Public Education and Economic History

Miscellaneous History
1

The myths contained herein are most likely nothing new to anyone here, but here’s an excerpt of what’s being taught at a local school regarding the Great Depression:

What was the Smoot-Hawley tariff; why was it significant, and how did tariffs in general contribute to the GD?

  1. To increase the protection afforded domestic farmers against foreign agricultural imports.
  2. This was significant because in the second half of the 1920s there was massive agricultural overproduction during the 1920s (lifestyle of 20s). This in turn led to declining farm prices during the second half of the decade, it also contributed to the GD because it decreased international trading by substantial amounts.

How long did the GD last?

  1. 1929 on black Friday to 1939

What caused the GD?

  1. A host of different things. Two specific ones were the obsession of consumerism of 1920 Americans and the need to have all nice, new things, got them in trouble because they could not pay their loans back and a credit crunch started, caused not only by bank runs but the because of the second reason that caused the GD. The second reason being that farmers chose to buy more and more land and push for higher output for the same prices and the land they chose to farm could not sustain such harsh planting conditions, so the farmers weren’t making money, the soil turned to dust, and the banks needed the money back so they repossessed the land and the tractors leaving millions homeless, starving, and unemployed.

What was Hoover’s reaction to the GD? (republicans reaction)

  1. Hoover’s reaction was extremely relaxed, he believed that America always had highs and lows in the economic system (just the way capitalism and free-trade was) and it would fix itself if people just pushed through it.
  2. He does not want to sacrifice freedom and “the land of opportunity” or the “American dream” because he put too much regulation and wanted to make sure that the government did not get involved in the responsibility of the individual.
  3. As the GD continued and conditions were getting worse from 1928 to 1933, the people were more and more distressed and scared that Hoover’s “Rugged Individualism” was not working for the economy.

What economic philosophy and political party did Hoover subscribe to?

  1. Republican

What is Rugged Individualism?

  1. Individualism in social and economic affairs; belief not only in personal liberty and self-reliance but also in free competition

Describe the spiral of doom. Why did some Americans think capitalism had failed?

  1. Industrial collapse led to the collapse of banks which could not collect on their loans, while the huge banking crises which led to bank closures, especially in Germany and the US, in turn led to further sections of industry being pulled down.
  2. Rich people own manufacturing businesses/plants-the demand decreases so people are loosing their jobs-they need to spend less so they buy less-directly affects the rich people because now there is a little amount of people who are buying product-rich people loose money-cant pay for mortgages/loans-banks don’t get the money-banks fail-international debts/credits fail-international banks fail (specifically in Germany and Great Britain).
  3. People thought capitalism had failed because so many people were petrified of the system so there was no money being put into the system, so it was either at a standstill or going downhill which to the public eye meant that the system was not working.
  4. LOOK AT SPIRAL OF DOOM ON BOTTOM

What caused the Dust Bowl and what impact did it have on the nation and its people?

  1. The extreme overuse of lands in the mid-west caused bushels of grain to go to as low as a third of the market high point so farmers had two choices: cut back, hoping supplies would tighten and prices would rise or they could plant more as a way to make the same money on higher output (HUGE debts because they needed more land for higher output, circles back to credit crunch and bank runs)
  2. Millions of people migrated to the west (mainly California) to chase a non-existant dream of work, thousands of perished due to travel/starvation/suicide. (Think Grapes of Wrath)

How does consumer-spending impact the economy?

  1. Consumer-spending impacts the economy because since it is a free-market economy, its growth depends of consumer spending. In the roaring 20s and early 2000s consumer-spending was through the roof (1920s: cars, radios & 2000s: houses) which is why stocks were posting extremely high rates each quarter. Unfortunately, capitalism works in waves so whenever there is an extremely high “bubble” or economy, it is unsustainable because of consumerism and the influence of fear within people. For example in both the crash of 29 and 07 people
  2. basically sold their stocks and tried to take their money out of their banks overnight causing the market to come to a free falling, disastrous recession/depression. During recession/depression people tend to be frugal with their money, hardly spending or investing which does not help jumpstart the economy either. An extremely famous British economist, John Meynard Keynes, proposed that the only way a market would get out of a depression or recession would be to pump money back into it, to force people to spend/invest. FDR actually, in a way, followed that idea by imposing the New Deal because it pumped billions of dollars into public works projects, incomes for millions of people, and money to try and push the market back up onto its feet.

What is the Federal Reserve and what does it do?

  1. In its role as a central bank, the Fed is a bank for other banks and a bank for the federal government. It was created to provide the nation with a safer, more flexible, and more stable monetary and financial system.

[The SPIRAL OF DOOM referenced above is shown below]:

End of WWI (Europe didn’t need our wheat) > Overproduction > prices go down > companies/farms loose profit > Cut spending > Buy on credit > cut spending > Companies loose money > Layoffs > Unemployed people don’t spend $ > Foreclosures go up > Banks fail > Raise tariffs > Raise interest rates trying to stop people from buying on credit > Only 2% upper class can buy goods > Companies loose more money > Unemployment goes up > 1 BIG cycle!!

