THE ANDERSON FILES Capitalism’s fascist temptation

In 1928, U.S. Treasury Secretary Andrew Mellon pushed the Federal Reserve Board to aggressively hike interest rates to control inflation and credit-fueled stock market speculation. They did, and, as a result, the New York Stock Exchange suffered the worst crash in its history in October 1929.

Mellon advised President Herbert Hoover to “liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate … It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people.” The Great Depression would follow.

Mellon was the country’s most powerful banker and a prominent industrialist with a gigantic business empire. He was Secretary of the Treasury from March 9, 1921 to Feb. 12, 1932 under Republican presidents Warren Harding, Calvin Coolidge and Herbert Hoover.

Mellon emphasized cutting taxes on the rich. The top marginal tax rate fell from 73% in 1922 to 24% in 1929.

The Great Depression was a result of a crisis of overproduction. The Roaring ’20s experienced an economic boom but too many commodities were produced than could be profitably sold.

During the decade, income inequality exploded. Historian Becky

BY DAVE ANDERSON

Little notes that “by 1928, the top 1% of families received 23.9% of all pretax income. About 60% of families made less than $2,000 a year, the income level the Bureau of Labor Statistics classified as the minimum livable income for a family of five.” At the beginning of the 1920s, rural America’s economy was already in a depression.

We are socialized to think the boom-and-bust economic cycle is somehow natural. It is irrational, cruel and stupid. There were more than 60 banking crises in the industrialized world between 1805 and 1927.

Increasingly during a crisis, many people turn toward charismatic authoritarian leaders.

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