Strange how things work out. I commented previously that it would be good (though impossible) to hear the views of Alastair Cooke on the election of Barack Obama. As it turned out a repeat of Cookes America popped up on TV last night and went some way to suggest how Cooke may have reported the event.
The episode repeated from the 1970’s series was entitled “The Promise Fulfilled and the Promise Broken” and gave an account of the events leading up to and beyond related to the 1929 Stock Market Crash. The parallels between then an now were clear and despite the 1970’s styles and strange colour hue of the filming it could have been filmed today.
In typical Cooke prose he chose to concentrate on the personalities of the US Presidents involved and how those characteristics influenced that dire time. Hoover seemed resigned to the crisis and to the established wisdom that eventually the tide would turn on the economy – as a result the crisis grew. 1 in 3 unemployed and the emergence of shanty towns (Hoovervilles) as men travelled looking for work.
Contrast that with the personality of Roosevelt who in 1933 put in place a dramatic series of plans to bring the economy out of depression. He convinced congress to centralise power, he fixed wages and prices, closed banks and set about building an infrastructure to create the jobs and build the framework for the next phase of American growth. He spent the public purse in a manner that had never been seen before. All from a wheelchair that was never seen.
Cooke contrasted that approach with that of the UK – an approach that mirrored that of Hoover – wait and see. Only the economic regeneration in Germany forced the UK to act – though sadly an economic regeneration with a military ambition.
As for 2008 – lessons learned in 1929 seem to be influencing governmental action. Capitalism on it’s own does not know how to correct a recession – governments do. If, as was the case in 1933, enough was enough – why suffer. The power to fix economies lies in the hands of central government – Roosevelt proved that.
The causes of the 1929 crash are no doubt complex but Cooke from the comfort of the 1970s drew a sentence together that was as right for 1929 as it is for 2008 – “a mountain of debt on a molehile of cash”. Everyone regardless of their status was an investor in stocks – buying stocks without the full price available to them, in the sure knowledge that the value would go up. In the current housing slump where house price rises were fuelled by readily available credit at low rates the parallels with the 1929 Stock Market crash are clear.
Cooke’s title was “The Promise Fulfilled and the Promise Broken” perhaps in today’s language “An end to boom and bust”. While the question we wait to have answered is Barack Obama a Hoover or a Roosevelt.