Q&A May AD 2010
Our Lady of the Rosary
On this page:
The Man in the Linen Sheet?
“Die Gedanken Sind Frei”?
Morality of The
Great Depression (Conclusion!))
Question: On Tuesday of Holy Week the
Passion Gospel spoke of a young man wrapped in a linen sheet and losing it to
the crowd. Who was the “young man” and why would such an incident be
included in a Gospel?
Answer: The reference is to Mark xiv: 51.
There is no clear indication of who the young man might have been, while it is
clear that the reference contributes nothing to understanding the Passion and
death of our Lord. Some Scripture scholars conjecture that the young man
is none other than the Evangelist Mark himself.
The material in Mark’s Gospel is generally held to come from the preaching
of Saint Peter as written down by his young associate. The humbling
experience with the sheet may be Mark’s assertion that he too was an
eyewitness to at least some of the events about which he wrote. It may
be a sort of personal “signature” on his account of the Gospel. That
Mark was somehow associated with Jesus and the Apostles, and could have been
present in Jerusalem during the time of our Lord’s Passion, is attested to
by the fact that, shortly after, when released from Prison, Peter “came to
the house of Mary the mother of John, who was surnamed Mark, where many were
gathered together and praying.”
Mark’s mother’s house was apparently a center of Apostolic activity—it
is often identified with the Cenacle, the place of the “Upper Room” where
the Last Supper was celebrated. It is difficult to believe that a Jew
would have been away from his home in Jerusalem during the celebration of the
Others have conjectured that the “young man” would
have been Saint John, the youngest of the Apostles. But this is
unlikely, as Mark xiv: 50 records that “Then [Jesus’] disciples
leaving him, all fled away.” Nonetheless, Peter and probably
John appear shortly thereafter at the house of the high priest, so they could
not have fled very far.
In any event, no mention of either one of them being improperly clothed is
made in any of the Gospel accounts. And both men seemed to want to
“fit in” among the probably hostile guests in the house of the High
Question: “Die Gedanken Sind Frei”?
[Thinking is in freedom]
Answer: The Associated Press reports that
Bishop Richard N. Williamson, SSPX was convicted of “Holocaust Denial” on
April 16, 2010 in Germany His “thought crime,” committed in
Regensburg, Germany in an interview with Swedish Television, is to be punished
by a fine of €10,000 ($13,544). Bishop Williamson's lawyer, Matthias
Lossmann, indicated that he will be appealing the verdict. Germany is
one of those places in the world where one can be prosecuted for expressing an
unpopular opinion—no doubt, Herr Hitler would be proud.
from last month]
Question: Were there moral aspects to the
Great Depression? A lot of
people suffered for well over a decade. Shouldn’t someone be held
responsible? Can we prevent such a thing from happening again?
Finally! This will be a brief summary of what has gone before.
● A notable feature of the Lincoln and
(Theodore) Roosevelt presidencies was an emphasis on government involvement in
large businesses. Politicians incorrectly assumed that free enterprise
was unable to complete large scale infrastructure projects like railroads,
turnpikes and canals. A number of state constitutions were amended to
allow financing of such, previously prohibited, projects. There was, at
the same time, a distrust for any firm that had a large share of the market in
its industry, even if it gained that share by making the product available to
the consumer at the lowest cost or highest quality. State involvement
brought inefficiency through regulation and taxation, and made possible the
monopolies or cartels impossible under free competition. Unitary banking
laws made for small and poorly capitalized banks that would fail when the
economy turned downward.
● The Federal Reserve was chartered in 1913
(with no Constitutional amendment), making cheap credit available to
government and business, thereby facilitating spending by both on dubious and
unprofitable projects. The interest rate was no longer market driven,
and dollars began to be manufactured out of thin air, thereby stealing the
wealth of all who held dollars. The Fed also made fractional reserve
banking easier—the process of loaning the same money a number of times,
which would further inflate the dollar and lead to bank collapses when
depositors unsuccessfully demanded the return of their money.
