Depressions: 1920s v. 1930s

As Ludwig von Mises correctly noted, in the absence of government intervention, unemployment is always voluntary. Yet, over ten million Americans were unemployed in 1938.   Compare that to the eight million in 1931 and 969,069 in 1923.

Depression of January, 1920 - July, 1921

Fact:  Real GNP fell every year from 1919 to 1921 with a total fall of 16% over that three-year period.

Fact:  GNP declined 6.9%.

Fact:  18% deflation.

Fact:  Wholesale prices fell by 36.8% (the worst since the Revolutionary War and worse than any year during the Great Depression).

Fact:  Unemployment spiked to 11.7%.

Fact:  The stock market fell by 47%.

Fact:  Business bankruptcies tripled.

Fact:  Business profits fell by 75%.

Fact:  Automobile production declined by 60%.

Fact: Total industrial production declined by 30%.

Fact:  HARDING AND COOLIDGE CUT TAXES (Revenue Acts of 1921, 1924, and 1926)

Fact:  The combined top marginal normal and surtax rate fell from 73% to 58% in 1922, and then to 50% in 1923 (income over $200,000).

Fact:   In 1924, the top tax rate fell to 46% (income over $500,000).

Fact:  The top rate was just 25% (income over $100,000) from 1925 to 1928, and then fell to 24% in 1929.

Fact:  The GNP averaged 7% from 1924 to 1929.

Fact:  Between 1922 and 1929, real GNP grew at an annualised rate of 4.7% and the unemployment rate fell from 6.7% to 3.2%.

Fact: Between 1922 and 1928, the average income for those earning more than $100,000 increased by 15%, but the number of “rich” quadrupled.

Fact: In the same period, the number of taxpayers earning between $10,000 and $100,000 increased by a staggering 84% and the number of taxpayers reporting income of less than $10,000.

Fact:  By 1923, unemployment was 2.4%.

The Great Depression

Fact:   Hoover expanded civil service coverage of Federal positions.

Fact:  Hoover canceled private oil leases on government lands.

Fact:  Hoover instructed the Justice Department and the IRS to pursue gangsters for tax evasion.

Fact:  Hoover set aside 3 million acres of national parks and 2.3 million acres (9,000 km²) of national forests.

Fact:  Hoover advocated tax reduction for low-income Americans.

Fact:  Hoover closed certain tax loopholes for the wealthy.

Fact:  Hoover doubled the number of veterans' hospital facilities.

Fact:  Hoover wrote a Children's Charter that advocated protection of every child regardless of race or gender.

Fact:  Hoover created an antitrust division in the Justice Department.

Fact:  Hoover required air mail carriers to adopt stricter safety measures and improve service.

Fact:  Hoover proposed federal loans for urban slum clearances (not enacted).

Fact:  Hoover organised the Federal Bureau of Prisons

Fact:  Hoover reorganised the Bureau of Indian Affairs

Fact:  Hoover instituted prison reform

Fact:  Hoover proposed a federal Department of Education (not enacted)

Fact:  Hoover advocated $50 per month pensions for Americans over 65 (not enacted)

Fact:  Hoover chaired White House conferences on child health, protection, homebuilding and home-ownership

Fact:  Hoover began construction of the Boulder Dam (later renamed Hoover Dam)

Fact:  Hoover signed the Norris – La Guardia Act that limited judicial intervention in labour disputes.

Fact:  Hoover raised the tax rate on the "evil rich" from 25% to 63% while arguing for decreases in rates for the lower incomes. See the Revenue Act of 1932 and his speeches on progressive taxation.

Fact:  Hoover increased federal spending by 52 per cent from 1929 to 1933. Adjust to reflect deflation, and the Hoover figure is a disconcerting 88 per cent.

Fact:  Hoover massively increased infrastructure programmes.

Fact:. Hoover recognised measures such as Federal and state and local public works, work-sharing, maintaining wage rates ("a large majority has maintained wages at high levels" as before), curtailment of immigration, and the National Credit Corporation and urged more drastic action.

Fact: Hoover established a Reconstruction Finance Corporation, which would use Treasury funds to lend to banks, industries, agricultural credit agencies, and local governments.

Fact:  Hoover broadened the eligibility requirement for discounting at the Fed.

Fact: Hoover created a Home Loan Bank discount system to revive construction and employment measures, which had been warmly endorsed by a National Housing Conference recently convened by Hoover for that purpose.

Fact: Hoover expanded government aid to Federal Land Banks.

Fact:  Hoover set up a Public Works Administration to coordinate and expand Federal public works.

Fact: Hoover issued an order restricting immigration to increase employment for citizens.

Fact:  Hoover made it a priority to weaken the "destructive competition" (i.e., competition) in natural resource use.

