Echoes Dispatches From Economic History
This year's Republican nomination battle has again highlighted the contentious nature of the U.S. tax code. And with regard to Mitt Romney, the founder of private-equity firm Bain Capital LLC, the argument has grown especially heated over the categorization of income and capital gains.
Many analysts have questioned the tax policies governing an important component of Romney's income, a form of compensation known as "carried interest." Portrayed in the press and academic writing as a modern product of hedge funds and private equity, carried-interest arrangements and the tax issues surrounding them actually have a long history, linked to oil speculation and wildcatting at the turn of the 20th century.READ MORE
Free Exchange on the return of support for U.S. manufacturing
Kevin Drum on making the patent system work better
Marginal Revolution on the effects of marginal tax rates in the interwar era
Paul Krugman on the Very Serious Person's solution to lack of demand
The Telegraph on a recently uncovered Bretton Woods transcript
History News Network on the corporate personhood debate
Chances are you’ve never heard of Beardsley Ruml. But if you pay income taxes, he has exerted a significant influence on your life. He's the man who conceived what he called the "pay-as-you-go" method, now better known as estimated tax payments. In the process, he transformed the American way of income taxes.
Before 1940, only about 7 percent of Americans even paid income taxes. World War II changed that drastically. The unprecedented costs of the war meant two things to American leaders: People would have to pay much higher taxes and, more important, far more people would have to pay them.READ MORE
We live in a golden age of financial journalism. Michael Lewis, Gretchen Morgenson, James Stewart, William Cohan, Jesse Eisinger, Jake Bernstein, those fellows at Bloomberg: They’ve turned the business page and business books into required reading, and sometimes thrilling entertainment.
But this style of reporting isn't new. It began in the '60s -- the 1860s -- with the work of one man. He was a relentless investigator, a witty writer, a teller of gripping tales, America’s first great financial journalist.READ MORE
In the midst of the Great Depression, people who bet on stock-market declines were considered unpleasant, unwanted, un-American, un-something. Yet as a New York Times writer noted in February 1932, "The bearish speculator is not often reviled in healthy markets; it is when prices are declining that opprobrium is heaped upon him."
Short-selling transactions involve a broker "lending" equity shares to an investor, who pledges to return them at a later date. Usually, the broker sells the shares, credits the investor's account, then waits for the investor to repurchase and return them. If the buyback price is lower, the account balance, less fees and interest, represents profit; if the price is higher, the investor adds funds and takes a loss. Short sales can yield big gains when markets collapse, but analysts have long debated whether they accelerate price slides or instead help establish "fundamental" values after a bubble.READ MORE
NEP-HIS blog on how the European Union mirrors U.S. fiscal federalism
EconoMonitor on how the most recent financial crisis compares with past ones
Marginal Revolution on the secret agreement that revolutionized China ...
... and on how American bread is getting better while French bread is getting worse
Credit Writedowns on how Smith and Schumpeter would interpret the U.S. income gap
Free Exchange on Ben Bernanke the professor versus Ben Bernanke the chairman
History News Network on how to think about corporate personhood
American Enterprise on the history of American advertising
Ellen F. Brown
Word on the street is that the publishing industry is under attack by technology. Amazon.com Inc. has launched a bare-knuckled assault against independent bookstores. Print-on-demand firms make it possible for anyone to get his work on the market, and thus threaten to render agents and editors obsolete. And with e-books priced so low, how can authors and booksellers earn a decent living?
Yet the publishing industry has a long history of weathering these sorts of challenges, and its past offers some optimism for the future.READ MORE
Gregory DL Morris
Although it may seem shocking to watch the 112th Congress, there was a time when national leaders were swift and decisive in getting things done. In November 1910, in the space of less than two weeks, a group of government and business leaders fashioned a powerful new financial system that has survived a century, two world wars, a Great Depression and many recessions.
Of course, the Jekyll Island conference, which met that month, was dodgy even by the standards of the Gilded Age: a self-selected handful of plutocrats secretly meeting at a private resort island to draw up a new framework for the nation’s banking system. Add in the gnarly live oaks and dripping Spanish moss of coastal Georgia, and the baronial becomes baroque.READ MORE
Before Greece entered the euro area, its basic monetary unit was called the drachma. As the country debates with growing seriousness whether to return to its old currency, the coin's history and design repay a closer look. They speak of the extreme persistence of an idea, a coin and an image -- going back 25 centuries.
The word drachma comes from the Greek "drax," meaning a handful. It originally referred to a handful of six iron rods, called obols. Obols were used as currency before the widespread use of coinage.READ MORE
Feb. 12, 1970, was a historic day on Wall Street. For the first time in the 178-year history of the New York Stock Exchange, a black man joined the trading community on the exchange floor.
Joseph L. Searles III, the Newburger, Loeb & Co. partner who achieved this milestone, took a meandering route to the Street. He had been a professional football player for the New York Giants and later made a name for himself in politics as an aide to New York City Mayor John Lindsay. But Searles's experience in finance was extremely limited.READ MORE
For President Herbert Hoover, the election year of 1932 would be a rough one. It opened with weak equities markets, declining commodities prices and intensifying anxiety about both economics and politics.
