Echoes Dispatches From Economic History

Kirsten Salyer

Economic History Roundup

11 months ago
Weekly Links

(Kirsten Salyer is social media editor for Bloomberg View. Follow her on Twitter.)

READ MORE

Philip Scranton

When the Senate Went After Wall Street

11 months ago
BE052226

In the spring of 1933, many Americans blamed Wall Street for the financial havoc caused by the Great Depression. Millions had lost investments through industrial bankruptcies, foreclosures, bank failures, bond defaults and collapsing stock prices.

That sentiment intensified in May as the Senate probed the crash and its aftermath. Emerging documentation of insider favoritism and fraud "created a cyclone of outrage" and generated broad public support for President Franklin D. Roosevelt's financial agenda.

READ MORE
Hilter in the First Beetle

“Owning a VW is Like Being in Love,” Popular Mechanics announced after polling its readers in 1956. “These owners have actually fallen in love with a car.”

Popular Mechanics wasn’t alone in marveling at the U.S. reception of the small “made in Germany” car. The New York Times Magazine, Fortune, Business Week, Road and Track and the Nation added to a buzz that was vastly disproportionate to the vehicle’s market share at the time. Of the 7.9 million new automobiles sold in the U.S. in 1955, Volkswagen AG (VOW) had accounted for just 28,907.

READ MORE
U.S. Capitol Ruins

Most developed nations try to limit the inflow of people from less developed ones. Yet, until the early 1800s, migration policy worked in the opposite direction, and was aimed at preventing skilled people in relatively advanced economies from seeking opportunity elsewhere.

For centuries, Europe’s rulers believed that when it came to trade, one nation’s gain was another’s loss, and that the strength of a state depended on an ample treasury of precious metals to finance war. Along with import prohibitions, export bounties and high tariffs, bans on emigration were seen as legitimate means to encourage the sale of goods that would bring in gold from abroad.

READ MORE

Philip Scranton

How Roosevelt Fixed Farms and Factories

11 months ago
BE052226

On May 7, 1933, President Franklin D. Roosevelt gave his second national radio "fireside chat," outlining New Deal reforms in farming and manufacturing.

Both industries had been afflicted by overproduction, low prices and low wages as the Great Depression dragged on. In response, Roosevelt was now proposing that the government intervene in the economy on a new scale.

READ MORE
Rockefeller

Today, Benjamin Graham is known primarily as Warren Buffett’s investing mentor and the author of multiple classics about value investing. Toward the end of his life, in the 1973 edition of “The Intelligent Investor,” Graham wrote, “Ever since 1934 we have argued in our writings for a more intelligent and energetic attitude by stockholders toward their managements”.

Even before the 1934 publication of his first book (co-written with David Dodd), Graham had shared his wisdom regarding the rights of shareholders through the financial press of that era. Graham’s 1932 series of articles for Forbes -- which featured headlines such as “Are Corporations Milking Their Owners?” and “Should Rich Corporations Return Stockholders’ Cash?” -- is probably his most notable contribution.

READ MORE

Kirsten Salyer

Economic History Roundup

11 months ago
Weekly Links

Read more Echoes online.

(Kirsten Salyer is social media editor for Bloomberg View. Follow her on Twitter.)

READ MORE
Billy Sol Estes

Billie Sol Estes, the Texan con man whose exploits rattled the administrations of Presidents John F. Kennedy and Lyndon B. Johnson, died in his sleep May 14. From a penniless background, Estes built up a $40 million West Texas empire of cotton, grain, real estate and fertilizers, and then lost it all when a series of newspaper articles in 1962 revealed that many of his dealings were fraudulent.

Estes once wrote that “Everything I touched made money.” The truth was that everything he touched was tainted. His downfall toppled five federal officials, was linked to seven mysterious deaths and was rumored to have almost cost Johnson his spot on the 1964 presidential ticket (though you won’t read a word about Estes in Robert A. Caro’s four-volume biography, “The Years of Lyndon Johnson”). As it turns out, even the story behind the story that brought down Estes has a shady element.

READ MORE

Robert Wright

How Nonprofits Became Tax-Exempt

11 months ago
Tax Forms

The uproar over allegations of politically motivated investigations by the Internal Revenue Service shouldn’t be surprising given Americans’ long love affair with nonprofits and their strong disdain of partisanship, especially within bureaucracies.

After independence, and especially after ratification of the Constitution, Americans began forming businesses, charities and other associations at unprecedented rates. Unshackled from British law and the threat of monarchical tyranny, they sought to invest in long-term stability, and in each other, in ways that required the establishment of large and lasting organizations.

READ MORE

Robert Kuttner

Germany's Perverse Devotion to Austerity

11 months ago
Reparations

Next summer will mark the 100th anniversary of the chain of diplomatic missteps that led to World War I. In light of recent economic blunders, this also should be the opportunity to revisit the war’s aftermath, when miscalculations seeded the conditions that led to World War II.

