Mistakes of the Great Depression Repeated

The adage, "Those who do not learn from the mistakes in history are doomed to repeat them," is now being being played out once again. There's an excellent article written by the syndicated columnist, Amity Shlaes, in the Hillsdale College publication Imprimus, September 2010 issue, about all the mistakes that were being made in the depression of the "thirties" that are now being made once again.


Here is an excerpt from the article:

Regarding monetary policy, it is clear that there wasn't enough money in the early 1930s. So Roosevelt was not wrong in trying to reflate. But, though his general idea was right, the discretionary aspect of his policy was terrifying. As Henry Morgenthau reports in his diaries, prices were set by the president personally. FDR took the U. S. off the gold standard in April 1933 and by summer he was setting the gold price every morning from his bed. Morgenthau reports that at one point the president ordered the gold price up 21 cents. Why 21, Morgenthau asked. Roosevelt replied, because it's 3 x 7, and three is a lucky number. "If anyone knew how we set the gold price," Morgenthau wrote in his diary, "they would be frightened."

Discretionary policies aimed at cleaning up Wall Street were destructive as well. The New Dealers attacked the wealthy as "money changers" and "Princes of Property." In 1937, after his re-election, Roosevelt delivered an inaugural address in which he described government as an instrument of "unimagined power which should be used to "fashion a higher order of things." This caused business to freeze in its tracks. Companies went on what Roosevelt himself resentfully termed a "capital strike."

.....Consider the case of Alfred Lee Loomis, who had the kind of mind that could contribute significantly to Gross Domestic Product and job creation. During the First World War, he had improved the design of firearms for the U. S. Army. In the 1920s he became wealthy through his work in investment banking. He moved in a crowd that was developing a new form of utility company that might finally be able to marshal the capital to bring electricity to the American South. But when Loomis saw that the Roosevelt administration was hauling utilities executives down to Washington for hearings, he shut down his business, retreated to his Tudor house, and ran a kind of private think tank for his own benefit.

The link to the entire article:

http://www.hillsdale.edu/news/imprimis/archive/issue.asp?year=2010&month=09