Fact:  Hoover granted direct loans of $300 million to States for relief.

Fact:  Hoover worked to reform the bankruptcy laws (i.e., weaken protection for the creditor).

Fact:  Hoover also displayed anxiety to "protect railroads from unregulated competition," and to bolster the bankrupt railroad lines.
 
Fact:  In addition, Hoover called for sharing-the-work programmes to save several millions from unemployment.

Fact: In 1931, Hoover instituted a massive increase in government spending that included direct relief programmes and public works projects in order to provide jobs and security for the growing population of unemployed workers.

Fact:  Hoover supported the initiation of a national sales tax, a measure that failed in Congress.

Fact:  Hoover encouraged Congress to pass a farm act (the Agricultural Marketing Act), which would help farmers to increase efficiency in selling their goods and grant them loans.

  
Fact: To give farmers some added protection from foreign competition, Hoover also supported raising the agricultural tariffs, though his poor political acumen was not able to convince Congress of his plan, and his tariff ideas failed in Congress.

Fact: To give farmers some added protection from foreign competition, Hoover also supported raising the agricultural tariffs, though his poor political acumen was not able to convince congress of his plan, and his tariff ideas failed in Congress.

Fact:  Hoover granted further rights to Native Americans, preserving national forests, and developing massive construction projects.

Let's recall the words of Josh Marshall, a PROGRESSIVE and contributor at the PROGRESSIVE Talking Points Memo:

"Hoover was part of the 1912 Progressive party and he was in key respects a Republican Progressive in the early 20th century meaning of the term -- which is to say he was a technocrat who believed in scientific management and things like that. It is also true that as the Depression deepened Hoover did take steps in the direction of government intervention in the economy...The straw-man version of Hoover's presidency, in which he sat back and did nothing for four years, waiting on the market to correct itself is a caricature."

 

 Hoover In His Own Words

“We might have done nothing. That would have been utter ruin. Instead we met the situation with proposals to private business and to Congress of the most gigantic program of economic defense and counterattack ever evolved in the history of the Republic. We put it into action...”

- Herbert Hoover, 11 August 1932

   

“No government in Washington has hitherto considered that it held so broad a responsibility for leadership in such times. . . . For the first time in the history of depression, dividends, profits, and the cost of living, have been reduced before wages have suffered.”

- Herbert Hoover, 11 August 1932

“Some of the reactionary economists urged that we should allow the liquidation to take its course until we had found bottom...

We determined that we would not follow the advice of the bitter-end liquidationists and see the whole body of debtors of the United States brought to bankruptcy and the savings of our people brought to destruction.”

- Herbert Hoover, 4 October 1932

“They were maintained until the cost of living had decreased and the profits had practically vanished. They are now the highest real wages in the world.”

-Herbert Hoover, 5 November 1932

"Creating new jobs and giving to the whole system a new breath of life; nothing has ever been devised in our history which has done more for . . . 'the common run of men and women.’”

- Herbert Hoover 22 October 1932

If You Want Obamavilles, Repeat What Hoover Did

 “The ideas embodied in the New Deal Legislation were a compilation of those which had come to maturity under Herbert Hoover’s aegis. We all of us owed much to Hoover.”

 - Rexford Tugwell, economic adviser to and member of FDR's Brain Trust, 1946

Fact:   Hoover expanded civil service coverage of Federal positions.

Fact:  Hoover canceled private oil leases on government lands.

Fact:  Hoover instructed the Justice Department and the IRS to pursue gangsters for tax evasion.

Fact:  Hoover set aside 3 million acres of national parks and 2.3 million acres (9,000 km²) of national forests.

Fact:  Hoover advocated tax reduction for low-income Americans.

Fact:  Hoover closed certain tax loopholes for the wealthy.

Fact:  Hoover doubled the number of veterans' hospital facilities.

Fact:  Hoover wrote a Children's Charter that advocated protection of every child regardless of race or gender.

Fact:  Hoover created an antitrust division in the Justice Department.

Fact:  Hoover required air mail carriers to adopt stricter safety measures and improve service.

Fact:  Hoover proposed federal loans for urban slum clearances (not enacted).

Fact:  Hoover organised the Federal Bureau of Prisons

Fact:  Hoover reorganised the Bureau of Indian Affairs

Fact:  Hoover instituted prison reform

Fact:  Hoover proposed a federal Department of Education (not enacted)

Fact:  Hoover advocated $50 per month pensions for Americans over 65 (not enacted)

Fact:  Hoover chaired White House conferences on child health, protection, homebuilding and home-ownership

Fact:  Hoover began construction of the Boulder Dam (later renamed Hoover Dam)

Fact:  Hoover signed the Norris – La Guardia Act that limited judicial intervention in labour disputes.

