Depression-Era Economics

The literature on the Great Depression throws up some curious parallels and contrasts to today.

From Kindleberger (The World in Depression, 1929-1939, p. 194):
“In the electoral campaign, Roosevelt charged Hoover with total responsibility for the depression. It’s origin, he said, was entirely within the United States… Hoover, in reply, insisted that the depression had originated abroad.”

Also from Kindleberger, p. 139:
“The Unemployment Insurance Fund, being in deficit, had to be made up by the German government, which thereby suffered a budget deficit. The Socialist Party proposed raising contributions to the fund by a 4 per cent levy largely on government officials, whose contracts provided protection from unemployment.”

In Ireland, the first Fianna Fáil budget of 11 May 1932 included a tax amnesty for those with undeclared overseas accounts.

The settlement would enable them to resolve any outstanding liabilities by paying 75 per cent of the amount owed in outstanding taxes on foreign holdings from 1914 to the present, with no penalties or interest charges.
(Dáil Éireann – Volume 41 – 11 May, 1932 – In Committee on Finance. – Financial Resolutions—Minister’s Statement.)

Ronan Fanning’s book on the Department of Finance, pps. 233-4, reveals that the same government hoped to but failed to cut public service pay.

“This proved a difficult process and the reductions were widely resisted by public servants, including the senior civil servants that the government relied on to implement its policies – some , whose tenure predated the state were threatening to take early retirement under a clause in the 1921 Treaty. The proposed cuts were targeted at higher-paid public servants – including Government ministers. This dispute suggests a strong division of opinion, with the farming community very much in favour of cutting the cost of public services. One minority report to the report on this topic concluded that:

‘Even at the reduced rate there are many competent people who would gladly exchange places with public servants for the next ten years. The discontented State Servant would derive much benefit from a sojourn in the beet fields of Leinster, the cow pasture of the Kerry hills, or turf banks of the Bog of Allen for £1 a week’.”

7 replies on “Depression-Era Economics”

This dispute suggests a strong division of opinion, with the farming community very much in favour of cutting the cost of public services.

Daß nur er im Trüben fische
Hat der Hinz den Kunz bedroht.
Doch zum Schluss vereint am Tische
Essen sie des Armen Brot.

I have been strident in calling for this article and any that compare depression histories to the present.

Thanks for doing this!

So: direct parallels are apparent. The desire to ask those who have, to share with those who do not, is a common and successful tactic when a depression is raging. It is all the more acceptable in view of the deflation again common to the two periods.

We are clearly in the early stages of a depression, that amazingly, began for Japan twenty years ago and for the USA, in 1999. Failure to admit this, causes false policy options to be considered.

NAMA and land policy are in need of urgent review. We do not need a Rolls Royce banking system, either. Let us cut our losses now!

Hoover’s view that the roots of the Depression were sown in Versailles, appears to be the accepted one today.

John Maynard Keynes wrote in his Economic Consequences of the Peace: “Mr Hoover was the only man who emerged from the ordeal of Paris with an enhanced reputation. This complex personality with his habitual air of a weary Titan, his eyes starely fixed on the true and essential facts of the European situation, imported into the councils of Paris, when he took part in them, precisely that atmosphere of reality, knowledge, magnanimity and disinterestedness which, if they had been found in other quarters also, would have given us the Good Peace…. “

And so the man was was credited with saving Europe from starvation, would be destined to be forever linked to economic failure and assemblages of human misery in his own country.

If his advice had been accepted in Paris, Germany and Europe may have been saved from Hitler and a more devastating war.

As for Ireland, I would guess that the class with education (as distinct from the educated) would have had a strong sense of entitlement compared with the great unwashed, an outlook that is common in developing countries where there are a lot of poor people.

Today we are familiar with the smoked salmon socialist type who is a big fan of distribution as long as his own nest can continue to be feathered!

There appears to have been a series of conspiracies of explicit and tacit nature across a range of educated interests that enabled the Irish banking disaster. For some, it will have created wealth. For others, they will have extracted power and fees etc. But I fail to see that it was worth it.

I hope you all enjoy it. Maybe the insight into your own carnal nature will enable development of some sort. You do all appear to be venal in the extreme with few heroes.

Comments are closed.