1929 Only the Beginning
It was only in 1927 that the Dow Jones Industrials had crossed the 200 mark for the first time since 1907. Now in August 1929, powered by rapid expansion in automobile production and growth in electric utilities, the Dow soared to an all time high of 381. Then the stock market began to fall. And that was just as well, according to President Herbert Hoover
and the Federal Reserve. To forestall inflation, the Federal Reserve had been sterilizing inflows of gold into the United States since 1928, and the nation's money supply had started contracting. But then came Black Thursday and panic selling. By November 13, the Dow had declined below 200.
Hoover Acts to Keep Wages and Prices Up
Soon after the market crash President Hoover summoned business and labor leaders to the White House. He secured an agreement with industry leaders to maintain employment and with labor leaders to maintain wage rates. It was the first governmental action in response to the crisis.
|Intention: By keeping wages and prices up, the president hoped to avoid a slump.||Liberal Line: Huh? President Hoover did that?|
|Outcome: The slump was deepened and extended because businessmen felt constrained from liquidating unsound business plans.||Conservative Line: First thing Hoover did in response to the crash, and it was the wrong thing.|
1929-1939: A Decade that will live in stupidity.
Why Stuck on Stupid?
Seventy years ago the leaders of both US political parties turned away from the policies that had created
an economic powerhouse we call the Roaring Twenties. For ten long years Americans suffered
economic dislocations: deflation, inflation, a four-year economic contraction, endless unemployment, mindless political experiments, and
ruthless attacks on businessmen for political gain as their leaders stayed Stuck on Stupid.
Today, after a twenty-five year economic boom, Americans are once more faced with a political elite
that wants to monkey with success. It wants to raise tax rates. It wants to restrict trade.
It wants to increase government power.
Its time to look back and remind ourselves how it came to be, starting in 1929, that America
got itself Stuck on Stupid. Otherwise it could happen again.