Rebellious echoes

October 12, 2011

By Martin Hutchinson
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The Occupy Wall Street protesters may not know much about Coxey’s Army. But like the current demonstrations, Jacob Coxey’s 1894 March on Washington occurred after a period of economic turmoil that increased inequality and followed a crash of the financial system. Mr. Coxey failed, but his demands of stimulus spending and printing money became the standard response to recessions. Occupy Wall Street should be so lucky.

Economically, the lead-up to 1894 bore considerable resemblance to the present. In the preceding boom years, disruptive technologies like the transcontinental railroad and refrigeration brought prolonged downward pressure on prices. Since America was on a gold standard, this resulted in about 20 percent deflation in consumer prices. As in the past decade, when American manufacturing workers saw their living standards eroded and employment opportunities diminish, farmers of the late 19th century were especially adversely affected, and income differentials widened.

The financial crash of 1893 resembled that of 2008, with similar distress in the financial sector, but caused more corporate bankruptcies and higher unemployment. It also brought a severe credit problem. To avoid running out of gold in early 1895, America sought a bailout from J.P. Morgan.

Mr. Coxey, a successful businessman with Populist Party connections, began his march with 100 participants from his home town of Massillon, Ohio. They demanded federal deficit spending on roads and other public works, with laborers paid in paper money, thus expanding the currency in circulation.

A generation before John Maynard Keynes espoused his theories, the protesters found little response to their ideas in the conservative administration of Grover Cleveland. The march was eventually dispersed with little short-term effect. Mr. Coxey’s prescriptions, however, have since become conventional wisdom, notably in the fiscal and monetary responses to the most recent downturn.

Occupy Wall Street arises from a similar situation, when technology-driven deflation has widened income gaps and produced a stratum of economic losers. In that respect, it does not resemble, say, 1932, when distress was general, or even 1968, a period of great prosperity. But like Mr. Coxey’s followers, Occupy Wall Street could influence the debate for decades ahead. It just needs some ideas.

Comments

It would be more correct to say that the American economy does not yet resemble 1932. The government’s efforts have thus far been effective in preventing a depression.

On the other hand, there is still a lot of economic instability bubbling up around the globe. The world’s economic situation is more precarious than usual.

Posted by breezinthru | Report as abusive
 

Coxey had a unified, coherent approach to his demonstration.

Occupy Wallstreet is highly fragmented, incoherent and unorganized.

In short, there are many screaming messengers, but no message.

The same may be said for your pointless blog.

Posted by deemerk | Report as abusive
 

How come this is a “technology-driver” deflation? What about the real-estate bubble, manipulated interest rate and complex derivatives that blow up the financial system?

Posted by dacia1300 | Report as abusive
 

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/