The general misunderstanding that has been taught as history is that the “Roaring Twenties” and Republican laissez faire policies led to the stock market crash of 1929 and caused the depression of the 1930’s before the 4 term (1933 until death 1945) presidency of FDR and the Democrat controlled congress were able to save the country by the policies of expanding the role of the Federal Government through the “New Deal”. Slobberknocking Hogwash!!!
First, the stock market crash was caused by fear and speculation. It was more of an investor disaster than an economic collapse. The fear was two-fold; Banks were weak, due to monetary supply decisions by the Federal Reserve (which was exerting more influence), and a growing nationalism that was dominating thought on a global scale, this was combined with the short-sightedness of investment speculator’s fantasy of a never bursting bubble. Even with the crash, unemployment rose from 3+% in 1929 to 8+% in 1930; not enough to crash the economy. Economists like Milton Friedman and historians who lay blame on the Smoot-Hartly Tarriff Act of 1930 have given different damage causing weight to the effect of varying political decisions. My contention is that Republican President Herbert Hoover’s decision to abandon laissez faire restraint and to initiate market interference by federal policy and manipulation created an upheaval, from which, our country has never returned. He used misguided persuasion to insist that companies maintain their wage levels and as much of their employment numbers as possible. He signed into law the Smoot-Hartley Act in 1930 and more than doubled the income tax during his one term 1928-32. These government policy moves crashed the American economy! Smoot-Hartley initially created a sharp increase in factory production and employment before its devastating effects (unforeseen consequences) were understood. Starting with bank failures in Europe , the law triggered a trade war. US
Depression Era Unemployment Statistics | ||||
Year | Population | Labor Force | Unemployed | Percentage of Labor Force |
1929 | 88,010,000 | 49,440,000 | 1,550,000 | 3.14 |
1930 | 89,550,000 | 50,080,000 | 4,340,000 | 8.67 |
1931 | 90,710,000 | 50,680,000 | 8,020,000 | 15.82 |
1932 | 91,810,000 | 51,250,000 | 12,060,000 | 23.53 |
1933 | 92,950,000 | 51,840,000 | 12,830,000 | 24.75 |
1934 | 94,190,000 | 52,490,000 | 11,340,000 | 21.60 |
1935 | 95,460,000 | 53,140,000 | 10,610,000 | 19.97 |
1936 | 96,700,000 | 53,740,000 | 9,030,000 | 16.80 |
1937 | 97,870,000 | 54,320,000 | 7,700,000 | 14.18 |
1938 | 99,120,000 | 54,950,000 | 10,390,000 | 18.91 |
1939 | 100,360,000 | 55,600,000 | 9,480,000 | 17.05 |
1940 | 101,560,000 | 56,180,000 | 8,120,000 | 14.45 |
1941 | 102,700,000 | 57,530,000 | 5,560,000 | 9.66 |
Source: | ||||
The income tax increase was more than doubled at the top and bottom. In 1931 the bottom rate was 1.5% on income $0 - 4000 and the top was 25% on $100,000. In 1932 the bottom rate was 4% $0- 4000 and the top was moved to 63% on $1 million. $100,000 was now taxed at 56%. Considering that the average income throughout the 30’s was less than $2,000 per year, who was nearly destroyed by these increases? Let me help:
EVERY BUSINESSMAN/EMPLOYER IN AMERICA! Click on link to compare 1931 rates to 1932. Follow the comparison through 1945 to see Roosevelt ’s salvation (lol).
With the election of 1932 Franklin D. Roosevelt (the “Savior”) swept into office surrounded by a ‘Brain Trust’ of young intellectuals who were the new wave of academic progressives. Some wishing, with jealousy, for the ambitious transformation that was taking place worldwide; Stalin’s communist Russia, Mussolini’s fascist Italy and the new rising star Adolf Hitler’s national socialism (Nazis) were all held in high esteem by intellectuals and progressives in the early 30’s.
To be continued...
“Fun and Educational”: http://www.thepeoplehistory.com/1930s.html
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