Awful Aughts

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American History, Bush Administration, economy

Awhile back I wrote a post correcting a claim by Fred Thompson that Calvin Coolidge’s tax cuts had been good for the economy. They weren’t. But while I was researching that post I found some other remarkable parallels between the Roaring Twenties and today, an era I like to call the Awful Aughts (as in 00s).

One of those parallels is with our remarkable inability to rebuild the Gulf Coast after Hurricane Katrina. During the Coolidge Administration, the United States experienced several nasty natural calamities. Among these:

On March 18, 1925, a tornado that ripped through Missouri, Illinois and Indiana killed 689 people and devastated many small towns.

On September 18, 1926, a massive hurricane hit Florida and the Gulf Coast. The Great Miami Hurricane (this was before big storms were given people names) killed 372 people and injured more than 6,000. Almost 18,000 were left homeless, and property damage was estimated to be between $80 million and $100 million. That would be something like $2 billion today. But remember there wasn’t nearly as much developed real estate in the region as there is now.

In April 1927, floods along the Mississippi River covered 4 million acres, drowning several thousand people and leaving about 600,000 people homeless. Property damage was in the neighborhood of $300 million.

On September 29, 1927, a tornado tore through St. Louis and destroyed more than a thousand homes.

And if that wasn’t enough, in September 1928 a Category 5 hurricane roared through the Caribbean and the Bahamas, then struck Florida near Palm Beach on September 16. At least 2,500 people were killed when storm surge from Lake Okeechobee breached the dike surrounding the lake, flooding hundreds of square miles. Flood waters covered the land for several weeks, and thousands were left homeless.

As awful as these disasters were, it’s more instructive for us to see how the Coolidge Administration responded. In brief, many of the devastated areas stayed devastated for a long time. This created pockets of economic stagnation in the United States, which became a drag on the entire U.S. economy. Although the Great Depression didn’t officially begin until after the stock market crash of 1929, in actuality large parts of the United States fell into depression in 1926 and 1927.

Please note that I am not saying hurricanes and floods caused the Great Depression. Rather, what we see in the response to these disasters was part of a pattern. Calvin Coolidge believed that cutting taxes and reducing government spending was about all that government needed to do to help the economy. He did cut taxes, and unlike our current “president” he cut government spending, too, and made government regulatory policies much friendlier to business. In short, he did everything the Club for Growth might have asked. But his frugality allowed large parts of the country to rot, economically speaking, and the rot eventually helped bring the whole bleeping house down.

There were other many other drags on the economy in the 1920s, such as a crisis in agriculture. For a number of reasons I won’t go into now, food prices fell and farmers were unable to make a decent living. Millions of farm families lived in abject poverty. Calvin Coolidge himself was from a poor farm family that had suffered deprivation in the 1890s, but in spite of this Coolidge was remarkably unsympathetic. He famously said, “Well, farmers never have made money. I don’t believe we can do much about it. But of course we will have to seem to be doing something.” Whereupon he embarked on a series of tepid, cosmetic “solutions” that didn’t help farmers at all. And he vetoed all bills by Congress that might have given the farmers some relief.

Note that there was little sympathy for farmers in non-farming America. Apparently city dwellers of the time thought it was hilarious that only 10 percent of farm families had running water in their homes or owned a bathtub, which were impossible luxuries to most farmers.

But let’s get back to the disasters. The 1926 hurricane unavoidably killed what had been a booming real estate market as well as tourism in Florida. (The real estate developers were so frantic to downplay the effects of the storm that they actually hindered Red Cross efforts to raise relief funds; bad publicity, you know.) Miami Beach itself was rebuilt fairly quickly with private money, but the region became economically depressed three years before the Great Depression was supposed to have begun.

I want to look in particular at the 1927 floods. Coolidge appointed his commerce secretary, Herbert Hoover, to lead disaster relief efforts. David Greenberg wrote,

Hoover threw himself into his task, but the funds he secured were insufficient. Private philanthropy simply came up short. Public debate swirled around a strong response from Washington—in both dollars and symbolism. Coolidge resisted both. Governors, senators, and mayors asked him to visit the flood zone. “Your coming would center eyes of nation and the consequent publicity would result in securing millions of dollars additional aid for sufferers,” the governor of Mississippi wired. But Coolidge demurred. He declined requests from NBC to broadcast a nationwide radio appeal, and from humorist Will Rogers to send a telegram to be read at a benefit.

To be fair, up to that time it was not considered the federal government’s job to respond to disasters. But people read newspaper accounts of the horrible suffering caused by the floods, and then they look at the federal budget surplus made possible by Coolidge’s frugality, and they put two and two together, as it were.

