LITTLE GREEN HOUSE; Chapter Four

I believe that houses are like the people who occupy them. If they remain standing long enough  they can become all things. First the little house on K street was a home,  and then it was a bordello and a bar, and then it sat empty for a few years. I mean, who would want to live in such an infamous den of inequity? That question was answered during the roaring twenties, when 1625 K street became the home of various fraternities associated with George Washington University - the campus is one block south across Pennsylvania Avenue, between 24^th and 19^th Streets. But the frat parties came to abrupt end with the onset of the Great Depression.

One in four Americans lost their jobs. Those who still had a job saw their wages fall by almost half, at the same time that the price of food went up. Those who lost their home or apartment threw up shacks and shanties on vacant land and called them "Hoovervilles". Empty pockets turned inside out were called "Hoover Flags". There were literally millions of Americans in agony. Industrialist Henry Ford proclaimed that the Great Depression had been caused by “an era of laziness”, and President Hoover, from his government subsidized home three and ½ blocks south of the Little Green House, seemed to agree. But to the vast army of unemployed, that did not seem to be so much an answer as a justification as to why Ford's family was not going hungry like theirs. The District of Columbia in 1930 had a population of 607,000 people, and almost half of them had no regular income.

Still the town should have barely noticed when on 5 December, 1930 some 3,000 communists came from all over the eastern half of the United States to stage a “hunger march” in Washington. The march was badly organized. The timing was stupid. Two marchers died from exposure to the harsh winter weather, fifteen others came down with pneumonia, twenty with the flu. Still the government managed to overreact. There were more cops than marchers. Great sums had been spent to isolate the communists, far more than was spent in relief efforts. If the American Communists had been better organized, they might have posed a real threat to the capitalist system, because President Hoover decided the best capitalism could do was to encourage those with money to invest it. See if their response sounds familiar. They did invest their American profits, but not in America.

In response to Hoover's pleadings, some investments were made. In 1931 the frat house at 1625 K street was remodeled into office space. But by then there was not much call for new office space, even in Washington D.C. The economy did not need old spaces given new names. It needed new purposes. The little Green house, now a little green office building, sat empty, waiting for something to happen.

In 1932 fifteen thousand well organized WWI veterans marched on Washington, petitioning their government for early payment of their long promised war bonuses. The money was supposed to be paid in 1945, but the men were hungry now -  their children were hungry now. But this time the government had the tools to respond to such a petition. This was why Washington had been established. The power structure called out their District of Columbia police force (above). Shots were fired. Two veterans were killed. A few cops were beat up. The Federal government decided that the problem was not that the working stiffs had been pushed to far, it was that not enough force had been applied to keeping them under control.

That “enough force” had a name – General Douglas MacArthur (above, left). Ordered to clear the “Bonus Army” from around Jenkin's Hill, the imperious MacArthur sent in tanks and troops with fixed bayonets and tear gas. Crowds of government workers shouting “Shame, shame” at the soldiers. But their shouts did not shame MacArthur.

Once the area around capital had been cleared the General led his little army across the river to attack the shanty town  where the desperate veterans had left their families (above). This had not been ordered. MacArthur did this on his own. The two infants who died in this assault were MacArthur's trophies, as were the hundreds of mostly women, who were beaten and bloodied in this lesson for the lazy. Major Dwight David Eisenhower, who was the liaison with the district cops, described the burning of the shantytown as “pitiable.” MacArthur, who had pity only for injustices suffered by himself, was quietly retired and given a  job in the far off Philippines where it was to be hoped, he would never be heard from again.

In 'upper crust' Washington, “Old” Washington, the removal of General MacArthur was a defeat equal to surrender at Appomattox Court House. He had been one of them. And they never got over it, nor over him.  Still, with the incoming new administration there was reason for the wealthy denizens of Washington to hope. Wrote the Saturday Evening Post, “No occupants of the White House since Theodore Roosevelt had been so significantly favored as to birth and material circumstances (as FDR). Even the so called "Cave Dwellers" of Washington dropped their masks of indifference and cheered openly. At last the nation was to have a President and First Lady who have enjoyed exceptional privileges due to family position and wealth”.

