tv Tonight From Washington CSPAN December 29, 2009 8:00pm-11:00pm EST
my question is about nuclear energy and without being an expert on the topic you do hear about the greenization of technology. we have radioactive waste, potential for an accident or a terrorist attacks and also the crossover of the potential technology into the weaponization. i wonder if anyone has a strong opinion on whether we are confident this is a good choice or is this more of a necessary evil type of situation? >> ..
on the gold standard. dr. paul is hon their chairman which hosted the hour-long event. >> appreciate you very much you coming this morning. and talk about a subject that i've been talking about for a long time. a lot of people ask when and how did i get the title for the book. and i do tell a little bit how that happened. i really didn't create the title. it came to us naturally. it was during the campaign on the college campus in ann arbor. all the sudden the students started chanting. they kept saying end the fed. it was a spontaneous outburst. it gave me the idea that maybe we could follow up with a book. but it to me is a very important subject.
because of the significance of it. it's becoming more important all the time. now the book was written with the intent of explaining to my best ability the role of the federal reserve, and our financial system. but there's a lot more to it than just that. the bottom line really becomes the nature of money itself. and the book is sort of in certain -- broken down into certain groups. and in certain parts. i start off by talking about when i first started thinking about money as a very young person. i thought at the time that i had mixed feeling about talking about my personal experience even as a small child about my first job earning pennies. and recognizing the value of the money and saving coins.
and yet when i sent it to publisher, i said maybe you want to strike that. at times those stories sound corny. that was the part he really liked. it turned out a lot of other people to like to read a little bit about my early experience in money. i can tell many, many stories about that. the reflections that my grandmother had about the importance of money. she was from germany. she knew something about the runaway inflation in germany. aped the significance of all of this. and the significance of owning property. this was very important. it starts with the idea of penny. at that time, the penny was made out of copper. that was not the truly traditional monetary unit. it never at that time,
approached anything of having it advantage to melt copper. eventually, we inflated the currency with where that was the advantage to melt not used gold and use silver. it'd be better to melt silver than pay a bill with silver. we have gone so far that it has become an advantage that the copper is worth more than one penny. we went from copper to copper and zinc to zinc and we're at a point now that we can't afford the zinc standard. the obviously is creating money out of thin air in the government. inside the book as well i go over the history of the federal reserve. it's not the greatest in detail. there's a lot more information about the reason that they brought up the fed and created the fed.
of course they came out of the crisis of 1907. but the real important history which deserves a lot more intention than it gets in the book. that is the argument always used about we had to have the fed because the gold standard always failed. that's why we had the crisis in the 19th century. but the truth is is all of the monetary crisis that we had throughout the 19th century, especially around the civil war period came because we didn't follow the gold standard or local people inflated or the banks inflated or it happened within the states. it had nothing to do with falling on the rules. but that history is important.
that story is what we need to understand how it happened. i go through the section about my experience with meeting the verso'sian economist. because that is what i have concentrated on. frequently i'm asked. as a matter of fact this week, joe scarborough asked me. he took a quote that i had made in the banking committee in the early part of this decade as saying we're going the wrong way. we're going to have a crisis. he was pushing. how did you know this? he said i didn't exactly know it as much as i've read economics than are a lot better. but my exposure came with my first reading "a road to surf
surfdom." and then i mentioning the personal association. that was an important influence. just that i read and studied and got to meet him. and got to now hans who was a teacher and ran the economics department at education. and then becoming friends with murray rothbard. so the personal associations reinforced all of the things that i was inclined to believe anyway. and this i mentioned these
things in the book. but we have other reasons and other concerns that we should have about the whole monetary system. the other associations that i talk about in the book are the associations with the federal reserve board chairman. i've had a few of those. as a matter of fact, just for a month or so when i first went into congress, burns was still the chairman. i didn't really get to know him. it was such a short period. he was in poor health. but the one that i got to know the best in earlier was paul volker. i came him a plus for the various chairman that i've met. because he seemed to be more willing to discuss thing on a one-to-one basis.
actually, there was one time when we were working on the monetary control act in 1980s which gave a lot more power, regulatory powers to the federal reserve. and to monetize debt. and i was arguing one case in the committee that it was a dangerous thing because he could -- we could -- the federal reserve was giving too much power to inflate endlessly. it didn't have to have any reserves whatsoever. it could take interest rates down to entree oh or whatever. and he was just agreeing with me. he said, look, i'd like to you come have breakfast with me. that wouldn't happen with bernanke or greenspan. he tried to convince me differently. he said you may be right about this.
i may be right on the interpretation of the legislation. he himself would not inflate. he wants this so that he has the power to restrain monetary authorities, rather than to expand monetary authority. but it turns out that, you said, you might not want to use the powers to rapidly expand the money supply. but some day somebody else might want to do it. and of course i made the comment that some day it's right here. when you see what bernanke did within a few months doubling the monetary base of that -- his authority was gran fit back -- granite back in that time. the federal reserve was required to have gold behind the expansion of money. they were restrained. as bad as they were in inviting problems, they still have some restrains up until 1971. even though the federal reserve
act gave the power to the feds to buy corporate debt, they really never did that until just recently. it used to be gold and silver that they used as reserve. after that 1971, they just used treasury bills. which was bad. but still there was some restraint on that. that depends on the amount of debt. that gave license to the congress to run up the amount of debt. but today what backs our dollar is derivatives. all of the worthless, toxin assets that we were required to buy are now held by the feds. we don't know exactly how much and what they have bought. that's why we are arguing for the case of auditing the fed. next to the federal reserve board chairman that i had some
confrontations with and discussion with was alan greenspan. and i'd tell the story in there about the time -- i think most of you here in this audience would know the story. alan greenspan was of course a supporter of and a friend of ann rand. he was in the group of people. in the 1960s, he wrote the fantastic article about how bad debt was and how bad the wang was and confiscating money. it was a wonderful article. we had one session one morning before we were going to banking committee. it was to go in and personally say hello to the federal reserve board chairman because he was getting ready to testify and get a picture with him. i dug out the copy of the objectivist news letter where
the original article appeared on the gold standard. so i dug that out. and i took it with me. when i was meeting and i pulled it out. do you recognize this news letter? i recognize that. i handed it and flipped it open to the article. do you remember the article? he said, oh, yes. i said would you autograph this? would you want to add a disclaimer on this? he says, oh whereby no. he said something amazing to me. no, just reread that recently. he fully endorses everything that he wrote back then. now that he's out of being the chairman he said something favorable towards gold. who knows. he had his chance to talk about selling money. i think he of course committed so much to the financial bubble that we have. bernanke, of course, i would
consider him a little less friendly. so i would -- you know, even though i had the disagreements with alan greenspan, i would say he was a little more cordial. i've had some conversations with bernanke and greenspan and give you information about that. but the rest of the book deals with you know, why we should get rid of the fed and why the fed doesn't deserve to exist. a pretty important reason, although i consider it today under current conditions probably the weakest argument. that's rather sad. that is the constitutional argument. i mean if i wanted it get somewhere in washington, and say the reason we have to get rid of the federal reserve is because of our respect for the constitution and the constitution, yes, and they give
us authority. forget it. [laughter] >> it doesn't work that way. they don't want to hear that. and they would say, oh, no. the courts say it's okay. oh, okay. the courts can rewrite the constitution. and the courts have always favored central banking and the government over the people. so the gold-claws contract, they just canceled the agreement. the government doesn't have to pay in gold because they promised. they just cancel. it the government uses the courts to abuse the contract and stick it to the people. so the people aren't rewarded as a should be. it says we're not allowed food anything unless we're authorize
ed. that was not permitted was denied. so there's no provision in there that the congress now has the authority to set up a central bank. and yet that argument and debate started right after the institution. that was favorly for the first national bank. there is no authority to set up the central bank. there is a monetary provision. that is that congress is to deal with the a will the of coin, silver, and gold as legal tender. the states were prohibited from doing anything else. the states were very much involved in printing money and being very inflair nation their. the states weren't allowed to print their own paper money,
they were to use only gold and silver. today if than individual or a state demanded that you use gold and silver, you could go to jail. it's within turned on its head. it's the lose interpretation of the constitution, the willingness to go on the with court to just obliterate the whole idea of honest money that was provided for us in the constitution. but the responsibility for monetary policy really falls within the congress. but some interpret that as to say that congress then should be the ones who -- the one who gets to print the money and distribute the money so the populous, you know, position. i don't endorse that. although i endorse the idea that congress should have more responsibility. in order to have sound money. they don't have license to inflate the currency.
