Warren G. Harding: A Return To Normalcy
I must admit, I am not a Harding expert. Warren G. Harding is one of those presidents between Teddy and Franklin Roosevelt that seems to be brushed over in our history books. I was availing myself to a speech delivered by Thomas E. Woods of the Ludwig von Mises Institute. This presentation was part of a conference entitled: The Great Depression: What We Can Learn From It Today. The speech was entitled “Why You’ve Never Heard of The Great Depression of 1920” by Thomas E. Woods, Jr.
I’ll give you a quick answer. You never heard of it because there was no extended depression in 1920. The reason why there was no depression is quite interesting and applicable to our condition today. I’ll set the stage for you.
In the last year of the Woodrow Wilson Administration, the United States and other world powers were entering a period of deflation as a hang-over effect of World War I. In fact, the 1920 economic figures were worse than year 1 of the great depression. Now in today’s world, poor economic indicators always results in a clamor for our Federal Government to step in and rescue the economy. In 1920, those sentiments existed too, but they were less influential and cooler heads prevailed. More specifically, Harding ignored the advice of Herbert Hoover and set a course for a “Return to Normalcy”. Normalcy to Harding meant a pre-war economy and return to time-tested government policy.
The Harding Administration started by cutting the US Budget from $6.3 Billion in 1920 to 5 Billion in 1921 and again to $3.2 Billion in 1922. He also lowered taxes. In the process, Harding was able to reduce the Federal Debt by one-third. He was sworn into office in March of 1921 and by the Summer economic indicators were improving.
I found this speech very interesting because we know from history that Franklin D. Roosevelt had a policy much different from that of Mr. Harding and the Great Depression was not avoided. It has been said “those who refused to learn from history are doomed to repeat it”. We are now experiencing, yet again, tremendous economic upheaval and the current administration seems more inclined to follow FDR than Mr. Harding. I would suggest you have a look at the speech.