● A number of anti-trust acts, the passage of
the income tax (Amendment XVI, 1913), the direct election of Senators
(Amendment XVII, 1913), and federalization of the state militias as a National
Guard (Dick Act, 1903) undermined the concept of a federal union with
specifically delegated powers, with the remainder being reserved to the States
● World War I created an economic bubble
as America supplied itself and the European belligerents with food and
military goods. The bubble burst with the war’s end and the return to
a peacetime economy. The Depression of 1920-21 was brief in comparison
with others earlier in the century, and very brief when compared with the
Great Depression. The short duration of this post-war depression is
attributed to President Harding’s rapid downsizing of the federal government
and refusal to interfere in the reorganization of the economy.
Adjustment was painful but mercifully swift.
● The 1920s—the “roaring
twenties”—were times of great growth in the US economy. The
industrial revolution “came home” as Americans became able to acquire
household appliances, radios, and even automobiles. While this growth
was due, in part, to artificially low interest rates and abundant credit,
these same conditions kept businessmen and investors from recognizing the
point at which “enough” became “too much”—with no market driven
rates people continued to invest beyond the economy’s ability to respond
with useful goods and services. This Fed induced “bubble” burst with
the market crash of 1929, leaving many with worthless investments.
● The Fed belatedly exercised controls in
August 1929, not in time to stop the 24‑29 October 1929, Black
Thursday‑Black Tuesday, stock market crash. Rather than let the
economy find its own equilibrium as Harding had done, President Hoover asked
the Fed to more than halve interest rates, continuing new
mal‑investment, and postponing the reorganization of the economy.
● In spite of overwhelming economic advice,
Hoover authorized the 17 June 1930 Smoot-Hawley tariff to keep foreign goods
out of US markets, trying to force domestic purchasers to buy US manufactures
and agricultural products. Relations with foreign governments were
damaged, and foreign retaliation damaged the US export industry.
from Europe declined from a 1929 high of $1,334 million to just $390 million
in 1932, while U.S. exports to Europe fell from $2,341 million in 1929 to $784
million in 1932. Overall, world trade declined by some 66% between 1929 and
● 22 January 1932 Hoover established the
Reconstruction Finance Corporation (RFC), providing about $2 billion in
aid to states and municipalities, and short term loans to banks, railroads,
farm mortgage associations, and other businesses.
● 1932 the Revenue Act was one of the largest
tax increases in American History:
The range of tax increases was enormous. Many wartime
excise taxes were revived, sales taxes were imposed on gasoline, tires, autos,
electric energy, malt, toiletries, furs, jewelry, and other articles;
admission and stock transfer taxes were increased; new taxes were levied on
bank checks, bond transfers, telephone, telegraph, and radio messages; and the
personal income tax was raised drastically as follows: the normal rate was
increased from a range of 1½ percent-5 percent, to 4 percent-8 percent;
personal exemptions were sharply reduced, and an earned credit of 25 percent
eliminated; and surtaxes were raised enormously, from a maximum of 25 percent
to 63 percent on the highest incomes. Furthermore, the corporate income tax
was increased from 12 percent to 13¾ percent, and an exemption for small
corporations eliminated; the estate tax was doubled, and the exemption floor
halved; and the gift tax, which had been eliminated, was restored, and
graduated up to 33⅓ percent.
● Hoover clearly thought that he could aid
the post-crash reorganization of the economy by seizing private wealth and
spending it though governmental programs. On some small level, this put
people to work, but robbed the private sector of the capital needed to
rebuild. In the 1932 campaign Franklin Roosevelt denigrated Hoover as
"the greatest spender in history." And the Republican party
"has piled bureau on bureau, commission on commission ... at the expense
of the taxpayer." Roosevelt falsely claimed: "For three long
years I have been going up and down this country preaching that
government—federal, state and local—costs too much. I shall not stop that
preaching." In actual fact, as Governor of New York, Roosevelt had
converted a $15‑Million surplus into a $90‑Million deficit.
● Hoover lost the November 1932 election but
remained a “lame duck” president until the inauguration on 4 March 1933.
Without Roosevelt’s concurrence he was not able to carry out legislation to
stem the tide of bank foreclosures. Rumors that FDR would go off the
gold standard caused large purchases of US gold and devalued the dollar.
● Only when Roosevelt took office did he
close the banks—four days before Congress gave him the authority to do
so—in a bill that no one read, and which established draconian measures for
confiscating gold held by Americans at $20.67 per ounce, and voiding all
contract clauses providing for payment in gold. “The Great Gold
Robbery of 1933,” as historian Tom Woods calls it!