The upper crust of Washington had acquired the nomen of The Cave Dwellers, because they were rarely seen outside their Kalorama neighborhood, to the North of K street. And the subsequent invasion of Washington by the army of Roosevelt's New Deal technocrats now destroyed “the incomparably delightful relationship between the official and social life” of Washington.

The small southern town inside Washington was suffering a revolution - as usual, hardest felt in the mundane things of life. In 1937 some 40,000 people jammed Washington's Union Station (above) twice a day, coming and going.  Suddenly, Washington (and the government) was going to work.

Federal clerks toiling away in unairconditioned offices now numbered a daily invasion of  200,000, since most could only afford to live outside the district. And then came the final insult.  In 1937 plans were announced to cut down 50 of the imported Japanese Cherry trees to make room for the planned Jefferson Memorial.

Outraged, a group of female Cave Dwellers chained themselves to the trees – their final line in the sand had been drawn at trees, not people. But it was a pitiable last stand. A brainy New Dealer came down in person and served the ladies coffee in china cups. He listened to their passion for tradition. He served them more coffee and promised to replant any trees damaged. Then he served them more coffee, and when the ladies slipped their chains to escape to the toilet, the trees were bulldozed, and the construction proceeded. (The trees were later replaced, but the ladies never forgave the insult.)

Like an ancient totem which had lost its magic, in early December of 1941 the Little Green House on K street was also bulldozed. The safe in the backyard, if it was ever there.  was plowed over as well. And in its place an 11 story steel frame concrete structure would rise. And like the rest of Washington, it would be filled with lobbyists.

- 30 -

A NEW DEAL - The Death of Capitalism

I have a few surprises for you. The Great Depression, which began in 1929, was even worse than the history books say it was.  The unemployment rate during the Great Depression is usually said to have been almost 25%.  But farmers and farm workers were not considered unemployed until they had lost their farms.   In 1933 the unemployment rate amongst non-farm workers was actually 37%.  

By 1933 the average income of American families had been cut by 40%,  Nine million savings accounts had been completely wiped out.  Sixty per cent of Americans were living below the poverty level.  One in four Americans had been evicted from their homes. And 2 million Americans were reduced to working as migrants.  

By 1934 almost half of the banks in America had failed. Corporate profits had fallen by 90%. New home construction  had dropped by 80%.  Between 1930 and 1933, prices had fallen by 20%,  and industrial output had been reduced by almost half.

The New Deal did not end the Great Depression. It cut unemployment by half, but that still left one in five Americans looking for a job, any job.  In 1929 investments by individuals, corporations and governments, a practical display of faith in the future, had been $92 billion. By 1933 that faith in the future had fallen to $10 billion.  Four years of the New Deal had returned that investment to $94 billion. 

However, it was just then that the deficit hawks insisted that the government must now “balance its books”, “pay its bills” and “live within its means”.  Federal budgets were slashed in 1937, and in 1938. Investments dropped to $61 billion.  This period is called “The Roosevelt Recession”. To quote from Wikipedia, “Unemployment jumped from 14.3% in 1937 to 19.0% in 1938, rising…to more than 12 million in early 1938…Personal income in 1939 was almost at 1919 levels…”. High levels of unemployment remained until 1943, when war work finally reduced unemployment to just 2%.

World War Two was almost as expensive on the home front as it was on the front lines. In the first 18 months of U.S. involvement in World War Two, from December 7, 1941, to April 1, 1943, 12,123 Americans died in uniform. Over that same period 65,000 civilians died in industrial accidents all across America - 4 civilian deaths for every one military death. 

These civilian workers died while making artillery shells, machine gun bullets, building bombers and digging coal. Civilian deaths declined steeply over the last two years of the war, but with American combat deaths totaling about 300,000 for all four years, the final disparity remained about three civilian dead for every one dead soldier in uniform.

Despite the drop in unemployment brought on by war production, poverty actually increased during the war years. According to a Congressional Committee, with unemployment close to just 2% during the war, 20 million Americans still went to bed hungry.  One in four wage earners was making just 64 cents an hour. Part of that was capitalistic resistance to the "new" minimum wage laws, and part was the result of a massive influx of people into the job market. Three million teenagers dropped out of high school to work in war plants.

