Friday, October 9, 2015

Herbert Hoover's Economic Policies Contributed to the Market Crash of 1929


            The stock market crash of 1929 led to the Great Depression, but it was federal government policies that led to the stock market crash. Herbert Hoover and his administration implemented New Deal-like policies before the crash that hurt the economy. The 31st president felt that the economy could be stimulated through “government spending, protect jobs,” and policies that would prevent “wages from falling.”[1] Interventionist policies on the market had drastic effects for over three years of his presidency, and despite these failings, Hoover pushed forward. Instead of adhering to laissez-faire principles of capitalism and a free market, Hoover justified his doomed policies:

The past three years have been a time of unparalleled economic calamity. They have been years of greater suffering and hardship than any which have come to the American people since the aftermath of the Civil War.…

Two courses were open. We might have done nothing. That would have been utter ruin. Instead, we met the situation with proposals to private business and the Congress of the most gigantic program of economic defense and counterattack ever evolved in the history of the Republic. We put it into action.[2]




            As it became clear that a depression of epic proportions was unfolding, Hoover pushed forward with his failed economic policies. Railroads and construction companies maintained high wages according to Hoover’s urging; which eventually led to layoffs and as the economy worsened. The farming industry received subsidies and “marking cartels” were formed.[3] His policies worked more to treat the “symptoms of a disease,” but only made “the disease worse.”[4]






[1] Mark Thornton, “Hoover, Bush, and Great Depressions,” Mises Institute, January 11, 2011, https://mises.org/library/hoover-bush-and-great-depressions.
[2] Ibid.
[3] Ibid.
[4] Ibid.

Thursday, October 8, 2015

Were there parallels between the New Deal and Nazi Germany?


            It is not an uncommon story among the general populace that the New Deal and the Second World War helped the United States to recover from the devastating Great Depression. Even though this is the dominant narrative, there are many economists that challenge this theory that the New Deal saved capitalism and helped to bolster the United States economy (many books have been written on this subject alone). They would conclude that government intervention was not only a drawback to the New Deal policies, but American citizens lost free market liberties associated to capitalism in the process. There are also some individuals that have drawn parallels between FDR’s New Deal policies and European governmental programs promoted by fascists and national socialists, such as Nazi Germany.  


            The Civilian Conservation Corps (CCC) was a program that has been associated with similar youth organizations of Nazi Germany. The CCC program enrolled young men “as amateur forest rangers, marsh drainers, and the like, on projects designed to improve the countryside.”[1] They were provided with the basic essentials of shelter, clothing, and earned one dollar a day.[2] Until the military draft of 1942, two and half million young men went through this program.[3] The well-respected historian, John A. Garraty, was one who saw a similarity between the two nation’s programs for youth and said:

Both were essentially designed to keep young men out of the labor market. Roosevelt described work camps as a means for getting youth "off the city street corners," Hitler as a way of keeping them from "rotting helplessly in the streets." In both countries much was made of the beneficial social results of mixing thousands of young people from different walks of life in the camps. … Furthermore, both were organized on semimilitary lines with the subsidiary purposes of improving the physical fitness of potential soldiers and stimulating public commitment to national service in an emergency.[4]



            However, not only historians and economists of today have noticed these similarities through the lens of the past, but so did individuals living at the time during the implementation of the New Deal. The New York Herald Tribune published Mark Sullivan’s opinions on the New Deal on June 26, 1936; and he said, “The New Deal is the American variation of the new order that has been set up in three great European countries and some smaller ones. The term ‘New Deal’ is the American equivalent of the term ‘Fascism’ in Italy, the term ‘Nazi’ in Germany, and the term ‘Soviet’ in Russia.”[5] Even the press in Germany enthusiastically praised FDR’s New Deal policies. The Nazi Party newspaper, the Völkischer Beobachter, had commented that FDR’s New Deal exhibited “National Socialist strains of thought in his economic and social policies.”[6] Even Professor Garraty writes, that "Early New Deal policies seemed to the Nazis essentially like their own and the role of Roosevelt not very different from the Führer's."[7]


            Despite the similarities and federal policies that increased the size and scope of federal power in the United States, Americans did not follow the path of the Nazis or other European socialists. Americans have always had a deep-seated individualistic spirit and love for liberty that hails all the way back to the Revolutionary era. This spirit might be assaulted and even bent from time to time, but the antistatist tradition will continue to prevail, as long as Americans remember their heritage.   