the congress does not have that authority. yet, we still have some allies of the federal reserve and audit the fed. they would just as soon as turn over the monetary authorities, the monetary power to the congress. but that certainly wouldn't solve the problem. so the constitution that wanted us to have paper currency. they talked about paper credit, that is prohibited. we're doing exactly that. that's the reason that we are in so much financial trouble and approaching the dollar crisis. the second argument that i use against the fed is the more argument. and that's not much stronger in washington than the constitution argument. they don't want to hear anything
about that either. but there's a moral argument against the federal reserve. because we're giving power to a few individuals to create money. out of thin air. and have legal tender laws that says you must use the paper money. you can't use gold as a constitution because it says that you should. but you must use paper money. and then that gives the central bank the authority to count fit money. and always for good reasons, of course, to maintain a stable economy. so the fed was given its authority, you know, to have a stable currency. but they did this through the count fitting -- counterfeiting process. most of you here probably remember the story of the law. the whole theme of the law is if
you had a moral principal behind the law it should be that if you as an individual can't do something to or against your neighbor, you can't get the government to do it either. they need to have moral principals. if you are not permitted under any system of government to steal from your neighbor, if your neighbor has three cars and you have none, nobody says you have a right to go in. i need a car. i'm going to take your car. fortunately, we still call that theft. well, a person with three cars. that's unfair. so therefore we have to take a car to you and give it to somebody else that needs the car. because needs now are rights. so who does that?
if you are not allowed to steal a car, you can send somebody from the government to go and steal one and transfer that. so that's how the whole transfer system comes about. why can't we accept the whole idea of morality. unfortunately what happens is the opposition grabs the moral high ground. it's only moral to take care of people who need something. and needs are write. demands become right. if you can do that with the central bank in a moral way to create new money and distribute it. what happens is the money gets distributed to their friends rather than the people who are
supposed to get help. and it's a total failure. now another argument that i have against the central bank and one of my strongest arguments, a major reason why we should always be concerned, is the central bank and this whole system facilitated the growth of government. and if the growth of government is the opposite of defending your liberty, you only get the growth of the government by diminishing personal liberty. and that should be enough. but, of course, some people like big government. there's some people who delight in ruling over other people. and then there's a large number of people who are convinced that they are going to get benefits, you know, in this manner.
it's for the ideas of promoting our goodness around the world. it has nothing to do with protecting oil or anything else. but we need a military presence around the world. but if you have honest money, and government's couldn't counterfeit, these ideas would still float around. but they would be forced to pay for it immediately. if we could ever get the whole notion that you shouldn't allow the government to borrow. look, if you want to do a, b, c, we're going to take money and pay for it. this would slow things up. there's a convenience. for those who want big government have the tax be an inflation tax. this is vote for all of the welfare programs, vote for all of the war fair programs. don't be responsible for this.
don't be morally or economically responsible. just pass the programs. if you find it, you get re-elected. running as santa clause is a lot better than running against santa clause. that's been done for many, many years. that's coming to an end. that's why there's a difference right now. because the system is in a process of failing. but one the reasons it lasts so long is in the early stages which can last on time. those who promote the system believe that they are smart enough to control this and make it to gradual that hardly anybody catches on. eventually it fails. but in the mean time, you can see the erosion of liberty. and if you go from 1913 on, and matt said in the introduction, we're working with a dollar that's probably 4 cents on the dollar of 1913.
this is something that we have to deal with it. and the federal reserve, of course, is something that we must take care of. and take care of rather rapidly. they get re-elected. liberty is more valuable because they need more power and force. they can't drive. they can't say what do you mean? you need more money and welfare programs and keep the business groups happy and keep the oil people happy?
that's eventually ends. and the real question is are they going to be so powerful that they just come down hard on us? that meansty rants. that means dictatorship. because they have no other way of maintaining order. because there will be so much poor. and we're in that transition now because we're becoming a much poor country. we were poor 10 years ago, and even before that. but we were doing well because we were able to borrow money. i think in the history of the past decade is written, i think it will be seen that in the collapse of the nasdaq was really the beginning of our problems. although the markets went up and the statistics weren't all that bad. i don't think real employment ever was resumed. real employment, unemployment,
those numbers are growing drastically. now the last issue that i want to talk about may be the one that becomes more practical. that has to do with the economic ramifications of the federal reserve. and the reason that we shouldn't have the federal reserve for just simple economic reasons. and the mandate and the federal reserve act wore the federal reserve was to maintain the value of the dollar. and to have full employment. and maintain the value of the dollar means stable prices. well, they failed. they flunked. they get an f. they are destroying the value of the dollar. and we have increases in the
cost of living. they said, no, it's not bad. we're only destroying the money. it's a lot worse than that. 2% is evil too. you know, under money, your value of the money goes up. but the cost of medicine goes up much more rapidly. but when you create new money, the cost goes up differently for different areas. if everybody's wages went up at the same rate as the money supply would go up.
and everybody's cost doesn't work that way. they come up with the figures. they say, oh, prices went up 2% last month. if you exclusion full food and energy, they only went up half a percent. so it wasn't so is bad. food and energy prices went up. it means a whole lot. that's important. whenever the government is involved, you will see the money gravitating. as we put more money into medicare, we didn't better quality and more people taken care of.
we just had prices go up. same thing in education. they pump out the money. the government is mandating and sending money. everybody goes to college. does everybody get a better education? no, the prices of education go up and the quality of education goes down. whether, it's, you know, the public school or college system. there's too much money in there. prices are pushed up. so we e have a lot of inflation that exists today. and yet, the federal reserve is claiming great victory. i mean, right now one the greatest dangers to us is that they are getting very confident and trying to portray that everything the government, federal reserve and treasury has been successful.