The war did not lead to inflation because it simply was not allowed to.  In 1929 the top tax rate, applied to incomes over $100,000 a year ($16 million per year, today), was 24%. By the end of the war the top rate was 94%.   In addition there was a “Victory Tax” of 5% tacked onto all income. You could avoid paying that tax on a portion of your income, by buying “War Bonds”. They earned only 2.9% interest, but more than half of all Americans bought them to avoid the Victory Tax. This took $185.7 billion (about half the cost of the war) out of circulation for ten years, until the bonds reached maturity. The sacrifices required were shared by all Americans, as were the benefits of victory.

In economic terms, America’s Second World War was the New Deal on steroids. In 1948 President Harry Truman gave the final price tag for America’s war at $341 billion, ($4 trillion in modern currency). The most obvious expenses, such as tanks, airplanes, tents, military bases, aircraft carriers, artillery pieces and explosives, were items that had little if any peace time applications. By the last few months of the war,  aircraft went directly from the production lines, to the scrap yards. But those were, in fact, merely the most obvious expenses. Despite what conservative ditto thinkers might insist, by 1965 that enormous war debt had been repaid in full. The year before our entry into the war the national debt, what with all that New Deal deficit spending,  was 43% of the Gross Domestic Product. In 1946 it was 128%. In 1965, it was back to 45%.

The debt was repaid so quickly because we spent our way to prosperity, something the ultra conservatives  insist is an impossibility. New highways and rail lines, power plants, refineries and water systems, built to supply war plants and their workers, provided increased opportunities for profit in the post war years. More importantly, more than 7 million veterans went back to school, fully funded under public law 346, the “G.I. Bill”.  By 1951 this single piece of social legislation had educated 8 million veterans. One and a half million were given “on the job training”, two million went to two and four year colleges, including three American Presidents (including Ronald Regean) 14 Nobel Prize winners, and hundreds of thousands of teachers, doctors, nurses and businessmen. According to a 1988 Congressional Budget Office Study, for every dollar spent on the G.I. bill, $7 was repaid in increased earnings, consumer spending and taxes paid back into the government. And that does not include the result of a better educated, healthier workforce on production. The result for business was that the productivity of two man-hours in 1940 could be matched by just one man-hour in 1965.  And yet the number of employed more than increased to match the population growth.

If there is a lesson here for our current hobbled economy, it is that we should not be attempting to emulate the New Deal, but the Second World War.  We  must declare war on our own fear, bigotry, ignorance and greed. Goals must be set - sustainable energy, a smart power grids, rejuvenated transportation systems, universal health care, and lifelong free education  - goals which once met will generate new wealth. To meet those goals, limits must be set, such as limits to the level of  sacrifice required from each economic group.  On the other side of any sacrifice there must be a demonstrable healthier, stronger democracy, and not just another handful of billionaires.

At the core of this proposal is the fundamental truth that capitalism is not sustained by a wealthy few.   If that were true the Kings and Queens of old should have produced capitalism eons earlier . Merely replacing the greed of the nobility with the greed of the richest does not sustain an economy.  Capitalism is  the product of a large, healthy middle class. And if the inequities of capitalism are justified by its advantages, then it must raise the standard of living and fuel the  ambitions of the most people possible. The production of billionaires is merely a happy side effect of capitalism, it cannot be a justification for the greed and selfishness which capitalism rewards. .

Today the ratio of national debt to Gross Domestic Product exceeds 200% -  twice what it was in at the end of World War Two. That is because, during the most recent spending spree (The Republican tax cut of 2018, in particular)  we made no investment in the middle class, no investment to provide for future wealth. And then came the Covid-19 pandemic. In short, time is running out for capitalism. And if it dies, it will be suicide. The golden goose will have been killed by its most fanatic acolytes, the bankers and the CEO's, the hedge fund managers - those addicted to greed and stupidity.  And the first step in curing any addict, is to cut them off from their drug of choice.

