<p>In 1932, Franklin D. Roosevelt defeated Herbert Hoover to become our 32nd President. At the time, the US was suffering from its worst financial crisis, and was deep into what would become known as the Great Depression.  There are eerie parallels between that time and today's "Global Financial Crisis."  There are also a number of lessons to be learned from that era, which are still valuable today.  Perhaps the most important one being that we need political and business leaders who exhibit and make decisions based on integrity.  Let me take you back to that time and FDR's inaugural speech, and the lessons it holds for us today and tomorrow. </p> <p>It all started with the stock market crash on October 29, 1929 (known as "Black Tuesday"). However, what is little known is that even in early 1930, credit was ample and available at low interest rates. Nevertheless, consumers were full of fear and they, as well as businesses, were reticent to borrow and spend. For example, by May 1930, sales of automobiles had fallen below 1928 levels. By late 1930, fear was running rampant and the steady economic decline accelerated.  By 1932, 13 million people were unemployed (25 percent of the employable population); industrial production had fallen by nearly 45 percent; building of new homes dropped by 80 percent; some 5,000 banks failed; and crop prices fell by 40 to 60 percent. The US economy would not begin to recover until March 1933. Sound somewhat familiar?</p> <p>Much has been written about the causes of the Depression. The traditional explanations may sound familiar to you. Namely: a combination of high consumer debt; ill-regulated markets that permitted malfeasance by banks and investors; and, growing wealth inequality. However, it is probably fair to say that the basic cause was a sudden loss of confidence in the economic future of the US.  It is interesting to note that today the measured level of consumer confidence is at its lowest level since the government began measuring it.  In fact, for the month of October, the index declined by 23.4 points, the third biggest drop on record.  The biggest two drops were experienced in the 1970s at a time when the oil producing countries cartel (OPEC), the same as today, minmized oil production and the price of gasoline sky-rocketed along with fears of a war with Russia, as well as war in the Middle East.  Again, sound familiar? </p> <p>President Roosevelt summarized the reasons for the general malaise it in his inaugural speech. He also succinctly stated the way out of the financial crisis. In part, FDR stated:</p> <p>"Plenty is at our doorstep, but a generous use of it languishes in the very sight of the supply. Primarily this is because the rulers of the exchange of mankind’s goods have failed, through their own stubbornness and their own incompetence, have admitted their failure, and abdicated. Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.</p> <p>Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.</p> <p>The money changers have fled from their high seats in the temple of our civilization."</p> <p>A complete copy of FDR's speech can be found at: <a href="http://historymatters.gmu.edu/d/5057">http://historymatters.gmu.edu/d/5057</a>.</p> <p>FDR's lessons seem to have been forgotten and repeated over the last 10 years or so. Perhaps we will learn them this time. If so, what are some of the lessons we will need to learn? Well, I would posit that two of the most important lessons will: 1) we need politicians and business leaders who know that the definition of integrity is doing the right thing even when no one is watching; and, 2) they and we ourselves need to apply that principle in all of the decisions made! </p><p> But we will also need to remember that fear feeds on itself and creates more fear. Not to imply that only thinking positive thoughts will solve this crisis. But positive thoughts combined with positive actions (i.e., actions based on integrity) will.</p> <p>Editor's Note: This is the first of a two-part article. The second part is called <a href="/articles/a-call-for-the-return-of-integrity-part-ii">A Call for the Return of Integrity, Part II</a>.</p> 2008-10-27T02:08:49Z -15.4455 507 2067 true 7 8006 a-call-for-the-return-of-integrity 13 2008-10-27T23:22:21Z 2008-10-27T23:22:21Z

More than 70 years ago the US was mired in its deepest financial crisis. President Roosevelt, in his inaugural address, exposed the root of the problem. The same causes which got us into trouble again!

1 2009-02-24T09:46:47Z