The Weiner Component V.2 #42 – Patterns of History: Part 2: Post World War II

English: United States President Franklin D. R...

English: United States President Franklin D. Roosevelt signing the declaration of war against Japan, in the wake of the attack on Pearl Harbor. (Photo credit: Wikipedia)


“YOUR MONEY IN WAR BONDS HELPS TO…” – NARA – 516270 (Photo credit: Wikipedia)

English: The "Big Three": From left ...

English: The “Big Three”: From left to right: Joseph Stalin, Franklin D. Roosevelt, and Winston Churchill on the portico of the Russian Embassy during the Tehran Conference to discuss the European Theatre in 1943. Churchill is shown in the uniform of a Royal Air Force air commodore. (Photo credit: Wikipedia)

Forgetting the horror caused by World War II, the Second World War economically changed the United States and the rest of the world positively.  The U.S. and other countries, including Germany and Japan, entered the war with the bulk of their populations being lower class, having a minimal standard of living.  Relatively shortly or at least within the first two decades after the end of the war the bulk of their populations had risen to a middle class status, having a comfortable standard of living for the majority of their populations.  What happened?


The Great Depression broke out early in 1929.  It brought about economic isolation with each nation attempting to survive by itself.  Germany, Japan, and Italy attempted to recover by imperialistic advances.  Italy expanded into North Africa, Japan into China and the rest of Asia.  Germany intended to expand both East and West in Europe.


In the United States, separated by thousands of miles from Europe and Asia, there was no immediate threat of war.  The country, under Republican President Herbert Hoover, just continued on essentially waiting for the capitalistic system to reassert itself.  It didn’t.


The majority of the population was lower class, just barely surviving on their limited incomes.  But at this point there was massive unemployment and no real jobs available.  Men deserted their families they could no longer support, rode the rail lines as hobos, following rumors of work in one or another part of the country.  The entire capitalistic system had broken down.  And no one understood why or how to fix it.


In 1933 Franklin Delano Roosevelt became the 32 President of the United States.  In his maiden speech on the new device, radio, he spoke of people having nothing to fear but fear itself.  Roosevelt used radio to talk the nation through its irrational apprehensions of the Great Depression.


Roosevelt changed the function of government.  Before he became President it provided a safe environment in which its population could function.  With the Roosevelt Administration it took on responsibility for those people within the country who could not properly provide for themselves.  What had been a matter handled by Church charities earlier would from then on be taken care of by the Federal Government.  The problem had grown too large for the religious institutions to take care of.


Roosevelt called his program the 3 R’s: Relief, Recovery, and Reform.  Under Relief, Roosevelt offered the New Deal, where the Federal Government would create jobs for the unemployed.  There was everything from manual labor to theater projects for writers and actors.  The New Deal even produced some films.  There were projects like Hoover Dam, electrification of sections of the United States, and community theaters, plus innumerable other projects.


With all this conditions improved in the United States but the depressed state continued.  There was still a high rate of unemployment.  While conditions improved total Recovery never came about for the United States until shortly after World War II in Europe broke out with an endless need for food and war materials.


Reform was legislation that was to keep causes of the depression from occurring again.  There were bank and other types of regulation.


On December 7, 1941 the United States entered War II after being attacked at Pearl Harbor, Hawaii.  The War would not end until the unconditional surrender of Japan in 1945, after the dropping of two atomic bombs.


It was from this point that recovery began, first within the United States and then with Europe and Asia.


Once America entered the war the United States became the “Arsenal of Democracy,” involved in what was practically considered a holy war against the Axis Powers, the forces of evil.  The U.S. supplied Allied Nations with the materials to fight the war.  Initially the Allied nations stored their gold supplies in the United States for reasons of safety.  In order to fight the war they spent that gold buying food and war supplies.  After that when the gold was spent the United States developed a policy of “lend lease” which was actually a policy of giving to the Allies what they needed to continue their efforts against their enemies.


Where did all this money come from?  The United States Government printed it and used it to pay for the goods and services produced.  This money then was added to that already circulating in the National Cash Flow.  Because money added to the Cash Flow is spent several times this added several times the amount initially added to the Cash Flow.


The U.S. also sent armies overseas to fight in North Africa, Europe, and Asia.  Interestingly even with the casualties caused by the war its overall population still increased.


The entire nation was involved in fighting the war.  People put in window boxes in their apartments or turned their lawns into “Victory Gardens,” growing vegetables.  Housewives saved the excess fat from their cooking and turned it in to their butchers who, in turn, turned it over to manufacturers who used the grease in their production of war materials.  Children collected old newspapers and tin cans that were reprocessed and reused.  Virtually the entire families were involved in the war effort.


The government sold War Bonds.  For $18.75 one could buy a War Bond that would return $25.00 in ten years.  Larger denominations were also sold.  Children in public schools bought and collected War Stamps which when the amounts were large enough were exchanged for War Bonds.  Adults also contributed their excess money buying these.  Largely everyone was putting money into the war effort.


In addition rationing was instituted shortly after the United States joined the war effort.  Items of food like meat and many vegetables were rationed in the country with the bulk being sent overseas for the war effort.  Gasoline and many other items were also rationed.  Families were issued rationing books with all kinds of stamps in them, the amount depended upon the number of the family.  Women went shopping with limits set by the rationing books.


All vehicles built during the latter part of 1942 until the end of the war in 1945 were military vehicles.  There were none built for civilians.  Virtually all the U.S. factories were converted to the war effort.


From 1940 on there were more jobs available than there were people to hold them.  Once America had entered the war in December of 1941 people could work double shifts at the factories.  In addition in 1942 many high school students worked after their school day.  Women were brought into the factories.  In 1943 for the first time in the general society Blacks in the Northern states also got jobs working alongside whites in the factories.  All this to meet the production needs of the war effort which President Roosevelt kept increasing.


The major problem that evolved was that the working public was now earning more money than it could spend.  Selling War Bonds was a device to take some of this money off the market.  For people who wanted more than rationing allowed there was the Black Market, illegally selling items of food and other products without the use of rationing stamps.  But even with this there was a tremendous buildup of money among the general public.  And at the end of the war all this money would be looking for products to purchase.


It is worth considering briefly the question of where the money that the Federal Government spent came from.  The statement was made that the Government printed it as it was needed.  Keep in mind that under President Roosevelt the basis of money changed.  At the beginning of 1933 money was gold in the form of coins.  By the end of that year and thereafter the gold had been collected, melted down in blocks and stored in depositories.  New paper money had been issued in its place.  The new source of currency had no real value.  It was a means of exchange: the production of goods and services for the potential to eventually purchase new goods and services.  The wealth produced was the goods and services used during the latter part of the Great Depression and during World War II.  The potential that the United States had, with everybody working, for production was the real wealth produced.  And this principle remains true today.

English: US GDP from U.S. Department of Commer...

English: US GDP from U.S. Department of Commerce: Bureau of Economic Analysis (Photo credit: Wikipedia)

The Weiner Component V.2 #28 – The Pattern of U.S. History & the Evolving Purpose of Government: Part 1

The Articles of Confederation, ratified in 178...

The Articles of Confederation, ratified in 1781. This was the format for the United States government until the Constitution. (Photo credit: Wikipedia)

The order in which the original 13 states rati...

The order in which the original 13 states ratified the constitution, then the order in which the others were admitted to the union (Photo credit: Wikipedia)

The issue here is to discern the pattern(s) of U.S. history and ascertain   the purpose of the Federal and State Governments?  For what are they or should they be responsible.  And how has this changed over the years?