In 1919, at the Versailles Peace Conference, France and the U.K. resolved to impose draconian “reparation” payments on a defeated Germany. The idea was both to compensate the U.K. and France for the horrific costs of the war, and to ensure that Germany could never again threaten Europe.

READ MORE

Philip Scranton

Roosevelt's First 100 Days

11 months ago
New Deal

In his first 100 days in office, President Franklin D. Roosevelt steered 15 major bills through Congress. This flood of legislation restructured faulty market practices and laid the groundwork for years of New Deal reforms to bring the economy out of the Great Depression.

Political commentator Walter Lippmann was stunned. Before Roosevelt’s inauguration in March, "we were a congeries of disorderly, panic-stricken mobs and factions," he wrote. "In the 100 days from March to June we became again an organized nation confident of our power to provide for our own security and to control our destiny."

READ MORE
Steam Engines

Tomorrow happens to be National Train Day, which was designated as the first Saturday after the anniversary of the driving of the “Golden Spike.”

On May 10, 1869, the Central Pacific and Union Pacific (UNP) railroads were joined in a remote area of Utah, completing the first transcontinental railroad. This made the West Coast easily accessible for the first time, along with the vast expanse between the Pacific Ocean and the Missouri River. This region, often called the “Great American Desert,” previously had been as alien to easterners as the moon.

READ MORE

Kirsten Salyer

Economic History Roundup

12 months ago
Weekly Links

Read more Echoes online.

(Kirsten Salyer is social media editor for Bloomberg View. Follow her on Twitter.)

READ MORE
Henry Ford

Corporate jargon has now given us the term “hive mind,” which expresses the belief that a group of individuals working in proximity can achieve a sort of critical mass that will generate more and better ideas than an individual working alone could. Many businesses in Silicon Valley seek to foster this creative environment.

This isn’t a new idea. There have been plenty of such places in U.S. history, including the Jet Propulsion Laboratory, in Pasadena, California, and the Manhattan Project, in Los Alamos, New Mexico. Perhaps the best example, however, was Detroit, where Henry Ford (F) was at the center of a hive mind that encompassed an entire city in the last years of the 19th century and remade America in the first years of the 20th.

READ MORE
First Income Tax Form 1040

A century ago today, the U.S. took a critical step toward embracing a permanent income tax when the House passed the Revenue Act of 1913, which led to the creation of the familiar Form 1040. For many years, however, few Americans were required to fill out the dreaded document because the income tax affected only a small number of wealthy taxpayers.

In 1943, Congress converted the income tax to a mass levy by drastically lowering exemption levels and introducing wage withholding. A Philadelphia lawyer, Clement J. Clarke Jr., told the House Ways and Means Committee that the mass tax could be designed so that returns wouldn’t be required for most taxpayers.

READ MORE
Cattle-Slaughtering Industry

Attention, American carnivores: the next time you pick up your fork and knife at your favorite steakhouse and dig into that perfectly marbled meat, say a little thank you to England’s “Beef-Eaters.”

Few of us realize the role that England played in the development of America’s beef trade. As “the great beef-eaters of Europe” in centuries past, the English (at least the middle and upper classes) consumed far more beef than their continental neighbors. Meat, and particularly beef, was believed to ensure great strength and virility.

READ MORE

Philip Scranton

When the Great Depression Hit the Oil Industry

12 months ago
Oil wells

The global oil industry faced a classic squeeze in the spring of 1933: falling prices and expanding supply.

This brutal dynamic would exacerbate the international tension and economic havoc already roiling the world's markets during the Great Depression. And it would help set the stage for a century of energy politics.

The world's oil producers blamed the U.S.

READ MORE
Grenville

As the euro area tries to wrestle member states into fiscal submission through bailouts, austerity and capital controls, it would be well advised to consider a historical precedent: the American Revolution.

In the early 18th century, North America held a role in the British Empire that was similar to the one occupied by Cyprus or Slovenia in the euro area today. Americans were slavers, smugglers, rumrunners and fanatics -- as “opulent, commercial, thriving” as they were irresponsible and fiscally profligate. But as the empire struggled to stay solvent after the Seven Years War, the government of Prime Minister George Grenville attempted to bring the colonists to heel in the name of fiscal austerity.

READ MORE

Kirsten Salyer

Economic History Roundup 

12 months ago
Weekly Links

Read more Echoes online.

(Kirsten Salyer is the social media editor of Bloomberg View. Follow her on Twitter.)

READ MORE
Refinancing Assistance for Mortgages

In most of the world, homeownership isn’t seen as a natural step in the progress toward responsible adulthood. Outside the U.S., mortgages are for small amounts, for shorter times, and have adjustable interest rates. The popular U.S. 30-year mortgage with a fixed rate, which makes possible low monthly payments and a more certain future, is an oddity.

How did Americans develop such a peculiar financial practice? The New Deal.

READ MORE

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."