Echoes Dispatches From Economic History

1912 Election

Since the financial collapse of 2008, the advocates of regulation and the supporters of competition (via breaking up the banks) have echoed a debate that took place 100 years ago.

The presidential election of 1912, which occurred at the climax of modern industrialization and finance capitalism, featured four candidates espousing different solutions.

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Michael Schiltz

Japan’s Ill-Fated Experiment With Money Doctoring

about 2 years ago
Echoes: 11/29

The business of giving advice to other nations on how to manage their finances has always been a contentious undertaking.

In the 1910s, U.S. economists such as Edwin Kemmerer preached the virtues of a stable currency to Mexico and Guatemala; more recently, Greece has received plenty of advice from the International Monetary Fund.

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Echoes: 11/29

Not every economic-development program works out. On a late April morning in 1801, most of Cincinnati’s thousand citizens lined the banks of the Ohio River, eager to watch one of the wonders of the age. A great new sailing ship, St. Clair, was passing downriver from Marietta for its maiden voyage on the high seas.

But something was terribly wrong: Those spectators were 600 miles from the closest salt-water port.

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Echoes: 11/27

When speculative bubbles form, as they did in the 1920s and the late 1990s, the financial community invariably listens to academic entrepreneurs peddling their pet philosophies about the financial boom.

There have been many such financial celebrities, though Irving Fisher, the son of an itinerant minister from New York and Connecticut, may have been the first.

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Philip Scranton

The End of the Radio Trust

about 2 years ago
Radio Corporation of America broadcast transmitter

Since the 1890s, U.S. antitrust litigation had sought to protect consumers and competitors from concentrated business power and the rigged prices it often yielded. On Nov. 21, 1932, a consent decree signed at a U.S. district court in Delaware proved a "decisive step" in the efforts to enforce antitrust law.

The decree separated the Radio Corporation of America from General Electric Co. and Westinghouse Electric & Manufacturing Co., ending the lawsuit the Justice Department had brought against the radio trust in 1930 for monopolistic practices.

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Echoes: La Grippe

The financial meltdown of 2008 has been attributed to a pre-crash economy whose incentives and rewards resembled a freewheeling casino rather than a rational marketplace.

Sometimes knowingly, sometimes unwittingly, and almost always shortsightedly, banks, government entities and consumers joined forces to create an environment in which untrammeled speculation, unwarranted credit, and pyramids of foolishly assumed debt yielded the appearance of boundless prosperity while masking the inevitability of epic disaster.

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Kirsten Salyer

Weekly Links

about 2 years ago

The London School of Economics on financial centers in the 18th century
The University of Delaware on the original Operation Twist
The Exchange on Milwaukee's brewing history
History News Network on the accuracy of the film "Lincoln"
The Winthrop Group on the democratization of higher education
The New York Times on tax-reform lessons from Ronald Reagan

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Philip Scranton

When the U.S. Asked Europe for Its Money Back

about 2 years ago
Echoes: FDR

"No sooner had the last U.S. ballot been counted, than Great Britain led France and other Debtor Powers last week in a free-for-all drive by press stories and diplomatic notes toward present postponement and future cancellation of what Europe owes the U.S."

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Echoes: Berley, 11/16

Quick, when did the Cold War end? One obvious choice: June 1987, when U.S. President Ronald Reagan stood in front of the Berlin Wall that separated communist East Germany from capitalist West Germany and famously challenged the Soviet leader Mikhail Gorbachev to “tear down this wall.”

Yet at about the same time as Reagan’s telegenic dare, far from the glare of the cameras, a less sensational but perhaps more significant barrier was crumbling: the one separating communist China from capitalist Taiwan.

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Kirsten Salyer

Weekly Links

about 2 years ago

The American Prospect on economist Arthur Cecil Pigou's insight on inequality
The Institute for the Study of Labor on how the market rewards influential economic research
Barcelona Graduate School of Economics on the mean lifetime of famous people
The Big Picture on the worst quarter for corporate profits in three years
The American on how China became capitalist

Read more from Echoes, Bloomberg View's economic history blog

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Echoes: Robert Walpole

As President Barack Obama and congressional Republicans seek to resolve the so-called fiscal cliff, the combination of automatic tax increases and spending cuts scheduled for next year, a mutually agreeable solution is lurking in an unexpected place: the 18th century.