we do not have the strength of our economy due to the artificial inflation. the good jobs are over seas. we're a debtor nation. who's holding our dollars? russia lopside -- russia, china, arabs, with the only thing restraining is they don't want to buy more. if they don't, they will lose the value of the dollar. they have an interest in trying not to panic. we have the right philosophy to
blame. the correct one is the federal reserve system. because they have created the financial bubble. they create the booms. and the booms demand that there is a bust. they have been pretty shrewd since 1971. when the last to go was removed. just because the stock market goes up and down, the people who lost the money aren't necessary one to gain it back again. right now the stock market is up. 30 to 40%. they say recovery is here. do you think the people who want the money in the last year or two regained. do you think the people who launch the money have regained? no, it's the traders. it's the wall street. and the people who get bailed out behind the scenes by the federal reserve.
if we hear about poor people, we have to reject the whole notion of government intervention, the rejection of the idea that personal liberty and personal freedom and private property and contracts can solve the problems. not perfectly, but better than any other system means that if we believe in that, if we care about our fellow man and we care about not serving the special interest at expense. and if we care about not having run away inflations like germany and zimbabwe. if we care, we must look at federal reserve system and come down on the side of saying it's unconstitutional. it's immoral. it's promotes big government.
and it's lousy economic policy. so, therefore, how can we lose this argument. it's impossible, if we do our job. it's just a matter of getting information out. hopefully, that information is necessary to convince the american people that will generate the support for ending the fed. just as we have generated support for at least starting off with auditing the fed. thank you very much. [applause] okay. i don't hear it.
>> i was just wondering since we went off the gold standard in 1971, how that has effected the economy of other countries. and if there is a link with some of the immigration and illegal immigration that we have today. is there a link? >> okay. the question is there a link between going off the gold standard and the problem that we have with illegal immigration? i haven't thought a whole lot about that. there's linkage that might be be direct. the linkage might not be that our economy has erodeed. that would be connected to the
federal reserve. and what that happens, the welfare state encouraging people not to take the jobs that they should take in a free market. so then the jobs go baking. and then we need labor. i get as much complaints in texas about illegal immigration about the need for workers. not so much now. because the economy is getting so weak. so it interferes with markets. and the fact that we interfere with our market here. it does encourage illegal immigration. also the welfare state and the inflation of the federal reserve permits us for a while to pay the bills of illegal immigrants. it means that we can for a while pay for their medical care and education. that encouraging more to bring families. instead of having a decent working program. in a free market you would have
a demand for labor. since we don't have a demand for labor. due to the economy right now. it's less of a problem. so indirectly, i believe there is a relationship. >> i work for an insurance company in manhattan, i'm a nurse there. it's a medicare/medicaid insurance company. i wanted to know what your thoughts are that we are increasing due to the economic status, 500 members a month compared to the 100 members a month. we had a huge layoff of all of our marketing. i wanted to know what you think about president obama health care reform? >> president obama's health care? >> she asked what i think about the initiative? i don't think very much about it. i think a lot about it. i don't have much positive things to say about it. [cheers and applause]
>> it's just like dealing out the financial, we had too much regulation. we get into the crisis. we spent more money. tax more people. think we're going to get out of trouble. the medical care problem has come because we've had mismanagement, since the early -- since the mid 1960s. the government has been involved in 65% of the medical care in that country. it's not going to be solved by moving up to 85 or 100%. it's going to make things much worse. people in washington now talk about a compromise to get some people to come together. and back off.
the compromise ought to be the people who argue for zero amount and 100% -- [cheers and applause] >> and the true compromise would be reducing it to 50 a% and moving that direction rather than always moving the other direction. so i have a lot of respect for people who say i believe in socialism, 100%, the government should take over completely. they ought to have the same respect for us. if we had way too much government, we ought to argue our case in a clear fashion. >> thank you for the revolution book.
>> ann rand? >> ask me how ann rand has influenced me? so many. more so even today because it's been a book that's been read by literally millions of people. yeah, she's had some influence. i mentioned about the objectives letter and greenspan's article back there in the '60s. so i read all of ann and's novels. i read those as i was finishing medical school. that would have been in the early '60s. when she started, i subscribed to that. i think the most important thing she did for me was to make me think through clearly exactly what i believed in. picking and choosing. deciding because if you happen
to be an individual that has faith and believes in a creator. she in many ways, i think, mocks that position. she talks about the gold standard and economic policies are just great. she made me think things through. she made thing come out, not with a clear understanding, but as so many conservatives and libertarians still read ann rand, don't endorse all of her philosophy. and yet she's had a great deal of influence in this century. there's no doubt about it.
i was wondering what the potential government takeover of the banking sector like general motors what about the possibility for routine police access due to the credit card system, the information in the credit card system. and the police routinely using it to gather suspect for the police lineup. >> i'm not sure i understand now. he's talking about credit cards being used in parking meters, and whether the police might take these and abuse the system. >> just in general, police abuse the information in the credit card system. >> right. whether you have parking meters or not, i think that's a real threat. you know the information you created money with plastic. i don't know the details of what
the odds are in the city of philadelphia abusing the credit cards of individuals because they go to parking meters. but i think the problem in general, much broader than just philadelphia or just, you know, parking meters. i worry more about what is the government going to do with a 50 -- $50 billion program which is involved. which means they are going to control every medical decision. that is the kind of thing that i really fear. i believe it was the news this morning on last night that showed that the private camera caught somebody breaking in and
stealing a car. there was a city camera, the government camera, you know, wasn't working. so we spent millions and millions of dollars. that's probably the best thing it's going for. is all of the survey lens and controls where it's medical anything. the government is to inept, they probably won't be able to do the job they think they are going to do. the only danger with all of the money they lose for the inept programs. >> good morning. thank you very much for bringing all of the our attention to the problem of the fed and making it public. my question is if by some miracle 1207 moved along and is signed into law, are you confident that the audit would be honest, and what -- who is going to audit the auditors? >> well, that's always the fear. and yet if we get that far, we've made a lot of progress.
we're going to have benefits regardless because we don't know how long it's going to take or whatever. [applause] >> obviously there are shortcoming in the federal government. the gao happens to have a little bit more reputation that the rest of the agency of the government. hopefully we would be able to get some good information. i don't worry as much as the gao not making a sincere effort as i am about the federal reserve making it a effort to prevent and get in the way of the gao
from allowing us to find out what's happening. i'm sure there's a lot of agreements that are made that will be hard to trace. it isn't that the federal reserve is going to have it written on the books. what we did is is a, b, c. they talk to other bankers. they say today i'm going to extend some loans to you. as soon as you go in and buy such and such stock or gold and do all of these things. so it'd be pretty hard to follow all that went on. you're right. there could be short comings. ultimately, the system isn't going to last. so it's the exposure and getting the american people to understand why it's so important to know more about them. thank you. you mentioned something last night. if i can borrow and refer to that. you mentioned the health care
that they would tell you what we're going to eat and drink. you mentioned a natural foods and legislation that would take that out of the free market and put it under the fda supposedly or whatever. happen point do we draw the line. this person is going to be on the personal liberties. they are abusing their health. and somebody needs to turn, you know, that person around. you said 50%. that would be a compromise. where does personal liberty go? >> the question is how far do we go? your end point might be different than somebody elses. it's about 30 years ago. and i think what i did in my own mind was i choice to speak out.
