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Q&A  May AD 2010
Our Lady of the Rosary
Parish Bulletin

On this page:
The Man in the Linen Sheet?
“Die Gedanken Sind Frei”?
Morality of The Great Depression (Conclusion!))

Q&A Archives

"Linen Sheet"?

    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.[1]  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.[2]  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.”[3]  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 Passover.

    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.[4]  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 Priest.

“Die Gedanken Sind Frei”?

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.

The Great Depression

[Continued 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?

    Conclusion:  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 and people.

●  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.

    U.S. imports 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 1934.[5]

●  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.[6]

●  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.[7]

●  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 corporations unsustainable.

●  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.[8]

●  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 recovery.[9]  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 important.

●  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 “stimulus” schemes.

●  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).[10]

   

Here ends the series on The Great Depression
Deo gratias. Allelúja. Allelúja.
[Series archived at www.rosarychurch.net/answers/archive.html#Depression

 

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