First Secretary of the Treasury under George Washington, Alexander Hamilton, is known as the Father of Modern Capitalism. One historian says Hamilton “supported government intervention in favor of business.” He wielded power over Washington and New York’s merchants and financiers. Hamilton was responsible for a number of policies aimed at a strong centralized government for the elite to take power over the people.
Actions of Hamilton:
- Bundled state and national debt(worthless IOUs) of the American Revolution
- Sold bundled debt to the rich
- Elite investors offered enormous profits for supporting US debt bonds
- To protect US manufacturers gave direct subsidies to business(handouts) & placed tariffs on imported goods
- Taxation of whiskey (led to a rebellion, but put down by national army)
- Created First Bank of U.S. (issuing paper currency)
- Created U.S. Mint
- Hamilton’s push for a strong national government and disdain for the common man put him at odds with Thomas Jefferson/James Madison, lobbyists for individual freedoms
- Hamilton vs. Jefferson/Madison led to the U.S. political party system
In the 1890s, the U.S. went into a major economic panic & Depression
Farms in the South and Midwest went belly up. About one-quarter of the railroads went bankrupt( railroad bubble akin to housing bubble). Unemployment reached 20% --4 million people.
Causes of the 1890s Depression
- Robber Barons in control of America
- Reading RR went into receivership, and other rail companies followed, triggering panic in US & overseas markets
- Railroad speculation, stock manipulation, no governmental oversight of monopolies, vote buying, political bribery, media control, interception of telegraph messages
- Farm debt (RR cartels price gouged for storage & shipping)
- Bank failures (600)& bank runs
- 15,000 bankrupt businesses(over-production/under-consumption of goods & services)
- Middle class home foreclosures/loss of life savings
- Currency: too much silver and not enough gold. Reserves fell to all-time low. Pres. Cleveland forced to borrow $60 million from JP Morgan to put the U.S. economy back on solid ground.
Reaction to Depression
- Some Americans blamed those who could not find work, accusing them of laziness or begging
- Wealthy feared violence and insurrection of the poor
- Rich lacked regard for common worker
- Protests and strikes throughout Depression.
- Federal troops, police at Tompkins Square Park attacked unemployed; hired Pinkertons used to put down union strikes or demonstrations.
- Most notable protest: Ohio businessman Jacob Coxey’s "Industrial Army" and his march with 500 men to Washington. Coxey and some leaders arrested for walking on the grass of U.S. Capitol. Coxey’s Army merely wanted to petition or lobby for jobs, road building, public works projects.
- Captains of Industry were anti-immigrant, fearing a takeover or “mongrelization”
Crash of 1929
1925-1929--Economic conditions eased--stock prices doubled
- By 1929, over a BILLION shares were traded! Stock exchange added 275 new seats.The stock market continued rising until October 24, 1929
- Selling frenzy and 13 billion shares and $4 billion later--the CRASH!
How Did Great Depression Happen
- Easy bank credit(credit bubble)
- Brokers pushing overpriced stocks
- Speculation orgy
- No government oversight
- Overproduction (supply vs. demand) by consumers
- Consumer fear & panic
- Simple explanation: http://www.angelfire.com/co/pscst/stock.html
After the Crash
- With the population of the United States at about 125 million, in 1929 fewer than two million people were unemployed countrywide; in 1930, eight million had no jobs; in 1931, thirteen million were without work. The jobless rate would peak between 1932 and '33 when sixteen million men -- or about one third of the national labor force -- were out of work.
- Rich remained rich: Mellon, Carnegie, Rockefeller, Harriman, Morgan, Vanderbilt, Astor, Ford
Random History Facts http://facts.randomhistory.com/2009/04/12_great-depression.html
- When the Depression struck, Mexican-Americans were accused of taking jobs away from “real” Americans and of unfairly burdening local relief efforts. Some were “encouraged” to return to Mexico
- Some scholars speculate that a “Great Depression” in 2009 would lead to more T.V. watching as an escape, longer lines at the ER, laid-off office workers migrating to the country, and even online banking runs. Overall, it would be less visible and more isolating than the 1930s' Depression.a
- Some scholars find the 2009 economic condition more troubling than that of the 1930s' Great Depression because debt in 2009 includes not only stocks but also millions of homes, property, local governments, and entire nations. Also, in contrast to the 1930s, the U.S. is now a debtor nation and more households in the U.S. are in far greater debt.
Economic recession in the 1980’s
- Ronald Reagan gave the S&Ls carte blanche to increase profitability by pumping up home ownership. Sound familiar?
- The easing of restrictions continued under George HW Bush. Poppa Bush and all the baby Bushes were elbow-deep in the S&L robbery that cost Americans, some say, $1.4 trillion. Example: Jeb Bush defaulted on a loan worth nearly $5 million. His collateral was a piece of property that was appraised at $500K. Guess who had to pick up the tab for $4 million? Check out Neil Bush and Silverado S&L. Neil, too, cost taxpayers $1.6 billion.
- Next crash was Enron in 2001-- an estimated $1-$74 billion lost in accounting scam. Enron gave over $5 million to campaigns since 1998. Out of the 248 elected officials investigating Enron's collapse, 212 received campaign contributions from Enron or its accounting firm, Arthur Andersen. Several members of Congress have now given the money they received from Enron to charity or to a fund set up to assist former Enron employees. Enron donated money to George W. Bush's campaign and Kenneth Lay was a close friend. (Lay was in on the Dick Cheney secret energy summit).
- From Counterpunch: Florida’s pension fund –(fund oversight board chaired by Jeb Bush) lost $334 million on Enron stocks and bonds in the wake of the company’s collapse. Many of the pension fund’s investments were made as Enron’s stock was plummeting in value and financial problems at the company were being publicly revealed.
- Depression of 2008--crash the housing market, dip in pension funds of unions, churches, universities and 401Ks of working stiffs. Taxpayer bailout of greedy Wall Street. Result: No one has gone to jail.
- Nothing has changed. History repeats itself. Wall Street remains in charge--running its Plutocratic Ponzi scheme.