Dixie Forever Mar 27, 2020 7:14:59 GMT
Post by lordroel on Mar 27, 2020 7:14:59 GMT
US President Hoover Bungles the Recession into a Depression
Unlike his predecessor, Herbert Hoover was not a small-government Republican. He advocated intervening in the economy, as he believed the government could be used to save the country from the unfettered free market. Herbert Hoover's brand of 'new economics' brought him to convene a series of meetings with businessmen and financiers, beginning in mid-November of 1929. According to Hoover, they needed to maintain wages, not cut them as they did in past depressions.
In 1919, Hoover was appointed by Democrat President Woodrow Wilson to head a conference on labor-management relations, which came up with series of recommendations that included abolition of child labor, shortening working hours, expanding collective bargaining, and establishing national old-age insurance. During the small depression of 1920-21, President Harding appointed him as Secretary of Commerce, and urged the President to enact public works programs to stabilize the economy, and having a government-business partnership much like the Italian philosopher Gentile had advocated. Hoover seemingly believed that government action to mitigate a depression would end the "needless suffering" of earlier depressions.
In 1926, he gave a speech in mid-May: "Not so many years ago - the employer considered it was in his interest to use the opportunities of unemployment and immigration to lower wages irrespective of other considerations. The lowest wages and longest hours were then conceived as the means to obtain lowest production costs and largest profits...But we are a long way on the road to new conceptions. The very essences of great production is high wages and low prices, because it depends upon a widening...consumption, only to be obtained from the purchasing-power of high real wages and increased standards of living."
In President Hoover's view, if a business produced too much and kept its prices too high and paid its workers too little, then people couldn't afford its product, sales would fall off, inventory would accumulate. Businesses would respond by slashing costs, i.e., cutting wages or laying off workers. If all businesses did this, they would cut the number of people who could afford their products, so Hoover wanted them to maintain high wages, and lower production to solve the problem. But this causes another problem - if businesses keep wages high, they price too many people out of the market. High wages don't cause prosperity but are a sign of prosperity.
The entire situation was untenable. While there was an increase in real wages and prosperity, the Federal Reserve was keeping interest rates artificially low when it continued to create money out of thin air, and pumping it into the credit markets. More money following the same amount of goods would necessarily distort the markets, as anyone with basic economic knowledge would realize, and cause inflation. But with these false price signals caused by easy money, businesses began more long-term projects than could realistically be funded by the real amount of savings in the US economy. The fix was to let the bubble pop, and let workers leave some areas of the economy that were unnecessary or inefficient and move to a new area of the economy, as the US had done in past depressions, and how Secretary Mellon advised Hoover to handle it.
Hoover "helped" the situation by passage of the Smoot-Hawley Tariff in 1930, raising tariffs on a number of goods, and causing a rash of retaliatory tariffs around the world, causing world trade to fall off, causing more unemployment. Hoover's continuance of the protective tariff policies of the 1850s Republican party to protect native industry led to a drop in exports of 67%. In the United States, they had always sought to protect native industry, especially in New England, and this put an effective tax rate of 60% on over 3200 goods. Thousands of economists and others petitioned for Hoover to veto the bill, but he didn't. In retaliation much of Europe repudiated much of their debts from the war.
Aside from this, Hoover ordered a massive increase deportations of immigrants, forcing companies to hire native Americans who would garner higher wages, along with shorter workweeks so they could keep staff levels and spread the work around so people wouldn't get let go, rather than dropping inefficient workers. Growing unemployment was blamed on new technologies, which Hoover called "labor-saving devices," which put people out of work rather than making them more efficient; it sounded like he believed there was a fixed amount of work to be done, and machines took that work from people.
Finally, Hoover took the $700 million surplus he inherited from Coolidge, and reversed it completely. Spending under Hoover increased from $3.3 billion to $6.5 billion while receipts went from $4.1 billion to $3 billion by the time he left office. In other words, he spent over twice as much as he took in.
Confederate Economy Slides Along into the Depression
Being one of the major trading partners of the United States, the Confederate economy had strong ties to its northern neighbor. With the Smoot-Hawley Tariff taxing incoming Confederate goods, including cotton, Confederates were incensed, including President William Reed from Texas, the first President from Texas.
The President Pro Tempore of the Confederate Senate, Walter F George of Georgia, who defeated Thomas Watson back in 1922 for a seat in the Senate, beat back calls from some in eastern Tennessee, western North Carolina and South Carolina, and northeastern Georgia to implement some of the same policies that the US President Herbert Hoover was implementing in the United States, as the Confederate Constitution forbade federal interference if a power were not explicitly granted to it, like the US Constitution (despite how much they were ignoring it to the north). Senators Kenneth McKellar (TN), Lee Overman (NC), and three others tried to pass a series of bills granting the government power to nationalize banks, create make-work projects (like highways, dams, etc), raise tariffs to protect southern industries, and to tax incomes through a direct tax on the states.
President Pro Tempore Walter George, CS Senator
The 498 people in the Confederate House of Representatives voted the bills down, 349-149, and the Senate voted down a similar series of legislation, with its 54 members voting 40-14 against. The 27 states of the Confederacy instead decided that their response to the economic downturn would be to tighten their belts. Government spending was cut by about 9% from last year's budget, while states each went through and made various cuts to programs begun under the auspices of the southern variants of the Progressives. There was some pushback, but southerners tended to gripe to each other rather than demonstrate and parade in towns at this point in history.