But Congress had adjourned, and Coolidge declined to convene a special session to pass an emergency appropriation. Only in late 1927, when Illinois’ Frank Reid, the Republican chair of the House Flood Control Committee, held public hearings was Coolidge’s hand forced. In his December 1927 State of the Union message—they were often done in December back then—he endorsed federal flood-control measures. But he insisted that local governments and property owners bear most of the costs. Coolidge’s plan also called for spending hundreds of millions dollars less than the Senate and the House bills. Deadlock ensued. Will Rogers remarked that Coolidge was going to further postpone relief legislation in “the hope that those needing relief will perhaps have conveniently died in the meantime.”

It must not be forgotten that African Americans bore a disproportionate share of the suffering. To spare New Orleans, the levee at Caernarvon, Louisiana, was dynamited. This was to divert water from the main part of New Orleans and into St. Bernard’s Parish. According to Wikipedia,

During the disaster, 700,000 people were displaced, including 330,000 African-Americans who were moved to 154 relief camps. Over 13,000 evacuees near Greenville, Mississippi were gathered from area farms and evacuated to the crest of an unbroken levee, and stranded there for days without food or clean water, while boats arrived to evacuate white women and children. Many blacks were detained and forced to labor at gunpoint during flood relief efforts.

The flood was a factor in the Great Migration of southern blacks to norther cities. It also soured African American support for the Republican Party, for a lot of reasons that can’t directly be blamed on Coolidge. But that’s huge topic I don’t want to get into now.

Anyway, David Greenburg writes that Coolidge eventually was maneuvered into signing a federal relief bill for the flooded region in May, 1928. That was thirteen months after the flood.

To explain why this is significant, I want to go back to the earlier Coolidge post, about how Coolidge’s tax cuts really didn’t provide the healthy economic growth that conservatives claim it did. I provided this quote —

Even before 1929, signs of economic trouble had become evident. Southern California and Florida experienced frenzied real-estate speculation and then spectacular busts, with banks failing, land remaining undeveloped, and mortgages foreclosed. The highly unequal distribution of income and the prolonged depression in farm regions reduced American purchasing power. Sales of new autos and household consumer goods stagnated after 1926. [Eric Foner, Give Me Liberty: An American History (Norton, 2005), p. 800]

And the stagnation in consumer goods sales was a critical factor in bringing on the Great Depression.

Coolidge did what he thought was the right thing. He cut taxes. He cut federal spending. He refused to throw money around on what we’ve come to call “entitlement” programs. He expected the farmers and the flood and storm survivors to get along without federal government help. He was a good conservative, in other words. And he and Hoover just about flushed the whole country down the toilet.

And I thought of this yesterday when I saw this article in the Washington Post by John Barry — “Our Coast to Fix — or Lose.” I urge you to read the whole article, but for now I just want to point to the ending: “The failure of Congress and the president to act aggressively to repair the coastline at the mouth of the Mississippi River could threaten the economic vitality of the nation.”

And I thought of this when I read at Bonddad Blog that consumer sales are dropping. And that our infrastructure is crumbling from neglect. And on and on.

Coolidge actually had some advantages over Bush. He paid off government debt, and he didn’t get us into a bleeping war that soaked up our bleeping resources. The long-term crisis we face now is not as much with farmers (although they’ve got their problems) as it is with our shrinking manufacturing base.

I’m just sayin’ that in the 1920s most people thought the economy was swell. The stock market went up, up, up. Lots of people made fortunes, The rich got richer. Good times.

But then, as now, income disparity grew. While the rich grew richer, most people didn’t. Many parts of the nation were suffering economically even as the 1920s roared on. Retail sales slowed, then dropped, about three years before the Great Depression swallowed everyone. I’m just sayin’.

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12 Comments

12 Comments

  1. erinyes  •  May 13, 2007 @3:01 pm

    Thanks for the history lesson Maha.
    Two things I LOVE about your blog are the history lessons from you and D.R. Marvel ( along with the witty and interesting comments from Swami, Justme, and Joanr16 ).

