Ninety years ago, then U.S. Army captain Dwight D. Eisenhower went on a recce across the country. Joining a convoy comprising various trucks, passenger cars, mobile field kitchens and repair shops, the caravan departed from near the White House lawn on July 7, 1919, and arrived in San Francisco two months later on September 6. Its purpose was “…to demonstrate the potential of motor transportation and to dramatize the need for better highways” writes author Daniel Yergin in The Prize – The Epic Quest for Oil, Money & Power. Yergin notes that this trip “…signified the dawn of a new era – the motorization of the American People.”
If its birth was 1919, the adolescence of the “motorization of the American people” has to be the 1953-54 recession. It seemed to Eisenhower, now President, that the economy needed stimulating. No doubt recalling his youthful road trip, he signed the Interstate Highway Bill in 1956, providing for 42,500 miles of new highways. The big losers at that time were the railroads, perhaps much like the automobile industry is destined to become the big loser this time around. Although in their case it is more like an assisted suicide.
Today’s Financial Times discusses the fallout from the 1956 stimulus in “Highway to Hell Revisited,” pointing out that massive government spending has unforseen consequences years down the road. Noting that “road lobbyists and real estate developers colluded against meaningful regulation and planning…the result was a distorted market and tax system.” In 1958, according to the FT, journalist William Whyte “…warned that sprawl was not just bad aesthetics but bad economics. A subtler and more serious problem than blight was that, for local authorities, the cost of providing utilities and other services was exorbitant. ‘There is not only the cost of running sewers and water mains and storm drains out to Happy Acres…but much more road, per family served, has to be paved and maintained.'”
Just think how different our country would now be with an efficient rail and transportation system and no reliance on foreign oil. Decisions made in the present can have dramatic repercussions 90-years on…Obama’s largest building project in the American Recovery and Reinvestment Act is $27bn for roads.
The Wisdom of Governments
The Department of Homeland Security followed this line of reasoning twenty-two years later by recommending that Americans stock up on duct tape, suggesting that it would help keep you safe in the event of a biological attack. I’m sure science will bear out the efficacy of such precautions, and we will eventually learn that the Bush administration actually held a high regard for science and education – you’ll recall his deft use of the intransitive plural subjunctive tense in his sentence “rarely is the question asked, is our children learning?”
So let’s close with FDR’s quote “…the only thing we have to fear, is fear itself.” It causes us to follow leaders blindly.
National Thrift Week
1919 also saw the Treasury Department encouraging civic organizations to promote National Thrift Week. The purpose of National Thrift Week, according to the New York Times (01/15/1922) was “…to help the individual to think straight and act wisely about money matters…” A ten-point financial creed was espoused that advised, among other things, to “pay your bills promptly – the curse of debt has put the goal of success beyond the reach of many men.” Contrast this with the message coming out of Washington today that banks need to start lending again to stimulate consumer spending and you see that the politicians are unable to grasp the fundamental problem of this economic crisis. Remember that “mortgage” is Latin for “death-grip!”