Historically during America’s Colonial Period people came for religious freedom which they did not generally extend to those with different beliefs once they were established in their own colony or they came for economic opportunities in order to exist in a non-fixed society where they could achieve goals not possible in Europe.  Here one could gain ownership of land and possibly prosper.  Many also were brought as indentured servants or as slaves.


It was to most of these people a New World with new opportunities that did not exist in the Old World, Europe.  The Colonial Governments provided the opportunities and if the settlers could properly utilize them they could make a new life for themselves and for their families.


In time, going from the 16th Century to the late 18th Century the settlements and society became more complicated.  On the East coast, in the Americas, Great Britain had gained control of most of the colonies.  By the last quarter of the 18th Century the British Colonies below Canada and above Florida no longer wanted to be ruled as dependent colonies, totally relying upon the mother country.  The immediate problem was taxes decreed by King George III and his Parliament.  This protest brought about the Revolutionary War.


When it became clear to England, after the Battle at Yorktown in Virginia on October 19, 1781, that it was too expensive in both gold and men to occupy the American Colonies with an army perennially the British gave the 13 Colonies their independence.  It was cheaper and more practical to simply trade with them.  What was to develop from that was the United States of America.


The overall purpose of the new state governments, under the Articles of Confederation, was to allow their populations to develop as best they could with the governments essentially providing safety from foreign invasions and keeping order within the individual states.


Each state was virtually an independent nation with essentially a largely powerless Congress made up of representatives from all the different governments.  They each could print or mint their own money.  They agreed to cooperate but essentially kept their own sovereignty.  The members of the unified Congress had to go back to their individual state legislatures for decisions over major bills.  And all bills required unanimous approval in order to come into being.  There was no executive office; Congress also had this function. This period lasted from the end of the Revolutionary War until 1788, when the Constitution was ratified and a new government established.


What brought the Constitution into being was mainly Shay’s Rebellion, which lasted from 1786 through 1787.  The coastal mercantile class that controlled the government in the State of Massachusetts, in order to raise money, passed a tax to be paid by the small inland farmers who were not represented in the State Legislature and tended to be short of cash.  The tax was vigorously collected, causing tax collectors to seize and auction off land in payment of debts.  During this period many people argued that since the large plantation owners in the Southern states had refused to pay their debts to English merchants, that they had amassed before the Revolutionary War they, the small farmers, could do the same thing to the state of Massachusetts.  This tended to raise fears among the property owning class throughout the new country and brought about for many an awareness of a need for a strong central government that could enforce its will.  It brought about the Constitutional Convention in Philadelphia in the summer of 1787 which was chaired by George Washington.


In 12 of the 13 states a new government came into existence in 1789 with the election of George Washington as its first President.  In Massachusetts a year earlier the state government was reformed.  Shay’s Rebellion had been one of the major motivating forces for the formation of the Constitution.  Henceforth life, liberty, and the protection of property became the creed of the new government.


The Constitution came into effect after 9 states approved it.  12 of the 13 states actually voted for it.  Rhode Island did not send any delegates to the Constitutional Convention and did not approve it.  It held a number of conventions within the state and did not approve the new government in any of them.  Finally in 1790 the Congress of the New United States voted to exclude Rhode Island in the near future from any participation with the other 12 states, thus totally isolating them.  On May 18, 1790, before this bill could come into effect, Rhode Island approved the Constitution and joined the Union.


The new government that came into being under the Constitution was run by both the educated and mercantile class.  These people formed the Federalist Party.  They were the elite.  In this government only male property owners could vote.  This group constituted the first political party.  While they ran the country for everyone’s benefit they favored their own class.  The function of government was the same as it had been under the Articles of Confederation.


In 1800 a new political party was formed under the leadership of Thomas Jefferson, the Democratic Republican Party.  Jefferson favored the yeoman/small family farmer.  During a dramatic election with all sorts of denouncement from both sides the Democratic Party won; Jefferson was elected President.  It was still government by the elite; but mainly for the benefit of the small farmer.


In point of fact Jefferson bought the Louisiana Territory from Napoleon and France.  The sale was technically illegal because the French had promised Spain, the original owner that they would not sell the territory; but there was nothing Spain could do about it since at that time she was ruled by one of Napoleon’s Marshalls and had been conquered by France.


To Jefferson the Louisiana Territory extended the new United States’ land area so that there would be land for yeoman farmers, in President Jefferson’s opinion, for the next hundred years.


After the War of 1812 the Federalist Party disappeared.  It backed the wrong side in that war, England.  It would not really appear again until 1860 under the new name of the Republican Party.


With the election of Andrew Jackson to the Presidency from 1828 to 1837 Democracy was spelt with a small d.  By then practically all males voted.  Land was cheap and practically all males owned some.  The vote was essentially universal for males.  In addition the Union had grown from the original 12 to 24 states.  And the Democratic Party had split into Jacksonian Democrats and Non-Jacksonian Democrats.


With Jackson the concept of rule by the elite disappeared.  President Jackson was considered by the population as one of their own.  He was the common man elevated to the Presidency and his government extended that concept with what was called the “spoils system,” whereby anyone could hold any government job.  It was now, to pre-quote Lincoln, “a government of the people, by the people, and for the people.”  Its overall purpose remained the same as it had been before: the government provided what was necessary in the country to exist, the people had the opportunity to make use of what the government provided.


With the earlier invention and dissemination of the Cotton Gin slavery, which had been dying out, became the means for the Southern states to raise cotton.  Cotton became the chief export of the large Southern planters.  It fostered the new Industrial Revolution and made slavery again important in the Southern States.  Spinning thread and weaving inexpensive cloth became the first major industry of the new Industrial Revolution.


At first England controlled this new industry; then it spread to the rest of Europe and the Northern parts of the United States.  The new Industrial Revolution was begun by an industry based initially upon slavery in the Southern United States.  To them Cotton was King.  It reestablished slavery as an economic system.


Gradually the Non-Jacksonian Democrats became a myriad of political parties.  The largest pro-business party was the Whigs.  Another was the Abolitionists which consisted of those who were against slavery.  There were innumerable others; some lasted a short period of time and disappeared, others persisted.  By 1860 the Whig, the abolitionists, and innumerable other smaller parties coalesced into the Republican Party and because the Democratic Party split into two political parts, the Northern and Southern Democrats, the new Republican Party won the Presidential Election with 40% of the vote and Abraham Lincoln became the first Republican President of the United States.


Lincoln’s name was not on the ballot in any Southern state.  The election consisted of two separate elections; one in the Northern and Western States and one in the Southern States.


This began the Civil War and the one question that had never been settled when the nation was first established under the Constitution was resolved by the outcome of the war: Who was more powerful the States or the Central Government?  In addition slavery was ended.


After the Civil War America went rapidly through the Industrial Revolution.  The railroads covered the nation, industry rose rapidly, there was the very rapid rise of new cities and the phenomenal growth of the old ones.  The country underwent rapid change with the growth of monopolies and oligopolies.  Actually practically every industry by the end of the 19th Century had become a monopoly with one of its lawyers having a seat in the U.S. Senate.  Just about all the state legislatures were prone to bribery.  Rockefeller’s Standard oil not only had a reputation of refining oil it also refined state legislatures.


Initially the state legislatures elected the members of the Senate; they were to serve the needs of the individual states.  The 17th Amendment to the Constitution was passed in 1913.  It caused the members of the Senate to be elected by the direct vote of the people of the respective states.


