The Great Depression: It's Causes and Resolve

Many people argue that the Great Depression was caused by a failure of our Free Market system. During the 1920’s the FED began to help England go back to the Gold Standard. The plan was for the US to print bonds for the UK to buy and to drive the prices us on the bonds so the return is less and the US makes more. The problem was that the UK didn’t buy any bonds. They returned to the Gold Standard and the US interest rates are lowered, making it a mal-investment. This open market trade operation led in part to the stock market bubble. In 1930 the American government created the Smoot-Hawley Tariff to protect American companies by charging a high tax on imports and thus almost eliminating trade between the US and Europe. During the time before the Great Depression people were living well and the economy seemed permanently stable, there was an economic boom. There was much economic progress, such as secure private property, international trade and immigration, technological change and development, and labor productivity. People had jobs, money, comfort, all was well. The government was printing excessive amounts of money and there began to be an inflation. People were investing in many things, and relied on banks for loans and securing their money. The real estate boom peaked, then the FED increased interest rates to slow down the stock market, and then industrial production decreased significantly within a few short years. This was a sign of the coming Stock Market crash, which occurred in 1929 and is known as Black Tuesday. The Stock Market bubble was the cause of this. People who invested their money in stock lost their money, many lost their jobs as a result of their boss or company’s money loss. The banks that they invested their money in were cleared out or bankrupt so people’s life savings were diminished. Many banks went out of business, which was more loss of jobs. The few banks left did not want to loan money and made it very difficult to do so for fear of going out of business. This made it hard to attempt to come out of the depression because people couldn’t get loans to start companies and create jobs and generate revenue. It was a downward cycle. Many argue that the cause of the Great Depression was the failure of the Free Market system, when in fact it was caused by the bubble created by too much economic boom and inflation and people investing in doomed stocks and companies. The economy and the stock market fluctuate, that is normal, but many factors built up and led to this fall and depression. I believe that the government policies did help in the short term with the Great Depression, but in the long term the economy would have fixed itself as it always does. It goes through fluctuations and periods and is designed to fix itself eventually. The economy is not perfect and constant and is expected to change and fluctuate to keep it going and people investing and participating. The New Deal policy created heavy regulations on all business in the attempt to stop competition, drive up prices, and drive up wages. This heavy government influence limited the jobs that were still intact and taxes took away from peoples wages to give to those out of work. They thought this, and immense government spending (which would be taken from the people through taxes) would encourage people to spend money and create jobs when in fact people were too fearful of loss to take that chance. People held onto their money. Excessive government control on business did not just spread the wealth to create jobs and encourage spending as they thought, but rather limited the businesses that were still in place.  The New Deal did create some short term jobs but did not permanently fix the situation. The Government’s eventual cut in spending, and therefore taxing, helped to come out of the Depression.  In the case of the Great Depression it may have been to severe to leave it alone and it fix itself, but it the government had waited to take complete control it may have fixed itself. Or, if the government had not taxed and limited but just created jobs and stimulated the economy. I believe that some of the policies did help the situation but that it made the Depression longer and that the economy, if left, would have eventually fixed itself.

Charter City Essay

If I were to create my own city in some uninhabited part of the globe where people could come in search of opportunity the key institutions I would use would be property rights for the individual, rule of law, markets and free trade, and free press. 

First, individual property rights are essential to economic growth. We have been divinely instructed of this. In D&C 134:2 it reads “We believe that no government can exist in peace, except such laws are framed and held inviolate as will secure each individual the free exercise of conscience, the right and control of property, and the protection of life”. These are the natural rights of man, which have been given of God of which we are born and cannot be taken away. They are essential for a government to exist in peace and a society to take place. Individual property rights will also encourage development and societal growth. This city cannot flourish without inhabitants, and the more the better. This is due to the fact that they bring their business with them. Their work, either in corporate businesses or their own small business, will stimulate economy through competition and selling their product. It will also stimulate technological growth and advances, increasing city growth and could lead to more trade between cities and countries. Labor productivity will surely improve, as well as human capital (knowledge and skills). They will also develop their properties as well, which will make them more valuable and stimulate the economy with buying and selling increased value property. 

Next, the rule of law. This is the idea that people and the government must abide by and obey the laws of the land. This is essential in holding a society together. It prevents the government from controlling the people and vice versa. All are equal under the law, therefore no one is above it. It helps guarantee the economic growth in that no one body controls the economy. The government is not able to force the people to do certain jobs for a certain amount of money. Thus we are able to have entrepreneurs. Entrepreneurs are essential to economic growth because they promote competition. They pursue profits and compete with the big business so that they aren’t able to monopolize the market. Therefore supply and demand aren’t stagnant, but rather may go up.