    You’re correct in pointing out the similarities between the roaring 20’s and today. People then and now were lured into the belief that they could get wealthy in “the market”, but like all good things, there is insider information allowing the fat cats to get rich from the toil and investment of the working drones. One big consideration is the true worth of the “green back”, which is currently in free fall. What is backing the dollar? Many say it’s the strength of America, others say it’s pegged to oil.I don’t know for sure, but what I do know, is that I’m working two jobs ( at 52 years of age ), my wife works about 50 hrs per week, groceries are way up, gas is around $3.00 per gallon, I haven’t recieved a raise in 3 years (eventhough my production and accuracy has risen), and my wife’s bonuses have dropped off about 20%, new home sales have hit the dirt in and around Orlando.
    All this, yet we are told that the economy is bright , the stock market is hitting new highs.
    My assessment: the economy is bungee jumping, and every new jump is done with a longer bungee, thanks to the FED and the “plunge protection team”.
    “Those that can make you believe absurdities can make you commit atrocities”
    How true………..

  2. Phil Bailey  •  May 13, 2007 @3:07 pm

    Coolidge also did not face other problems with spending of entitlements that will eventually consume the intire federal budget.

    The great depression ended when WWII began and the economic engin of the US was again turned on. All the federal spending from 33-40 did very little to revive the country.

    It appears to me that the votes in Lousiana are blaming state officials for their failures…look how many are scrambling to be govenor.

  3. jerri  •  May 13, 2007 @3:12 pm

    happy mother’s day Maha

  4. Bonnie  •  May 13, 2007 @3:42 pm

    Regarding Bush’s government spending, this increase has gone primarily to the military, Pentagon, anything related to the war, etc. Most of the other agencies such as the one I am in, HHS, have had budgets that are stagnant, primarily because of continuing resolutions (CR) that keep us funded at last year’s budget level. As far as I know, we never did get a true appropriations budget for FY 07. I think we were funded with still another CR at last year’s level through September. As far as I can tell, the Democrats are not rushing to do appropriations bills for FY 08. Granted there are these other problems; e.g., the Iraq war and firing of USAs. But, in the Constitution seeing that the government is properly funded is one of their prime responsibility. Congress failed that responsibility while under Republican control; I hope the Democrats will do better. I just want to point out that while Bush has increased Government spending, it has been in the best interests of the American people.

  5. Dan  •  May 13, 2007 @6:35 pm

    Louisiana 1927 Lyrics
    Artist: Randy Newman
    Album: Good Old Boys

    What has happened down here is the wind have changed
    Clouds roll in from the north and it started to rain
    Rained real hard and it rained for a real long time
    Six feet of water in the streets of Evangeline

    The river rose all day
    The river rose all night
    Some people got lost in the flood
    Some people got away all right
    The river have busted through clear down to Plaquemines
    Six feet of water in the streets of Evangeline

    CHORUS
    Louisiana, Louisiana
    They’re tryin’ to wash us away
    They’re tryin’ to wash us away
    Louisiana, Louisiana
    They’re tryin’ to wash us away
    They’re tryin’ to wash us away

    President Coolidge come down in a railroad train
    A little fat man with a note-pad in his hand
    The President say, “Little fat man, idn’t it a shame
    What the river has done
    To this poor cracker’s land.”

    CHORUS

  6. Dan  •  May 13, 2007 @6:44 pm

    Reply to Erinyes’s post:

    I have noticed that all references to “inflation” these last 3 or 4 years, since prices have skyrocketed (but “inflation” is not a problem yet…) is to “core inflation,” excluding everything that affects living standards!

    “CORE INFLATION
    A measure of inflation that excludes certain items which face volatile price movements. Core inflation eliminates products that can have temporary price shocks because these shocks can diverge from the overall trend of inflation and give a false measure of inflation.

    Core Inflation is thought to be an indicator of underlying long-term inflation.

    Notes:
    Core inflation is most often calculated by taking the Consumer Price Index and excluding certain items from the index, usually energy and food products. Other methods of calculations include the outliers method, which removes the products that have had the largest price changes.”

    http://financial-dictionary.thefreedictionary.com/Core+Inflation

    Oil crossed the #30/bbl level in 2003… Temporary?

  7. erinyes  •  May 13, 2007 @8:21 pm

    Sorry I forgot you Bonnie!
    Your posts are very informative.

  8. maha  •  May 13, 2007 @9:29 pm

    Coolidge also did not face other problems with spending of entitlements that will eventually consume the intire federal budget.

    Oh, bullshit. “Entitlements” like the GI Bill and post WWII mortgage subsidies helped fuel the great economic growth that lasted until the 1960s. Invest in your people, and you reap rewards. Let them rot, and eventually they’ll drag you down into the third world shithole the nation will become.

    The great depression ended when WWII began and the economic engin of the US was again turned on. All the federal spending from 33-40 did very little to revive the country.

