The great fiscal stimulus package ... of 1929

[Ichingcarpenter]

Popular imagination has the Great Depression opening with a bang in October 1929. We forget that even by December of that year, the market had no idea what was really in store. After a period of wild, bipolar volatility, stocks had taken two big tumbles (a 12.8% drop on Oct. 28 and an 11.7% fall the next day) while the top bankers and "captains of industry" rushed to shore up the market. By November, the Dow had hit its low for the year at 198, down from the giddy September high of 381.


But, the financial pundits and government leaders of the day insisted, the economy's fundamentals were still strong. Mass unemployment was, some months after the crash, still just something that went on in Germany and Britain. America was strong and merely needed a push to keep the financial markets from harming the broader economy.


With that in mind, Herbert Hoover -- only nine months into his presidency -- assembled leaders from the public and private sectors to create an economic-stimulus package. Among the measures, Time magazine reported at the time, was a promise from Congress to offer bipartisan support for a tax-cut package. The proposal called for $160 million in tax relief -- only about $22 billion if adjusted against the gross domestic product at the time, and therefore much smaller than the plan under consideration here in 2008. Read Time's original coverage of the plan.
http://www.time.com/time/printout/0,8816,738193,00.html


Also on the table was an assurance from the Federal Reserve that it would provide cheaper credit. Granted, the Fed had much less power over the money supply in those days, mainly because the amount of liquidity it could create was limited by the supply of gold it held to back the dollar. .....snip

http://www.marketwatch.com/news/story/great-fiscal-stimulus-package-/story.aspx?guid=%7BD3B850E5%2DE05D%2D40DA%2DA630%2D42B3CB838AE9%7D&dist=MostReadHome

Edited for quote from Hegel

"We learn from history that we do not learn from history." -- Hegel

[Lasher]

1. We do have what's left of our New Deal programs.

They have served as safeguards but have been somewhat eroded.

I suppose there were lots of folks back then who thought, "Such a thing couldn't possibly happen during these enlightened times." I see no shortage of that sentiment today.

[Ichingcarpenter]

2. I found it interesting on the old Time Mag. report on Ford's take.

For a solution Mr. Ford proposed: 1) "Putting additional value into goods or reducing the prices to the level of actual value." 2) "Starting a movement to increase the general wage level."

Unusual was this Ford statement because he alone of the conferees spoke before an official White House statement was issued, because he openly differed from the President whose position is that there has been no business recession, only a threat of one. But more unusual and surprising did it become when Motor Maker Ford suddenly went back to the President, announced he would increase the wages of all his men.

------------------------

Ford during the Depression
He was famous for his fair $5 a day wage when it came out and in 1929 Ford instituted a $7 day, but in 1932, as part of the fiscal stringency imposed by falling sales and the Great Depression, that was cut to $4, below prevailing industry wages.

Ford freely employed company police, labour spies, and violence in a protracted effort to prevent unionization and continued to do so even after General Motors and Chrysler had come to terms with the United Automobile Workers. When the UAW finally succeeded in organizing Ford workers in 1941, he considered shutting down before he was persuaded to sign a union contract.


Henry Ford: Hitler's First Foreign Backer

On December 20, 1922 the New York Times reported4 that automobile manufacturer Henry Ford was financing Adolph Hitler's nationalist and anti-Semitic movements in Munich. Simultaneously, the Berlin newspaper Berliner Tageblatt appealed to the American Ambassador in Berlin to investigate and halt Henry Ford's intervention into German domestic affairs. It was reported that Hitler's foreign backers had furnished a "spacious headquarters" with a "host of highly paid lieutenants and officials." Henry Ford's portrait was prominently displayed on the walls of Hitler's personal office:

The wall behind his desk in Hitler's private office is decorated with a large picture of Henry Ford. In the antechamber there is a large table covered with books, nearly all of which are a translation of a book written and published by Henry Ford.5

The same New York Times report commented that the previous Sunday Hitler had reviewed,

The so-called Storming Battalion.., 1,000 young men in brand new uniforms and armed with revolvers and blackjacks, while Hitler and his henchmen drove around in two powerful brand-new autos.

The Times made a clear distinction between the German monarchist parties and Hitler's anti-Semitic fascist party. Henry Ford, it was noted, ignored the Hohenzollern monarchists and put his money into the Hitlerite revolutionary movement.

These Ford funds were used by Hitler to foment the Bavarian rebellion. The rebellion failed, and Hitler was captured and subsequently brought to trial. In February 1923 at the trial, vice president Auer of the Bavarian Diet testified:

The Bavarian Diet has long had the information that the Hitler movement was partly financed by an American anti-Semitic chief, who is Henry Ford. Mr. Ford's interest in the Bavarian anti-Semitic movement began a year ago when one of Mr. Ford's agents, seeking to sell tractors, came in contact with Diedrich Eichart, the notorious Pan-German. Shortly after, Herr Eichart asked Mr. Ford's agent for financial aid. The agent returned to America and immediately Mr. Ford's money began coming to Munich.

Herr Hitler openly boasts of Mr. Ford's support and praises Mr. Ford as a great individualist and a great anti-Semite. A photograph of Mr. Ford hangs in Herr Hitler's quarters, which is the center of monarchist movement.

http://reformed-theology.org/html/books/wall_street/chapter_06.htm