                                                 - 30 -

LET'S MAKE A NEW DEAL - The Death of Capitalism

I have a few surprises for you. The Great Depression, which began in 1929, was even worse than the history books say it was.  The unemployment rate during the Great Depression is usually said to have been almost 25%.  But farmers and farm workers were not considered unemployed until they had lost their farms.   In 1933 the unemployment rate amongst non-farm workers was actually 37%.  

By 1933 the average income of American families had been cut by 40%,  Nine million savings accounts had been completely wiped out.  Sixty per cent of Americans were living below the poverty level.  One in four Americans had been evicted from their homes. And 2 million Americans were reduced to working as migrants.  

By 1934 almost half of the banks in America had failed. Corporate profits had fallen by 90%. New home construction  had dropped by 80%.  Between 1930 and 1933, prices had fallen by 20%,  and industrial output had been reduced by almost half.

The New Deal did not end the Great Depression. It cut unemployment by half, but that still left one in five Americans looking for a job, any job.  In 1929 investments by individuals, corporations and governments, a practical display of faith in the future, had been $92 billion. By 1933 that faith in the future had fallen to $10 billion.  Four years of the New Deal had returned that investment to $94 billion. 

However, it was just then that the deficit hawks insisted that the government must now “balance its books”, “pay its bills” and “live within its means”.  Federal budgets were slashed in 1937, and in 1938. Investments dropped to $61 billion.  This period is called “The Roosevelt Recession”. To quote from Wikipedia, “Unemployment jumped from 14.3% in 1937 to 19.0% in 1938, rising…to more than 12 million in early 1938…Personal income in 1939 was almost at 1919 levels…”. High levels of unemployment remained until 1943, when war work finally reduced unemployment to just 2%.

World War Two was almost as expensive on the home front as it was on the front lines. In the first 18 months of U.S. involvement in World War Two, from December 7, 1941, to April 1, 1943, 12,123 Americans died in uniform. Over that same period 65,000 civilians died in industrial accidents all across America - 4 civilian deaths for every one military death. 

These civilian workers died while making artillery shells, machine gun bullets, building bombers and digging coal. Civilian deaths declined steeply over the last two years of the war, but with American combat deaths totaling about 300,000 for all four years, the final disparity remained about three civilians for every one soldier in uniform.

Despite the drop in unemployment brought on by war production, poverty actually increased during the war years. According to a Congressional Committee, with unemployment close to just 2% during the war, 20 million Americans still went to bed hungry.  One in four wage earners was making just 64 cents an hour. Part of that was capitalistic resistance to the "new" minimum wage laws, and part was the result of a massive influx of people into the job market. Three million teenagers dropped out of high school to work in war plants.

The war did not lead to inflation because it simply was not allowed to.  In 1929 the top tax rate, applied to incomes over $100,000 a year ($16 million per year, today), was 24%. By the end of the war the top rate was 94%.   In addition there was a “Victory Tax” of 5% tacked onto all income. You could avoid paying that tax on a portion of your income, by buying “War Bonds”. They earned only 2.9% interest, but more than half of all Americans bought them to avoid the Victory Tax. This took $185.7 billion (about half the cost of the war) out of circulation for ten years, until the bonds reached maturity. The sacrifices required were shared by all Americans, as were the benefits of victory.

In economic terms, America’s Second World War was the New Deal on steroids. In 1948 President Harry Truman gave the final price tag for America’s war at $341 billion, ($4 trillion in modern currency). The most obvious expenses, such as tanks, airplanes, tents, military bases, aircraft carriers, artillery pieces and explosives, were items that had little if any peace time applications. By the last few months of the war,  aircraft went directly from the production lines, to the scrap yards. But those were, in fact, merely the most obvious expenses. Despite what conservative ditto thinkers might insist, by 1965 that enormous war debt had been repaid in full. The year before our entry into the war the national debt was 43% of the Gross Domestic Product. In 1946 it was 128%. In 1965, it was back to 45%.