i didn't really expect a political career. and i wasn't looking forward to it. but i wanted to speak out with the assumption that somebody was going to listen. and nothing much would happen. and i always wanted to say. at least i made the effort. so we all here, i believe, want to continue making the effort. but we also know that when do we do something else? and that to me is since i am not an endorser of violence, i don't like anticipate in it. i believe there is an certain time when individuals just flat out say no. so i have respect for the people like martin luther king and gandhi that said enough is enough. some people do that with the tax code and money issues. they go to prison over it. that to me is rather said. eventually when the government quits functioning, there's going
to be a lot of this. there's civil disobedience about the drug laws. despite how hard the federal government tries to override all state laws. i mean the use of marijuana keeps growing and growing and growing. so there is a defiance. the enforcement is going to become more difficult. it's going to be up to the individuals. it may be -- like if obama in the next six months, if there's a well, you know, i think the american people are going to say enough is enough.
those are personal decisions. i work to try to prevent that day when you are forced into that position. it seems like every single day we are doing that. and of course the house passed something just recently to monitor all food products. usually they are driven by the powerful interest. it was the laboratories that came in and closed down the little laboratories because the big labs wanted us to send all of the business to them. it was more inconvenient. you have a lab in your office because you want to make more money. there's always a monetary motivation behind some of that. it's always the excuses we want to take care of you. that's why we have to reject the notion. the best person is that person.
>> thank you dr. paul for your tireless leadership on the claws of freedom. thank you so much. i'd like to ask you about social security. there were $137 trillion of unfunded debt. how can we get washington to fess up and be honest? i'm 45 years old. i know i'm never going to get paid. i want out. i'm sure a lot of people in this room want out. how can we get washington to be honest? >> well, it's going to be difficult. but it makes one point. you want out, responsibility for yourself. it reminds me of the principal that you have a free society and your allowed to make your own
decisions, it's free in a society. that's legal. if you have a free society, or a society that you have today, will they permit us to get together and say we want out? we don't want anything to do with you. you don't have to take care of us? we'll take care of ourselves? in a free society, that should be legal. i don't think that's going to address the issue. if they lose creditability. the more they lose, the more people will look for other places for answers. and that is to ourselves to be responsible for ourselves. and that is the only way we can solve our problems.
i had a conversation with my father. and the when i proposed to him the idea of going back to a gold standard, first of all, he holds two paradigms. one we need a federal reserve and two we don't need to go back for the gold standard. the money multiplier. the moral saving, not what the federal reserve is doing. it becomes very limited under a gold standard. you wouldn't have the investment, you john the debt, you wouldn't have trillions of dollars worth of future obligations. because the attitude would change.
economic growth wouldn't seize up. we had tremendous economic growth in the latter part of the 19th century. we know the way the market system works. that is if we're working, and we earned $100 and we live on $50, we have $50 of true wealth as soon as it's measurable in something sound, not paper that loses value. half of the way he earned. that is capital. that means you can reinvest it. and then there's economic growth would be slower than in boom times, so yes, that wouldn't have happened under a system where you could only build a house when people committed it into a savings and loan and you
built a house. that was pyramiding. my house is going to be $120,000 next year. i'm going to borrow $120,000. they weren't doing that. the things that you would argue in favor. p reserve banking wouldn't happen. but that's what we want to stop. we want a steady growth. we want people who are qualified to buy houses. because it doesn't work. it might help temporarily. you can have community reinvestment acts and inflation and cause the boom. guess who loses the houses first. they lose their jobs, they lose their house. and the prices keep going up. so it doesn't serve their interest. so in the very narrow sense. the argument you make is
plausible. but that doesn't justify it. because it's only temporary. and the consequences are so serious. [applause] >> good morning. my question is on health freedom. at the end of the year, the united states is supposed to come in compliance with the code on nutritional health that's supposed to be regulated. i would bonding if you could comment on that. >> okay. he's talking about the regulation of nutritional products, vitamins. that's where the regulations will become international. everything is moving towards international controls. there's nothing wrong with free trade, free movement, and even the international currency as long as it's a commodity like gold. but this is typical of the movement. not only in monetary policy but in the area of nutritional
products. so they want the regulation to be put under the w20. and once again, i believe that's all motivated by the drug companies. they don't want competition. i'd take a very firm position. i don't like the sacrifice of any of our sovereignty. therefore, not only would i challenge w20 in regulating your access, i'd probably just get rid of the whole bunch. the united nations and ins and world bank. [cheers and applause]
purpose because as long as prices are free adjustable prices will go down and you can have a tremendous expansion of purchasing power if a loaf of bread costs of nine instead of $2 there's a lot of purchasing power. but under eight free market and the money supply is increased by market forces if the purchasing power of gold goes up there's a greater incentive and gold will come into the market not by the central bank passing out to favor a bank's and corporations and government officials. it would come into the market by the people who had to work and mine the gold so it is a more natural way. but it wouldn't be dictated by the congress or the central bank. >> good morning, congressman. i am a registered nurse and i work for one of the major
insurance companies. i worked mainly with medicare and medicaid customers. my question is you addressed one of the main reasons to control the federal reserve is, and their function, is to keep in check inflation. medicare recipients received word from the centers of medicare and medicaid services they would not receive a cost-of-living check, and i think a lot of medicare recipients work a little concerned. do you have any thoughts on that? and as a follow-up with obama as health care reform proposal it is suggested they will cut into medicare benefits. how do you see that to ultimately affect us baby boomers when that does come into fruition if it does? >> she talks about the cost of living increases are not going to be given to social security and they are starting to pinch pennies with medicare and medicaid which they neither have to.
