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The Crash of 1929, and "THE LIQUIDATIONISTS" (Part 3)

25/04/2021 09:48


Study carried out by Jorge Vendrell that will be part of his next book entitled: "#TOP SECRET CRIOGENIZACION ECONOMICA" Appointment obliged by copyright.


THE LIQUIDATIONISTS: "The state had to keep its hands off and let everything be liquidated. Mr Mellon, the American Secretary of the Treasury, had only one formula: "Liquidate the workers, liquidate the shares, liquidate the farmers, liquidate the real estate" Herbert Hoover. U.S. Pte.

Study carried out by Jorge Vendrell that will be part of his next book entitled: "#TOP SECRET CRIOGENIZACION ECONOMICA" Appointment obliged by copyright.


The French expression, laissez faire, laissez passer (let go), is the motto of physiocracy, an economic theory. it includes a series of economic recipes, which promote the free movement of goods, framed within the market economy and private property.


Laissez faire et laissez passer, le monde va de lui même; "Let them do and let go, the world goes alone," was first used by Vincent de Gournay, an eighteenth-century physiocrat, against government interventionism in the economy.


Let them do, let them pass, it was born as an economic demand for the freedom of the market, in order to stimulate free competition. It is also the motto of liberalism that was taken to the last extreme in the crash of '29 by the liquidationists of the Austrian school, which had such serious consequences on the American economy for a decade.


The slogan has been misrepresented from its initial conception since what was intended with its dissemination was the separation of public and private powers. The publics intended to safeguard both the legal and civil order, being under their tutelage: the police, jlos ueces and army. And the private ones related to free competition, which should remain exempt from interference from the state, limiting taxes to the services that the state had to provide

The Crash of '29


October 24, 1929, New York. The financial crisis that would devastate the foundations of the American and world economy would cast its shadow for nearly a decade until 1938, the year in which the recovery began.


The constant liquidation of stock market loan guarantees and the absence of stock market loans strongly fueled the collapse of securities, becoming, increasingly, the situation ungovernable.


Thursday, October 24, was the first day of panic; pro the Panic that did not end after those twenty-four hours of deep anguish, disbelief and fear. The unstoppable speculative fever and the illusion of quick and easy money had come to an end. A period of poverty, scarcity and recession was at the gates of this new America.



On Tuesday, October 29, the so-called black Tuesday, would confirm these suspicions the New York Stock Exchange, the most important stock market in the world, had fallen. From bonanza and euphoria to scarcity and disappointment. In Galbraith's words "the most unique feature of the catastrophe of 1929 was that the worst was continually getting worse. What one day seemed like the end of the crisis, was shown the next that it had only been the beginning." Indeed, the situation showed no signs of improvement: the worst was yet to come. And then came, the Great Depression would dominate the economic stage for nearly ten years.


The American president, Herbert Clark Hoover, adopted some very questioned economic measures that failed to reverse the situation and in the following elections he lost the presidency. Franklin D. Roosevelt held the American presidency in 1933.


Liquidationism is the most perverse way of applying the second part of this motto: «laissez faire et laissez passer» to let pass, or what is the same to drop.


This is how President Hoover relates to the liquidationists in his memoirs:

"Within our Administration, two schools of thought were being debated. The first was, "let the liquidationists do it," led by Treasury Secretary Mellon, who believed the government should keep its hands off and let everything be liquidated. He said that he would be pleased to have Mellon had only one formula: "Liquidate the workers, liquidate the shares, liquidate the farmers, liquidate the real estate."


Mellon insisted that when people suffered from an inflationary impulse, the only way to stop it was to let everything collapse. He argued that even panic was not a bad thing, he said:

"It will purge the system. The high cost of living and the high standard of living will be reduced. People will work harder, but they will live a more moral life. Values will adjust and entrepreneurs will emerge from the ruins of the less competent."


"The cost and standard of living will be reduced. People will work harder, but they will live a more moral life. Values will adjust and entrepreneurs will emerge from the ruins of the less competent."


" However, Deputy Treasury Secretary Mills, Federal Reserve Governor Young, Commerce Secretary Lamont and Agriculture Secretary Hyde believed with me that we had to use the powers of government to make amends. History will show that we act after ten days and that we plan every week and every month to prevent changes in the tide, usually for the worse. At this early stage, we were determined to use all the powers of government.


"I determined that it was my task, even without any precedent, to call on the country's industry to take coordinated and constructive action to resist the disintegrating forces. The business community, bankers, workers and the government have cooperated with broader measures than ever before. Our bankers and the Federal Reserve have gone through the credit storm unimpeded. Our largest companies have maintained wages, redistributed employment and accelerated major works. The Government has expanded public works, provided credit to agriculture and restricted immigration. These measures have made it possible to maintain a high level of consumption than we would have had without them. They have prevented a large increase in unemployment; have created many new jobs."


These fine words are at odds with the facts that drove the country into bankruptcy. The Great Depression dominated the economic scene for nearly ten years. The American president, Herbert Clark Hoover,adopted some very questioned economic measures that failed to reverse the situation and in the following elections he lost the presidency. Franklin D. Roosevelt held the American presidency in 1933.


Roosevelt must be seen as the forerunner of the mixed market economy. With its New Deal policy (1933-1937),it was characterized by a decisive action of the state in the economy. Among its measures were an increase in protectionism reflected in the increase in tariffs, large economic aid to banks, the promotion of industrial production, the construction of public works. A policy that was slow to bear fruit since it was not until 1938 that an improvement in the American economy began to be palpable.


ANALYSIS OF KEYNES AND FRIEDMAN: CRASH-OF THE 29

Economists such as John Maynard Keynes and Milton Friedman suggest that the prescription of the pol