Transcripts For CSPAN2 Burt Folsom The Myth Of The Robber Ba

Activism initiatives conferences and conference lectures. Dubbed by the news york times as the conservative force called the key pillar of the conservative movement by politico the role of educating americas youth is undeniable. And today i also have the honor of announcing my favorite beaker dr. Burton folsom. I first heard dr. Fulsome speak two years ago after the conference. He is one of the main reasons i decided to start a chapter on my campus and why now i aspire to become a history professor myself as a native of lincoln nebraska dr. Fulsome received his va from indiana university, his m. A. From the university of the breast and his ph. D. From the university of its bird. Over the last four decades dr. Fulsome is taught u. S. History at Murray State University Northwood University Hillsdale College. He was a professor of history at Hillsdale College in 2003 to 2017 gritty was recently pointed the distinguished fellow at Hillsdale College as well. His two favorite course to teach were history of american presence in the history of the American Economy. He is also a regular speaker and friend of Young America foundation especially our center for entrepreneurship and free enterprise. Please join me in giving a warm autumn two. Your burton folsom. [applause] [applause] thank you, thank you, thank you. And i have a question for you. [applause] are you glad to be here . [applause] i am delighted to be here. Im delighted to be here and since i have this one talk here remaining i wanted to give you some of the best wisdom that i have for dealing with the historic all records and the myth that you will encounter on your college campus, the ones that i encountered when i was a student and if i can help in anyway prepare you to deal with this when you leave the Conference Today i hope that will be success i might part that i want to do three myths, three myths of history that most College Professors teach. The teaching of these myths perpetuates the idea that government solves problems and capitalism creates them. It is really the reverse. That may look at the historical record and talk today about some of those myths. Myth number one, the Great Depression was caused by capitalism. We know the Great Depression of the 1930s. How many of you have heard that argument may be in classrooms already . Wow, a lot. The greatest economic catastrophe in u. S. History was caused by capitalism and you see sometimes the connection. The stock arcade crashes, banks are closing began employment rate skyrockets over 20 . And it looks like hey business collapsed, capitalism collapse, it failed. Some of you have seen the movie its a wonderful life for christmas were you see Jimmy Stewart and hes running a bank and it collapses under the strain of the Great Depression or almost collapses. Hes there to try to rescue it. What i want to do is go through this a little bit and talk about what is the problem with that argument. Its true that the stock architect collapse, absolutely true. Street that many many thanks, hundreds of them failed and its true that unemployment skyrocketed. Absolute truth of the issue is what caused that. For example i have three causes that have really nothing to do with capitalism. Number one, the Federal Reserve which has been manipulating Interest Rates throughout the 1920s, the Federal Reserve raised Interest Rates in 1929. The raising of those Interest Rates made money harder to borrow and therefore made it harder for Business People to get the capital they needed to invest and expand. Milton friedman won the nobel prize for her report that he coauthored on the Federal Reserve and the American Economy and part of that book included the 1930s. His argument is that the Federal Reserve manipulating of the Interest Rate really is the chief cause of the Great Depression. Thats point number one. Point number two the protective tariff, tariffs were raised in the 1930s. They were raised to record highs the smoothawley tariffs was the highest tariff in u. S. History. The he was enacted during president hoovers presidency when the Great Depression began. You were thinking gee i tariff attacks on imports, a tariff is help ring to cause the Great Depression . That sounds like it may not quite make sense but it does if you think of it this way. Tariffs have to do with trade. When you tax imports and you tax them highly you restrict trade. When you restrict trade you slow down and economy. In particular the restrictions that we had in the smoothawley tariffs were we put a high tariff on roughly 3000 items and they raised tariffs sharply on several of them for example we had switzerland with the major export. Swiss watches were the best watches in the world. If we would translate this 2 today they sold for about 30 apiece. The swiss watches were the best in the world. He kept perfect time and they sold for 30. Americanmade watches from New England States like rhode island were not as good and they cost 45. In other words they cost more than the swiss watch. The american watch and this is back in the days when we had to wind their watches. Every morning we would wind our watch and then it would keep time for that day and then we would wind to begin the next day. The americanmade watches have rovlin. You would wind it and it would