I just finished reading a Anxious Decades, America in Prosperity and Depression by Michael Parish. I found this to be a balanced and interesting perspective on the 20's and 30's. I thought it would be useful to share some observations with the community because we can learn much about where we are headed by what happened then. I will present this in the form of two diaries. The first compares the current administration to the three that preceded the Great Depression, the Harding, Coolidge and Hoover administrations. For those in a hurry, the punch line is that, Bush in my opinion takes the worst of each of these presidents. Note the similarities from observations from the book. These are my own syntheses, relying heavily on what Parish wrote, and are summaries, not exact quotes.
Similarities between Harding and Bush
- Both were idiots. Plain and simple. It was clear Harding often did not understand the policies that he was advocating. Harding said really stupid and confused things in public and his handlers limited his exposure. During his election run, Harding was hazily defined on issues. Senator Boise Penrose said during the 1920 campaign. "Keep Warren at home. Don't let him make any speeches. If he goes out on a tour, somebody's sure to ask him questions, and Warren's just the sort of damn fool to try to answer them." This has a striking similarity to our boy George in 2000.
- Both always try to fit in and be the swell guy in person.
- Harding's administration was corrupt. Six administration members had to resign, two in the cabinet. Most of the scandals were for tit for tat deals much like what is coming out about Delay. For example, Attorney General Harry Daugherty conspired with Thomas W. Miller to uphold the dubious claims of a German Banking family to recover $7 billion confiscated during WW I. Miller received $50,000 and Daugherty $224,000. And the teapot dome scandal in which, Secretary of the Interior, Albert Fall, made a deal with two companies, Pan American Petroleum Company and Continental Trading Company, in the oil business that both received lucrative leases in Elk Hill, CA and Teapot Dome, WY. For his trouble, Fall was given $100,000 cash and $200,000 in Liberty bonds. These have a striking resemblance to Bush administration antics today.
Differences between Harding and Bush
- Harding never wrote a significant piece of legislation. In contrast, Bush gets awful crap pushed through Congress.
- Harding actually appeared to be honest, and was just surrounded by pirates. Bush, on other hand, is just as immoral and corrupt and those that run his administration.
- Harding appeared to be well liked, but it is difficult to tell given that polls were not done with any frequency.
Other interesting notes
During Harding's time, Andrew Mellon cut taxes and came up with the trickle down theory, the progenitor of supply side economics, it worked then about as well as today. The maximum progressive tax on income went from 65% to 33% during the 1920's (sound familiar?)
Calvin Coolidge
When Harding died of a heart attack, Calvin Coolidge took over. Coolidge attacked unions, and did away with regulations on business. He named people sympathetic to business interests to regulator commissions, for example William E. Humphrey, a former attorney for the lumber industry to the FTC. Coolidge also pushed through 3 tax cuts that became a windfall for the rich, with some rich people paying no income tax at all. Low interest rates helped people borrow money and drove the economy. Many prospered
However, there were many who did not come out well. There was a large divide between the rich and the poor, to levels not seen until 2000-2005. Especially farmers had trouble due to higher productivity from using tractors, resulting in an oversupply of food. This drove down prices. Many people were just scraping by before the depression started.
Herbert Hoover
And then there is Hoover. There really were not that many similarities. Hoover was honest, a Quaker, and smart. He was a successful businessman who built a fortune, rising from poverty. However, there were some interesting personality paralells. Note what Parish says about Hoover...
Hoover remained convinced of his own rectitude and usually treated most professional politicians in both parties with contempt. This proved to be a near fatal flaw at a time when the economic crisis required maximum cooperation between president and Congress. Although a trained engineer and businessman, accustomed to looking facts squarely in the eye. Hoover finally shrank from the grim reality of the Depression. He retreated near the end into a fantasy world, where soothing words were used to paper over the accumulating evidence of a disaster. When his policies of self help and voluntary cooperation failed again and again, he stubbornly refused to change course. His words began to depreciate as rapidly as the assets of rural banks, and he lost the most precious and elusive political capital in a democracy: trust and credibility.
This fits Bush to a tee. If a financial crisis hits while Bush is in office, expect the same kind of misery. So in the preceding decade before the depression began, Bush has many of the worst traits and policies of the presidents at the time. Not a good sign. In my next diary I will summarize some of the financial goings on and how I think this hints at the storm clouds that may be brewing this time. As a teaser, the adage, "those that do not know their history are doomed to repeat it," applies.