[1] Ralph Raico, ”FDR and the Collectivist Wave,” Mises Institute, June 2, 2011, https://mises.org/library/fdr-and-collectivist-wave.
[2] Ibid.
[3] Ibid.
[4] Ibid.
[5] Hubert H. Humphrey, The Political Philosophy of the New Deal, (Baton Rouge: Louisiana State University Press, 2015), 3.
[6] David Gordon, "Three New Deals: Why the Nazis and Fascists Loved FDR," Mises Institute, September 22, 2006, https://mises.org/library/three-new-deals-why-nazis-and-fascists-loved-fdr.
[7] Raico, ”FDR and the Collectivist Wave.”

Wednesday, October 7, 2015

FDR's New Deal Weakened Capitalism



            The definition of capitalism and how it should be practiced in the economy is as disputed and diverse as religion. Party politics and individual agendas based on their respective understandings of capitalism have hurt, manipulated, and/or benefited the economy based on the individual eye of the beholder. Economists have argued over the definition of capitalism and the effectiveness of Franklin Roosevelt’s New Deal on the United States economy since its inception and application. There are many economists, who feel that FDR’s New Deal not only weakened capitalism, but that it also prolonged the Great Depression.
Dr. Steve Davies, the education director at the Institute of Economic Affairs in London, defines capitalism as “a system of the free exchange of goods and services between individuals on a voluntary basis under the rule of law and in a system of private property rights. In other words, it is a system of voluntary exchange in which all parties to the exchange are better off.”[1] FDR’s New Deal policies did not promote a voluntary exchange; and in the end, both parties affected by the New Deal were not better off.


The New Deal did little to help economic recovery. It prolonged high unemployment in the United States; “From 1943 to 1940, the median annual unemployment rate was 17.2 percent. At no point during the 1930s did unemployment go below 14 percent.”[2] The job market was not helped by the state influenced hikes in wages and labor costs, either. The New Deal negatively affected consumer prices and led to a tripling of taxes. The tax burden was intense and dipped into every aspect of American life from “income taxes, higher corporate income taxes, higher excise taxes, higher estate taxes, and higher gift taxes.”[3] The ever increasing taxes and unemployment “meant there was less capital for businesses to create jobs, and people had less money in their pockets.”[4]
As wage rates increased through New Deal policies, businessmen looked to technological mechanization in their industries and disposed of many entry-level jobs that called for unskilled labor. This led to the destruction of hundreds of thousands of jobs in the United States, particularly in states that were still behind in industrialization, like the South. Since the Civil War, the main unskilled labor force had remained the African American population. As a result, according to economist David E. Bernstein, “New Deal labor policies contributed to a persistent increase in African American unemployment.”[5]


Some economist purport that the New Deal helped the economy because of the massive public works projects had created jobs and spent billions of dollars in the economy; however, many of those projects went to the wealthier western states and not the poorer southern states.[6] Economist Jim Powell advocates that FDR used the public works programs as a ploy to buy voter support from western “swing” states over the “already solidly Democratic” South.[7] This argument is also supported in that relief and public works spending seemed to increase during election years.”[8] When FDR commented on Social Security taxes, he confessed that they were devised for securing votes and not to improve the economy. He said that they “'were never a problem of economics. They are politics all the way through.”[9] Burton Fulsom Jr. states that FDR’s goal was to “Tie older voters to the Democratic Party.”[10] Regardless, government projects and jobs are supported by the tax payers; and the New Deal was not helping the private sector rise up out of the depression to create the revenue needed to support the increasing federal government.


According to economist Thomas J. DiLorenzo, all the New Deal and public works projects did was divert already existing revenue from the private sector to the government: “The billions of dollars spent on public-works programs also failed to reduce overall unemployment—despite employing some 10 million people—because of the economic law of opportunity cost: diverting those billions from the private sector (through taxes) to the government sector only rearranged the composition of employment—fewer private-sector jobs and more government jobs.”[11] The New Deal did not improve the economy, but its “most important initiatives were active obstacles to economic renewal.”[12] There are many myths surrounding FDR’s New Deal that economics like Steve Davies have been trying to disprove according to their definition of capitalism.


Davies is clear in his statements that the New Deal did not save capitalism, nor did it end the Great Depression. He explains that where Great Britain had risen out of the depression by 1933, the United States found itself in greater peril by 1937. The United States had maintained its high unemployment, “but in addition the federal government has built up an enormous debt.”[13] Additionally, World War II did not save the United States from the effects of the Great Depression; in fact, he states that “the Great Depression does not really end until 1947 or 1948, and the war simply conceals or covers up the continuing low level of real wealth-creating economic activity in the United States.”[14] In the end, the statistical data produced by economists that share Davies’ definition of capitalism clearly show that the New Deal weakened capitalism.