but because we are going broke. but it's sort of ironic they have no hesitation to pass out trillions of dollars by the federal reserve to their friends and hundreds of millions of the funds we have no transparency of and we don't know where this money goes but now they are nickel and diming the recipients of the program. the transition -- my position has always been not to go after the people who become dependent on government medical care just because the politics, it doesn't work very well. but i don't know whether they do that for symbolism or think they are going to save enough money because the amount of money they are going to save his minor compared to these big dollars. why don't we talk about cutting 50% or 80% out of the military-industrial complex first. before we do that. [applause] thank you. >> good morning. my question is let's say the
federal reserve is finally ended and we are looking to implement a new system. how much faith what you have in congress not implanting a more disasters system or even worse yet a global currency, and what your thoughts be on combating that? >> he said if we get rid of -- if we all did the fed and get rid of the fed will should the concern be about the congress making it much worse for an international central bank. that is obviously it should be a concern. but it's not enough concern to say we've the federal reserve alone and let them continue to perpetuate this. the concern should drive us even more to make sure they do the right things and we should start with our traditions and the constitution and economic arguments, all the arguments on a new use for not going if a
national central bank if our dollar has become internationalized and it was a fee at dollar reserve currency it should be all the arguments to prevent the internationalists' from doing the same thing but we would still have the people in congress who would want to manage it but we just have to argue our case. that becomes an intellectual argument and educational problem and that is why i feel so good about what the campaign for liberty has been doing because they are involved very much in education and getting grassroots americans to understand why it is important to not have a federal reserve but an alternative to understand how way it works and how the market works when you don't have to go to international government and we don't have to depend on congress politicizing saying we get to print the money and pass it out. that will solve our problems either. >> one more question and we have to go. >> my question is i have a pretty good understanding of the federal reserve system and the
problems it brings to us and i have a pretty good understanding of austrian school of economics. what i am lacking is the understanding of what a sound currency would actually look like. what about that in up looking like and is their anything you can recommend that would help me understand that better? >> you're talking about -- he wants to understand what a sound currency would look like. i think you could go to the period of time in the 19th century when they had sound money and gold coins circulated and certificates should circulate and could circulate. it's the trust factor that would have to be there and you could still have electronic money and what ever. people could measure the value of the currency by something that should always be comfortable. larry rauf par who writes a lot about this and you can find at the end of the revolution book
various books by murray rothbar that will explain that as well as the end of the book on "end the fed." but the important thing he taught was that you should have a gold coin standard, and that is you don't have to carry the coins are now but if the government is guaranteeing, which they are supposed to be giving, guarantee that 80 certificate would be comfortable and that's better than the boy and standard. that means if you have $5,000 are getting worried about the government you get to vote against the government saying what i want my gold coins in my pocket, and then they would have to give you the gold coin. [applause] so there are examples. the best answers could be found in so much of the monetary writings of early rothbar. i need to close now because we are on time constraints but i want to thank you for coming and i am delighted there's so much
coming up next, book tv presents "after words," an hourlong discussion between a guest host and author of a new book. this week will street journal economics editor david wessel talks about his book "in fed we trust." he looks of the role played by federal reserve chairman ben bernanke following the 2008 economic collapse. he discusses his book with alice
rivlin, first director of the congressional budget office and current senior fellow at the brookings institution. >> host: hello. i am alice rivlin and it's my pleasure to be talking to david wessel about his book, "in fed we trust" been bernanke's war on the great panic which actually has a second subtitle as i read it. not every book has to subtitles, how the federal reserve became the fourth bank branch of government. it's a fascinating book. >> guest: thank you. >> host: i loved it and i think i should make that clear. at the outset you take the readers step by step through the crisis of the last couple of years from eyes of the chairman of the federal reserve ben
bernanke was so the book lets you see what ben and his colleagues were thinking, would the minister, why they did what they did, the internal tension and uncertainty and how they were learning along the way. you are a very good translator federal speak by the way and i've been known to speak fed speed calvo i tried not to. [laughter] the last couple of years were a wild life at the fed and it's not necessarily over yet. i was watching closely during this period but i learned a lot from this book. there's other books about the crisis, quite a few of them. mostly the particular episodes like lehman brothers or bear stearns. but this one gave this a very close inside look at the actions of the federal reserve to of particular focus of been bernanke. now, you start this book with
that climactic weekend in september of 2008 which is actually only a little bit more than a year ago. it's hard to realize that it was not long ago. the weekend when they let lehman brothers fail and then they bailed out aig. then you go to the run-up of the crisis and proceed more or less chronologically with through with a whole step by step thing until last summer. now, you're basic judgment as i get it is that many people, including ben bernanke and his predecessor, alan greenspan should have seen the potential for the meltdown that happened in the financial system and acted quote to head it off but they didn't. and once the crisis happened, ben bernanke was the right man
in the right place, so he is something of a hero of this. so let's start by talking a little bit about bin bernanke and why you think this was true. what did he learn from being a scholar of the great depression for example? >> guest: welcome you know, ben bernanke when he was a student of economics and harvard and mit became very interested in the work agree economist milton friedman and anna schwarz did that blamed the great depression of the federal reserve, that the federal reserve was too tight with credit at the wrong moment. the federal reserve was captured by the economic orthodoxy of its day enamored with the gold standard and managed to create the great depression or take a recession and turn it into the great depression. friedman and schwartz said the bank's field as a result of that. bernanke bought the argument but he added one important amendment and that was the failure of the
banks themselves made the great depression worse, and that insight, that work of history turned out to be enormously relevant when the crisis hit because after all writs remember what happened, we had a housing bauble that burst, bernanke and hank paulson, treasury secretary, pronounced it to be contained meaning the damage would be limited to housing and it wouldn't screwup the rest of the economy. and it turned out not to be contained and win big financial institutions began to implode especially after lehman i think bernanke realized he was at risk of presiding over something like the episode he studied and that gave him or courage to do dramatic things some other person would have. i think in the beginnings of his colleagues thought he was overreacting. after all anybody who studies one episode in history tends to see everything that happens like this happening again and they thought he was overdoing it.
writing in the end -- >> host: he was fighting the last war. >> guest: it turned out he was fighting something the looked like the depression which is something that we could be in 2008 going through something that we thought because all the economists told us would never happen again. >> host: he was an academic. he had never been on wall street or from a bank. was that a handicap? >> guest: i think it was in some respects and not in others. i think that they gave him academics have a way of looking at the world and he certainly had a keen sense of history. i don't think that he necessarily understood exactly how the markets would react to some of his things the way someone like alan greenspan with whom he served what, somebody who knew how markets thought. i think some people in the markets didn't trust him or have confidence or know what to do and i think also and this is happening still today that he is learning how to be a more effective inside player in