It was during this period that the nation changed from a rural country with cities to an urban one with rural areas that produced the necessary food for the population.  The changes were so rapid that the support systems and support laws had to be developed with and after the changes.  Proper water for the people of the cities, evacuation of sewerage, building regulations, proper ventilation, a sane workday in the factories, rules for the employment of women and children, and so on.  All this and more had to be understood and laws had to be passed regulating these conditions.  All this would take an infinite amount of time to be done.  And all this would initially condone an infinite amount of corruption and bribery.


Initially the Populist Party came into existence to support the agrarian class.  Among other things the railroads were charging the farmers different rates to transport their crops.  The rule was to charge what the traffic would bare.  In most cases the trains were the only way to get the crops to market.


From 1892 to 1896 the Populist (People’s) Party, a U.S. agrarian political party came into existence.  It was hostile to cities, banks, railroads, and banks.  It contained the poor white cotton farmers of the South and the wheat farmers in the Plain States.  In 1896 it supported the Democratic candidate, William Jennings Bryan.  The Republican candidate William McKinley won that election.  The Populists became part of the Democratic Party after that election.


The major change at the beginning of the 20th Century was the Progressive Movement.  Some of its leaders were Presidents Theodore Roosevelt, William H. Taft, and Woodrow Wilson, both Republicans and Democrats.  Robert M. La Follett, Charles Evans Hughes, William Jennings Bryant, and Al Smith were also some of the reformers.  Efforts were made to reform local government, public education, industry, etc.  It was a local, state, and national movement.  It brought about financial reform with the establishment of the Federal Reserve in 1913 and women’s suffrage in 1919 with the 19th Amendment to the Constitution.  The Presidential Election of 1920 that made the Republican, Warren G. Harding President of the United States, was the first time all the women in the country voted in a national election.


The Progressive Movement targeted political machines and their bosses.  They sought regulation of monopolies and corporations through antitrust laws.  They were essentially an urban movement which largely and successfully brought the country into the Twentieth Century.

The reform stopped when the United States entered World War I.  After the war with the refusal of the U.S. to sign the Versailles Treaty and join the League of Nations the country entered into a corrupt Republican period that in 1929 ended with the Great Depression.


In the early part of the 20th Century lawyers like Louis Brandeis, who later became a Supreme Court Justice, began using sociological facts as evidence.  This was a first, expanding the concept of what presented   proof.  The function of the government was still to provide a safe base for its people in which to live; they were still responsible for themselves and their families.  Basically, where the individual or family couldn’t handle the situation it was up to the local religious organization and/or neighbors to help the situation and provide aid.  This had worked up to now.


With the Great Depression, which was a world disaster, a good percentage of the population could no longer provide for their basic needs.  This was far beyond what local charitable organizations could handle.  In general all the neighbors were in the same deplorable situation.  Overnight the country changed, jobs disappeared and a fair percentage of the population could not handle the economic situation, but the Republic Government under President Herbert Hoover with the multi-millionaire, Andrew Mellon as his Secretary of the Treasury, could not adjust to the crisis.  There had been depressions and recessions in the past and in all cases the economy had eventually adjusted itself and come out of crisis after a period of time.  They expected that to also happen here.  Consequently they kept talking about prosperity being around the corner.  After three years the depression just got deeper and it was time to elect a new President.  The Candidates were Hoover for the Republicans and Franklin D. Roosevelt for the Democrats.


In addition, shortly before the election, the veterans from World War I, who had been promised a bonus in the future, organized a Bonus March and came to Washington, D.C., requesting that Congress give them their promised bonus then.  They set up a camp just outside the city.  Congress refused to vote the bonus and President Hoover ordered General Douglas MacArthur to clear the veterans out of the flats.  In the process of doing this several were killed.


When the election came the Democratic candidate, Franklin D. Roosevelt won by an overwhelming majority, 57.4 percent of the vote.  It was with this administration that the United States expanded the purpose of government, adding the maxim that it was responsible for the welfare of the people who could not care for themselves.


What we’ve seen from the Colonial Period on was that the overall purpose of government was to provide a safe place for the citizen to get on with his life.  When the citizen ran into situations beyond his ability beyond his ability to deal with then the community and the religious organization would help him.  The government provided safety and security from foreign invasion and presumably a safe place to live.

The Weiner Component Vol.2 #6 – Part 3: The Purpose of the Federal Reserve

The title page to Keynes' General Theory.

Unemployment rate in the US 1910–1960, with th...

Unemployment rate in the US 1910–1960, with the years of the Great Depression (1929–1939) highlighted. (Photo credit: Wikipedia)

The Federal Reserve was established on December 23, 1913. Its major mission was to avoid panics or major recessions in the future. It would at that time do this by being able to move money quickly anywhere throughout the National Economy. In essence since the nation functioned through its banking system the new Fed would protect its financial institutions from runs or panics where the depositors could all withdraw their funds, generally following a rumor that the bank was on the edge of failing.


In addition the United States economy had/has systematically gone through regular business cycles of recession, slump or depression, recovery, and boom. Invariably each of these stages of the economy leads to the next stage. During a boom period overproduction is invariably reached, workers are laid off, there is less income available, which accelerates the recession. This, in turn leads to a trough or low economic point which can be a depression with high unemployment. Eventually there is a shortage of goods and the amount of money being spent in the National Cash Flow increases; people are hired; there is more and more money available and recovery begins, continuing until a peak or production boom is reached again. The duration of the cycles can and do vary, going from less than a year to over ten years as the Great Depression did from 1929 to 1940. It was ended by World War II. These depressions can be regional or they can cover the entire nation, if not the world, as it did in 1929. They generally last between the two periods given above.


In simple terms this is the economic pattern of every industrial nation. Does it have to continue? That’s an interesting question. The probability is that it can be controlled by the Central Government’s actions.


In 1929 the science of economics was generally not understood well enough to determine exactly or why the depression was happening. In 2008 when the country had what is now called the Great Recession, enough was understood to avoid a greater depression than that of 1929. This depression was avoided by actions of the Federal Government.


Even today economists disagree as to what caused the Great Depression and how it should have been dealt with. There are numerous theories. Probably The Keynesian theory is the most accepted. Keynesian economics deal with the various theories about how in the short run, mainly during recessions, economic output is strongly influence by aggregate demand or total spending. Aggregate demand does not necessarily equal the productive capacity of the economy. Instead it is influenced by a host of factors that can behave erratically, affecting production, employment, and inflation.


Keynes theories were first presented during the Great Depression in his 1936 book, The General Theory of Employment, Interest, and Money. Keynes’ approach contrasted with classical economics. Keynesian economists believe that the private sector’s decisions sometimes lead to inefficient economic outcomes which require active policy responses by the public sector (government). It is a combination of the two that stabilize output with the government exercising control over the private sector. Monetary policy actions are needed at times by the Central Bank and fiscal policy actions (Government spending.) in order to stabilize output over the business cycle. Consequently Keynesian economics requires a mixed economy, predominantly private sector with a strong role for government interventions during recessions and depressions.


Traditional or classical economics as developed by Adam Smith in his 1776 book, An Enquiry Into The Wealth of Nations, set the Market making all the societal decisions. The motivating force, according to Smith was the “invisible hand,” the profit system. Adam Smith was responding to an economic system called mercantilism, where gold was considered the basic wealth of the nation and the economic decisions were being made by the kings of the various countries.


John Maynard Keynes during the world economic disaster called the Great Depression was questioning the validity of this system, saying what was needed to solve this problem was a combination of private enterprise balanced by state control of the marketplace. To him unfettered classical economics had brought about the Great Depression.