Also, there are markets and free trade. Free market is based on the right to property. Free market and trade promote competition, and we as humans strive to be the best and compete with each other. If there was no incentive, for example if we all received the same amount of money for our work, there would be no growth. No one would feel the need to work harder or create new technologies or make more money (because it would be impossible). On a spiritual level, we have been commanded to improve and use our talents and with this lack of incentive we would be wasting them. There wouldn’t be different companies for the same product with different costs, demand for the product could decrease. We are always looking for the next best thing, the newest technologies, and if there wasn’t any growth in it we would all eventually have the product and demand would decrease or disappear. 

Free press is the final institution I would use. Free press promotes economic growth in a few ways. One would be that it would get the word out about the city and promote city growth through people migrating there. This leads into the other ideas previously mentioned like entrepreneurship. Also, these small businesses can get the word out about their business and create some buzz around their product. They can increase their clientele. Others can speak of businesses they most trust or got the best value from. The city, as a whole, could also use this free press to contact and promote trade between other cities or countries promoting economic growth throughout the world. If the government controlled the press they could limit entrepreneur and small business exposure, which without exposure these would fail and the big business or government business could create a monopoly which would not stimulate economic growth.

The key institutions necessary for economic growth are property rights for the individual, rule of law, markets and free trade, and free press. Using these institutions I would create a city that flourishes in economic growth.

Madison's "Federalist 51"

  In mapping out the U.S. government the founding fathers had many difficulties. During this time James Madison raised this important question: “In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself.” 

The problem with this statement is that to keep the government in control, the people must keep the government in check. Although its primary duty is to govern and protect the people it can lead to the government having too much power. To prevent this, as James Madison suggest in his Federalist 51 paper, we must structure the government to avoid this and add to it auxiliary precautions. Auxiliary precautions are internal checks and balances within the government to protect it from becoming a tyranny. The first is republican government. Madison said “[Pure] democracies have ever been spectacles of turbulence and contention: have ever been found incompatible with personal security or the rights of property: and have in general been as short in their lives as they have been violent in their deaths.” The reason he viewed it as a “vile form of government” was because all men could agree and vote on something whether it be good or bad and it would still be a democracy. For example, all men in the U.S. could vote for the death of someone undeserving and untried and it would still be a democracy. Therefore, the people need a government to govern and protect them, and in return the people must give the government its power. He believed in a republic of continental size, meaning authority will lye with the society as a whole but it will be broken down into parts to protect the rights and interests of the minorities from that or the majority. Next, separation of powers and check and balances. The government, with the power given it by the people, would be set in two divided into smaller departments “hence a double security arises to the rights of the people.” “The different governments will control each other, at the same time that each will be controlled by itself”. The power of the government would be separated between the departments that make it up, and the two main parts would “check and balance” each other. Lastly is that of a written Constitution, which was of course written to help outline the U.S. government. It outlined the rights of the people that the government could not take away and limited the government’s power. The difficulty with Madison’s original statement is that the government cannot technically control itself when it has a system of checks and balances that keep it from complete control or a tyranny. It also cannot technically completely control the people when the people are what give it its power. 

Madison believed that these auxiliary precautions built into the Constitution would solve the initial important question he posed. The Constitution has a system of checks and balances which prevents a governmental tyranny, it states the rights of man plainly, and protects their rights. It separates the government into parts, and creates democracy but not a “pure” one, and outlines our government. Madison’s ideas were truly inspired and helped to shape and outline our U.S. Constitution which outlines this great country’s form of government. With these ideas the government can truly govern the people and control itself.

The Constituion

The Constitution of the United States was inspired by God. Their is a passage in the scriptures that tells us of this. In D&C 101: 80 it says “And for this purpose have I established the Constitution of this land, by the hands of wise men whom I raised up unto this very purpose, and redeemed the land by the shedding of blood.” It was inspired by God for his children to live in a land of freedom, free from bondage so that it will one day be a Zion unto us. It was also inspired for man to be accountable for his actions in his agency. The sections of the Constitution protecting our rights were divinely inspired. It protects our natural  or God given rights, which are life, liberty, and the pursuit of happiness. Also, for example our right to freedom of religion. We would not be able to worship our God were it not for that right established by the constitution and surely inspired of God. The founding fathers had a faith in God and that surely contributed to the Constitution. They were all inspired of God because they had the spirit guide them. They also had a desire to establish this country under God. They had a desire to follow promptings. Just like in our lives as members of the church today God will show unto us all things if we desire to know of them and ponder and do what the spirit has guided us to do. Christopher Columbus was surely inspired of God to discover America which would one day lead to this country being established as well as the Constitution. This country needed to be established with the rights outlined by the constitution to ensure that when the day came that Joseph Smith restored the true church the American people would be free to join it. All these events leading up to the Constitution surely show that it was divinely inspired by God for the purpose and protection of his children. Even the Revolutionary War which the poor and outnumbered Americans should have  lost was won surely by the help and mercy of God. Because of this divine inspiration we are able to live and worship freely in this land of promise.