washington and in dealing with the congress and that is something some previous fed chairman paul volcker, alan greenspan, your time at the fed as vice chairman, you had done a lot of washington before. so i don't think it was help the didn't have this experience but i think that's the portfolio skills he had figuring out what to do in this instance was the most important thing we could have asked for in a fed chairman at this incredibly terrifying moment in history. >> host: what about his personality? >> guest: that's also interesting. alan greenspan in my view made the fed a little bit too much like the vatican. he was the pope and he was infallible and most people didn't know anybody else's naim and bernanke came to washington determined he said at the time to fill the greenspan's policy but to be different than greenspan. i call him in the book to be the on the greenspan to elevate the committee over the character of the chairman. i think actually that was a bit
naive but it did help him build consensus at the fed so when the time came for him to exert strong leadership to push people to do things they were not entirely comfortable with he had acquired their trust. i think in the beginning he seemed kind of awkward in public like nervous when he was speaking. his hands would shake sometimes. >> host: yes, i actually was with him recently when he gave a speech and i commented to him afterwards you seem very relaxed compared to a couple of years ago and he said life in doing this a lot. >> guest: he grew into the job. i think we are kind of lucky this crisis didn't hit in august 2006 when he had been in the job six months. he did have a year to get used to the fact. i don't think anybody can ever appreciate how much power you have put more frighteningly how much every word you utter can move markets around the world. i don't think people appreciate
when they become fed chairman how loud the megaphone is. >> host: it's partly the press that makes it flout. >> guest: we are very good amplify years, absolutely. i also think that some people don't like the decisions he made. but very few people on here even the critics in congress think that he was somehow motivated by something other than what he thought was the right thing to do. he is accused less than other people of being in the pocket of wall street particularly because imagine what they would be saying. >> host: he never was a wall street person. if he had come from goldman sachs that would have been different. so that's true. but also think that he's not a very pretentious person and when you're telling people the world is about to end and you are not known as a high-priced people tend to say you must really mean it whereas if he had been one of these people who pronounced
every third day as the most extraordinary day in american history that would have been different. >> host: let's come back to the question of why so few people saw this financial crisis coming. you and i are presumably among the culprits. we were not in a responsible public positions but i watched the economy and the markets and i've been with the fed and you've covered the economy and especially the fed for "the wall street journal" for many years and so far as i know neither of us were out there issuing donner warnings and 06 or 07. why did this crisis catch so many people by surprise? >> guest: that is a very good question and i'm not sure i have a complete answer. i mean, some of my colleagues in the press will take a question like that and point to have a dozen stories we did in the run-up to this crisis. and say see, we did see it
coming. but i tell them look, if we had done a better job, if more of us have seen it coming and if we had listened more to be cassandra and less than the people who told us everything was going to be all right we might not have been so bad. so i want to start from the beginning seeing the press didn't do as good a job as it would. and i think -- >> host: neither did the academics. >> guest: but i want to start from the beginning seeing that i think actually one of the frightening things it's the litany of people and checks on the system that failed here and it's hard to find something that functions right. the best i can do is say two things. one is we were diluted because we had such a stable economy for so long and such a resilient one. it wasn't like nothing had gone wrong in the previous years. 9/11, a couple of war in the middle east, the 2000 election, oil prices going up and down. there were plenty of things that went wrong in the economy but
each time the economy stumbled and picked up again so people began to believe the u.s. economy really was super brazillian and would recover. so we were -- >> host: i said that at the time. you probably did too. >> guest: we were lulled into a sense of false security and the other was of imagination. i don't like the metaphor that compare this to 9/11 because so many people by the 9/11 so it is not the same thing but there is one part which makes me -- i think is a parallel. there were people who said we were vulnerable to terrorism. there were people who said new york would be targeted. there had already been one terrorist bombing and people read about terrorists coming on an airplane but nobody charging knew they could hijacks many planes and flying into so many buildings of the same time. well, in this case i honestly don't think it occurred to anybody that so much of the financial house of cards was
built on the assumption house prices wouldn't fall across the country. and if they had seen that come in. if they have said what if house prices fall, not just one place all over the country and not just for a month or two with six months or 12 months maybe they would have been able to see how interconnected everything was. but as you know, bernanke and hank paulson treasury secretary in the fall of 2007 were describing the housing problem as contant. they really didn't see how much what was the bomb at bear stearns or aig or any of these other financial institutions was tied to mortgages which were tied to the price of the value of the house. >> host: it seems amazing in retrospect. but i was among those who said the subprimal market is quite small and it's not going to move the whole financial structure. >> guest: what was strong from this for the press is when 90%
of experts say everything is going to be okay, and 10% say they are wrong, the sky is falling, our tendency is to ignore the 10% or make the coverage kind of 90/10. but like we have to listen more carefully to the critics and examine their arguments more. not pipe them, the ones who say the world is going to end every three days hoping someday they will be right but the ones who have reasonable critics. we need to spend more time thinking about them and sharing their views with public getting people talking about them so we don't join the group which was the problem here. >> host: what about bernanke himself in this earlier period? he was on the board of the fed will greenspan was still the chairman and he left to go to be the chairman of the council of economic advisers had and he took over the chairmanship from greenspan in 06 when the housing boom was running out of steam. was turning down. it was before the crisis burst.
but in retrospect was the fed asleep at the switch in that period because housing prices were levelling out and then turning down and we were all worried about this subprimal crisis, but it proved to be much more than is of prime problem and the fed as i remember wasn't doing much. >> guest: i like the asleep at the switch mode for as much of a doctor who misdiagnoses a patient. i think that you can go further back during the the greenspan years the fed kept interest rates very low for a long time. in hindsight it looks like that wasn't a good idea that they had many more unintended consequences sparking an orgy of speculation and borrowing. >> host: but we were in an incomplete recovery. >> guest: there were reasons but if you think that in retrospect they should have done
it sooner than you have to put bernanke on one of the senators then because he was making a strong case this was necessary to avoid deflationary like japan and the causes of the long interest rates were savings around the world. there was and monetary policy. and then secondly, as you know, alan greenspan wasn't exactly an admirer of regulation and didn't -- >> host: why didn't know that. [laughter] >> guest: and bernanke gave his speech as governor in which he said in case of asset bubbles when the price of stocks or houses go up at an unsustainable pace the fed should not raise interest rates but it should think about using its regulatory tools to try and deal with that particular when the access lending -- >> host: but he didn't do that. >> guest: he didn't pursue it. so that is when the seeds are planted. i think they misdiagnosed the economy in 2006. i have no doubt i don't think ben bernanke would say otherwise had he been more pressure in
2006 they would have been doing more to prevent banks from lending so much on the mortgages that were never going to get paid back. >> host: even in 2007 by the end of 2007, the economy looked very weak and the fed began taking action. rather tentatively at first and then more aggressively and it did some rather unusual things to get liquidity to the banks. but even then bernanke did not have full board or open market committee behind him. do you want to talk about what he was up against? >> guest: that's true. as you know the fed chairman is very powerful but not all powerful. and bernanke didn't have anywhere near the cloud on the committee that greenspan had at the end. he had the job for 19 years.