The actual causes of the 1929 Great Depression have been extensively discussed by economists and remains a matter of intense debate. In fact they are part of the larger debate about economic causes. The economic events that took place at that time have been studied thoroughly: a deflation in assets and commodity prices, dramatic drops in demand and credit, disruption of trade, widespread unemployment, over 13 million by 1932 the lowest point of the economic decline, and hectic poverty.


There is no consensus as to overall causes other than it started with the initial stock market crash that began on Black Tuesday, October 29, 1929 when panic selling of securities led to a continued dropping of value of the securities until the end of 1932 when it reached its lowest point. The Crash triggered the depression which had reached a high level of deteriorating economic conditions such as rising unemployment, over production, a totally unequal distribution of incomes, under consumption, and extremely high debt.


Both the stock market and the economy would slowly improve after 1933 with the new President, Franklin D. Roosevelt. It would rise to new heights after 1939 with the outbreak of World War II in Europe. The stock market and the economy would rise to new heights with a massive infusion of money for goods and services within the United States. War will have brought about its end within the U.S. It is interesting to note that it was the money spent during the war, first by European and Asian nations, then after December 7, 1941 also by the United States that specifically ended the Great Depression.


Once the Great Depression had started there were massive mistakes made by the Federal Reserve. The Fed actually caused a shrinkage of the money supply and greatly exacerbated the economic situation. Deflation caused people and businesses to owe ever increasing amounts upon money they borrowed actually shrinking the money supply in the U.S. by about 1/3.


With the election of Franklin D. Roosevelt to the presidency in 1932 a form of Keynesian economics became the policy of the President from 1933 on when he assumed power. Roosevelt’s policy was the “3 R’s: Relief, Recovery and Reform.” This comprised Roosevelt’s “New Deal;” his attack upon the Great Depression, which essentially lasted from 1933 to about 1938. The Federal Government put itself in a position to help turn the country around. It brought about great improvement but not a complete end to the Great Depression.


Toward the end of 2007 in the last year of the George W. Bush’s Presidency what is generally called the Great Recession began. The Housing Market in the United States collapsed. A great many people had been using their home as bank or checking accounts generally from the 1980s on, constantly refinancing their home and taking their equity out as property values continually increased. People bought the toys they always wanted: new cars, fancy trucks, boats, expensive vacations; just about anything they felt was desirable.


This had been going on for about thirty years, the entire career of many people in banking had taken place during this period. Housing loans or second mortgages were divided into miniscule fractions, put into a multitude of different Hedge Funds and sold to the general public as safe interest paying loans. The process brought the value of the home loans up millions, if not billions of dollars. The banks were earning large amounts in fees as the demand for loans actually forced up the value of the homes. By 2007 the end had been reached, property values had been raised beyond the point of sanity. The bankers were in denial that conditions could possibly change. Some banks were lending out 125% of the appraised value of the properties, working on the premise the housing values would rise endlessly.


The economic collapse began during the second week of March, 2008. It tended to be worldwide. In the United States, on Tuesday, with the encouragement of the President, George W. Bush and the Secretary of the Treasury, Hank Paulson, the Chairman of the Federal Reserve, Ben Bernanke injected $236 billion dollars into the American banking system. Citigroup, the world’s largest bank spent one billion dollars bailing out six of its hedge funds. Lehman Brothers, America’s fourth largest bank went under. AIG, the world’s largest insurance company, had moved into the business of insuring leveraged debt right at the time when the financial system was at the point of collapse. When the Housing Bubble burst Ben Bernanke, as chairman of the Fed, announced an $85 billion loan for them. Hank Paulson, the Secretary of the Treasury proposed buying up hundreds of billions of dollars’ worth of toxic assets.


With the accession of Barack Obama on January 20, 2009 as President of the United States that country and the rest of the Industrial Nations continued to hover on the point of economic collapse. This would have occurred if the governments had not interceded with masses of cash. They prevented, using taxpayer money, a depression that would have made the Great Depression of 1929 look like a weekend holiday. It would have been the total collapse of the banking systems which, in essence, run the economies of all those nations.


(Interestingly Donald Trump’s administration wants to do away with all the regulation in the U.S. which came about to avoid a repeat of this situation. Memories are short!)


President Barack Obama continued the bailout, saving the banks from their own stupidities, and he added the American automobile industry which was also on the point of total collapse. The governments of the various countries spent a lot of money saving their economies and returning the world to economic sanity.


Recently President Donald Trump commented in one of his speeches that President Barack Obama increased the National Debt more than any other prior President. He did so cleaning up the financial messes that they had helped to create.


We have passed beyond Keynesian economics to the point where the Free Market is today a farce. The governments of the United States and of the other industrial nations have assumed responsibility for the welfare of both the rich and the poor within their societies. How long will it take for the populations to understand this?


In the United States and in most industrial nation there are groups that want to return to the good old days. Whatever they were. Everything is changing. The 21st Century will be completely different from the 20th Century.


It should also be noted that it was the Federal Reserve, under Chairman Ben Bernanke, who used creative Monetary Policy in a period of a little over 24 months, with strong encouragement from President Obama, to buy up the toxic mortgage pieces throughout the United States at the rate of 45 billion dollars’ worth a month and also he added another 40 billion dollars a month directly to the National Cash Flow.


The Republican dominated House of Representatives from 2011 on did nothing to help the situation. They should have applied Fiscal Policy, creating jobs by spending money on infrastructure modernization. Instead they tended to cut government spending and worsen the Great Recession. Mitch McConnell, the Republican majority leader in the Senate, announced that they would make Obama a one term president by not cooperating with him on anything. To them no price was too high in order to make Obama a one term president. Somehow the needs of the American people were lost.


It was the Federal Reserve and the President who saved the country from falling into the worst depression in its history. The Republicans, once they got control of the House of Representatives, refused to pass anything that would make President Obama look good. This was true even if it had a negative effect on the country and hurt the majority of its citizens. President Obama offered a Bill that would engender spending on our decaying infrastructure. It did not even come up for discussion in the House of Representatives.

The Weiner Component Vol.2 #6 – The Federal Reserve: Part 1

English: Monthly changes in the currency compo...

English: Monthly changes in the currency component of the U.S. money supply as reported by the Federal Reserve at the St. Louis Fed’s F.R.E.D. website at: The data was copy/pasted into an Calc spreadsheet, the monthly changes were calculated using a simple formula, then this image was generated from that data. (Photo credit: Wikipedia)

Every industrial nation or group of countries like the Euro-pact, which uses a common currency, has a Central Bank that largely controls that controls its Monetary Policy, the flow of currency within its borders. In Europe it’s called the Central Bank and in the United States it is called the Federal Reserve System or the Fed.


Initially when the United States was founded under the Constitution in 1789 the Secretary of the Treasury, Alexander Hamilton, suggested that a Bank of the United States be established; and it was in 1791. The bank served as a repository for federal funds and as the government’s fiscal agent.


The bank was privately owned, as money for it was subscribed by private citizens, but its prime function was to serve the new government. It was granted a twenty year charter by Congress and had branches in eight cities. Consequently in addition to acting for the government the bank also conducted general commercial business. Although it was well managed and profitable critics charged that it was favoring the mercantile class over agrarian interests. This brought about its temporary termination after its charter expired in 1811. In 1816 the Bank of the United States was reestablished because the country had faced financial problems during the War of 1812 and it received a new twenty year charter.