Saved by WWII

-Gov Spending

-Gov hiring

2

in the second half of the 1920s there was massive agricultural overproduction

This is my very favorite statist myth: overproduction. “O no, there’s too much food, we’re all going to die! Ahhhhh!” LOL…

They used this same argument to promote imperialism - i.e. “we must access foreign markets because overproduction in advanced economies is causing falling rates of interest/profit.” Amusingly, this was Marxist dogma, but it was pushed by the big crony capitalists leading up to the Spanish-American War and beyond. There’s a good book on the subject in the literature section, I’ll post the link if I can remember the title.

But anyway, yes OP, history at all levels has been woefully perverted - and intentionally, compliments of the Rockefeller Foundation et al.

3

Are you suggesting there is no such thing as “overproduction”? Maybe not in an absolute sense, but I think those of us who aren’t “bubble denyers” would suggest calling overproduction a “myth” is a bit too far.

4

Was this quoted from a textbook?(!)

5

Well, a good question would be: why was there an overproduction? I wouldn’t call this a myth, per se, but it is lazy to start the “SPIRAL OF DOOM” off with something as vague as overproduction (especially when the “lifestyle of the 20s” is seen as a sufficient reason).

It’s not uncommon for someone to go out of business: people, including entrepreneurs, are not infallible. But something should be suspicious when everyone in several (usually, capital intensive) industries seems to make very similar mistakes at the same time; a “cluster of errors” as it were. Of course, the excerpt above is from a history class and not all historians are necessarily economists.

6

For all I know, it might have been. A friend sent me this information and said that it was a study guide. I remember reading as much regarding the Great Depression in school. I remember telling my history teacher -in front of the class- that Hoover was anything but laissez-faire and that FDR’s running mate went so far as to state that Hoover “was leading the country down the road to socialism.” FDR’s secretaries said that their administration had just taken many of Hoover’s schemes and made them bigger. There was a pause and the teacher said, “Ok- moving on…”

Good times.

7

Are you suggesting there is no such thing as “overproduction”? Maybe not in an absolute sense, but I think those of us who aren’t “bubble denyers” would suggest calling overproduction a “myth” is a bit too far.

There is no such thing as overproduction in a free market. Obviously bubbles brought about by State intervention are another matter.

8

Well, a good question would be: why was there an overproduction? I wouldn’t call this a myth, per se, but it is lazy to start the “SPIRAL OF DOOM” off with something as vague as overproduction (especially when the “lifestyle of the 20s” is seen as a sufficient reason).

It’s not uncommon for someone to go out of business: people, including entrepreneurs, are not infallible. But something should be suspicious when everyone in several (usually, capital intensive) industries seems to make very similar mistakes at the same time; a “cluster of errors” as it were. Of course, the excerpt above is from a history class and not all historians are necessarily economists.

I suppose I need to clarify my comment. If by overproduction you mean a boom leading to a bust (as in the 20’s), then the myth is that such boom is a free-market phenomenon, when rather it is a result of State intervention.

But if you mean overproduction in the sense that prices are falling and this collapses profit margins (as I mentioned in connection to imperialist propaganda in the 19th century), then this does indeed occur in a free-market, and thank God! So the myth would be that this is a bad thing, when clearly increasing production and falling prices is a good thing (save for the crony capitalist who likes monopoly-rent fattened profits or the old money banker who sees the relative value of his capital slipping away).

9

If it were from text, it’s more realistic than the garbage I sat through in the early 90s. I didn’t have outside sources and influences to go to for real history, but I at least knew that public school teachers that promoted the same perspective that the state is our salvation was flat out wrong. Growing up with hippies taught me to distrust government, but a yearning to learn taught me to question the facts and dig deeper.

I walked out of my last high school history class, told the administration I couldn’t listen to the rhetoric (and the teacher really didn’t care for me correcting him regularly). They waived the course for my diploma, so I sat in the library during that period for the rest of the year reading real books.

Those instructors even back then were generally wound up in the state as savior. This is why I am on the verge of pulling my own kids and homeschooling them. I just need to finish my own degree so I have the time.

10

…then I guess it’s not a “myth” then, is it.

(Unless of course you want to argue that “non-free markets” are a myth.)

11

…then I guess it’s not a “myth” then, is it.

As I said in the previous post…

the myth is that such a boom is a free-market phenomenon, when rather it is a result of State intervention.

12

This is less coherent than the normal view of the great depression, at least that revolved around a massive stock market bubble which gave a reason for the massive calculation failure which lead to the depression.

I remember in my APUSH class we learned that the problem was that wealth inequality rose, and the rich spent to little… Which was bad.

13

…You mean a previous post to someone else after I made my initial comment and you responded to it.