Fact:  Hoover raised the tax rate on the "evil rich" from 25% to 63% while arguing for decreases in rates for the lower incomes. See the Revenue Act of 1932 and his speeches on progressive taxation.

Fact:  Hoover increased federal spending by 52 per cent from 1929 to 1933. Adjust to reflect deflation, and the Hoover figure is a disconcerting 88 per cent.

Fact:  Hoover massively increased infrastructure programmes.

Fact:. Hoover recognised measures such as Federal and state and local public works, work-sharing, maintaining wage rates ("a large majority has maintained wages at high levels" as before), curtailment of immigration, and the National Credit Corporation and urged more drastic action.

Fact: Hoover established a Reconstruction Finance Corporation, which would use Treasury funds to lend to banks, industries, agricultural credit agencies, and local governments.

Fact:  Hoover broadened the eligibility requirement for discounting at the Fed.

Fact: Hoover created a Home Loan Bank discount system to revive construction and employment measures, which had been warmly endorsed by a National Housing Conference recently convened by Hoover for that purpose.

Fact: Hoover expanded government aid to Federal Land Banks.

Fact:  Hoover set up a Public Works Administration to coordinate and expand Federal public works.

Fact: Hoover issued an order restricting immigration to increase employment for citizens.

Fact:  Hoover made it a priority to weaken the "destructive competition" (i.e., competition) in natural resource use.

Fact:  Hoover granted direct loans of $300 million to States for relief.

Fact:  Hoover worked to reform the bankruptcy laws (i.e., weaken protection for the creditor).

Fact:  Hoover also displayed anxiety to "protect railroads from unregulated competition," and to bolster the bankrupt railroad lines.
 
Fact:  In addition, Hoover called for sharing-the-work programmes to save several millions from unemployment.

Fact: In 1931, Hoover instituted a massive increase in government spending that included direct relief programmes and public works projects in order to provide jobs and security for the growing population of unemployed workers.

Fact:  Hoover supported the initiation of a national sales tax, a measure that failed in Congress.

Fact:  Hoover encouraged Congress to pass a farm act (the Agricultural Marketing Act), which would help farmers to increase efficiency in selling their goods and grant them loans.

  
Fact: To give farmers some added protection from foreign competition, Hoover also supported raising the agricultural tariffs, though his poor political acumen was not able to convince Congress of his plan, and his tariff ideas failed in Congress.

Fact: To give farmers some added protection from foreign competition, Hoover also supported raising the agricultural tariffs, though his poor political acumen was not able to convince congress of his plan, and his tariff ideas failed in Congress.

Fact:  Hoover granted further rights to Native Americans, preserving national forests, and developing massive construction projects.

Let's recall the words of Josh Marshall, a PROGRESSIVE and contributor at the PROGRESSIVE Talking Points Memo:

"Hoover was part of the 1912 Progressive party and he was in key respects a Republican Progressive in the early 20th century meaning of the term -- which is to say he was a technocrat who believed in scientific management and things like that. It is also true that as the Depression deepened Hoover did take steps in the direction of government intervention in the economy...The straw-man version of Hoover's presidency, in which he sat back and did nothing for four years, waiting on the market to correct itself is a caricature."

 

 Hoover In His Own Words

“We might have done nothing. That would have been utter ruin. Instead we met the situation with proposals to private business and to Congress of the most gigantic program of economic defense and counterattack ever evolved in the history of the Republic. We put it into action...”

- Herbert Hoover, 11 August 1932

   

“No government in Washington has hitherto considered that it held so broad a responsibility for leadership in such times. . . . For the first time in the history of depression, dividends, profits, and the cost of living, have been reduced before wages have suffered.”

- Herbert Hoover, 11 August 1932

“Some of the reactionary economists urged that we should allow the liquidation to take its course until we had found bottom...

We determined that we would not follow the advice of the bitter-end liquidationists and see the whole body of debtors of the United States brought to bankruptcy and the savings of our people brought to destruction.”

- Herbert Hoover, 4 October 1932

“They were maintained until the cost of living had decreased and the profits had practically vanished. They are now the highest real wages in the world.”

-Herbert Hoover, 5 November 1932

"Creating new jobs and giving to the whole system a new breath of life; nothing has ever been devised in our history which has done more for . . . 'the common run of men and women.’”

- Herbert Hoover 22 October 1932

Franklin Delano Roosevelt And Barack Hussein Obama III

In 1938, there were still 10 million Americans of working age, who were unemployed.  Compare that to the eight million in 1931. Hundreds of millions of dollars spent resulting in higher unemployment.  Replace the "m" in "millions" with "tr" and the dark cloud of déjà vu should descend uncomfortably and enshroud you.