The Second Bank of the United States would exist until and through most of the second term of Andrew Jackson’s presidency. It’s President, Nickolas Biddle, attempted to force Jackson to sign a Congressional bill chartering another twenty year extension to the bank. President Jackson reacted to this by moved all new government income to a group of western banks, that became known as his “pet” banks, and spent the funds already deposited in the Bank of the United States before withdrawing funds from his “pet” banks to pay for the needs of the Federal Government. The Second Bank of the United States got a state charter and would eventually go bankrupt. The western “pet” banks went on a lending spree which inflated the sale of western land by hundreds of percent, resulting in a depression, when the bubble burst, that affected the entire United States during the tenure of the next President, Martin Van Buren. In any event the nation no longer had a Central Bank.


In 1913, during the Presidency of Woodrow Wilson, a new Central Bank was set up by Congress. It was called the Federal Reserve and was supposed to regulate the flow of currency within the nation in order to avoid the large and regular economic dips of recession and depression.


Its initial mission was to control Monetary Policy, the flow of money through the entire economy. Gradually Congress extended it purpose by new legislation. These gradual extensions were a broadening of Monetary Policy.


Keep in mind that at this point in the history of the United States money or currency was specie; that is, it was gold or silver in the form of coins. Paper money did exist but it was a promissory note that could be exchanged at any bank, theoretically at any time, for gold and silver coins. However if this was done on a massive scale there would be a run on the bank and it would run out of money and go bankrupt. In order for business to properly occur more bank notes were printed than there was gold available.


Basically these metals, gold and silver, were purchased by the National Government and then minted into different denominations. The coins denoted the weight of the metal. A one ounce gold coin was a $20 gold piece. A one ounce silver coin was a silver dollar. Money, then, was exchanging value for value. The basic value of the metals was agreed upon international; so money as gold or silver could be used anywhere in the world.


In 1929, for various reasons, the Great Depression occurred. Under a Republican administration, that of President Herbert Hoover, the country, and, for that matter, the world, went economically downhill for the next decade. Each industrial nation had to work out its own deliverance from the Great Depression.


In 1932, the Democrat, Franklin D. Roosevelt was elected President of the United States. He introduced the “New Deal.” His basic program was the three R’s: relief, recovery, and reform. He attempted to offer employment to many of the unemployed, an end to the reasons for the depression, and reform by legislation or otherwise so it could never happen again.


Roosevelt was the longest serving President in the history of the nation. He served for four terms, through the Great Depression and most of World War II, dying in office during his fourth term.


Sometime during his first administration he had a bill passed by Congress that changed the use of money, first in the United States and then it was copied throughout the rest of the world. The Federal Government collected all the gold coins, with the exception of a small number that could be kept as souvenirs, issued paper silver certificates for one and five dollar bills and Federal Reserve Notes for any amount above that. The gold coins were melted down into bars of gold and stored in underground depositories like Fort Knox, situated around the country, with gold certificates issued for the gold, which the government kept on deposit to verify the value of the Federal Reserve Notes.


In essence money being worth its weight in gold became a myth. The gold certificates were never on display or otherwise available. There was never any record kept of actual gold being added or subtracted from the gold supply in the depositories. Money became paper, a token of no real value; everything else was a fiction.


Early on in World War II the countries that were to become allies of the United States shipped their gold supplies to the U.S. I don’t believe the gold was ever returned to those nations. They spent the gold on buying supplies with which to fight the war. After the gold was spent the United States used a system called “lend lease” to supply its allies with the necessary food and war materials. Those goods were never really paid for monetarily. But World War II ended the last hangovers of the Great Depression. The United States and later the rest of the world emerged in different levels of economic fitness in 1945. All actual money had become paper tokens that were used to exchange goods and services for goods and services. The basic world currency, upon which all the other national currencies were based, after the war was the American dollar. It is still that today.


The Federal Reserve came into being because of the depression or panic of 1907 and other extreme downturns in the economy. Attempts had been made during the late 19th and early 20th Centuries, by the moneyed class, mainly bankers, to control the economy mainly for reasons of profit. These, in turn, particularly when they failed, had exacerbated economic shifts within the economy, usually in a downward direction.


The Panic of 1907 and 1908 was also known as the 1907 Bankers Panic or Knickerbocker Crisis. Its causes took place initially over a three week period when the New York Stock Exchange fell almost 50% from its peak the previous year. It lasted for slightly over a year.


Monetary panics occurred during this time of economic recession and there were numerous runs on banks and trust companies. It spread throughout the nation with many state and local banks and businesses going bankrupt. The primary cause of the run was a retraction of market liquidity by a number of New York City banks and a loss of confidence among depositors, exacerbated by unregulated side bets of bank funds by banking executives.


The panic was begun in 1907 by a failed attempt to corner the market on stock of the United Copper Company. When this failed, banks that had lent money to the cornering scheme suffered runs that later spread to affiliated banks and trusts, leading a week later to the downfall of the Knickerbocker Trust Company, New York City’s third largest trust. The collapse spread throughout the city trusts as regional banks withdrew reserves from New York City banks. Panic extended across the nation as vast numbers of people withdrew their deposits from regional banks.


To simply state what happened was that the object was for a group of investors to gain control of the stock shares of United Copper Company. The group concerned controlled numerous banks and trust companies. They believed that a large number of shares had been borrowed and sold short. (To sell short is to sell a stock at a higher price before one owns it, then when the price drops buy the stock at a lower price, and eventually pocket the profit.)


The group believed that a majority of the stock was held by the Heinze family and that a significant number had been borrowed and sold short on the belief that the price would drop considerably. Their aggressive purchasing would drive up the price of the stock. The short sellers would be forced to come to them in order to purchase stocks that they had already sold and they could charge whatever they wished.


United Copper rose in one day from $39 to $52 a share. It then went up to nearly $60 a share, but the short sellers were able to able to find United Copper from other sources. The group has misread the Market and the stock price began to collapse. It closed at $30 and then dropped to $10 a share. The manipulators and the banks they represented were ruined. As news of the collapse spread depositors rushed to pull their money out of these banks. The run on banks spread throughout the city. A week later many regional stock exchanges throughout the nation were closing or limiting trading.


The hero of the crisis was J.P. Morgan. He coordinated the heads of the banks and trust companies and was able to keep the total economy of the United States from collapsing. The Panic of 2007 was from May 2007 to June 2008, 13 months. While it started and was centered in New York City the entire nation was involved. There was bank panic, runs on banks and trusts with crowds of depositors withdrawing all their funds, and falling stock prices that resulted in massive economic disruption. Production fell 11% in the nation, imports went down by 26%, and unemployment rose to 8% from under 3% two years earlier. Even immigration dropped to 750,000. It had been 1.2 million two years earlier. J. P. Morgan lost about $21 million straightening the situation out.


The frequency of economic crises and the severity of the 1907 panic led to a national debate on reform of the system. In May 1908 Congress passed the Aldrich-Vreeland Act that established a National Monetary Commission to investigate the panic and propose legislation to regulate banking.


It was discovered that the major difference between European and American banking systems was the existence of a Central Bank which controlled Monetary Policy. They could easily move money to where it was needed. The European nations all had one, the United States did not. The European states were able to extend the supply of currency during periods of low cash reserves. The United States had a great problem doing this.


The final report of the National Monetary Commission was on January 11, 1911. For nearly two years Congress debated the proposal. On December 23, 1913 Congress passed the Federal Reserve Act. President Woodrow Wilson signed the bill immediately and the legislation was enacted on the same day, December 23, 1913, creating the Federal Reserve System as the Central Bank within the United States.



