Question by Billy Bob: How many of you would support Laissez faire capitalism?
* During World War I, federal spending grows three times larger than tax collections. When the government cuts back spending to balance the budget in 1920, a severe recession results. However, the war economy invested heavily in the manufacturing sector, and the next decade will see an explosion of productivity… although only for certain sectors of the economy.
* An average of 600 banks fail each year.
* Organized labor declines throughout the decade. The United Mine Workers Union will see its membership fall from 500,000 in 1920 to 75,000 in 1928. The American Federation of Labor would fall from 5.1 million in 1920 to 3.4 million in 1929.
* Over the decade, about 1,200 mergers will swallow up more than 6,000 previously independent companies; by 1929, only 200 corporations will control over half of all American industry.
* By the end of the decade, the bottom 80 percent of all income-earners will be removed from the tax rolls completely. Taxes on the rich will fall throughout the decade.
* By 1929, the richest 1 percent will own 40 percent of the nation’s wealth. The bottom 93 percent will have experienced a 4 percent drop in real disposable per-capita income between 1923 and 1929.
* Individual worker productivity rises an astonishing 43 percent from 1919 to 1929. But the rewards are being funneled to the top: the number of people reporting half-million dollar incomes grows from 156 to 1,489 between 1920 and 1929, a phenomenal rise compared to other decades. But that is still less than 1 percent of all income-earners.
* The conservative Supreme Court strikes down federal child labor legislation.
* President Warren Harding dies in office. Calvin Coolidge, becomes president. Coolidge is no less committed to laissez-faire and a non-interventionist government.
* Supreme Court nullifies minimum wage for women in District of Columbia.
* The stock market begins its spectacular rise. Bears little relation to the rest of the economy.
* The top tax rate is lowered to 25 percent – the lowest top rate in the eight decades since World War I.
* Between May 1928 and September 1929, the average prices of stocks will rise 40 percent. The boom is largely artificial.
* Herbert Hoover becomes President.
* Annual per-capita income is $ 750. More than half of all Americans are living below a minimum subsistence level.
* Backlog of business inventories grows three times larger than the year before.
* Recession begins in August, two months before the stock market crash. During this two month period, production will decline at an annual rate of 20 percent, wholesale prices at 7.5 percent, and personal income at 5 percent.
* Stock market crash begins October 24. Investors call October 29 Black Tuesday. Losses for the month will total $ 16 billion, an astronomical sum in those days.
* By February, the Federal Reserve has cut the prime interest rate from 6 to 4 percent. Treasury Secretary Andrew Mellon announces that the Fed will stand by as the market works itself out: ‘Liquidate labor, liquidate real estate… values will be adjusted, and enterprising people will pick up the wreck from less-competent people’.
* The Smoot-Hawley Tariff passes on June 17. With imports forming only 6 percent of the GNP, the 40 percent tariffs work out to an effective tax of only 2.4 percent per citizen. Even this is compensated for by the fact that American businesses are no longer investing in Europe, but keeping their money stateside. The consensus of modern economists is that the tariff made only a minor contribution to the Great Depression in the U.S., but a major one in Europe.
* Supreme Court rules that the monopoly U.S. Steel does not violate anti-trust laws as long as competition exists, no matter how negligible.
* The GNP falls 9.4 percent from the year before. The unemployment rate climbs from 3.2 to 8.7 percent.
* No major legislation is passed addressing the Depression.
* The GNP falls another 8.5 percent; unemployment rises to 15.9 percent.
* This and the next year are the worst years of the Great Depression. For 1932, GNP falls a record 13.4 percent; unemployment rises to 23.6 percent.
* Industrial stocks have lost 80 percent of their value since 1930.
* 10,000 banks have failed since 1929, or 40 percent of the 1929 total.
* GNP has also fallen 31 percent since 1929.
* Over 13 million Americans have lost their jobs since 1929.
* International trade has fallen by two-thirds since 1929.
Congress passes the Federal Home Loan Bank Act and the Glass-Steagall Act of 1932.
* Top tax rate is raised from 25 to 63 percent.
If history has taught us anything is that conservatism doesn’t work, but instead leads us into bad economic times.
* The Supreme Court declares the National Recovery Administration to be unconstitutional.
* Congress authorizes creation of the Works Progress Administration, the National Labor Relations Board and the Rural Electrification Administration.
* Congress passes the Banking Act of 1935, the Emergency Relief Appropriation Act, the National Labor Relations Act, and the Social Security Act.
* Economic recovery continues: the GNP grows another 8.1 percent, and unemployment falls to 20.1 percent.
* Top tax rate raised to 79 percent.
* Economic recovery continues: GNP grows a record 14.1 percent; unemployment falls to 16.9 percent.
* The Supreme Court declares the National Labor Relations Board to be unconstitutional.
Answer by Stephene
I do. Despite the BS your history books will tell you, FDR’s Socialist policies actually made a recession into the Great Depression. The laissez faire capitalism is what contributed to the prosperity during the turn of the centuryh and the roaring twenties.
What do you think? Answer below!