Ever wonder why we don't hear about the Depression of 1920-21? Reaching further back in history, why no discussion of the Banking Crisis of 1832?I'd guess most people don't know we had a Depression in 1920-21. Richard K. Vedder and Lowell E. Galloway, in their book, Out of Work, noted that the magnitude of the 1920 Depression "exceeded that for the Great Depression of the following decade for several quarters."
In 1832, Andrew Jackson -- Father of the Democratic Party -- rescinded the Charter of the 2nd US National Bank and said the following:
"Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves."
What is the common thread of these economic crisis? First, they both contain elements of the economic crisis that is happening today. Second, and most importantly, these economic events were handled in exactly the opposite way that we are addressing the current economic crisis.
Upon election in 1920, what did Warren Harding and the 66th Congress do to combat the Depression of 1920?
They did nothing. Actually, Harding and Congress did do something. They shrunk the size of the Federal government and cut taxes to spur economic growth. Federal spending was cut from $6.3 billion in 1920 to $5 billion in 1921 and $3.2 billion in 1922. Federal taxes were cut from $6.6 billion in 1920 to $5.5 billion in 1921 and $4 billion in 1922. Harding’s policies started a trend. The low point for federal taxes was reached in 1924. The Depression of 1920 lasted a little over a year, and the "Roaring 20's" began (under Calvin Coolidge, as Harding died in office in 1923) .
What happened a decade later in the '30's, and what was our economic policy? How long did The Great Depression last?
Andrew Jackson loathed the very thought of a National Bank (Federal Reserve, anyone?) In Jackson's veto message, he stated the bank needed to be abolished because (listed by relevance):
- It concentrated the nation's financial strength in a single institution.
- It exposed the government to control by foreign interests.
- It served mainly to make the rich richer.
- It exercised too much control over members of Congress.
Andrew Jackson also managed to reduce the federal debt to only $33,733.05 in 1935, the lowest it had been since the first fiscal year of 1791. President Jackson is the also only president in United States history to have completely paid off the national debt.
What we have today instead is Trillion Dollar Deficits (that started with Bush), that will ultimately have to be repaid by our children, and our children's children. If that's not theft, then I don't know what the proper definition of theft would be. It's simply immoral and depraved.
As theologian Dietrich Bonhoeffer said: "The ultimate test of a moral society is the kind of world it leaves to its children."
Hmmmm...