English: Flag of the United States Federal Res...

English: Flag of the United States Federal Reserve Bank (Photo credit: Wikipedia)

The Weiner Component #169 – Part 2: The Presidencies & Political Parties in the United States

English: Partisan makeup of the Senate at the ...

English: Partisan makeup of the Senate at the beginning of the 107th United States Congress, January 3, 2001. Democratic Party – 50 Republican Party – 50 Tie broken by the Vice President of the United States (Al Gore to 2001-01-20, Dick Cheney thereafter) (Photo credit: Wikipedia)

English: Seal of the President of the United S...

English: Abraham Lincoln, the sixteenth Presid...

If you draw a horizontal line across a sheet of paper and put a mark in the center then the right side proceeding to the end of the line tends to be conservative getting more reactionary as you move farther toward the right end and the left side tends to be liberal, getting more radical as it moves to the left end.  Today the left side represents the Democratic Party and the right side is the Republican Party.


This model of right and left was initially created by the way the Chamber of Deputies placed themselves in the hall during the period of the French Revolution in late 18th Century.   The difference then was that the legislative body was divided into three groups, the right were the reactionaries who wanted to bring back the king and his form of government; the left were the radicals who wanted to get rid of the king and brought about the “Reign of Terror.”  They wanted a representative government, essentially led by a dictator.  The majority of the Chamber was called the Mountain.  It was the center which contained the majority of delegates.  They were the moderates.  France would eventually become a Representative Democracy.


Today in the United States legislature there is no center.  We have a right, the Republicans and a left side, the Democrats.  And between the two major groups, in the center, there is an empty space, which, in turn, makes it difficult for any type of compromise to be reached or even for any real communication to occur.  As far as the far right is concerned compromise is giving in to their position.


In 1797, when the Constitution was written, there were no thoughts of political parties.  By 1789, when it took effect, Alexander Hamilton, the First Secretary of the Treasury, had organized the Federalist Party, which basically supported the tidewater mercantilist groups rather than inland yeoman farmers.  Thomas Jefferson, who supported the latter group at the very tail end of the 18th Century organized the Republican Party as a solution to the Federalists and ran as its first candidate for the presidency in the year 1800.  The Federalists, as an insult, rechristened it as the Democratic-Republican Party.  This first name has stuck through the years and is still used today.  The Presidential campaign in the year 1800 was a very raucous one with Jefferson being denounced, among other things, as an atheist.


Jefferson won the election and the Federalists were never again able to win a Presidential Election.  They ceased to exist as a political party after the War of 1812.  In that war with England they had refused to support the government against Great Britain.


President Thomas Jefferson, following his philosophy of leading a country of small yeoman farmers, in 1803 bought the Louisiana Territory from France for $11,250,000, adding 828,000 square miles to the new United States and doubling its size.  He calculated that he had added enough land to allow it to freely grow with small farms for at least one hundred years.


The Federalist position had been favoring a strong central government, close ties with Great Britain, a centralized banking system and close links between the government and men of wealth.


What followed after the War of 1812 was the Era of Good Feelings which ended in 1824 when John Quincy Adams was appointed to the Presidency by the House of Representatives after an election in which none of the four regional candidates achieved enough of a majority to win the election.


In 1828 the Democratic-Republican Party split into Jacksonian Democrats and the Whig Party.  The Jacksonian Democratic Party became the modern Democratic Party.  They supported the primacy of the President over the other branches of government.  The Whig Party advocated the primacy of Congress over the executive branch.  In the 1850s the Whig Party declined.  Its leaders had died out and it split over the issue of slavery.  The Democratic Party also split into two section, Northern and Southern, anti-slave and pro-slave.


In the Election of 1860 the remnants of the Whig Party and remnants of other third parties like the Abolitionists and other dissatisfied groups coalesced into the new Republican Party while the Democrats split into two separate political parties, one Northern and Western and one Southern.  The Northern Democrats ran Stephen A. Douglas while the Southern Democrats put forth John C. Breckenridge.


Douglas and Breckenridge had over 50% of the vote together but neither one had as much as Lincoln.  Lincoln won the election with under 50% of the popular vote.  No one Southern State had his name on their ballot.  It was as though two totally separate elections had occurred.  In point of fact one can easily say that the Civil War actually began with this election.


At the end of the Civil War Radical Republicans dominated both Houses of Congress.  The President of the United States was a former Southern Democrat, Andrew Johnson.  He had been a senator from Tennessee who remained in Washington and refused to join in the Secession from the Union.  Johnson ran with Lincoln during his second term as the Vice-presidential candidate under the slogan of the National Unity Ticket.


Lincoln was assassinated early during his second term and Andrew Johnson became president from 1864 to 1867.  The Radical Republicans had a super majority in both Houses of Congress; consequently they were able to do whatever they wanted.  Johnson was unsuccessfully impeached toward the end of his term.  In 1868, the Republican, former General Ulysses S. Grant, became the 18th President of the United States.


In the election of 1876 the Republican Rutherford B. Hayes ran against the Democrat, Samuel J. Tilden.  The Republicans desperately wanted to retain the presidency.  Tilden had the greater number of popular votes.  Several states ended up electing two sets of electors, both Democratic and Republican.  The crisis was not resolved until the night before the new President was to take office.  A back-door deal was made by which the Republicans got the presidency and the Southern States had the Northern armies of occupation removed and became independent states again, ending all the remnants of the Civil War.  The United States reemerged as a two party nation.  At this time the Blacks systematically lost their rights as freedmen, although they kept that title.


The Republican Party adopted many of the economic policies of the Whigs: national banks, railroad expansion, and high tariffs.  They were the businessman’s political party.  Their anti-slave policy and the Civil War had brought the Black population, the freedmen, into their party and kept them dominant in Congress until this time.  The Southern States returned to the Democratic Party which maintained its traditional values.  The Republicans also attracted shop owners, skilled craftsmen, clerks, and professionals who were attracted to the party’s modernization policies.  These political coalitions lasted almost to the end of the 19th Century.


The Civil War expedited economic change in America.  From its end through the 1920s there was a rush of new immigration into the United States, mainly from Eastern Europe and Ireland.  The Industrial Revolution in all forms of rapid economic growth took hold of the country at this time generating a rapid settlement of the entire continental United States.  The late 19th Century was the period of the Gilded Age, rapid industrial growth, the confluence of money into the hands of a few brought about the rise of the “robber barons,” monopoly and oligopoly; phenomenal affluence for a small number and sweat-shops and twelve to fifteen hour shifts for large groups of children, women, and men in factories.  The country went from a rural nation to an urban one during this period.


Small towns became cities virtually overnight with almost no understanding or regulations about supplying clean water to large populations and housing or sewerage or food regulation laws.  The government performed no social services.  Political machines developed by both political parties in the urban areas.  Epidemics became common, particularly in warmer weather.  Death tolls, particularly in slum areas were inordinately high, especially among infants and young children.


Among this environment, within the urban areas, individual states, and the Federal Government the Progressive Movement developed and grew.  It would continue until the United States got involved in the Great War (World War I).  Both major political parties would at different times lead this movement, which, to a large extent, would be fed by magazine articles and books demonstrating the horrific conditions that existed in the factories, slums, and cities.


All the presidents from Lincoln’s death until Teddy Roosevelt’s accession were decent men but weak presidents.  They and Cabinet members were continually hounded by jobseekers and political machine operators looking to collect on campaign promises.


