Veterans Day has its origins in the commemoration of the Great War, which ended in the eleventh hour of the eleventh day of the eleventh month in 1918. In Commonwealth countries, it is Remembrance Day.
America had enjoyed spectacular economic growth during the war, even before entering as a combatant on the side of the allies in 1917. After the war ended, the economy contracted. The first blow was a relatively modest pullback in 1919. Then, in 1920, a severe recession hit. It was marked by serious deflation and a drop in gross national product estimated between 2.4 percent and 6.9 percent. Unemployment rose while industrial production plummeted. Farmers were especially hard hit.
Labor became more militant as returning soldiers increased the workforce and unions lost the bargaining power they had earned during the war.
The Seattle General Strike occurred in 1919. Some 65,000 workers walked off their jobs for four days. But the strike failed as some unions failed to join more militant groups, the business community rallied and federal troops were brought in.
The Great War’s aftermath would play a key role in the Great Depression. French and British leaders swept aside President Woodrow Wilson’s plans and imposed a harsh peace on Germany. It demanded enormous reparations and that Berlin accept blame for the war. More recent scholarship argues that Russia and France were more to blame for the war’s onset than Germany. The result was an ongoing debt crisis in Europe even while America enjoyed the Roaring Twenties.
Two attendees at the Versailles peace conference were John Maynard Keynes, as a British treasury official, and Herbert Hoover, the great humanitarian who had organized aid for refugees. Keynes was ferociously critical of the peace, writing his Economic Consequences of the Peace. So was Hoover. The two admired each other. Keynes said that Hoover was the only man who left the conference with his reputation enhanced.
When Depression hit, the two also agreed that it had its origins in the Great War. But each would go on to very different fates.
Today’s Econ Haiku:
The oligarchs are angry
Money in “the tubes”