1990s >> 1992 >> no-1058-october-1992

Lamont’s long wait

  “We have already weathered the worst of the storm and signs of stability are already appearing”.

So said Lamont on 6 December . . . 1930. No, not Norman, but Robert P. Lamont, President Hoover’s Secretary of Commerce. As Marx once remarked, when history repeats itself the first time is a tragedy, the second a farce.

Following the Wall Street Crash in October 1929 industrial production in America fell continuously until by the second half of 1932 it had dropped by nearly a half. During this period the politicians and economic “experts” regularly predicted that the bottom had been reached and that recovery was just round the corner:

1 January 1930:  “I have every confidence that there will be a revival of activity in the spring and that during the coming year the country will make steady progress.”—Andrew Mellon, Secretary of the Treasury, in his New Year message.

15 February 1930:   “The bottom of the business decline appears to have been reached.”—Cleveland Trust Company.

15 September 1930:  “Business appears to be turning the corner, and industrial activity seems to be increasing.”—Cleveland Trust Company.

5 November 1930:  “The prospect is that by March unmistakable signs of business recovery will be available.”—Standard Statistics.

21 March 1931:  “The business decline, if not already ended will end in the present half year, and be succeeded by general business improvement.”—Harvard Economic Society.

27 May 1931:   “We believe that the worst of the industrial depression has been witnessed.”—Standard Statistics.

18 October 1931:   “The depression has been deepened by events from abroad which are beyond the control either of our citizens or our government.”—President Hoover.

26 October 1931:  “Important forecast: During the winter and early spring, business will round out the U-bottom trough.”—Babsons.

1 February 1932:  “In our opinion, evidence now at hand strongly suggests that business sounded bottom in the last quarter of 1931.”— Babsons.

As in Britain over the past two years, these predictions were worthless. And for the same reason. Capitalism is an uncontrollable economic system which will bend neither to the wishes of politicians nor to the opinions of experts. But Marx was wrong. Not about slumps being inevitable from time to time under capitalism but about what happens when the same event occurs twice in history. The predictions of Robert P. Lamont in 1930 were as farcical as those of Norman N. S. H. Lamont today.

(The source of the quotes above is Faith, Fear and Fortunes by Daniel Starch, published in New York in 1934.)