The debt was repaid so quickly because we spent our way to prosperity, something the ditto thinkers still insist is an impossibility. New highways and rail lines, power plants, refineries and water systems, built to supply war plants and their workers, provided increased opportunities for profit in the post war years. More importantly, more than 7 million veterans went back to school, fully funded under public law 346, the “G.I. Bill”.  By 1951 this single piece of social legislation had educated 8 million veterans. One and a half million were given “on the job training”, two million went to two and four year colleges, including three American Presidents (including Ronald Regan) 14 Nobel Prize winners, and hundreds of thousands of teachers, doctors, nurses and businessmen. According to a 1988 Congressional Budget Office Study, for every dollar spent on the G.I. bill, $7 was repaid in increased earnings, consumer spending and taxes paid back into the government. And that does not include the result of a better educated, healthier workforce on production. The result for business was that the productivity of two man-hours in 1940 could be matched by just one man-hour in 1965.  And yet the number of employed more than increased to match the population growth.

If there is a lesson here for our current hobbled economy, it is that we should not be attempting to emulate the New Deal, but the Second World War.  We  must declare war on our own fear, bigotry, ignorance and greed. Goals must be set - sustainable energy, a smart power grids, rejuvenated transportation systems, universal health care, and lifelong free education  - goals which once met will generate new wealth. To meet those goals, limits must be set, such as limits to the level of  sacrifice required from each economic group.  On the other side of any sacrifice there must be a demonstrable healthier, stronger democracy, and not just another handful of billionaires.

At the core of this proposal is the fundamental truth that capitalism is not sustained by a wealthy few.   If that were true the Kings and Queens of old should have produced capitalism eons earlier . Merely replacing the greed of the nobility with the greed of the richest does not sustain an economy.  Capitalism is  the product of a large, healthy middle class. And if the inequities of capitalism are justified by its advantages, then it must raise the standard of living and fuel the  ambitions of the most people possible. The production of billionaires is merely a happy side effect of capitalism, it cannot be a justification for the greed and selfishness which capitalism rewards. .

Today the ratio of national debt to Gross Domestic Product exceeds 105% -  approaching what it was in at the end of World War Two.  But during the most recent spending spree (The Republican tax cut of 2018)  we made no investment in the middle class, no investment to provide for future wealth. In short, time is running out for capitalism. And if it dies, it will be suicide. The golden goose will have been killed by its most fanatic acolytes, the bankers and the CEO's, the hedge fund managers - those addicted to greed and stupidity.  And the first step in curing any addict, is to cut them off from their drug of choice.

- 30 -

LITTLE GREEN HOUSE ON K STREET Chapter Four

I believe that houses are like the people who occupy them. If they remain standing long enough  they can become all things. First the little house on K street was a home,  and then it was a bordello and a bar, and then it sat empty for a few years. I mean, who would want to live in such an infamous den of inequity? That question was answered during the latter half of the roaring twenties, when 1625 K street became the home of various fraternities associated with George Washington University - the campus is one block south across Pennsylvania Avenue, between 24^th and 19^th Streets. But the frat parties came to abrupt end with the onset of the Great Depression.

One in four Americans lost their jobs. Those who still had a job saw their wages fall by almost half, at the same time that the price of food went up. Those who lost their home or apartment threw up shacks and shanties on vacant land and called them "Hoovervilles". Empty pockets turned inside out were called "Hoover Flags". There were literally millions of Americans in agony. Industrialist Henry Ford proclaimed that the Great Depression had been caused by “an era of laziness”, and President Hoover, from his government subsidized home three and ½ blocks south of the Little Green House, seemed to agree. But to the vast army of unemployed, that did not seem to be so much an answer as a justification as to why Ford's family was not going hungry like theirs. The District of Columbia in 1930 had a population of 607,000 people, and almost half of them had no regular income.

Still the town should have barely noticed when on 5 December, 1930 some 3,000 communists came from all over the eastern half of the United States to stage a “hunger march” in Washington. The march was badly organized. The timing was stupid. Two marchers died from exposure to the harsh winter weather, fifteen others came down with pneumonia, twenty with the flu. Still the government managed to overreact. There were more cops than marchers. Great sums had been spent to isolate the communists, far more than was spent in relief efforts. If the American Communists had been better organized, they might have posed a real threat to the capitalist system, because President Hoover decided the best capitalism could do was to encourage those with money to invest it. See if you think that Republican response sounds familiar. The capitalists did invest their American earned profits, but not in America.