Benjamin Roth, a lawyer from Youngstown, Ohio, noted in his diary: "Even those who invested after 1930 -- after the crash -- at what they considered bargain prices, now find their 'bargains' selling at half price or lower." He added: "Business shows no sign of pick-up. People are already looking toward the next presidential election when a Democrat will probably replace Hoover. In the meanwhile, Hoover adds to his long list of artificial stimulants."READ MORE
NPR's Monkey See on the hype about Charles Dickens's 200th birthday
Wonkblog on Guinness's contribution to economic research
Free Exchange on the disconnect between modern workers and outdated labor benefits
Megan McArdle on whether inequality will get worse
Matthew Yglesias on the decline of publishing jobs
More than a year and a half after the Dodd-Frank financial reform was enacted into law, many of its provisions are under attack.
Banks have fiercely opposed everything from its proposed limits on proprietary trading to its new rules on derivatives to its regulation of the muni-bond market. Republicans in Congress have opposed much of what the Consumer Financial Protection Bureau was established to do. Republican presidential candidates have called for the act's repeal. And regulators have missed three-fourths of the law's rulemaking deadlines.READ MORE
Cable television has lately been bringing the art and science of owning a pawnshop to life -- even for those fortunate enough to experience it only vicariously. But pawning has been integral to Americans' financial lives for centuries.
History Channel's "Pawn Stars" features the oversized Harrison family and their Las Vegas pawnshop, Gold & Silver. Old paper currency, antique pistols, classic guitars and works of art are typical of the items offered up for appraisal there, making the series seem like a less genteel version of "Antiques Roadshow."READ MORE
Elizabeth Tandy Shermer
American firms have been on the move of late -- and not just to Mexico or China. Most major job relocations are from one U.S. state to another, according to the Department of Labor. And with unemployment remaining stubbornly high, and companies sitting on a lot of cash, states have been competing ever more fiercely to attract new businesses.
Ohio reportedly has offered incentives worth $400 million to Sears to entice the company and its 6,000 employees to move from Illinois. Pennsylvania, Ohio and West Virginia are vying intensely to be the home of a new "ethane cracker" Shell plans to build. The governors of Kansas and Missouri have intervened, personally, in a battle to host the headquarters of AMC Entertainment.READ MORE
Americans struggling through the Great Depression didn’t have Jon Stewart and Stephen Colbert to provide a nightly lampooning of the rich, powerful and foolish, but they did have Will Rogers. “I am not a member of any organized political party," he famously observed, "I am a Democrat.”
Born in the Territory of Oklahoma in 1879, Rogers became a working cowboy. In about 1900, he assembled a circus act that performed roping tricks, and took it to New York City theaters, where he headlined in vaudeville for a decade. He started touring nationally, offering witty commentaries on the news, and he began a syndicated "Daily Telegram" which soon ran in 500 newspapers. (His columns are collected here.)READ MORE
Disunion on engineering the first U.S. ironclad ship
History News Network on what really caused the "Great Recession"
The Atlantic on 60 years of losing U.S. manufacturing jobs
Washington’s Blog on General Butler and the original 99 percent movement
EconoMonitor on the decline in conspicuous leisure
Center for Economic Policy Research on austerity and anarchy in Europe from 1919-2009
India's ambivalence about modern retailing has brought derision from the West. The government's decision to put off legislation that would have opened India's retail market to foreign investors, announced Dec. 7, led to howls of outrage. On Jan. 10, the government partially reversed course, decreeing that foreigners could own single-brand stores under certain conditions.
Those conditions include obtaining at least 30 percent of the products sold from small Indian manufacturers -- which was unattractive to retailers who gain competitive advantage from their ability to source globally on a large scale. On Jan. 22, the Swedish furniture retailer IKEA said it was putting its entry into the Indian market on hold.READ MORE
Robert E. Wright
We usually don't think of the U.S. as a monetary union, but early in its history it essentially was. Unlike the crisis-wracked euro zone, the dollar zone survived its first few decades without a major crisis, providing the fragile young republic with a period of relative stability during which it began to congeal culturally, economically, politically and militarily.
European policy makers hoped that the euro would serve as the unifying and integrating force of the European Union much as, they believed, the dollar had for the early U.S. What the Europeans failed to appreciate was that early America's real glue was not its dollar union but its fiscal one.READ MORE
History is filled with examples of people who achieved fame not because of a major accomplishment, but simply because they were the first to do something. Such is the case of Ida May Fuller, a resident of rural Vermont who became the first beneficiary of a recurring Social Security payment on Jan. 31, 1940.
Fuller was born on Sept. 6, 1874, and attended school in Rutland, Vermont, as a classmate of future President Calvin Coolidge. Known to her family and friends as “Aunt Ida,” she never married or had children, and she lived alone most of her adult life. After working for decades as a teacher and legal secretary, and contributing to Social Security for almost three years, she filed her retirement claim in November 1939.READ MORE