In the 1700s, Great Britain had a debt burden that was even more ominous than the $16 trillion the U.S. government now owes. In 1716, Parliament proposed an ingenious, and fairly uncontroversial, way to reduce this debt, called a sinking fund. The scheme was copied 74 years later by the U.S. Congress. And it could work just as well now as it did three centuries ago. The sinking fund was the brainchild of Robert Walpole, who was then the first lord of the Treasury and chancellor of the Exchequer. Its purpose was to chip away at a national debt that had swollen to 55 million pounds, which Parliament considered “insupportable.”

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Kenneth D. Ackerman

History Suggests Grand Bargain to Avert Fiscal Cliff

about 2 years ago
Echoes: 11/14

The “fiscal cliff,” a combination of tax increases and severe spending cuts scheduled to kick in next year, is a product of multiple deceptions. Both the expiration date on the Bush-era tax cuts and the trillion-dollar “sequesters” that were enacted as part of last year’s debt- ceiling deal were designed to cover up an overarching problem: the country’s out-of-control debt.

The U.S. government today owes $16.05 trillion to bondholders and creditors, more than $51,000 for every American. This debt is already larger than the country’s annual economic output and threatens to cripple the economy for generations.

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Alasdair Roberts

Warren Harding’s Fatal Quest for Normalcy

about 2 years ago
View: 11/13

Ohio again is the big political state,” the Cincinnati Post said. “It may be pivotal as well as political. It may decide the election.”

It was June 1920, and the newspaper had good reason to boast. A few days earlier, the Republican convention in Chicago had nominated Ohio Senator Warren G. Harding as its candidate for president. And the Democratic convention in San Francisco was about to make its own bid for Ohio’s 24 electoral votes by choosing the state’s governor, James M. Cox, as its flag bearer.

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Philip Scranton

Roosevelt Wins and the Beer Battle Begins

about 2 years ago
Echoes: Roosevelt Wins

As the 1932 presidential election neared, Benjamin Roth, a stalwart Republican and devoted diarist, was deeply discouraged.

"Business is at a complete stand-still and it looks like a tough winter," he wrote. “The national election campaign grows intense and people are very partisan."

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Heather Cox Richardson

When Republicans Deliberately Sowed a Financial Crisis

about 2 years ago
Uploaded by UUID:6697267 at 11/8/2012 12:46 PM

This week, President Barack Obama won re-election in a victory that so surprised many of his ideological opponents that they have spent the hours since wailing that the country is going to wrack and ruin.

With a divided and polarized government, and a battle looming over a “fiscal cliff” of more than $600 billion in tax increases and spending cuts scheduled for next year, Obama faces a rocky term ahead -- even assuming his Republican opponents negotiate in good faith.

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Echoes: 11/6

Whoever prevails in today’s election, the 2012 presidential campaign should go down as a referendum on the long conservative fascination with Ayn Rand, the controversial libertarian novelist and philosopher.

Mitt Romney, the Republican candidate and former titan of private equity, embodies Rand’s belief in the moral rectitude of free-market capitalism. A secretly videotaped speech Romney gave to a private fundraising audience -- in which he asserted that 47 percent of Americans were “dependent upon government” -- was an excellent distillation of this worldview.

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Philip Scranton

When the Unemployed Marched to London

about 2 years ago
TWIGD 11/5

By 1932, the U.K. had been running a national unemployment insurance system for more than 20 years. But no amount of experience could prepare the government for the demands of the Great Depression.

The National Insurance Act of 1911 provided health-care coverage and industrial unemployment benefits to the unemployed. Workers, employers and the government contributed to the fund.

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Echoes: 11/02

Even as global financial turmoil induces some to advocate for freer markets, the heavier hand of Keynesian macroeconomic policy is also experiencing a resurgence.

Yet John Maynard Keynes was far more than the Ivory Tower academic economist we think we know. He was, above all, a practitioner and student of high finance. Investment and finance were his vocation, and political economics was his avocation.

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About Echoes

Echoes is Bloomberg View's economic history blog. It is edited by Stephen Mihm, an associate professor of history at the University of Georgia and the author, with Nouriel Roubini, of "Crisis Economics: A Crash Course in the Future of Finance," and of "A Nation of Counterfeiters: Capitalists, Con Men and the Making of the United States."