why the colonies were morally justified in declaring independence

The colonists were morally justified in declaring independence from Great Britain. One of the reasons the colonists gave King George III for declaring independence was the natural rights. These rights are rights that a man is born with, such as life, liberty, and the property. When King George III came into power he wished to change the government and make his power stronger, focusing on royal power. He began by removing the Whig leaders from the government who up to that point had held the most power. He then increased the amount of military in America. This started a series of events leading up to the American Revolution. To raise revenue the king began placing many taxes in the colonists. The first was the Sugar Act which increased duties on many imported goods. Some of these were wines, coffee, indigo, textiles, and or course sugar. Then there was the Currency Act which prohibited colonists from issuing any paper money. These Acts were in 1764. Then, in 1765 the king passed the Stamp Act. This put taxes on all printed goods such as newspapers, pamphlets, and even playing cards. He also passed the Quartering Act which forced the colonists to house British troops and provide food for them. The colonists were very upset over the excessive taxing of all their goods and imports. They were being taxed without representation in Parliament. They had no control or say over what they should be taxed on or for how much. This led the colonists to attempted boycott and they did their absolute best to prevent stamps from being available the day the Act was going into effect. Going back to the natural rights the colonists had the right to revolt in that the Acts took away from their natural rights. First, the fact that they had taxation without representation. Because of all these taxes the colonists could not only not afford simple items some may call necessities, but it also took away much of their earnings. They had a right to life and excessive taxing made it hard to provide for and afford life, not only for those trying to but goods but those trying to live off of selling them. They also had the right to property which the taxes also took away from. They couldn't afford possessions, or in other words property. The Quartering Act took away from all three natural rights. This is due to the fact that the colonists had to spend what money they had after taxes to provide for the troops. This took away from life and property. They also had to give up part of their property by housing these men which they could have used for themselves or family. Lastly, it took away from their liberty because they were forced to house these men weather they agreed to it or not. The colonists had never done anything to deserve punishment through taxes and other means that were placed upon them. They had always been loyal to the king and government and had traded with them fairly, which is another reason why the colonists were morally justified in revolt. In 1766 the Declaratory Act was passed which stated that Britain can regulate and tax the colonists in any way they see fit. At this point they still have no representation, meaning their rights are still being taken away. In 1767 the Townsend Act was passed which placed duties on imports like tea. This upset the colonists to a large extent because the colonists considered tea their staple drink and a staple of life. It was very important to them and they could no longer afford it. This led to the Boston Tea Party, which was a protest in which a group of colonists dumped large amounts of Tea into the ocean. The king also declared that any colonists moving towards the West must return to the East, thus taking away property opportunities for the colonists. In 1774 the Intolerable Acts were passed. It declared that the Boston Port was closed until the East India Trading Co. was compensated (which had a monopoly on imports and was the government’s trading company). They could no longer get their goods and foods which takes away from their life, liberty, and property. It also took away from colonial merchants who made their living off of trade. The Intolerable Acts also included the Massachusetts Government Act. The Massachusetts Government Act brought Massachusetts's Government under the control of the crown. The Administration of Justice Act declared that royal officials no longer had to face trial in the colonies. The colonists were being treated unfairly in their lack of representation and their natural rights being taken away. They were not being treated as equals, and later in the Declaration of Independence they will state that “all men are created equal”. Their right to assemble was taken away so they could no longer govern themselves which was another attempt of the king to ensure his own power over the colonists as well as the British government. This is another example of their liberty being taken forcefully from them. Another reason the colonists are morally justified in declaring independence is that when they had had enough of the taxes and unfair treatment they attempted to solve their issues with the British government and king peacefully. The colonists originally did not want to break from Britain and loyalty to the king. They tried to propose their concerns and ideas for resolve peacefully to the king, but king George III would not even listen to their proposal. Instead he continued to worsen the colonists situation until it drove them to revolt. In 1775 the colonists finally declared themselves to be in a state of rebellion. They had had enough years of unfair and poor treatment. The colonists then formed the Continental Congress in which they declared the abuses against them and declared their rights and the natural law. In the second Continental Congress they tried one last time to reconcile with Britain peacefully but were denied and declared their open rebellion. The revolution then began. The colonists had many reasons why they were morally justified in declaring Independence, and without their bravery and determination for liberty we would not live in this wonderful country the United States of America today.