Weatherford Democrat

Viewpoints

September 28, 2012

COLUMN: The 1920s may hold key to our economy

— How many have heard of the great recession of 1920? To be quite honest I had not heard of it before, I read Dr. Thomas Sowell’s article An Economic Plan dated Sept. 11, 2012. I surmise that the reason that few people know about the event is because, as recessions go, it was over quite quickly. It will amaze you to know that the plan used by President Harding was very similar to the one proposed by Mitt Romney and Paul Ryan. Economist and politicians still argue about what caused the Great Depression. Herbert Hoover was the Secretary of Commerce in President Harding’s administration and wanted to pursue a different solution to the Depression problem, but the president rejected Mr. Hoover’s plan. When Mr. Hoover became president, he got the chance to try his solution to a depression, and now we know why President Harding rejected the plan.

Here are some statements from an article written by Thomas E. Woods Jr. in The Forgotten Depression Of 1920 (Nov. 27, 2009):

“The conventional wisdom holds that in the absence of government countercyclical policy, whether fiscal or monetary (or both), we cannot expect economic recovery — at least, not without an intolerably long delay. Yet the very opposite policies were followed during the depression of 1920–1921, and recovery was in fact not long in coming.

The economic situation in 1920 was grim. By that year unemployment had jumped from 4 percent to nearly 12 percent, and GNP declined 17 percent. No wonder, then, that Secretary of Commerce Herbert Hoover — falsely characterized as a supporter of laissez-faire economics — urged President Harding to consider an array of interventions to turn the economy around. Hoover was ignored.

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.’ 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.”

Text Only
Viewpoints
  • larry jones cropped:color NOW HEAR THIS: Going on a wild goose chase

    In recent years I’ve written quite a bit about the introduction and negative consequences of non-native or invasive species. Fire ants, killer bees, English sparrows, Asian carp, feral hogs and others too numerous to list have forever changed our local ecosystem.

    April 13, 2014 1 Photo

  • LETTERS TO THE EDITOR: TV offers

    Have you seen those TV offers where they give a price for one product and then offer a second like items for-free? All you have to do is pay a separate shipping and handling charge for the “free” items.

    April 13, 2014

  • John Paul Carter-color.jpg NOTES FROM THE JOURNEY: What’s in a name?

    Names are important. When my son, Rush, (who’s named after my father) and his wife, Vanessa, were expecting their third daughter, I gave up on having a male namesake and suggested, in jest, they call her “Johnnie Pauline.”

    April 11, 2014 1 Photo

  • tiscione, lou.jpg TISCIONE: The Christian and the government

    The church in the Old Testament lived under a theocracy. That is, both the church and state were one. God anointed kings. Civil laws and religious laws were one and the same.

    April 11, 2014 1 Photo

  • larry jones cropped:color NOW HEAR THIS: Getting in the chicken business

    Anyone who is my age or older has heard the famous quote, “A chicken in every pot.” It is normally attributed to Herbert Hoover during his 1928 presidential bid.

    April 6, 2014 1 Photo

  • VIEWPOINT: Obsessed with sports

    I remember reading a synopsis of the five reasons for the “Decline and Fall of the Roman Empire” by Edward Gibbon in which he listed the Romans’ obsession with sports at the coliseum as a cause of the fall of the empire.

    April 6, 2014

  • 0912 one bday wm j kelly 2013 mug.jpg KELLY: What do you think?

    On March 21, this paper published an article about a six-month drug trafficking investigation involving 12 people. On the front page was a photo of the 12 people involved. The use of drugs had made them a sorry-looking bunch. The look in their eyes was particularly disturbing.

    April 4, 2014 1 Photo

  • Hamilton, Lee.jpg Time to fix government

    In 1965, the chairman of the powerful Ways and Means Committee, Wilbur Mills, brought legislation establishing Medicare and Medicaid to the floor of the U.S. House. That was my first year in Congress, and I remember vividly the moment when Mills came to the Democratic caucus to explain his plans.

    April 3, 2014 1 Photo

  • LETTER TO THE EDITOR: Review of ‘Noah’

    TV host Glenn Beck and other stalwarts of the Christian right have attacked the recent blockbuster “Noah” as being “pro-animal” and unfaithful to the Bible.

    April 3, 2014

  • tiscione, lou.jpg TISCIONE: While going, disciple!

    The purpose that God has given to His people is to be holy. He has likewise given His people a mission. The mission of God’s people, the church of Jesus Christ, is as clear as His revealed purpose.

    April 3, 2014 1 Photo

Must Read
Top News
House Ads
AP Video