

The Great Depression actually began in 1920, though we didn’t know it then. In the next ten years, the U. S. Federal Debt was reduced 36%, causing a series of recessions, and finally the Depression officially began in 1929. It continued to worsen through 1932. Here is why:

Annual Message to Congress, Herbert H. Hoover, December, 1931

I must at this time call attention to the magnitude of the deficits which have developed and the resulting necessity for determined and courageous policies. These deficits arise in the main from the heavy decrease in tax receipts due to the depression and to the increase in expenditure on construction in aid to unemployment, aids to agriculture, and upon services to veterans….

We must have insistent and determined reduction in government expenses. We must face a temporary increase in taxes. Such increase should not cover the whole of these deficits or it will retard recovery. We must partially finance the deficit by borrowing. It is my view that the amount of taxation should be fixed so as to balance the Budget for 1933 except for the statutory debt retirement. Such government receipts would assure the balance of the following year’s budget including debt retirement.
Even with increased taxation, the government will reach the utmost safe limit of its borrowing capacity by the expenditures for which we are already obligated and the recommendations here proposed.
We must avoid burdens upon the government which will create more unemployment in private industry than can be gained by further expansion of employment by the Federal Government. We can now stimulate employment and agriculture more effectually and speedily through the voluntary measures in progress, through the thawing out of credit, through the building up of stability abroad, through the home loan discount banks, through an emergency finance corporation and the rehabilitation of the railways and other such directions.

I am opposed to any direct or indirect government role.

And a year later, having learned nothing, while the Depression continued to worsen, President Hoover said:

Annual Message to Congress, Herbert H. Hoover, December, 1932

The first (suggested) action is the continuing reduction of all government expenditures, whether national, state, or local. The difficulties of the country demand undiminished efforts toward economy in government in every direction.



The time has come when, if the government is to have an adequate basis of revenue to assure a balanced budget, this system of special manufacturers’ excise taxes should be extended to cover practically all manufactures at a uniform rate, except necessary food and possibly some grades of clothing.
It is today a matter of satisfaction that the rate of bank failures, of hoarding, and the demands upon Reconstruction Corporation have greatly lessened. The acute phases of the crisis have obviously passed and the time has now come when this national danger and this failure to respond to national necessities must be ended and the measures to end them can be safely undertaken.

In 1935, New Deal federal spending programs such as the Works Progress Administration (WPA) were begun. By June 1937, the economy had begun to recover. Industrial production was greater than in 1929. However, President Roosevelt, himself having learned nothing from history, increased taxes and cut spending in yet another attempt to balance the federal budget. And predictably, the economy again crashed (The “2nd Depression”).

Now comes President Barack Obama, who has learned nothing from the the lessons of the past 80 years:



Yes, America’s finances were in such great shape we had a recession that began the end of 2000. And of course, if America were debt-free it also would be money-free.


The 1990’s marked one of the longest recession-free periods in U.S. history.




Hmmm . . . Let’s see. When times are bad, we increase the deficit, which cures the recession. Then when times are good, we cut the deficit, which causes the recession. Could there be a hint buried in that history?


What more can one say? More than 80 years of doing the same things and seeing the same results, and still our leaders haven’t learned a thing. How is it that the least competent and least knowledgeable seem to rise to positions of power?

That is the great human mystery.

Rodger Malcolm Mitchell