● Closing the banks may well have increased
the fears of depositors that their money would not be returned, and seems to
have exacerbated the banking panic.
● FDR’s attempts to control the depression
consisted largely of government made jobs and measures to increase the general
price level. Some of the government jobs produced useful results—they
were certainly a political windfall for those politicians in a position to
dispense them to the unemployed public. Attempts to raise prices were
generally counterproductive—destroying agricultural product left people
starving; establishing minimum price levels destroyed the ability of
small businessmen to compete; and condoning union violence led to more
violence, and ultimately to wage and benefit levels that made major
● The various “alphabet soup” agencies
transferred the legislative power of Congress to the Administration, a
precedent which continues to this very day, with agencies making regulations
that are enforced as though they were laws. Depression-era agencies
spent money for purposes not clearly designated by Congress, making them very
useful for political patronage.
● Between 1933 and 1942 new taxes were levied
on everything imaginable, including sales of liquor, toothpaste, soap, furs,
refrigerators, matches, candy, chewing gum, fountain syrups, CO2,
electricity.... The marginal income tax increased at all levels and
reached 100-percent on large incomes. Companies were taxed on
“excess” profits and retained earnings—the former tax destroyed the
incentive to efficiency, while the latter tax made it difficult for a company
to expand without borrowing money. Roosevelt proposed that death taxes
should take as much as 86.88 percent of estates—estates which had been
acquired in spite of greater tax burdens.
● Government spending as a percentage of GDP
went from about 11% in the 1920s to about 20% in the 1930s. The
increased taxation and spending represents a decrease in the ability of the
private sector to produce useful goods and create permanent jobs.
● Social Security taxes were passed off as a
form of retirement insurance, even though no insurance pool was formed, the
taxes being disposable revenues of the government, and payments to retirees
would be made out of current income. Social Security taxes were to paid
by employers without any authorizing amendment to the Constitution, and
without regard to the chilling effect they would have on employment figures.
● Unemployment remained in double digits
until the US planned to enter World War II in 1941.
● Some claim that World War II ended the
Great Depression, in spite of the great loss of life and property, and the
difficult conditions under which people lived both at home and in military
service. It would be more correct to say that post-war peace began the
end of the Depression as American productive capacity returned to free
enterprise uses, employing workers in meaningfully productive jobs.
● Things to Be Learned from History
● Tampering with credit and interest rates
creates a moral hazard, the false sense that additional capital investments
will lead to prosperity. Such economic “bubbles” must eventually
“burst.” Economic systems that fail to recognize this reality ought
to be treated with suspicion—“the people who did not see what was coming,
denied what was happening, and then failed to see the implications of what was
indeed happening” ought not to be the ones trusted with overseeing the
Indeed, recovery is most likely if governmental officials have little or
nothing to do with it. Honest money and a free market are far more
● Taking the wealth of the private sector and
spending it on public projects cannot bring about lasting prosperity.
Short of war, which helps no one, there are only so many public works projects
that can claim to benefit the nation—a municipality needs only so many
bridges, dams, and hospitals—any more constitute space consuming clutter,
which must be maintained at considerable local taxpayer cost. Wealth
taken from private individuals is consumed, and not invested in enterprises
that create additional wealth and employment opportunities. The economy
is not something to be “jump-started” by stealing from it to fund
● Accumulation of debt will not make America
wealthy once again. Counting government spending as though it were an
contributory part of the Gross Domestic Product is a fallacy, for government
spending never produces wealth, but takes it away rather from those who are
workers and producers. National debts and un-funded liabilities (e.g.
Social Security) will hang like an albatross around the necks of our children,
long after the “new has worn off” of any bright and shiny public work.
● The next war will not leave the United
States as well off as did World War II. The next war will be fought
globally, and not just on someone else’s territory, thereby making an export
opportunity for American productivity. America today has relatively
little productive capacity, and war can only be expected to diminish it.
● Americans have little or no reason to think
that they somehow enjoy God’s favor and can expect to be protected from the
folly of irresponsible economic and foreign policies. [We Americans]
“do not consider ourselves a Christian nation, or a Muslim nation, but
rather, a nation of citizens who are, uh, bound by a set of values” (Barack
Obama, Turkey, April 2009).
Here ends the series on The Great
Deo gratias. Allelúja. Allelúja.
archived at www.rosarychurch.net/answers/archive.html#Depression