The truth of the matter is that it was not until FDR conscripted millions of men and sent them off to war did unemployment levels truly come down to manageable levels, which, however, was hardly the end of the Great Depression.  As everyone should know, unemployment was only one of the several components. 

Thus:

In terms of aggregate production, statistics show no recovery until after World War II ended, when the size of government was at long last reduced.

The gross national product (GNP) didn’t recover to 1929 levels until 1940.

Personal consumption was 8 per cent lower in 1940 than in 1929.

Net private investment, the backbone of a healthy economy, from 1930 to 1940 was negative $3.1 billion, a breathtaking figure.

Because of FDR’s mind-spinning interventionist policies, European nations came out of the Great Depression years ahead of America.

FDR believed that the Great Depression was caused by low wages. That was his fatal flaw. Because, in fact, the truth was the diametric opposite, as we now know: low wages (and prices) were caused by the depression.

And yet based upon this stupendous misunderstanding of basic economics, FDR proceeded to mandate wage and price controls, which thus kept the American people in a state of poverty for well over a decade.

When prices and wages are forced by government, the demand for labour is necessarily reduced. Why? Because in order to stay in business, businesses must turn a profit; so that when wages and prices are forced, businesses must adjust their employment and spending accordingly, or they run out of money. They must therefore cut back on workforce, and they must decrease output. In this way, forced wages create unemployment. You see, not even politicians can subvert or defy the laws of economics.

This is the most basic cause and effect process you can imagine: employers simply cannot pay out money that they don’t have. Production and production alone generates wealth. 

That’s another crux, and FDR’s interventionist policies crippled production.

By means of the National Industrial Relations Act (NIRA), FDR’s First New Deal sought to turn United States agriculture, and other industries, into a massive government cartel.

“The Fascist Principles are very similar to those we have been evolving here in America.”

 - National Recovery Administration

It was at this time also that FDR began restricting production, so that unemployment began increasing.

The NIRA failed spectacularly, but in the process, it gave birth to another disaster: the National Recovery Administration (NRA).

"Those who are not with us are against us.”

- NRA motto coined by its head, Hugh Johnson

The NRA was bureaucratic up to the gills, and, among other things, it required every businessperson to sign a pledge to observe FDR’s job-destroying minimum-wage laws, his maximum-hour laws, and his prohibitions on “child labour” (i.e. teenage labour), and so on.

Prices were therefore not permitted to rise above or fall below “costs of production,” regardless of consumer demand.

Quoting historian John T. Flynn:

"[Code-enforcement police] roamed through the garment district like storm troopers. They could enter a man’s factory, send him out, line up his employees, subject them to minute interrogation, take over his books at the instant. Night work was forbidden. Flying squadrons of these private coat-and-suit police went through the district at night, battering down doors with axes looking for men who were committing the crime of sewing together a pair of pants at night."

- John T. Flynn, The Roosevelt Myth, 2007

Countless people across America were arrested and sentenced to jail or prison for invented crimes like “pressing suits of clothes for thirty-five cents when the Tailors’ Code fixed the price at forty cents.."

FDR also made the private ownership of gold illegal.

"[Mussolini is an] “admirable gentleman” and [I 
am] “deeply impressed by what he has accomplished.” 
 - Franklin Delano Roosevelt

He nationalised gold stocks.

He created an abortion called the Agriculture Adjustment Administration (AAA), which implemented a government cartel on agriculture markets, and which quite literally paid millions and millions of dollars to farmers for slaughtering their livestock and burning their fields, while the rest of the country starved.

"Reminiscent of Fascism is the principle that the state no longer leaves the economy to its own devices.…Without question, the mood accompanying this sea change resembles that of Fascism.” 
- Benito Mussolini on Roosevelt, Looking Forward

Under the AAA, which was later declared unconstitutional, one sugar refining business was paid $1 million to not refine sugar.

He made null and void all existing contracts that promised to pay in gold, which was an act of pure and simple theft, and which in any case did not inflate prices, as was his whole intention in making gold illegal in the first place.

In 1935, the United States Supreme Court ruled that Roosevelt’s NRA and AAA were unconstitutional.

It’s worth noting also, if only for posterity sake, that the NRA and the AAA were both explicitly modeled after Mussolini’s fascist system, of which FDR was an explicit admirer.

FDR also emulated Mussolini’s propaganda campaign against freedom and free-markets.

“Fascist means to gain liberal ends.”

- Robert Shaw, Progressive writer, North American Review, 1934

Under the Second New Deal, Roosevelt’s AAA, which the Supreme Court had declared unconstitutional, was, however, resurrected under the “soil conservation programme.”

It too paid taxpayer money to farmers for not producing.

A number of other programmes that the Supreme Court ruled unconstitutional were simply reenacted by FDR under different names as well. 

Many of these unconstitutional programmes, also modeled after European fascism, are still in place today.