Working with Congress, President Reed negotiated an agreement of a reduction in government spending of around $350 million, going from $1,856,000,000 to something around $1.5 billion, and suspending pension payments to veterans for 18 months, giving them bond notes instead, at a discount, so that they would get for every $7.93 due in pension, they would get $10 bond notes due in 1933. Despite cries from a number of people that the government had no business interfering in how businesses operated, President Murray also met with a number of business leaders and governors on what they could do to combat the rising unemployment across Dixie, and they agreed to a few measures: an 8-hour work day and phasing out child labor under 14 (which would encourage hiring of more adults), and less productive workers would be let go with a severance to ease the burden as they went to a new job. States also cut personal income taxes, since the confederal government had no ability to tax personal incomes, allowing more people to keep more money, and the confederal government lowered business income taxes (a power it did have, but kept under 15% for much of the last few decades) from a high of 21% on certain business incomes down to 12.5%.
A first for the nation, he brought in Archibald Grimke, a black planter from South Carolina, into the cabinet as the Secretary of Agriculture. It shocked a number of people in the Deep South, but won high praise from the CAACP and from many abroad as an important step in the advancement of the rights and respect of colored people in the Confederate States. While a number of colored people had served as postmen, sheriffs, marshalls, and other non-cabinet positions, Grimke was the first to hold a cabinet position. To this point, a large number of black Confederates had earned, fought, and gained almost all the rights of white Confederates, and were often found to be as well educated or even more educated than a number of poor whites, as black Confederates placed a very high value on education to better themselves. With Booker T Washington's model of schools, many blacks were made literate and when they were freed from slavery, they formed their own businesses to earn money to maintain their independence so as not to need to depend on former masters. After years of living together, there was still a deep connection between many whites and blacks, which was almost familial in a number of cases, but the change in legal status didn't always translate to a change in social status, leading to close-knit black communities who helped each other. Over the last 70 years, black Confederates had gained and were accepted on juries and could give testimony in courts in trials involving white people, and in many (but not all) counties, could vote in local elections and in state-wide elections, though certain legal codes in some states still worked to disenfranchise some blacks due to property requirements and tax payment requirements. Poll taxes, however, had fallen out of use since 1919 when too many veterans had failed to pay them after being away at war.
Germany Loses its Kaiser
In Germany, Kaiser Heinrich I passed away in his sleep in late 1929, with his state funeral in the Berlin Cathedral attended by a number of world leaders, including Presidents Hoover and Reed. His son, Prince Waldemar William Louis Frederick Victor of Prussia, would be crowned shortly afterward as Kaiser Wilhelm II, taking the name of the first emperor of a united Germany.
Heinrich I's funeral procession.
When the depression hit Germany, the new Kaiser had long been influenced, as had a number of Germans, by the Texas Germans in the Confederacy. He did adopt some make-work projects for his new fascination - the automobile, while also cutting the German budget, including what he believed to be less necessary with the collective security of the League of Nations, the German Army, with purchases and training being reduced for tanks, guns, ammo, and recruitment, leaving the army to reduce down to around 195,000 persons by 1934. The Autobahn began construction as a series of 4-lane highways, as straight as possible, with exit markers based on the German Mile, rather than the French Kilometer. So, exit 1 would be 1 German Mile from the end of the highway. Exit 10 would be at the tenth mile of the highway, and so on. A German Mile came from the British and American yard being the same as a Confederate Meter (about 3.3 inches shorter than the French meter), and 1000 yards being a Confederate Kilometer, being 1,760 new meters in length. The Autobahn would go north-south and east-west, and historic city centers would be circumnavigated with Ringbahnen (ring highways) around them.
In the German colonies, massive new train and road works, along with plumbing and electrification projects began, financed through debt, tariffs, and taxes, with a number of black Germans in the colonies gaining technical training and education for the first time, becoming truly a part of the colony rather than an 'other' as some had treated them. Germans came from Europe to the colonies in search of cheaper living, lessening the burden on the European fatherland's welfare system, and allowing them to get cheap land or open businesses with more lenient colonial regulations. Colombia and Venezuela also became destination points, along with British Patagonia.
Central and South America
President Hoover began the withdrawal of American troops from their occupation, running since 1912, and by 1932, ended the takeover of the nation, which had become an American protectorate. President Reed shortly thereafter secured a treaty with Nicaragua for development of the country and its resources by Confederates, but only if they hired native Nicaraguans to do the work and turn over much of the companies created in Nicaragua to native Nicaraguans. The Confederates agreed, provided that the country would adopt their common law legal system and the Confederates could have temporary control of the legal system to root out corruption endemic in the nation, a legacy of the Spanish colonial efforts in the New World. Over the course of the next decade, the Confederate-Nicaraguan partnership produced a marked increase in local prosperity, while Confederates got a lot of resources out of it. Likewise, Costa Rica, British Honduras, Colombia, and Venezuela improved considerably, while the US occupation of Haiti almost sparked a war scare between the US and CS, since the Confederates had bought the Dominican Republic in 1870 for $1.5 million, when the US refused to do so.
Good updates jjohnson.