    Mostly true, but in other ways the New Deal was wonderfully successful. The New Deal programs had a longer-term success in fostering economic stability. Federal deposit insurance, unemployment insurance, Social Security, increased government oversight of securities, and other New Deal innovations made Americans’ economic lives more secure and created a buffer against many of the factors that cause economic depressions.

    It appears to me that the votes in Lousiana are blaming state officials for their failures…look how many are scrambling to be govenor.

    Have you talked to anyone who lives in Louisiana or on the Gulf Coast? I have. They’re pissed at everybody. But mostly they’re pissed at Bush.

  9. moonbat  •  May 13, 2007 @11:35 pm

    The USA in the early 20th century was a rising nation about to eclipse the then-dominant empire, England. I don’t know what our balance of payments was back then, but I think the country had started going solidly in the black by about the 1880s (we were a debtor nation prior to that, I think).

    Today, we’re an empire that’s in debt up to our eyeballs, and China and the other Asian tigers are about to eat our lunch, if they haven’t already. The IMF would’ve declared us bankrupt long ago, were it not for the fact that the dollar is the world’s reserve currency, and no one is yet ready to cash out their dollars, which triggering a global panic.

    And so I believe whatever crisis comes next, it will make the Great Depresion look like a picnic. This doesn’t even touch on the way fascism is more in style this time, versus socialism back in the 1930s.

    I just finished reading The Fourth Turning, which is about cycles in history. The authors present evidence for an 80-100 year cycle that’s repeated itself for the last 500 or so years in American and English history. Within this 80-100 year long cycle, there are four shorter “seasons”, each corresponding to a generation (about 20-25 years each).

    These “seasons” are a lot like the four seasons we experience with the weather. They each have their own mood, their own sociological and economic characteristics, and they repeat, in much the way that winter this year is like winter last year, spring always follows winter, and so on. Spring and summer are times for expansion and growth, autumn a time for unravelling and contraction, and winter a time of crisis. The crisis is major, all encompassing, and changes everything.

    In this schema, the Great Depression and World War 2 were the last crisis this country went through. The roaring 20s were part of “the unravelling” that preceded this crisis. In more recent history, the 1960s-up till Reagan were a summer, a period of awakening, that repeats once every long cycle. It was followed by an autumn or unravelling (the great conservative revolution that began with Reagan), and ends in a crisis

    A crisis begins with a catalyst (the 1929 stock market crash, or perhaps 9/11 in our time) and culminates in a climactic battle, often a global war, that sorts out the winners from the losers, big time.

    The book talks a great deal about the kind of child rearing that occurs within each of these seasons, and how this, plus the socioeconomic context of each season, produces a particular kind of people, a generation, that rises in their own way to meet the challenges of the time. These same archetypal generations occur over and over again, because of the repetitive nature of the four “seasons” within the long cycle.

    The book has had the same sort of impact that works like Future Shock did when it came out in the 70s. The Fourth Turning was published in 1997, and I found it to be one of the most fascinating books I’ve read in quite a while. It helped me, a baby boomer who grew up during the ever expanding 1960s, understand these weird conservative kids who came later, as well as my parents’ generation who built the world I grew up in. It’s also making me look forward to the children of these conservatives – they parallel the heroic generation that got the country through the Depression and World War 2.

  10. Stella  •  May 14, 2007 @7:35 am

    Thanks Maha. Don’t know much about history, but I had a feeling we’d been here before and had to go through it all over again so we’d really learn our lesson.

    I’m with moonbat – the works of William Strauss and Neil Howe have really helped my comprehension of the world.

    I’m very grateful for the work you do to produce this blog. It attracts the best commentary I’ve found anywhere.

  11. joanr16  •  May 14, 2007 @1:25 pm

    erinyes, you made my day.

    Phil Bailey, your grasp of history and current events are on a par with your spelling.

    Dan, I’m glad you posted (all) the words to Randy Newman’s song. For weeks after Katrina hit, I had the chorus repeating in a loop in my head. It was heartbreaking and maddening at the same time, just like events as they unfolded.

    maha, thanks for yet another lucid history lesson.

  12. Patrick  •  May 15, 2007 @11:01 am

    If anyone is still reading this thread and interested in a wonderfully written and concise history of the period we are batting about here, I highly recommend Leuchtenberg’s “Perils of Prosperity 1914-1932” (http://www.amazon.com/Prosperity-1914-1932-Chicago-American-Civilization/dp/0226473716) I was teaching a class once and for a lecture I wanted to refresh my basic memory of the period and talk about *lots* of scary parallels betwen times. At the time of the class it was shortly before the stock bubble popped (the summer of irrational exuberance!), and all I could think is that we were going over a cliff once again.



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