Recession

“ Well, on Friday, we learned that after twenty-two straight months of job loss, our economy has now created jobs in the private sector for six months in a row. That’s a positive sign. But the truth is, the recession from which we’re emerging has left us in a hole that’s about eight-million jobs deep. ”

“ While drinking my coffee—never more than two cups—it was my custom to read and digest stock and bond quotations, for though I had no investments—the only time I had been able to take a flurry there was an unforeseen recession in the market—I thought a man who didnt keep up with trends and conditions unfitted for a place in the businessworld. ”

“ All we need today is to look upon the fundamental, sound economic conditions to know that this business recession causes more perplexity than fear on the part of most people and to contrast our prevailing mental attitude with the terror and despair of five years ago. ”

“ The present state of our economy is disturbing. We take office in the wake of seven months of recession, three and one-half years of slack, seven years of diminished economic growth, and nine years of falling farm income. ”

“ Thus, with alterations in the so-called Margin of Production, the natural85 allocations from Wealth to Wages would rise or fall as the Margin receded or advanced, whereas the natural allocations from Wealth to Rent would rise with the advances of the Margin and fall with its recession. ”

“ We will get this recession behind us and return to growth soon. We will get on our way to a new record of expansion, and achieve the competitive strength that will carry us into the next American century.
We should focus our efforts today on encouraging economic growth, investing in the future and giving power and opportunity to the individual. ”

“ The way out of this recession, the way to create jobs, is to grow the economy by encouraging investment in factories and equipment, and by speeding up tax relief so people have more money to spend. ”

“ We’ve just come through the worst recession since the Great Depression, and while our economy as a whole has been growing and adding private sector jobs, too many folks are still struggling to get back on their feet. ”

“ Next, this bill also puts needed money back into consumers' pockets, the consumers that need it the most -- middle class families that have seen their wages decline far longer than what the economists say this recession -- for the length of this recession. ”

“ We are now in the early stages of economic recovery following a short recession. Typically, a post-recessionary period has been marked by vigorous economic growth aided by anti-recessionary policy measures such as large tax cuts or big, stimulation spending programs. I have declined to recommend such actions to stimulate economic activity, because the persistent inflationary pressures that beset our economy today dictate a restrained fiscal policy. ”

“ It is very important to understand that the Wall Street crisis took us over the wall in terms of precipitating the severe recession we are in, but we have to remember that during those 8 years, as I mentioned earlier, the middle class was also shrinking. ”

“ I concede, sir, that, in the ordinary mutations of business and commerce in all seasons, and daily, stock markets rise and fall; but behold this country as it stands as to honest material of just speculation on exchange! ”

“ These four factors are not only the causes of the first plateau, but, as soon as any particular plateau is overcome and advance again begun, they are likely to arrest the advance and to cause another period of recession or of no advance. ”

“ Our credit in finance today is greater than that of any other country on earth. Our standing before the world in credit is the very highest. Business in our land is prosperous, barring one or two instances, such, for example, as the decrease for a while in the demand for steel as building moves slowly and, if you please, something of a decadence in the -construction or selling of automobiles, caused by war, of nations decreasing export sales. ”

“ At this time we behold, sir, seven great nations of the world tendering us their securities bearing from 5 to 7 percent, while the great commercial bodies all around us of an industrial nature—in many respects of the highest class—heretofore yielding splendid profits, tender their securities bearing from 5 to 7 percent. Yet our people demonstrate their confidence in the administration here in government ”

“ it acts almost solely to prevent recession from a scale of conspicuous expenditure that has once become habitual.
A standard of living is of the nature of habit. ”

“ It is announced that the finance of the banks is frustrated and the credit of the country assailed to echo through the world. The standing of our country is so diminished by accusation as to leave it unworthy of the confidence of an American. ”

“ When those gentlemen, whoever they are, which have frightened the poor woman with a small security to have her sell it at a complete loss and robbed the estates of the little possessions which they may have from which income may have been afforded, and then the little-business man shall be compelled to get rid of what he possesses on the ground that what he has is a loss and then induced to enter doubtful investments again, this result will reproduce exactly the situation of 1929-30. ”

“ The time to repair the roof is when the sun is shining—by filling three basic gaps in our anti-recession protection. ”

“ A crisis in its last analysis is the result of a lack of adjustment between production and consumption, due primarily to mistakes in production. It is significant that crises usually occur in periods of business prosperity when credit [Pg 56] is easy, prices high, and employment general. Such a period of business prosperity and rising credit may have been begun by a series of good harvests. The demand for manufactured commodities increases, prices rise, manufacturers enlarge their factories or engage in new enterprises, wages and profits go up. ”

“ But if, on the other hand, growth in the supply of money does not keep pace with the economy's current production, then prices will fall, the nations's labor force, factories, and other production facilities will not be fully employed, or both. ”

“ But what the world in fact has seen has been the complex case of a fall in prices accompanied by great improvements in production. The business man and capitalist has had, to be sure, to [Pg 102] deal with falling prices; but the same amount of capital and labor has turned out more commodities than before; and his total money returns, so far from declining, have generally increased. The money incomes of the managers of industry have shown the same upward movement as the money incomes of the other classes in society. ”

“ State clearly and explain the movement of prices of stocks, bonds, mortgages, land, commodities generally, wages and interest rates on long time and short time loans, before, during, and after a crisis.
4. Tabulate for a series of years covering periods of prosperity and depression, the prices of stocks, bonds, real estate, and of some commodities.
[Pg 27]
5. What economic changes occurred in your own community in the panic of 1893-94, or in the years 1903-04, or in 1907-08?
6. Is it possible that the amount of all goods produced shall be in excess of the community's power of consumption? ”