it's hard to imagine bin bernanke doing this job 19 years nor am sure that is good for the country frankly. the federal reserve policy committee is when a fully stocked 19 people. the president's 12 of the regional banks and seven governors including the chairman and washington. and the chairman can only go so far without the kennedy behind him and there are a number of people on the kennedy who then and now think that if you do too much to help the economy you get unwelcome inflation and the fed ought to err on the other side and there are also people who are very uncomfortable with the way that bernanke has used the fed money whether it is bear stearns or aig -- >> host: to much bailing out. >> guest: so i think he had to work hard to convince them that this was one of those once every 50 your defense that required once in every fifth year medicine and some of them are still skeptical. some of them still think this
was a mistake and had for instance he not been so willing to allow bear stearns and bear stearns had gone bankrupt we might have had a smaller the crisis. >> host: let's come to bear stearns. you see in the book before bear stearns and after bear stearns and now we are in early 2008. why was it so significant? >> guest: january 2008 the fed cuts interest rates buy quite a bit. 1.5 percentage points in a matter of days. >> host: you describe that as ben bernanke weeks up. >> guest: then he breathed a sigh of relief and thinks we are finally ahead of this thing and then they are kind of surprised by the episode. i think it is significant for two respects. one is that it happened and an institution that had collateral, which had some problems but had collateral couldn't borrow short-term. >> host: let's be clear it wasn't a commercial bank with
deposits. it wasn't really an institution for which the fed felt responsibility. >> guest: the first thing is it happened. bear stearns was in trouble it was a surprise. bernanke judged it was a surprise for which the markets were not ready and hank paulson at the treasury and tim geithner at the fed agreed with him and then secondly the fed decided as you point out quite rightly to help a bank for which it had not been responsible, it was not supervising, didn't actually know a whole lot about it and it uses extraordinary power that had been given to the fed in the thirties but not used since to land to almost anybody in circumstances that in the fed for not checking with congress or the president are deemed to be unusual and i did a story in the journal that used that before and after bear stearns because it was a red letter day at the fed and if you talk to
people there in bernanke, don, the longtime vice chairman they knew they were crossing the river they had always avoided before. and frankly i thought as a reporter who covered the fed is never going to get more interesting than this. this is the to be the big event. that is when i started to write the book. i was naive to go to the earlier point not saying it was coming. it never occurred to me i was in the foothills of this crisis and we still have the himalayas ahead of us. >> host: was bear stearns to big to fail or two interconnected to fail? >> guest: it wasn't that big which is one of the troubling things. it was interconnected but we didn't know what interconnected was until we got to aig leader in the trauma. >> host: and lehman. >> guest: and aig. it was such a startling thing that the world had grown, markets were up a point there were lots of institutions and
wall street that depended on lots of short-term borrowing and i think the fear was that if when they couldn't borrow short term if their stearns failed that everybody would be in trouble and nobody would be able to borrow short term and all of the banks would seize up so that was the judgment they made that the bad things that came from bailing them out, the notion people what wall street but to reckless things because they think the fed will always be there were outweighed by the shock that would have happened if bear stearns failed. >> host: what they had to stick pretty toxic assets and landed the money to another bank, jpmorgan chase to rescue have them rescue barras terms. >> guest: basically a $30 billion to subsidize the purchase of bear stearns by jpmorgan chase and in return the
fed bought its it characterized as a loan but it sure looks like a purchase. if it goes up they get the money and it goes down they lose money in the managing this portfolio $30 billion worth of stuff nobody else wants. >> host: right. and i guess i have to confess when i was at the fed i don't know if i ever heard of this emergency provision of 13-3 whatever it is but i certainly never focused on it. >> guest: i knew about it only because of my colleague who covered the fed with me at the journal and is now at the economist when an editor of new york would say there's a rumor the fed is going to land to this company or that company he would always respond they haven't done that for a long time and it would take a vote of five governors to do it so i wouldn't have known about it either if greg hadn't had talked about it. [laughter] host koza then disaster upon
disaster. there was the rescue of fannie mae and freddie ek backend bernanke was part sitting in all of these things. and then there was lehman which was in some ways a lot like bear stearns. it was also in the investment bank. but they let it fail. why did they do that? >> guest: first important they wasted the time between march and september between bear stearns and lehman. they did it to the fannie mae freddie mac thing and that was preoccupying and people disagree and argue about whether they did that the right way but they did something. >> host: they had to do that. >> guest: the question is whether they could have -- this all a problem, had planned and executed it. they didn't get ready for another bear stearns. they didn't go to congress and say we don't have i've enough power or money or equipment to cope with a fire like this again. they say paulson and bernanke if we asked we would have been turned down, it was election year and that would have been
worse by the the cut in not asking at all. they don't do what would have happened if we do this again? is a little discussion about options but not really a lot. so i think they are not well prepared for lehman brothers. they get into trouble. paulson to some extent bernanke are very reluctant to do another bear stearns. they've both been pummeled by their colleagues for bailing out bear stearns. >> host: and by the public. >> guest: and they say there's three issues here. one, wall street shouldn't count on us to count everybody out. number two, the markets know lehman brothers is in trouble and number three the man is in such bad shape that they don't have enough collateral and secured it to offer the fed enough to keep them going so they say let's do bear stearns i can only this time we will see if we can get wall street for its own self-interest to subsidize the deal. that's when they call everybody together at the fed and the actually manage to get wall street to put money on the table and find a buyer.
barclays, a british bank. unfortunately for them the british government doesn't let it happen and they get to this point they don't have any alternative they think -- >> host: very late in the game. >> guest: history would be totally different if the british government elected to the cut gunter and barclays was able to bye lehman brothers. it might have been to test the leader with aig. i'm not saying this was the only problem. we now know the economy was slowing precipitously at the time lehman brothers was going down. but i think that they made a miscalculation and ben bernanke and paulson dropped the notion that they somehow wanted to try a failure. they don't mention that anymore. they rely exclusively on the legal argument he didn't have the power to do it but i find most people just don't believe that. they think the fed managed to stretch every day except that lie. but it's worth remembering the editorial pages on monday after that weekend they praised them
for letting lehman go. it was only in the aftermath in the hours and few days afterwards that it turned out that they had expected ripples but they didn't expect a tsunami. the markets did not anticipate. >> host: briefly what happened? >> guest: it goes into bankruptcy saturday night. big news. and then a couple of things happen. one thing is the fed and the treasury figured the money market funds, these mitchell funds that take deposits from people are not insured usually and then they use it to buy short-term iou from industrial companies. they felt there's been so much publicity none of the money market funds will still have money. well a big one date and it had to admit that it couldn't pay back the people that put the money 100 cents on the dollar so that triggered 19th century styled run on the money market funds. but around the world what happened is people said if the
u.s. government will let lehman brothers fail then who knows who might go last and banks refused to lend to each other because they were not sure who else has problems we don't see. so the financial system never found a great metaphor that seizes up, the wheels start turning and it freezes and that is when bernanke i think becomes a hero -- >> host: we have to leave it there for a moment in a crisis to take a short break and come back to continue this story and we will come back to that point and what happened next.
>> host: back again, david wessel. we are talking about your book "in fed we trust" been bernanke's war on the great panic. and we were in mid panic when we took a break. it was a bad moment when a whether by design or by accident in bernanke and tim geithner stultz benet the new york fed and hank paulson at the treasury let lehman brothers fail and the consequences were dire.
and almost immediately they were faced with another giant, aig. now, aig isn't a bank, not even an investment bank. it's an insurance company. and what was the fed doing bodying an insurance company? i used to have a fantasy back when i was at the fed if somebody in the staff had walked into my office and said i'd think we ought to buy a large feeling insurance company what i have said. [laughter] >> guest: i think there was quite a bit of that at the fed at the time. so bear stearns and lehman brothers are kind of second cousins of the bank and the fed understood the business we are in. they really did not see aig gunning. aig is a terrible illustration of how firms can exploit the loopholes in the financial regulation. aig which has a fascinating history of its own at this point
is a series of strong insurance companies on top of which has been built a casino. at the casino is where people are betting on the default of other companies, and it turns out that they've taken all lot of bets that the house doesn't have enough money to pay off the people have placed bets. post because they were counting on the good credit rating of the insurance company and when they lost that they were in trouble. >> guest: so they couldn't borrow money to pay off and they haven't set aside enough money and their counterparties, the people who placed their bets for every big name you could think of, goldman sachs, a way to bank and others. from what i know it was very -- it was only on the friday before that weekend that they realized aig might actually be a problem and i described in the book how tim geithner is a quick course of insurance law when an insurance company goes under and they negotiate with the commissioner can they take money
from the insurance companies and give it to the parent to pay off some of the debtors and the higher a couple of big investment banks, jpmorgan and goldman sachs to see if they can raise money for aig but it quickly becomes clear in the wake of lehman this is not going to work. this outfit is about to go under and the other banks are saying we want our money from these guys and has all the earmarks. so they swallow very hard. bin bernanke says this is the one he was the most outraged about and they spend $85 billion now we are well over three times their stories in just a matter of months to bailout aig and basically take ownership. this time there's no hope of getting anybody else to do that. the taxpayers get 80% interest in effectively and fire the ceo and their plan as maybe we can sell off pieces and pay ourselves back up the disaster is so great that hasn't happened.
