it.Β
Eisenhower was wary of it for good reasons, having seen the effects at first hand -- often of greater benefit to the industry than to soldiers. And there is ample truth in the old American joke that the ideal military project is one with a contractor in every congressional district.
That said, it does make economic sense for a big customer, such as a military force, to use its spending power to adjust the market to its own needs. If you have two suppliers, it eventually pays off to spread your orders so you keep both of them in business, even if that costs some money on the short term. Allowing an effective monopoly to come into being would be more expensive on the long term.
As for the war on terror: I think that is more complicated. In my opinion the problem has been that the spending priorities of the "military-industrial complex" were at odds with the actual needs of fighting in Iraq and Afghanistan. The industry needed mainly big projects, such as missile systems, warships, tanks, and combat aircraft. The war required an investment in manpower, personal equipment for foot soldiers, small-unit mobility, and intelligence gathering capability. The momentum of the existing projects (and no doubt the activities of the industry lobby in Congress) has been such that only recently the necessary shift in spending priorities has started to happen. There will always be both winners and losers, but overall I don't think the "traditional" arms industry gained anything from this conflict. -
Message 16
Posted by hotmousemat (U2388917) on Monday, 30th November 2009
suvorovetz
Market preserves the liberty of all its participants. Government encroaches on these liberties when interfering with the market.Β
But the market does not self-perpetuate: if left to themselves markets end in monopolies (or at least cartels), which are not good for anyone except the monopolists.
The US system was well aware of this and took lots of measures to break up 'trusts'. But the downside of preventing domination by a few big players was to have a lot of weak ones, which in the case of banks proved to be disasterous in the depression.
It is a dilemma that is still being played out today. Except that now big companies are multi-national and cannot be controlled by any one governement and are thus getting the upper hand. -
Message 17
Posted by suvorovetz (U12273591) on Monday, 30th November 2009
But the market does not self-perpetuate: if left to themselves markets end in monopolies (or at least cartels), which are not good for anyone except the monopolists.Β Funny that you mentioned this. I will quote excerpts from Anthony Sutton's Wall Strett and FDR (Chapter called The Oppression of Small Business):
"The proponents of the National Industrial Recovery Act made a great show that NRA would protect the small businessman who, it was alleged, had suffered in the past from unfair application of the anti-trust laws; the suspension of the anti-trust laws would remove their more unwelcome features, while NRA would preserve their welcome anti-monopoly provisions...
When we examine the results of the NIRA, even a few short months after passage of the bill, we find that...President Roosevelt had abandoned the small businessman of the United States to the control of Wall Street. Many industries were dominated by a few major firms, in turn under control of Wall Street investment houses. The major firms were dominant....through establishing the NRA codes. They had the most votes and could and did set prices and conditions ruinous to smaller firms." Sutton then goes on to provide plenty of back-up stats that I won't bother you here with, unless I'm asked. Here's the conclusion of this chapter:
"To sum up, we can trace the Roosevelt National Recovery Administration from planning on Wall Street to implementation by prominent financiers and industrialists with the obvious result: oppression of small business in a manner reminiscent of the Rockefeller-Morgan activities of the late 19th century.β -
Message 18
Posted by Frank Parker (U7843825) on Monday, 30th November 2009
Suv (message 15)
Can yoiu not see a middle road? One that permits markets to operate but provides a degree of regulation to ensure fair competition and protection of workers and consumers. The recent experience in financial markets surely shows the consequence of "light touch" regulation, let alone zero regulation.
As for maximum hours of work - surely even the USA has rules about the permitted hours of people in jobs involving the control of complex machinery where lives may put at risk by fatigued operators (I'm thinking airline pilots and truck drivers for example). -
Message 19
Posted by Frank Parker (U7843825) on Monday, 30th November 2009
Suv (btw my message 18 related to your 14, not MM's 15!) re message 17.
It would appear from what you are quoting that a policy derided by it's opponents as "socialist" actually benefitted the capitalists! And people say the USA doesn't "do" irony! -
Message 20
Posted by suvorovetz (U12273591) on Monday, 30th November 2009
Plotinlaois It would appear from what you are quoting that a policy derided by it's opponents as "socialist" actually benefitted the capitalists! And people say the USA doesn't "do" irony!Β I'm afraid, the irony is on you, so to speak. Let me quote a few more excerpts from Sutton's book (Chapter The Corporate Socialists Argue Their Case):
"One can trace a literary path by which prominent financiers have pushed for national planning and control for their own benefit and that ultimately evolved into the Roosevelt New Deal...These extracts reflect the basic outlook of our Wall Street financier philosophers. These were not minor figures on the Street. On the contrary, they were the powerful and influential elements and in significant cases associated with Roosevelt and the New Deal. Otto Kahn was a prime mover in the Federal Reserve System. Lamont and Perkins were key figures in the banking and insurance fields. Businessman Brookings gave his name and money to the influential research institute that produced the reports upon which much policy came to be based. Louise Kirstein, a vice president of Filene's firm, and Walter Teagle of Standard Oil became two of the three dominant men who ran the National Recovery Administration under Bernard Baruch's protΓ©gΓ© Hugh Johnson. Bernard Baruch was probably the most prestigious Wall Streeter of all time, perhaps even exceeding in influence both Morgan and Rockefeller...What was the philosophy of the financiers so far described? Certainly anything but laiisez-faire competition, which was the last system they envisaged. Socialism, communism, fascism or their variants were acceptable. The ideal for these financiers was "cooperation", forced if necessary. Individualism was out, and competition was immoral. On the other hand, cooperation was consistently advocated as moral and worthy, and nowhere is compulsion rejected as immoral. Why? Because, when the verbiage is stripped away from the high-sounding phrases, compulsory cooperation was their golden road to a legal monopoly. Under the guise of public service, social objectives, and assorted do-goodism it is fundamentally "Let society go to work for [us]." -
Message 21
Posted by suvorovetz (U12273591) on Monday, 30th November 2009
Also The recent experience in financial markets surely shows the consequence of "light touch" regulation, let alone zero regulation.Β I don't know about "surely shows." I'd generously say, it's highly debatable. Peter Schweizer, for example, is pretty sure that it is the other way around as he shows in his book "Architects of Ruin."
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