The major issues of this period were the protective tariff, currency reform, and civil service reform.  President James A. Garfield was shot by a dissatisfied job seeker.  Even with this civil service reform came slowly over the course of the late 19th Century.


Tariff and currency reform lasted throughout this period and led to the Progressive Movement.  Business interests supported protective tariffs and tight or hard money (gold).  They lobbied and spent freely to achieve these goals, which the Republicans tended to support.  The Democrats largely backed a loose money policy, using both gold and silver.


From 1876 through 1900, Congress was known for being rowdy and inefficient and the Presidents as more or less capable of doing their jobs but not much more.  The two major political parties tended to be similar in their outlook with the exception that the Republicans favored business and the Democrats vied slightly toward farmers.  And the government was considered highly corrupt.


With one exception, and that was Grover Cleveland, the Democratic candidate, who was twice elected to a four year term in 1884 and in 1892, all the other presidents had been Republicans.  All of them, from both political parties had served in the Civil War.


In addition, among the farmers, at this time, the Granger Movement gradually developed and it in turn become part of the Populist Movement, which pushed for Agrarian Reform in the United States.  The Populist Movement and urban conditions and corruption throughout the country gave birth to the Progressive Reform Movement which existed on the both the state levels and on the national level.


The early Progressive Movement rose on a grass root level.  It was supported by the farmers who wanted a loose money policy.  This would allow them to pay back their debts with less expensive currency.  The businessmen and bankers preferred a tight money policy.  They wanted the debts paid back with more expensive money than they had initially spent or loaned out.  Into this mix came magazine and book writers, the muckrakers, who tended to expose the corruption that existed on all levels of society.  Also at this time the giant industrial cities came into existence with no initial rules or regulations on how they had to be governed or function, in areas like hygiene, sanitation, and city government and social services to the newly arrived immigrants.


All this gradually ended with the accession of Theodore Roosevelt to the presidency after the assassination of William McKinley by an anarchist in 1901.  Teddy Roosevelt, a Republican, would be the first of the Progressive Presidents.  He would be followed by William Howard Taft, another Republican.  The third Progressive President would be Woodrow Wilson, a Democrat.  This period would end with the First World War


During this period corruption was exposed in numerous aspects of the nation and a certain amount of regulation was promulgated throughout the various levels of the society: local, state, and national.  The Senate up to 1913 had been appointed by the different state legislatures and had become, usually by bribery, largely an extension of large corporations like Standard Oil’s attorneys.  It thereafter, through the 17th Amendment to the Constitution, was directly elected by the people within the individual states.  Oregon introduced in 1902 the initiative and the referendum process, which, in turn, was copied by numerous other states.  The recall election was also introduced whereby an elected official could be unelected from his office.  In addition Women Suffrage (the vote) came about at this period.  The tide of reforms ended with the World War.


At the end of the war Woodrow Wilson went to Europe to develop the Treaty of Versailles.  He brought the treaty to Washington where it was rejected by the Republicans in the Senate.  There was a struggle to pass the Treaty, and, during that time, President Wilson suffered a heart attack from which he never totally recovered.


The Treaty could have been modified to satisfy the Republicans but Wilson refused to compromise.  The United States never signed it.  Instead they eventually signed a separate treaty with Germany.  The major item in the Treaty was the establishment of a League of Nations, which the United States never joined.


At the end of his term the invalid, Woodrow Wilson, was replaced by the Republican, Warren Harding, who died in office after a number of corruption scandals emerged.  He was replaced by his Vice President, Calvin Coolidge, who later ran on his own and won.  He, in turn, was replaced by Herbert Hoover.  These three Republican presidents fully believed Adam Smith’s theory that the market-place would make all the proper economic decisions for how the country should be run.


The motivating force according to Adam Smith was the “invisible hand,” the profit motive.  This brought the country in 1929 to the Great Depression.  Neither Hoover nor his staff knew how to really deal with this situation.  The United States and numerous other industrial nations went through periods of unbelievable misery with the governments trying to function in periods of massive unemployment and chaos.


In 1933, four years later, the new President, the Democrat Franklin D. Roosevelt, working on almost an experimental basis saved capitalism and the country by adopting socialistic principles.  He called his policy “The New Deal,” a term taken from poker.  The Federal Government assumed responsibility for those who could not care for the mselves.  They created jobs and projects like Hoover Dam, which was originally called Boulder Dam, throughout the United States and he brought about social security.  It was a time of rapid experimentation, anything that worked and solved problems was utilized.


But even with all this many of the aspects of the Great Depression remained.  The country was better off but many still suffered.  What ended the last remnants of the Great Depression was World War II.  The spending required to fight and win the war and the army the U. S. raised ended the last remnants of the massive economic turndown.  In point of fact, the country entered the war in December of 1941 with the majority of the population being in the lower class and ended the war in 1945 with the majority of the population belonging to the middle class.  The economy had changed considerably.


During the Second World War both political parties concentrated on fighting the war.  Roosevelt died during the last year of the fighting and was replaced by his Vice President, the Democrat: Harry S. Truman.


Truman in 1945, after the war ended, sponsored, what he called, the Fair Deal, as a continuation of the prewar New Deal.  The Republicans derided Truman and his program as a poor man’s version Roosevelt’s politics.  In 1948 they ran Thomas E. Dewey against him.  They also passed the 12th Amendment to the Constitution, which limited presidential tenure to two terms in office.  While the Amendment did not affect Truman; it would come into being with the next president; still it gave him a strong hint.  Franklin D. Roosevelt had died in office during his fourth term in office.


In 1948 the Republicans were positive that they would win the election.  At that time, before television, victory celebrations were held on radio.  On the night of the election there was a victory celebration for Dewey.  The Chicago Tribune headline the next morning was “Dewey Wins.”  But when the votes were counted Harry S. Truman had won and was still President of the United States.  All the polls had predicted Dewey as the winner; they all ate crow that year.


For the next four years there were a lot of frustrated Republicans in both Houses of Congress; but Congress still worked.  The fear after the war was that with the massive return of the military to civilian life the country would go into a deep recession with massive unemployment as it did directly after World War I.  But with intense rationing, the continual sale of war bonds, and unlimited employment during the war there was lots of money available.  All the automobile factories had been producing only for the war effort for the last four years; they now converted to civilian production, everyone wanted a new car.  A new industry, television came into being.  Other positive things happened.  There was no recession.  The returning veterans found jobs, started their own small business, returned to school: finishing high school and colleges.  The country smoothly went back to peacetime.  In fact, veterans received a government allowance if they went back to school.


Unfortunately, even with the new Organization, The United Nations, to which all the allied nations now belonged, peace did not come.  On June 25, 1950 until July 27, 1953 the United States and other United Nation countries were involved in the Korean War, which ended at the 38th Parallel, where it had begun.  This was the line splitting Korea into two parts: Communist in the North and non-communist in the South.  It would seem that almost every succeeding president from Truman on would have their own specific war.


Truman was followed in the presidency in 1953 by Dwight David Eisenhower, the general who had led the war in Europe.  Eisenhower, initially had never voted in a presidential election.  He did not know which political party he belonged to.  Finally he decided he was a Republican and ran as their presidential candidate.


Eisenhower ended the Korean War by threatening to use atomic weapons.  It ended in a draw, which still continues to this day.


As a replacement for Truman the Democrats came up with Adlia Stevenson, the governor of Illinois.  Stevenson ran against Eisenhower twice and lost both times.  Eisenhower considered himself a middle-of-the-road Republican, that is, a moderate or liberal Republican.  The two parties functioned well together during his eight years in office.


