Echoes Dispatches From Economic History

Republican legislators across the country have recently reinvigorated debate about the “right to work.” To the great fury of Democrats, they have introduced bills to either create or strengthen laws prohibiting unions from bargaining for contract clauses that make membership a requirement to work in an organized firm.

But the concept of a “right to work” has a long and bipartisan history.

The agents moved in to seize the illicit shipment, but the traffickers turned on them, shooting the senior officer and destroying his vehicle. With the local courts hopelessly compromised and corrupt, the outraged authorities wanted to extradite the perpetrators. But this only made them more defiant and violent, and they were never caught or prosecuted.

This may sound like Tijuana or Juarez in recent years, but the year was 1772, and the place was near Providence, Rhode Island. The ringleader of the attack, John Brown -- a prominent local merchant whose business interests included smuggling and slave trading -- helped found the university that bears his name (and happens to be my employer).

In 1928, to capitalize on a booming economy that everyone just knew would continue to improve, a group of Chicago businessmen decided to commemorate the city’s centennial by promoting a 1933 World’s Fair.

One hundred million visitors were expected to come to the 400 acres of new parkland along Lake Michigan and deposit their wealth into city coffers. Operating funds were raised with a $10 million bond sale on Oct. 28, 1929. The next day, the stock market crashed.

Writing nationally syndicated columns for the New York Times and hosting regular radio broadcasts, Will Rogers was a busy cowboy humorist in June 1932.

Arriving early at Chicago’s Congress Hotel for the Republican convention, he began interviewing congressmen.

Nouriel Roubini on Germany ignoring the lessons of the 1930s
The Center for Economic Studies on the rise and fall of union membership
The British Museum on the history of money
The Big Picture on the importance of paying attention to long secular cycles
Free Exchange on the decrease in American mobility
History News Network on Supreme Court justices misquoting Alexander Hamilton in the health-care dissent

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

This month marks 150 years since President Abraham Lincoln signed the Pacific Railway Act, committing the federal government to support a transcontinental railroad. The federally subsidized construction of the Union Pacific and the Central Pacific, culminating in the driving of the famous golden spike in Utah in 1869, was an epic achievement, cutting weeks off the travel time between the East and California, and truly knitting the continent together.

Although the railroad between Omaha and Sacramento did much to boost national unity and economic growth, it wasn’t a boon for everyone. Like any economic change, it created losers as well as winners.

Big historical events often come to seem inevitable, and little today seems more inevitable in retrospect than America’s declaring independence on July 4, 1776.

So it can be startling to recall that well into the spring and early summer of that year, the Continental Congress meeting at the State House in Philadelphia was by no means committed to declaring independence. Until the last minute, powerful men in the Congress still hoped to negotiate a settlement with England.

Elmer Davis, born in Aurora, Indiana, in 1890, became a Rhodes Scholar and then joined the New York Times as a reporter in 1914. By the early 1920s, he had drafted a history of the paper and created a memorable satirical alter ego, Godfrey G. Gloom, an “old-fashioned Jeffersonian Democrat from Amity, Indiana.”

Gloom attended both national political conventions in Chicago during the 1932 presidential campaign, and Davis recorded his comments in interview form in the New York Times.

The 21st century began with a major correction on Wall Street and a long period of volatility in global financial markets. The VIX, sometimes called the fear index, soared, and congressional hearings explored why major investment banks couldn’t better hedge market risk. Traders sought reprieve, and risk management became elevated from prudent practice to a tool for financial survival.

Risk is most efficiently managed through the purchase of options and other derivatives. Many investors know that the economists Fischer Black and Myron Scholes are considered the pioneers of derivatives pricing through their options-pricing theory. Their Black-Scholes formula and its variations remain the primary tools in the optimal pricing and determination of derivatives hedges.

History News Network on a century of U.S. health-care reform."
Free Exchange on America's changing dependence on foreign oil.
Centre for Economic Performance on Germany's Great Depression.
EconoMonitor on parallels between Europe 1931 and today.
The Atlantic on the comeback of the American city.