[1] Steve Davies, “Capitalism is NOT Imperialism,” Learn Liberty, June 3, 2013, http://www.learnliberty.org/videos/capitalism-not-imperialism/.
[2] Jim Powell, FDR's Folly: How Roosevelt and His New Deal Prolonged the Great Depression, (New York: Three Rivers Press, 2003), vii.
[3] Ibid, ix-x.
[4] Ibid.
[5] Ibid, xi.
[6] Ibid, xii.
[7] Ibid.
[8] Ibid.
[9] Burton Folsom Jr., (2011), "Does Obama Have Any Idea Why New Deal Failed?," Human Events 67, no. 30: 25.
[10] Ibid.
[11] Thomas J. DiLorenzo, "New Deal for the World, A," Mises Institute, January 1, 1999, https://mises.org/library/new-deal-world.
[12] Alan Brinkley, (2008), "No Deal," New Republic, December 31. 12-13.
[13] Steve Davies, "Top Three Myths About the Great Depression and the New Deal," Learn Liberty, July 1, 2011, http://www.learnliberty.org/videos/top-three-myths-about-the-great-depression-and-the-new-deal/.
[14] Ibid.

Tuesday, October 6, 2015

Democratic Governments Must Tolerate Dissent




            A true democratic government absolutely has to tolerate dissent at all times. Democracy is a system where the people are in power and govern directly or through the election of representatives. The people are the voice of the government; thus, dissension or expressions of the people that differ from either the majority or minority must be allowed for the system of government to progress as structured. Any attempts to destroy the people’s voice to any degree then would destroy the democratic system of government.
            The Bill of Rights protects this right of expressing opposing opinions or dissension in the First Amendment: “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”[1] It is a fact that not all people in the United States will agree with all of the laws of the federal, state, and local governments; but suppression of their viewpoints or dissension would be unconstitutional. Dissidents of the law, who share their views, must not be persecuted or silenced by the law. However, violence perpetrated by dissidents is also at odds with the democratic system of government.
            In the United States, Congress has the power to “suppress insurrections” or violent uprising against the government.[2] Dissension by itself is not a violent action, nor is it treason. A dissident believed of committing a crime against the country would still have their rights to be protected from illegal searches and seizures, a right to a speedy trial, and to be judged by their peers. However, it has been the case with the federal government to infringe upon these constitutional rights in times of war and crisis.


            John Adam’s administration passed the Alien and Sedition Act (1798), which was meant to silence, arrest, and fine their opposing party’s dissension towards their policies. Abraham Lincoln suspended habeas corpus—an action only allowed by Congress, not the Executive Branch—during the Civil War to incarcerate Northern dissidents, who opposed his administration’s actions. Woodrow Wilson’s administration resurrected the Sedition Act and the Espionage Act during the First World War, which allowed for further suppression of civil liberties once again. The bills passed during Wilson’s presidency witnessed similar outcomes and infringements against civil liberties that Adams and Lincoln allowed during their terms prior.

The Espionage Act of 1917 imposed $10,000 fines and as much as 20 years in prison for anyone saying or doing anything the state construed as “discouraging enlistments” in the military. The Sedition Act of 1916 imposed similar criminal penalties for any type of criticism of the government. All printed materials were censored; thousands were deported without due process of law; and state-sponsored vigilante groups conducted warrantless searches and seizures. The author Upton Sinclair was arrested for reading the Bill of Rights in public; the poet E. E. Cummings was imprisoned for three-and-a-half months for writing a letter to his mother saying that he did not necessarily hate Germans; and in New Jersey one Roger Baldwin was arrested for reading the Constitution in public.[3]

            Violent acts against the government are criminal actions that must be brought before the legal system; however, simply dissension is protected by the Constitution and should not be infringed. In the Virginia Resolution, which opposed the Alien and Sedition Act of 1798 stated that "the Liberty of Conscience and of the Press cannot be cancelled, abridged, restrained, or modified by any authority of the United States."[4] Any action to the contrary by the government to suppress free speech, even dissention, goes against the intended purpose of a democratic government. Government actions to suppress freedom of speech and other  constitutional rights during the Wilson administration is what led to Eugene Debs’ response after his conviction  in 1918, “They tell us that we live in a great free republic: that our institutions are democratic; that we are a free and self-governing people. This is too much even for a joke.”[5]




[1] U.S. Constitution, amend I.
[2] U.S. Constitution, art. 1, sec. 8, cl. 15.
[3] Thomas J. DiLorenzo, “The Virus of Imperialism (Part II),” Mises Institute, September 9, 2013, https://mises.org/library/virus-imperialism-part-ii.
[4] “Virginia Resolution – Alien and Sedition Acts,” The Avalon Project, http://avalon.law.yale.edu/18th_century/virres.asp.
[5] John Milton Cooper, Jr., Pivotal Decades: The United States, 1900-1920, (New York: W.W. Norton & Company, 1990), 299.