In 1960 Richard M. Nixon, Eisenhower’s Vice President, ran against the Democrat, John F. Kennedy, who was a member of the House of Representatives from Massachusetts.  Kennedy won that election by less than one per cent of the vote.  The two parties were able to function together and more or less pass all the necessary legislation.  /there were problems with his civil rights reform attempts.  In Viet Nam There was action, but not a major crisis.  It was during Kennedy’s presidency that the Bay of Pigs debacle occurred and later the Cuban Missile Crisis came about.  The Soviet Union had installed atomic missiles in Cuba.  Kennedy, short of war, got Russia to remove them.  His frustration came about in being limited in passing civil rights legislation.


Kennedy, while getting ready to run for a second term in 1963, was in a motorcade in downtown Dallas, Texas, when he was shot by an assassin.  His Vice President, Lyndon B. Johnson became the next President of the United States.  President Johnson was reelected in 1964.  He ran against the arch-conservative Barry Goldwater and overwhelmingly defeated him.  Johnson attempted to force the war in Viet Nam toward an American victory by massively increasing U.S. forces there.  He was not successful.  In the United States he declared War on Poverty.  Again he was not successful.  As an essentially defeated man Johnson announced that he would not run for the presidency in 1968.


Where Johnson was eminently successful was in pushing through Congress both his and John F. Kennedy’s plan for civil rights reform in the nation.  Segregation was essentially legally ended throughout the South and in other parts of the country.  The statement that “all men are created equal” in the Declaration of Independence was expanded to include Blacks and Women.  It was a major achievement.


In the 1968 Election the Republican Richard M. Nixon ran against the Democratic Vice President, Hubert Humphrey.  A third party candidate, former Alabama Governor, George Wallace, ran representing the American Independent Party, which supported separation of the races in public education.  Nixon won with 43.4% of the vote; Humphrey got 42.7%, and Wallace received 13.5%.


The election year was tumultuous, being marked by the assassination of Martin Luther King and Robert F. Kennedy.  The Democratic Convention had open warfare between Viet Nam protestors and the Chicago police.  Nixon won the popular vote by .07 percentage points and the Electoral College vote by 301 to 191 for Humphrey.


Besides economic problems Nixon faced a massive protest throughout his presidency over the Viet Nam War.  He presumably had a secret plan to end the war.  This came down to a return of American prisoners of war and withdrawing with honor.  That was making a defeat in war not look like a defeat.


Negotiations were begun.  The initial problem was the shape of the Negotiating Table.  There were people from North Viet Nam, from South Viet Nam, and from the United States, and there was also the National Liberation Front, who were from South Viet Nam but favored the North.  The issue was resolved by using a round table with two smaller ones nearby.


Nixon’s strategy was to bring increasing pressure on Communist North Viet Nam by increasing the war so they would be willing to compromise.  He expanded the war to Cambodia and bombing along the Ho Chi Minh Trail.  Supplies were being brought into North Viet Nam into the South over this route.  There was both warfare and peace negotiations that would be going on during Nixon’s term as President.


In 1972 Nixon ran for a second term as the Republican candidate.  The Democratic candidate was the highly liberal senator from South Dakota, George McGovern.  The Republicans were so sure he could not win that they contributed money secretly to his campaign wanting to make sure he was the Democratic candidate.


McGovern ran on an Anti-War Campaign against the incumbent, Richard Nixon.  McGovern was perceived by many voters as a left-wing extremist.  Nixon won in a landslide, gaining 60.7% of the popular vote.  He received 18 million more votes than McGovern, carrying 49 states.


Unfortunately, during the election, because of some paranoid tendencies of Nixon, a group of his employees called the plumbers  burgled Democratic Headquarters at the Watergate Hotel in Washington, D.C. several times in order to find out what the Democrats were doing and planning.  The final time they did this they were caught and arrested.


The question became: What did Nixon know?  And when did he know it?  It took two years for this to unravel.  And then the answer was that he knew about the burglary from the very beginning.  Nixon resigned from the presidency two years after being elected for a second term.  He resigned the day before a Bill of Impeachment was to be voted upon in the House of Representatives.


Interestingly his vice president, Spiro Agnew, had resigned earlier.  The government had an 80 page inditement against him for extortion, going back to when he was governor of Maryland.  Because of the Watergate controversy the Justice Department allowed him to plead, no contest, and resign from the vice-presidency.


The irony was that Nixon chose a new Vice-President, Senator Gerald Ford, who assumed the Presidency in 1974.  President Ford later issued a Proclamation on September 8, 1974 pardoning Richard Nixon from any crimes he may have committed.


President Gerald Ford ended the Viet Nam War.  This was the first war that the United States lost.  Today Viet Nam trades with the United States and is a relatively inexpensive tourist attraction.  It cost a lot less to visit Ho Chi Minh City (formerly Saigon) than to go to a city in Hawaii.


In 1978 Republican President Gerald Ford ran against the Democratic contender, James Earl (Jimmy) Carter.  Jimmy Carter won by a margin of 57 Electoral votes.  He had a Democratic majority in both Houses of Congress during both congressional terms.  On his second day in office President Carter pardoned all evaders of the Viet Nam War.  He created the Departments of Energy and Education.  He brought about the Camp David Accords between Israel and the Palestinians.


The country suffered from Stagflation at this time, a combination of both high inflation and high unemployment.  Carter could not bring himself to allow the Draconian program that would solve this problem.  The next President, Ronald Reagan would do this and bring about a large homeless problem throughout the United States which still exists today.


President Carter signed the Panama Canal Treaties, giving the canal to Panama.  It was during his term in office that the Iranian Revolution occurred and the American Embassy personnel were held as captives by the new government of Iran.  They were returned to the U.S. shortly after the next president took office.  Carter was defeated in the 1980 Election by Ronald Reagan.


Ronald Reagan was elected to the presidency on January 20, 1981 and served two terms through January 20, 1989.  He was a Republican and a conservative, bringing about changes that the conservatives had wanted for years.  He was also the oldest man elected to the presidency.


Forgetting the post-Civil-War Period when the Radical Republicans, wanting to punish the South and controlled Congress from 1865 to 1878 when Rutherford Hayes stole the presidency from the Democrat, Samuel Tilden.  At that time the Republicans had a super majority in both Houses of Congress and could and did pass any law they put forth without the President’s signature.


Outside of this relatively short period in the nation’s history the two major political parties essentially got along and, more or less, cooperated with one another in passing the necessary laws for the nation.  The point has been made in an earlier blog that Democratic President Jimmy Carter was more conservative that Gerald Ford’s Republican Vice President, Nelson Rockefeller.  On the political line mentioned at the beginning of this blog Rockefeller would be placed left of center and Carter would go right of center.


This was true of many Congressmen.  There have historically been many conservative Democrats and moderate or liberal Republicans.  There was no separate void between them in terms of political positions.  There was always a slight difference in basic philosophy but there was always open communication and the possibility of compromise.


This has been a fact of United States history.  There was generally cooperation between both political parties.  The Conference Committee, which met after a bill was passed in slightly different versions in the two Houses of Congress, has been able to continually come up with a compromise bill for both Houses of Congress to successfully vote upon.


This system has existed until Barack Obama became President of the United States.  What has occurred from that time on has essentially been the development of the Tea Party, an extreme right arm of the Republican Party that is largely uneducated in the function of government and modern economics.  In the House of Representatives they are the Freedom Coalition.  In point of fact their aim seems to be to do away with the Federal Government