In response to Hoover's pleadings, some investments were made. In 1931 the frat house at 1625 K street was remodeled into office space. But by then there was not much call for new office space, even in Washington D.C. The economy did not need old spaces given new names. It needed new purposes. The little Green house, now a little green office building, sat empty, waiting for something to happen.

In 1932 fifteen thousand well organized WWI veterans marched on Washington, petitioning their government for early payment of their long promised war bonuses. The money was supposed to be paid in 1945, but the men were hungry now -  their children were hungry now. But this time the government had the tools to respond to such a petition. This was why Washington had been established. The power structure called out their District of Columbia police force (above). Shots were fired. Two veterans were killed. A few cops were beat up. The Federal government decided that the problem was not that the working stiffs had been pushed to far, it was that not enough force had been applied to keeping them under control.

That “enough force” had a name – General Douglas MacArthur (above, left). Ordered to clear the “Bonus Army” from around Jenkin's Hill, the imperious MacArthur sent in tanks and troops with fixed bayonets and tear gas. Crowds of government workers shouted “Shame, shame” at the soldiers. But their shouts did not shame MacArthur.

Once the area around the capital had been cleared the General led his tanks across the river to attack the shanty town  where the desperate veterans had left their families (above). This had not been ordered. MacArthur did this on his own. The two infants who died in this assault were MacArthur's trophies, as were the hundreds of mostly women, who were beaten and bloodied in this lesson for the lazy.  Major Dwight David Eisenhower, who was the liaison with the district cops, described the burning of the shantytown as “pitiable.” MacArthur, who had pity only for injustices suffered by himself, was quietly retired and given a  job in the far off Philippines where it was to be hoped, he would never be heard from again.

In 'upper crust' Washington, “Old” Washington, the removal of General MacArthur was a defeat equal to surrender at Appomattox Court House. He had been one of them. And they never got over it, nor over him.  Still, with the incoming new administration there was reason for the wealthy denizens of Washington to hope. Wrote the Saturday Evening Post, “No occupants of the White House since Theodore Roosevelt had been so significantly favored as to birth and material circumstances (as FDR). Even the so called "Cave Dwellers" of Washington dropped their masks of indifference and cheered openly. At last the nation was to have a President and First Lady who have enjoyed exceptional privileges due to family position and wealth”.

The upper crust of Washington had acquired the nomen of The Cave Dwellers, because they were rarely seen outside their Kalorama neighborhood, to the North of K street. And the subsequent invasion of Washington by the army of Roosevelt's New Deal technocrats now destroyed “the incomparably delightful relationship between the official and social life” of Washington.

The small southern town inside Washington was suffering a revolution - as usual, hardest felt in the mundane things of life. In 1937 some 40,000 people jammed Washington's Union Station (above) twice a day, coming and going.  Suddenly, Washington (and the government) was going to work.

Federal clerks toiling away in unairconditioned offices now numbered a daily invasion of  200,000, since most could only afford to live outside the district. And then came the final insult.  In 1937 plans were announced to cut down 50 of the imported Japanese Cherry trees to make room for the planned Jefferson Memorial.

Outraged, a group of female Cave Dwellers chained themselves to the trees – their final line in the sand had been drawn at trees, not people. But it was a pitiable last stand. A brainy New Dealer came down in person and served the ladies coffee in china cups. He listened to their passion for tradition. He served them more coffee and promised to replant any trees damaged. Then he served them more coffee, and when the ladies slipped their chains to escape to the toilet, the trees were bulldozed, and the construction proceeded. (The trees were later replaced in a different place, but the ladies never forgave the insult.)

Like an ancient totem which had lost its magic, in early December of 1941 the Little Green House on K street was also bulldozed. The safe in the backyard, if it was ever there.  was plowed over as well. And in its place an 11 story steel frame concrete structure would rise. And like the rest of K Street in Washington, it would be filled with lobbyists.

- 30 -