“ I hold, therefore, that a new axiom should be added to the science of political economy; namely, that as the purchasing power of money increases, its income producing power decreases, and in about the same ratio; and conversely, when the purchasing power of money decreases, its income-producing power increases. In other words, when prices rise interest rises; when prices fall interest falls. ”

“ The prostration of trade has arisen from extravagance, he repeatedly declares. "The commercial depression, so long, so monotonous, so heavy, and so dull, came from the excessive consumption of English capital in unwarranted constructions beyond savings, and unwarranted expenditure in living by all classes, which destroyed wealth without repairing it with new productions." ”

“ Suddenly, agriculture raised her drooping head, for commerce beckoned her to prosperity. Your people began to pay their debts and to become rich. Public credit was restored; the Treasury began to fill readily. Sources of revenue were explored, certain of continually increasing, equally certain of being never exhausted, except by folly and madness. Indeed, sir, so perfect was the financial machinery that it admitted of no improvement. ”

“ It will give assurance to our languishing industries that the volume of our circulating medium is not to continue shrinking, and that the tendency of prices shall no longer be downward. It will increase the wages of labor and the prices of the products of labor; it will reduce the price of bonds and other forms of money futures, it will lighten, but not inequitably, the burden of mortgages; it will increase largely, though not unjustly, the debt-paying and tax-paying power of the people. It will loosen the grasp of the creditor from the throat of the debtor. ”

“ For the probably receipts of the next year I refer you to the statements which will be transmitted from the Treasury, which will enable you to judge whether further provision be necessary.
The great reduction in the price of the principal articles of domestic growth which has occurred during the present year, and the consequent fall in the price of labor, apparently so favorable to the success of domestic manufactures, have not shielded them against other causes adverse to their prosperity. ”

“ Within the vitals of the economic system upon which it subsists the plutocracy has found a source of never-ending torment in the form of a constantly increasing surplus.
2. The Knotty Problem of Surplus
The present system of industry is so organized that the worker is always paid less in wages than he creates in product. A part of this difference between product and wages goes to the upkeep and expansion of the industry in which the worker is employed. Another part in the form of interest, dividends, rents, royalties and profits, goes to the owners of the land and productive machinery. ”

“ There is a certain relation or ratio between wages and interest, fixed by causes, which, if not absolutely permanent, slowly change, at which enough labor will be turned into capital to supply the capital which, in the degree of knowledge, state of the arts, density of population, character of occupations, variety, extent and rapidity of exchanges, will be demanded for201 production, and this relation or ratio the interaction of labor and capital constantly maintains; hence interest must rise and fall with the rise and fall of wages. ”

“ Because for a long period before the crash our production had been outrunning our consumption. The workers were producing more than they could buy with the wages they received. Our predicament is primarily due to the inequitable distribution of the earnings of industry as between capital and labor. ”

“ These intervals of advancing prices, when not succeeded by retrograde movements, most powerfully contribute to the progress of national wealth. And practically I should say, that when once a character of industry and economy has been established, temporary high profits are a more frequent and powerful source of accumulation, than either an increased spirit of saving, or any other cause that can be named. ”

“ Business, though feverish, was good; and many fortunes of our day had their origin in these excited business years of 1863 and 1864; when sales were easily made, most transactions were for cash, and nearly everyone engaged in trade or manufactures seemed to be getting rich. There must have been still considerable financial strength in reserve and, as the value of property depended largely on a stable government, ample funds for its maintenance would have been forthcoming in a supreme crisis. ”

“ Given favorable circumstances, the price decline soon leads to a search for new methods of economy in production. Raw materials are likely to fall in price. Supplementary costs are rapidly reduced. The price of labor tends to fall. Even though prices continue to fall slowly, profits may rise to a level encouraging to business activity. ”

“ It can scarcely be doubted, that one of the main causes, which has enabled us hitherto to support, with almost undiminished resources, the prodigious weight of debt which has been accumulated during the last twenty years, is the continued depreciation of the measure in which it has been estimated, and the great stimulus to industry, and power of accumulation, which have been given to the industrious classes of society by the progressive rise of prices. ”

“ Overstraining of bank resources by financial ‘deals’ and Stock Exchange speculation, exhausting the bank surplus in September; (3) Enormous increase in imports and decrease in agricultural exports, along with Europe’s withdrawal of its capital; (4) Rapid advance in cost of raw material and labor; (5) Struggle of capitalists to so entrench themselves in control of corporate enterprises that they could not be dislodged. ”

“ When insisting that we needed more currency, they evidently did not consider that during a crisis business contracts itself; that people reduce their expenses; that demand falls off, and thereby production is necessarily discouraged; that capital becomes more than ordinarily timid in its investments; that enterprise grows very circumspect, and confines itself to the safest ventures ”

“ The falling prices, the shattered credit, and the financial losses force many factories to close; many workmen are thrown out of employment, and business must again enter upon a period of retrenchment, for it has completed the cycle of changing prices. ”

“ On the whole, however, the other argument, bearing on the increase in the burdens of debtors under falling prices, has been more often heard in the United States, and certainly has been of more effect. Prosperity, activity, general industrial advance, have been in this country so great and so obvious that the argument as to any check to industry could take serious hold only in occasional periods of depression or slackened advance. ”