The Second New Deal, announced on 4 January 1935, introduced a number of new programmes, in addition to the renamed old, each one equally unconstitutional, though never, alas, brought before the court. 

“Roosevelt’s adoption of National Socialist strains of thought in his economic and social policies...the development toward an authoritarian state based on the demand that collective good be put before individual self-interest.”

- Nazi newspaper, Volkischer Beobachter, praising Roosevelt

There was, for instance, the National Labour Relations Act.

There was the Fair Labour Standards Act, which amounted to more job-destroying minimum-wage laws.

There was the Works Progress Administration.

Of course too there was the egregious and now bankrupted Social Security Act, which, among other things, forgot to take into account increasing life expectancies, and so was doomed to fail from the start, a fact which, unfortunately, most Americans don’t realize even today. 

“If we are to go forward, we must move as a trained and loyal army willing to sacrifice for the good of a common discipline. We are, I know, ready and willing to submit our lives and property to such discipline, because it makes possible a leadership which aims at a larger good. I assume unhesitatingly the leadership of this great army.…I shall ask the Congress for the one remaining instrument to meet the crisis—broad executive power to wage a war against the emergency, as great as the power that would be given to me if we were in fact invaded by a foreign foe.”

 - President Franklin Delano Roosevelt

Also, the Norris-LaGuardia Act, which Herbert Hoover made into law in 1932, was much more stringently enforced under FDR’s authoritarian hand, thereby making it impossible to prosecute against labour union violence, of which the whole history of labour unions is largely composed.

Extortion by unions was under FDR legally permitted, as long as that extortion concerned “the payment of wages by a bona fide employer to a bona fide employee” (Congressional Record 78th Congress, first Session, House, 1934).

There were in addition, of course, the interminable taxes imposed upon businesspeople, which taxes siphoned money out of the private sector and increased unemployment, as taxes against entrepreneurs always and inevitably will, since they take away the capital that is normally used to reinvest and thus produce.

Indeed, tax increases (much of which were used to pay FDR’s bureaucrats) were as responsible as anything else for annihilating the American economy.

Quoting FDR’s adviser Harry Hopkins:

“I’ve got four million at work [in federally created jobs], but for God’s sake, don’t ask me what they are doing.”

This same Harry Hopkins again: 

“We shall tax and tax, spend and spend, and elect and elect.”

Even prior to World War II, government spending under FDR doubled and then some.

Government spending went from $4.6 billion in 1932 to $9.1 billion in 1940.

Over $23 billion in deficits were accumulated.

Current profligacy makes these numbers look comical, and indeed in terms of sheer profligacy, Barack cannot be matched; but one must not fail to take into account the times.  On his watch, the United States has lost its stellar AAA credit rate and public debt now exceeds 100% - a 59% increase since Obama took office and said public debt now exceeds $10 trillion dollars.

Deficits annually during FDR’s reign averaged 42 per cent of the federal budget, a truly incredible figure, especially considering that in 1932 FDR had the nerve to campaign against budget deficits, and he even vociferously denounced them.

The primary purpose of FDR’s preposterous New Deal spending – at least, according to many – was simply to ensure his reelection, because he, like his protégé, was another power-mad politician. Accordingly, he gave free money to hoards and hoards of poor people in exchange for the vote.

What follows is from the Official Report of the U.S. Senate Committee on Campaign Expenditures, 1938:

• In one Works Progress Administration (WPA) district in Kentucky, 349 WPA employees were put to work preparing forms listing the electoral preferences of every employee on work relief. Many of those who stated that they did not intend to vote for Roosevelt were laid off.

• In another Kentucky WPA district, government workers were required, as a condition of employment, to pledge to vote for the senior senator from Kentucky, who was an FDR supporter. If they refused, they were thrown off the relief rolls.

• Republicans in Kentucky were told that they would have to change party affiliations if they wanted to keep their WPA jobs.

• Letters were sent out to WPA employees in Kentucky instructing them to donate 2 per cent of their salaries to the Roosevelt campaign if they wanted to keep their jobs.

• In Pennsylvania, businessmen who leased trucks to the WPA were solicited for $100 campaign contributions.

• As in Kentucky, Pennsylvania WPA workers were told to change their party affiliation if they wanted to keep their jobs. Many people refused and were fired.

• Government employment was increased dramatically right before the elections. In Pennsylvania, “employment cards” were distributed that entitled holders of the cards to “two to four weeks of employment around election time.”

• A Pennsylvania man who had been given a $60.50-per-month white-collar job was transferred to a pick-axe job in a limestone quarry after refusing to change his voter registration from Republican to Democrat.

• Tennessee WPA workers were also instructed to contribute 2 per cent of their salaries to the Democratic Party as a condition of employment.