run for an hour. It ran to our and about 58 minutes. Which is to say was off sometimes a couple of minutes in an hour but thats okay because remember you wind up the next day so you just reset it. You get back. Would you rather do that with the 45dollar american watch or would you rather have the swiss watch for 30 that you didnt have to do that with . Most americans said i want the swiss watch which is fine because switzerland would buy our watches and switzerland would sell us their watches and then they would die or products, typewriters for automobiles. United states had the cheapest cars in the best cars so we would sell switzerland our cars and they would sell us watches. We put a huge tariff on swiss watches we did it because the watchmaking Congressional District wanted price wristwatches out of the market so theres would sell instead tree to do this they had to pass a tariff that are truly doubled the price of swiss watches so roughly a 30dollar tariff on a 30dollar watch. In other words you pay 30 for a swiss watch in 30 for the Customs Service for the tariff so now its become a 60dollar watch and a lot of american watchmakers thought good if ours are 45 and a switch and a the switch watches 60 maybe more people will buy or watch his even though they dont tell time very well. You might say well yeah maybe and we can if you watch sales but look at it this way we lose car sales. Switzerland absolutely caught us off in our exports. Think about this. We put a height tariff on blankets on french wine. We put a tariff on spanish olives. All of these things so we have tariffs on all of these items and all of those countries european and otherwise refuse to buy our products. So now american cars which sold over 5 million in 1929 are down to 1. 5 million by 1932 and michigan detroit is in a Great Depression. We lost those sales and that became part of the problem and the auto industry. What im saying is that tariff the smoothawley tariff was a key cause in the Great Depression. The third and final one i want to do under the Great Depression is president hoover responded. You are staying hoover was a republican and he absolutely was. He was a member of i guess si with dave the liberal wing of the Republican Party and his presidency was in deed a disaster but he wanted to use government whenever he could then thought it would be good. He raised taxes because he thought this would be good to gather more money for the government as we are losing money because the depression is creating lower revenues, lower income and therefore lower revenue coming to united the United States. He thought attacks rate would be good. The tax rate in 1929 when hoover became president was 25 maximum i have an essay by the way a chapter in the book in the myth of the robber barons on Andrew Mellon which talks about the tax rate which was lowering the tax rate in the 1920s down to 20 and when we did that big a tremendous inventions like talking movies, radio. Heres one thats good for a summer day. Airconditioning. Im enjoying it right now. In some cases the air conditioner was the included in the 20s but it wasnt adopted until the 20s. We got tax rates down and those entrepreneurs like Willis Carrier have the incentive to invest. In the 20s it was very prosperous but the tax rate goes from 25 which is the maximum up to 63 . That means wealthy people at some point are paying more than half of their income to the government. If youre going to pay more than half your income to the government you are going to be careful about what you invest in and maybe you shouldnt be investing in much at all. In other words to tamp down heavily on entrepreneurship on investment right when we need investment to create jobs to replace the ones that we lost by the Federal Reserve raising its Interest Rate and by the smoothawley tariffs. What im saying is if we have three things the Federal Reserve raising Interest Rates for high tariffs and raising taxes, think about that, that capitalism or is that government . You have government creating the great oppression. Those changes are changes that made it hard, almost impossible for capitalists to operate. Free enterprise thinkers were at a standstill because of high taxes, because the tariffs affected import so much and because of the Federal Reserve raising Interest Rates. So what we have here i would just use the Great Depression was caused not a capitalism. The Great Depression was caused by government or capitalism is going to be ultimately part of the solution, not part of the problem. Thats number one. Myth number two is this. Franklin roosevelt, because hoover lost the election in 1932 to Franklin Roosevelt and so the republican is out in the democrat is in roosevelt and his program is called the new deal. Hes going to have a set of her grams what shes going to use to combat the Great Depression. Myth number two fdr or frank and roosevelt with his new deal, huge government effectively to help get the United States out of the Great Depression. Franklin roosevelt with his new deal used government effectively to help get the United States out of the Great Depression. How many of you had that talk to you in school . Thats exact weight what i have taught to me. And over here, how many of you have that . That is the prominent teaching. There are sometimes variations that some