Monday, October 5, 2015

Child labor laws



            Child labor laws were a result of industrialization and manufacturing; which commenced in the United States long before the Gilded Age. However, after the Civil War concluded and the Free States claimed victory, the free labor system—so predominant in the North—began to spread across the nation. Issues with child labor and related legislation arose in the North during the antebellum period; and it was magnified in the Gilded Age, as the industries multiplied and child labor grew.


            Children have worked right alongside of adults for thousands of years. They hunted and gathered with their nomadic families; and children planted seeds and harvested crops in agrarian societies. For many, this was the best education that they could obtain; since they would do the same work to provide for their families. The industrial revolution not only changed world markets, but they also changed the face of labor.


            Industrialization in America employed men, women, and children. Even the United States’ first secretary of treasury, Alexander Hamilton, remarked on the worth of children laborers, in his “Report on Manufacturers,” that “children are rendered more useful…by manufacturing establishments than they would otherwise be.”[1] The factories and mills hired children especially to work the jobs that were easier for their little hands and bodies to do. Like female laborers, the children also did not receive equal pay. When children labored “in piecework,” their employers often paid them “by the item rather than the hour.”[2] By 1880, the United States census recorded that there were “1.18 million children between the ages of ten and fifteen” working in America.[3] Every ten years, the number increased; and by 1910, there were over two million child laborers in America.[4] However, 72 percent of that group of child laborers was comprised of “farm kids,” with the majority of them working on family farms.[5] Despite the minority number of children working in industrial industries, great attention was brought to the work conditions that they labored under through concerned reformers.
            Even though slavery was abolished through the Thirteenth Amendment, slave-like treatment of free laborers was not also eradicated by that legislation. Laborers during the Gilded Age complained that they were treated like animals, “like slaves, like prisoners.”[6] Some complained that they had no “free time;” while others swore, had they known how they would have been treated in their industry, they “would never have come here.”[7] Children were part of this labor force, and were exposed to the same harsh working conditions as everyone else. However, these situations were not going unnoticed by concerned Americans. Gilded Age authors took to their pens to write compelling stories to highlight the oppressed worker. One story had a concerned citizen confront the father of one child laborer and told an alarming story: “He was out so late about the streets, Mr. Mell. He uses tobacco as most children use candy. And a child of that age ought not to be in the mills, Sir, he ought to be at school!”[8]
            The media, popular culture, and the cry of the reformers pushed local, State, and Federal governments to enact laws to protect the children from abuse. Restrictions on child labor that had its seeds in Massachusetts starting as far back as 1866, intensified during the Gilded Age.[9] By 1900, there were “twenty-eight states [that] restricted child labor.”[10] The restrictions varied from State to State, but efforts were being made to improve the lives of American children. For example, the age limit in Washington State to allow a child at “begging, peddling, or selling any article, or singing or playing musical instrument for gain on street,” was placed at ten years of age.[11] A sixteen year old in Vermont that had completed 9th grade could work “during school hours” on the railroad, at a mine, in a factory, a quarry, “in hotels, bowling alleys, or messenger service.”[12] In Utah, a person had to be twenty-one before they could deliver “messages or goods to immoral resorts, or other objectionable places, and in manufacture, selling or handling intoxicating liquors.”[13]




[1] Bill Kauffman, “Child Labor Amendment Debate of the 1920’s; or, Catholics and Mugwumps and Farmers,” The Journal of Libertarian Studies, vol. 10, no. 2 (1992): 140.
[2] Rebecca Edwards, New Spirit: Americans in the Gilded Age 1865-1905, (New York: Oxford University Press, 2001), 63-64..
[3] Kauffman, “Child Labor Amendment Debate of the 1920’s,” 142.
[4] Ibid.
[5] Ibid.
[6] Edwards, New Spirit, 62-63.
[7] Ibid, 63.
[8] Kauffman, “Child Labor Amendment Debate of the 1920’s,” 141.
[9] The Gilded Age: Perspectives on the Origins of Modern America, 2nd edition, edited by Charles W. Calhoun, (Lanham: The Rowman &Littlefield Publishing Group, Inc., 2007), 361.
[10] Ibid.
[11] “The Child Labor Bulletin,” The National Child Labor Committee, vol. 1, no. 2 (1912):  70.
[12] Ibid, 68.
[13] Ibid, 66.