• In one congressional district in Cook County, Illinois, the WPA instructed 450 of its employees to canvass for (Democratic) votes around election time in 1938. The men were all laid off the day after the election. 

(Cited in John T. Flynn, The Roosevelt Myth, and How Capitalism Saved America, by Thomas Dilorenzo.) 

In the words of historian Stanley High: 

“In states like Florida and Kentucky – where the New Deal’s big fight was in the primary elections – the rise of WPA employment has hurried along in order to synchronize with the primaries.”

- Stanley High, “The WPA: Politicians’ Playground,” Current History, 1939

In 1969, when all this evidence about New Deal spending came into the light, FDR apologists (i.e. academics) immediately began making excuses and rationalising FDR’s disgustingly biased spending – for instance, the fact that residents of western states received 60 per cent more federal money than residents of southern states. All the excuses these academics have made are factually inaccurate and have been refuted, many times over, by people like Jim F. Couch and William F. Shugart, in their excellent book Political Economy of the New Deal.

Franklin Roosevelt was, to quote one David Gordon:

“...a vain, intellectually shallow person whose principal interest was to retain at all costs his personal power” – i.e. “total subordination of his country’s welfare to his personal ambition.” 

- David Gordon, “Power Mad,” 1999

  
FDR had no grasp of economics, and in fact was really just another garden-variety politician, much like today’s world leaders, but more so.

"Remember well that attitude and method --the way we do things, not just the way we say things—is nearly always the measure of one's sincerity."

 - Franklin Delano Roosevelt, Butte, Montana, 19 September 1932

Paul Warburg, one-time ardent Roosevelt supporter, admirer, and friend, 31 August 1935:

"We have come to the point where we must appraise Franklin D. Roosevelt by his own standard, for it is only upon a judgment so arrived at that we can intelligently decide whether to be for him or against him...I am against him, and the purpose of this book, Hell Bent for Election,  is to tell you why.

There would be no reason to do this were it not for the very definite hope that my feelings may find an echo and my reasoning a response among those who share in the ever growing realization throughout the country that we are on the brink of a momentous decision."

Warburg also wrote a sequel in 1936, Still Hell Bent.

President Franklin Delano Roosevelt's economic theories, practises and programmes have been weighed by history, they have been measured, and they have been found wanting. In what world could the economic theories, practises and programmes of President Franklin Delano Roosevelt possibly beat the Austrian School of Economics and its triumphs as proven by Presidents Harding and Coolidge?

Which depression lasted 18 months and which lasted 18 years - the Depression of the Early 1920s or the Great Depression? 

Continue in Part IV.

Progressive Lesson: Appeal to the Public's Emotion In Progress

On the evening of April 2, 1917, President Wilson drove through a light drizzle to the Capitol. He was led into an antechamber where he stopped to look himself in the mirror. The editor of the Atlantic Monthly, Ellery Sedgwick, describes how “chin shaking, face flushed, he placed his left elbow on the mantel and gazed steadily at himself until he composed his features.” Wilson then walked into the corridor, through some swinging doors, and emerged in the House chamber. According to The Last Days of Innocence by Meiron and Susie Harries, “every seat was taken, and people were standing shoulder to shoulder in the galleries. Surpeme Court judges, Cabinet members with their wives, foreign diplomats, and senators wearing or carrying tiny flags were crammed together on the lower floor."

In a subdued voice, Wilson described the German’s various attempts at spying and sabotage against the United States and how German submarines attacked hospital ships and those carrying relief supplies to Belgium. Wilson elaborated, saying how “the present German submarine warfare against commerce is a warfare against mankind.” He therefore “advise[s] that the Congress declare the recent course of the Imperial German Government to be in fact nothing less than war against the government of the people of the United States.” However, he asserted that this war was for “keeping the war safe for democracy." In the climaxing conclusion, Wilson declared, “America is privileged to spend her blood and her might for the principles that gave her birth and happiness and the peace which she treasured. God helping her, she can do no other.” 

Two days later, the Senate approved of the declaration for war with 82 yeas to 6 nays. On April 5, Good Friday, the House of Representatives followed suit with 373 yeas to 50 nays. One day later, on April 6, 1917, the war resolution was brought before Wilson. In a side room off the main lobby, Wilson signed the resolution at 1:18 P.M. The Last Days of Innocence describes how “a buzzer sounded in the executive office, and immediately Daniel’s personal aide, Lieutenant Byron McCandless, ran out onto the White House lawn and semaphored to an officer waiting at a window in the Navy Department across the street. At once the signal was flashed to every ship and shore installation: ‘W…A…R.” 