professors will say well the new deal may not have completely got the south but it helped. It was a movement in the right direction and then other things came later to help more. The new deal was a step in the right direction and some will say it was really the whole way out of the Great Depression or some part of the Great Depression. Capitalism failed, government through new deal programs is ready to come to the rescue. Franklin roosevelt. When i was writing my look and i wrote the book new deal or a raw deal. In writing that book i spent a lot of time, about 10 years writing it the longest time i ever spent writing a book in the respected soap if was because i wanted to get this right. I went and i asked my fellow history professors and students to, what do you think was Franklin Roosevelts best policy maneuver, what did you think was his best program backs i would then sometimes say Franklin Roosevelt failed and i would cite program after program that was a failure where it had horrible unintended consequences. I would say what you think of that and they would frequently say well yeah maybe but he he did this which was good enough in came back to one particular program, the program which went under the name of the emergency relief and construction act. It was a program they gave money immediately to cities and states to feed starving people because we have almost 25 unemployment. I think there is some logic in that argument if you take it just that far. You have a situation where you have 25 of people unemployed and naturally they are going to run out of money at some point unless their savings is huge and most people didnt have that. Then they can feed their families and so even if other parts of roosevelts program are not so good the fact that he was willing to feed people and use that money is a good thing and it shows the importance of a Good Government program. What i want you to do though is get this, i explored this emergency relief act and the First Program really the First Federal Welfare Program in u. S. History. They called the relief back in the 1930s. We often call it welfare today. Heres an interesting point that it was 300 million. It is a lot if you put it in todays terms of many billions of dollars. It was a Large Program and end away was distributed you might find interesting. The state of illinois which now we have some illinois students. We are not putting them. These are the politicians in the state of illinois. Those politicians in the state of illinois were very clever and very crafty and they maneuvered the situation so that their state received almost 20 of all the money. In other words out of that 300 billion illinois got close to over 55 million. They got more money in illinois than new york, california and texas put together. They did it bite pleading need but they did it more pipe pleading we are good with Franklin Roosevelt getting votes for him when they needed them the most. Roosevelt could count of illinois delivering systems and emergency situations. They were politically important. Illinois was a swing state and roosevelt wanted to carry it. Illinois ansf the number one state receiving this relief money. Pennsylvanias number two. I know those are large states but they are not the largest states and you also find it adjusting to know that states that tended to be republicans in the 1930s didnt do so well. Massachusetts, its hard to believe that massachusetts was a republican state at one time but it was pretty 1930s massachusetts and connecticut were both republican states. Massachusetts and connecticut received a grand total of zero money. In other words three and william dollars is being spent for relief and massachusetts boston get zero. They werent the only states to give zero. The bottom five states all that zero and they tended to vote republican and the top five states got over half the money. So you have 300 million. The top five states get over half the money. The bottom five states give zero now what is in effect is this not a Welfare Program or a Relief Programs, its a redistribution program. We are redistributing wealth from republican states or states that are are not in some ways serviceable to Franklin Roosevelt to states that are very influential and key in Franklin Roosevelts economic or political career. So what we have Harry Hopkins was one of the leaders on the relief act of endless one of fdrs people and his Administration Administration who was helping to distribute the money and they would be careful to distribute the money to the people who they thought were politically the most worthy of receiving it. Boston is caught in a bind and is part of my research in the book i try to deal with how massachusetts was dealing with this. Listen to this massachusetts constantly worked to raise money because massachusetts has defeated its own unemployed plus it has to sin taxes to washington defeat illinois. Listen to this and massachusetts statewide unemployment drive racine 9 and that in todays money would be more like 50 million. The bostick civic symphony were. We gave concerts to benefit the child whispered Boston College and holy cross played an exhibition Football Game for charity. Benefit wrestling match in austin garden supplied 5000 for local needs. I would be closer to 100,000 day. City officials helped mayor curley at bo