The Forgotten Depression

"All the penalties will not be light. Nor evenly distributed. There is no way of making them so. There is no instant step from disorder to order. We must face a condition of grim reality, charge off our losses and start afresh. It is the oldest lesson of civilization."

President Warren Harding, inaugural address 1921

Interesting piece by Tom Woods on the Depression of 1920. This inevitable deflationary bust followed the inflation sponsored by War War I and the newly formed Federal Reserve.

His primary message is that recovery following the downturn was quick precisely because there was minimal governmental interference with the cleansing process. No subsequent downturn has been privy to the 'hands-off' approach that characterized the 1920 situation.

The article includes a couple of snippets from Warren Harding's speeches following his acceptance of the Republican Party's presidential nomination in 1920 and inauguration in 1921. Here's a piece of the 1920 speech:

"We will attempt intelligent and courageous deflation, and strike at government borrowing which enlarges the evil, and we will attack high cost of government with every energy and facility which attend Republican capacity. We promise that relief which will attend the halting of waste and extravagance, and the renewal of the practice of public economy, not alone because it will relieve tax burdens but because it will be an example to stimulate thrift and economy in private life.

"Let us call to all the people for thrift and economy, for denial and sacrifice if need be, for a nationwide drive against extravagance and luxury, to a recommittal to simplicity of living, to that prudent and normal plan of life which is the health of the republic. There hasn't been a recovery from the waste and abnormalities of war since the story of mankind was first written, except through work and saving, through industry and denial, while needless spending and heedless extravagance have marked every decay in the history of nations."

Downright stunning vis a vis the blather emanating from modern day bureaucrats.