The US government took various steps to mobilize the nation, including starting a propaganda campaign, censoring potentially damaging information, and building up the army. Before long, the government came upon several obstacles. To succeed, Wilson had to solve the problems enlistment and the domestic administration of the war effort. The US had many valuable assets to this war, including its population and its food.

Furthermore, Wilson had his past experience as a progressive that helped him appeal to the public’s emotions. Wilson once said in order for the war to succeed, his administration had to mobilize “not an army but a nation.” America’s mobilization is truly a major factor in the Allies’ success in World War I.

In the progressive movement, reformers learned that change could only be attained after appealing to the public’s emotions. From the hunger striking suffragists to the saloon-busting Carrie Nation, the progressives employed a variety of techniques to arouse the public. Lewis W. Hine traveled across the country between 1907 and 1918 photographing working children. With his pictures, Hine made the public shocked and angry. Between 1911 and 1913, the time when Hine’s photos were being circulated, 39 states passed child labor laws.

President Wilson was elected president of Princeton in 1902, during the height of the progressive movement. He became governor of New Jersey in 1910, won the Democratic Party ticket two years later, and became president in 1912. His early presidency was dominated by progressive reform. Wilson signed the Underwood tariff in 1913, a bill that cut the taxes on imported goods. He also supported anti-trust laws such as the Clayton Antitrust Act of 1914. Wilson pushed the Federal Trade Commission Act of 1914 through Congress, thus limiting business practices that lead to monopolies. He appointed Louis Brandeis to the United States Supreme Court, a leading opponent of big business. From his progressive background, Wilson learned that playing on the public’s emotion was the key for change.

The ensuing few month’s after President Wilson’s supposedly electrifying message to Congress, patriotic sentiments were almost nonexistent among the general public. According to Thomas Fleming’s The Illusion of Victory, on May 23, 1917, an American Press Résumé author commented on the lack of zeal, saying “There is evidence that in many localities the people have only entered the war with reluctance and with a feeling of inevitability rather than with any enthusiasm.” Wilson’s private secretary wrote to Colonel House explaining that “the people’s righteous wrath” had not yet been aroused.

According to Jean M. Jensen’s The Price of Vigilance, US Attorney General Thomas W. Gregory became convinced that German spies and sympathizers of the Kaiser Wilhem II were overrunning the country. The Justice Department’s Bureau of Investigation only had 300 agents, who had to provide for their own transportation. Enter Chicago businessman Alfred M. Briggs. Briggs offered to recruit local agents with their own cars to hunt out these traitors. This idea turned into a national organization that would become known as the American Protection League (APL), which would be operating under cover as the “Secret Service Divisions.” By June of 1917, membership surged to 250,000. A dollar bought a man membership and the right to call himself a member of the “Secret Service.” His credentials were shown in an official membership card and a badge proclaiming the holder a member of the US Department of Justice.

In 1919, the New York Bar Association created a report on vigilante groups during WWI, saying, “These associations did much good awakening the public to the danger of insidious propaganda but no other one cause contributed so much to the oppression of innocent men as the systematic and indiscrimate agitation against what was claimed to be an all-pervasive system of German espionage.” The government did much to fan the fire of suspicion and hatred spreading across the country. On June 15, 1917, President Wilson signed the Espionage Bill, which punished those who “wilfully make or convey false reports or false statements with intent to interfere with the operation or success of the military or naval forces of the United States, or to promote the success of its enemies.” People found guilty under this law were “punished by a fine of not more than $10,000 or imprisonment for not more that twenty years or both."

According to author R.M. Elroy, “[w]e all know this, that through disguised in a hundred ways, sly stealthy, ruthless, the German propagandists are still at work in every city of our land, striving by every means to make America accept the supremacy of Kultur.” The CPI even encouraged Americans to inform authorities of disloyalties in others. The APL took this to heart and worked in less-than-ethical ways to achieve this goal, including opening their suspects’ mail, burglarizing their homes and offices, tapping their telephones, and planting listening devices in their bedrooms and parlors. Meiron and Susie Harries’ The Last Days of Innocence describes how in the summer of 1918, the Attorney General Gregory received 1500 letters a day each accusing someone of disloyalty.

On the President’s Fourth of July speech in 1917, Wilson said, “Woe to the man or group of men who seeks to stand in our way in this day of high resolution.” To augment to the somber mood, Attorney General Thomas Gregory warned that rebels to expect no mercy “from an outraged people and an avenging government.” A popular writer sent a letter to The New York Times suggesting that anyone obstructing this “righteous war” should be executed.