Germans complaining about how Greeks, Italians and Spaniards aren’t paying their debts is a recurring feature of Europe’s debt crisis.

In May, German Finance Minister Wolfgang Schaeuble declared in a radio interview that “We Germans show that it’s possible to have solid fiscal policy and generate growth at the same time. We have the lowest unemployment. Those recipes that work for us must be applied in other countries and not the opposite.” A month later, he complained that Greece’s crisis was due to “decades of economic mismanagement.” And this week, he said U.S. President Barack Obama “should, above all, deal with the reduction of the American deficit.”

American history is full of fractious political battles similar to those of the past decade. At the heart of most usually lies an organized special-interest group opposed to the White House and its policies.

Perhaps the most famous of them was the short-lived American Liberty League.

Republicans departing their convention in June 1932 left their mark on Chicago, just as the Democrats were arriving.

Civic leaders had spent $150,000 to host the Republican convention, anticipating its 10,000 visitors would keep cash registers clanging. No such luck. Most enterprises wound up “singing the blues,” as shopkeepers’ convention income proved negligible, the New York Times reported.

The Exchange on the Bank of England's new online archive
Project Syndicate on John Maynard Keynes's essay on technological unemployment and shifts in East Asian development
The Atlantic on a graph of 2,000 years of economic history and the Economist's critique
Free Exchange on the mistake of using the Marshall Plan to defend Germany's position today
Kevin Drum on high school education over the past 30 years
James Fallows on apologizing for the Chinese Exclusion Act of 1882
Iowa State University on 25 years of Wal-Mart influence on Iowa retail

To read more from Echoes, Bloomberg View's economic history blog, click here.

In recent weeks, the financial pages have intensively covered JPMorgan Chase & Co. (JPM)’s $2 billion losses in derivatives trading. The episode has raised questions about the ability of Jamie Dimon, “the King of Wall Street,” to continue as the financial industry’s leading spokesman for regulatory restraint.

Some commentators have speculated that this incident may stiffen the resolve of legislators and regulators to demand tight limits on proprietary trading by depository institutions. This possibility suggests a look back to a moment during the Great Depression that did trigger more rigorous financial regulation -- the spectacular downfall of Richard Whitney.

In its heyday, the annual corporate report approached a work of art: a handsome glossy document crowded with splendid color photographs showing a company’s officers and smiling employees hard at work.

Pages crammed with data, statistics and charts underscored the message that things were going really well -- or, if not, would soon be right back on track. What annual reports lacked in candor they made up for in presentation, their prose crafted with care by consultants specializing in the art of best-foot forward. The annual report was, in short, a piece of propaganda designed to make management look good and stockholders feel good.

There was never a doubt that President Herbert Hoover would be renominated as the Republican Party’s standard-bearer in June 1932.

Still, a critique in the Economist was biting:

Economix on government leaks and press freedoms
Free Exchange on the Baltic recovery model
Kevin Drum on the rise of the 1 percent
History News Network on Nixon's biggest crime (not Watergate)
The Big Picture on corporate buzzwords by the decade

To read more from Echoes, Bloomberg View's economic history blog, click here.

Do big corporations really control U.S. politicians through money and contributions? Is the system more corrupt today than ever before?

It often seems that way. U.S. corporations spent about $3.32 billion in 2011 to lobby officials in Washington, according to OpenSecrets.org. This, plus billions more in newly liberated campaign contributions and other practices have combined to create a system many describe as “legalized bribery.”

Citigroup Inc. (C)’s online timeline commemorating its 200th anniversary presents a story of achievement, progress and world-uniting vision, but it says little about the Republic of Haiti -- and no wonder.

Citigroup’s history in Haiti is remembered as both among the most spectacular episodes of U.S. dollar diplomacy in the Caribbean and as an egregious example of officials in Washington working at the behest of Wall Street. It’s also a story marked by military intervention, violations of national sovereignty and the deaths of thousands.