The Great Panic (1890s depression)

[endicom]

Liberty
Stephen Cox
July 26, 2018

I have long been a fan of the Panic of 1893, which is the usual name for the great depression of the 1890s. When I say “great” I mean it is comparable by all available measures (business losses, unemployment, political turmoil) to the Great Depression of the 1930s — with two exceptions. First, the depression of the 1930s lasted for more than ten years, ending only with the start of the Second World War in Europe; the depression of the 1890s lasted less than half as long. Second, in the 1930s the federal government intervened massively to try to end the depression, whereas the government of the 1890s did as little as it could.

These two exceptions are closely related. In 1893 and after, President Grover Cleveland had the political and above all the intellectual courage to allow prices to sink until recovery could begin. He devoted his best efforts to stabilizing the dollar, so that sound money and real prices could beget confidence, and confidence could beget reinvestment. This happened. But in 1929 and after, Presidents Herbert Hoover and Franklin Roosevelt were guided by the economic ignorance and sheer quackery of their times (and ours); they intervened to keep prices up and bail out bad investments — using money, of course, extorted from the people who had made good investments. Roosevelt’s subsidies extended to the destructive political ideas of his time; he encouraged political action to fulfill the borderline-crazy terms of his first inaugural address, in which he announced:

The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.

More... http://libertyunbound.com/node/1875

[Bigun]

Compared with the remarkably dull, stupid, pompous, and oppressive forms of communism that manifested in the 1930s, the nostrums of the 1890s are bright, delusive rays of sunshine.

  and    The government generally screws up everything it touches. Especially economic issues.

[endicom]

and    The government generally screws up everything it touches. Especially economic issues.

I believe the U.S. political movements from the late 1800s through WWII are murky. I don't know that anyone has focused on that time period so we tend to see it in separate segments.

[Joe Wooten]

Liberty
Stephen Cox
July 26, 2018

I have long been a fan of the Panic of 1893, which is the usual name for the great depression of the 1890s. When I say “great” I mean it is comparable by all available measures (business losses, unemployment, political turmoil) to the Great Depression of the 1930s — with two exceptions. First, the depression of the 1930s lasted for more than ten years, ending only with the start of the Second World War in Europe; the depression of the 1890s lasted less than half as long. Second, in the 1930s the federal government intervened massively to try to end the depression, whereas the government of the 1890s did as little as it could.

These two exceptions are closely related. In 1893 and after, President Grover Cleveland had the political and above all the intellectual courage to allow prices to sink until recovery could begin. He devoted his best efforts to stabilizing the dollar, so that sound money and real prices could beget confidence, and confidence could beget reinvestment. This happened. But in 1929 and after, Presidents Herbert Hoover and Franklin Roosevelt were guided by the economic ignorance and sheer quackery of their times (and ours); they intervened to keep prices up and bail out bad investments — using money, of course, extorted from the people who had made good investments. Roosevelt’s subsidies extended to the destructive political ideas of his time; he encouraged political action to fulfill the borderline-crazy terms of his first inaugural address, in which he announced:

The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.

More... http://libertyunbound.com/node/1875

That is why economics courses and economists in general try to ignore the Panic of 1893. It shows that any government action other than ensuring sound money is doomed to disaster and merely makes the situation worse.