EXPECTATION #3:

The CPI played an integral role in this national witch-hunt. According to The Last Days of Innocence, in 1918, the CPI began screening a film called The Kaiser, the Beast of Berlin. This hate film showed the ruthless burning of Louvain and the pain of the victims on the Lusitania. In writing, a popular publication was Why America Fights Germany. In the novel, the Germans successfully penetrate into American soil and advance towards Lakewood, New Jersey. There, they demand beer and money. Furthermore, “[o]ne feeble old woman tries to conceal $20 which she had been hoarding in her desk drawer; she is taken out and hanged…Some of the teachers in the two district schools meet a fate which makes them envy her. The Catholic priest and Methodist minister are thrown into a pig-sty while the German soldiers look on and laugh.” Then, when the soldiers unsurprisingly become drunk, and “robbery, murder and outrage run riot. Fifty leading citizens are lined up against the First National Bank and shot. Most of the town and beautiful pinewoods are burned, and then the troops move on to treat New Brunswick the same way.” 

EXPECTATION #5:

Obviously, the CPI did its best to portray Germany and everything German in the worst way possible. It was rumored that the Germans put ground glass into food and poison on Red Cross bandages. Fear of espionage became so great that flashes of light from the stained glass windows of William Randolph Hearst’s apartment was thought to be covert signals to German submarines waiting in the Hudson River. Everything German was suddenly taboo. Frankfurters became “Liberty sausages,” dachshunds were “Liberty dogs,” and sauerkraut got changed into “Liberty cabbage.” Interestingly, following France’s refusal to support invading Iraq in 2003, French fries were changed into “Freedom fries,” showing that in some aspects, Americans never change. 

The New York Times suspended all German publications saying, “[a]ny book whatever that comes to us from a German printing press is open to suspicion. The German microbe is hiding somewhere between its covers.” Renowned publisher Irving Putnam declared, “I am opposed to opening the markets of America to the products of Germany for the next 25 years, and I will knowingly buy and use no German-made goods in the said period of time.” 

The German language itself came under brutal attack as well. In Win the War for Permanent Peace, the author Elroy proclaims that “[t]he surest way to defeat Kultur’s ambition is to destroy its grip on the schools…Fort Wayne, Indiana spent last year $14,772 for teaching German to immigrants, and $108 for teaching English; Columbus, Ohio, spent nothing teaching English and $16,000 for teaching German; Philadelphia spent $11,000 for English instruction and $70,000 for German.” As a result of these negative public sentiments, teaching of the German language was banned in many schools and German books burned. A speaker at a conference of the League to Enforce Peace declared, “Behind the chair of innumerable teachers we have seen the shadow of the spiked helmet.” 

In 1918, anti-German sentiments erupted into violence, with mobs ransacking German-American homes, painting their houses yellow, tarring and feathering German-American men, and forcing them to crawl on the streets. On March 28 in Willard, Ohio, the Cleveland Plain Dealer reported that German-American couple Mr. and Mrs. Zuelch “were taken by a crowd of men to the city hall and there before a crowd of 200 persons compelled to salute the American flag and then kiss it. A flag was given to Zuelch and he was commanded to display it in front of his cigar store. It was waving there tonight.” 

For Aurora, Honorable Charles F. Clyne, the U.S. District Attorney for the Northern District of Illinois, played an important role for the United States Department of Justice. For example, in the case of United States vs. Victor L. Berger, et al., “ five defendants were charged with conspiracy to violate the Espionage Law. All defendants were convicted and each was sentenced to imprisonment. All of the above cases are still under review by the District Court of Appeals on appeal by the defendants.” By pushing those who broke the law, the US government sent a clear message to the public that all dissenters would be punished, augmenting the feelings of fear, hatred, and suspicion.

Germans in Aurora, as in the rest of the United States, were met with trepidation from the general public. In February of 1918, Mayor James E. Harley, in accordance with the requests from the State Council of Defense, the American Protective League, and the Local Board for the City of Aurora, ordered the registration of all aliens living in Aurora or the Aurora area regardless of country of origin. Over 1600 families in Aurora and its proximity were registered with the information filed for “future use, if so desired, by government officials.” Then, the US Department of Justice ordered Aurora to register all the German aliens, including those who had declared their intent of becoming US citizens. Between March 1, 1918 and March 11, Chief Detective A. G. Wirz registered 99 male German aliens. This endeavor was so successful that the Justice Department ordered the registering of the 117 female German aliens currently residing in Aurora. Included with the registration form were the names of all relatives engaged in the war (and the side they were on), their desire for naturalization, the reason for their arrest (if applicable), complete measurements under the Bertillion System, three photographs, and finger prints from all fingers from both hands. A copy was mailed to the US Justice Department in Washington DC, a copy was forwarded to the United States Marshal in Chicago, and a copy was kept at the local police station. 

President Wilson realized that in order to make change in the public’s attitude towards war, he would also have to incite their dormant emotions. His administration surreptitiously imbedded feelings of suspicion, anger, and hate into the public. Armed with the public’s wrath, America could carry on fighting the war to end all wars.