>> host: so they still own it. >> guest: they still own it and it's hard to manage. the government isn't equipped to manage this thing while and as you know it is the gift that keeps on giving you stunning pain -- stomach pain. we know at that time there was some consideration saying to goldman sachs and deutsche bank and everyone else like that we can't pay 100 cents on the dollar. everyone has to take a bit of a hit. they decide they are not able to do that unless the banks acquiesce surprisingly the banks decide they would like 100 cents on the dollar and geithner, bernanke and paulson decide to be 100 cents on the dollar and that a year later is causing adjectival in the public wanting to know why did the bond holders of mutual get hurt and preferred shareholders at fannie mae and freddie mac and holders have to give up stuff but the aig parties. >> host: montanan to all the people who lost their jobs.
>> guest: somehow it was too important for goldman sachs to get less than 100 cents on the dollar so there's a lot of resentment. >> host: and added to that it turned out aig had promised bonuses to the very people who were running the operation you describe as a casino and making a lot of money on this casino and a promised these bonuses and the authorities once they owned the thing they decided that it was a contract and had to pay them but that further outraged a lot of people including me. >> guest: look, there's a lot of things to get all reach about here. the only thing i would say in the defense of the people making the decisions that week is it was kind of a busy week and i have no doubt if they had had another ten days to think about what is the best way to do the aig thing they might have found a way to avoid some of the things that got us so angry leader. but this is a little bit like a
military campaign. will work to where you've got battle's going and every continent, and so more than most people i guess i cut them some slack for having made the decisions that a year later we can see we are not optimal. but they definitely had some people got rich off of this and it was some of the people who got rich who in my opinion helped cause the crisis. >> host: yes and that is going to be a continuing argument for a very long time and cause a lot of people on main street as they see people who've lost their jobs feeling we got a raw deal. >> guest: i think a lot of americans think that wall street got bailed out and they didn't and they have a substantial number of facts on their side. the stock market is up, the banks have enough money to pay back the government. bonuses are back on wall street and we have still 10% unemployment and no prospect of
returning to anything that we would consider normal for years to come. >> host: and the argument to be made in defense of those who were taking these aggressive actions is if we hadn't done it would have been worse. >> guest: and i really admire barney frank the chairman of the house financial service committee for his ability to come up with the right one liner at the right time. nobody else in washington has that ability and matters of financial. he had a bunch of economists before him and he said he envied them because they had available to them the counterfactual. if they could see if this hadn't happened then that would have happened and so forth. and he said politicians don't have this luxury. nobody ever got elected with a slogan it could have been worse. it would have been worse without me. and in a sense, ben bernanke's problem is if you hung a banner from the federal reserve today that is what it would say, it could have been worse. >> host: it could have been much worse. >> guest: and that isn't
comforting. >> host: well, come to that now. because of to this point they were just fighting fires, fending off the army is in different parts of the battlefield when institutions were going down. not surprisingly they decided we'd better have a coordinated strategy and they came up with this thing, being bernanke and paulson and also geithner called the t.a.r.p., the toxic gas six -- troubled assets. troubled asset recovery program. and they went to congress and got a lot of money to make a sort of general solution to the problems and try to prevent any more institutions from going
down. they had to scare the congress to get the money. talk a little bit about that. >> guest: after aig bernanke says he doesn't think the fed can keep doing this. the fire is getting too big to put out and paulson comes to is a realization and they decide they have to go to congress and get money. this is something he's been trying to avoid. he's comfortable having the fed doing this. totally rational thing. so he and bernanke, no sign of the president, go to capitol hill and meet with the leaders and bernanke does scare the hell out of him. bernanke invokes the great depression and says it is up to them to stop it and he says he's known for some time it is likely they would meet tax payer money and every other banking crisis eventually taxpayers come and how profound. i think he makes the judgment the only way to get congress to act is to tell them that the world will end if they don't act and that is a high risk thing
because as you know conagra's initially says no the house rejects the bill and it's kind of like he told us the world would end if we don't do this and then they don't do it. so i think there was a great deal of damage done. and even worse, they tell congress they are going to use the money for one thing and use it for something else and i think the her to their own credibility with the public and market and hurt us in the months to follow. >> host: they went up if i remember with an incomplete plan that said we need to buy these troubled assets. but they couldn't figure out how they were going to do that and they didn't explain it to the congress and in the and they didn't do that. >> guest: i think ben bernanke's view is this will not work and we should be river to use the taxpayer money to buy shares in the banks and his concern was as long as the law is written broadly enough so we can do that i am not going to make a fuss. but paulson and what i think was a real communications mistake
not only says our plan is to use this to buy assets from the banks lousy loans from the banks but he decided the haiti putting money in the bank's, buying shares in the banks, and so he seems to close the door on something that within days they end up doing and that's never good in a crisis. pascrell and paulson who was not very experienced also went up with what i remember as a one or two page description of what they were going to do which the congress found rather insulting. this code was kind of funny i think that the -- well, not funny. the treasury view, their position as congress told us don't try to write the law. tell us what you need and let us write it, much the way president obama has done on the health care. we're right and they made the mistake is it that is where you are going to do you should write a letter and say i need your help on these objectives. instead they write something that looks like the law and it looks like a grant of almost
unlimited authority to the treasury and the defense says no court shall ever be able to oversee this. so there was a tactical mistake and it blew up in their face and i think it does reflect a bit of paulson's inexperience in dealing with congress. i think that he is used to doing deals, getting things done. >> host: and this was his opening offer. >> guest: it didn't play well and i do think it hurt them because you still here today they were going to buy the tax advances and they didn't do it. why didn't they do that and i can imagine other treasury secretaries who might have handled that with somewhat more agility and bought themselves less trouble. >> host: what they did do is buy shares in the bank's. and the banks didn't all want to go along with this actually. they had to persuade them to take it. why was that? >> guest: one of the things interesting here that goes to the lehman or aig thing is it
turns out it doesn't matter exactly what your legal powers are. if it is a big enough crisis and the chairman of the federal reserve and treasury secretary stare at you across the table and say you need to do this for the good of the country even the mighty bankers on wall street will do this and in this case they did. i think they knew a couple of things. one is the new the system was in trouble. they knew some of their colleagues were very weak and needed government money and they even believe it or acquiesced on the view of the government only put money in the weak banks that will identify them and being in trouble. so in order to get the banks to dewitt paulson gave a pretty generous deal. the money wasn't expensive by the market terms and there were not a lot of strings some of which came back to haunt the treasury leader. but i think we know more now than we did at the time. most of the big banks have now paid back the money and so, the
combination of putting capital into the bank's and then the obama administration stress test which we made fun of this business of sorting for putting the banks through an exercise, what if exercised, what if the economy were bad, how much, how many losses would you have and how much capital do you need against those losses, the exercise we ridicule and we thought was a stunt of some kind that turn out to work pretty well and it allowed the banks to begin to raise capital privately so they could pay back the government. so i think that there are a lot of things they did that you can say in retrospect might have been mistakes and there are other things they did in putting the initial terms of putting capital to the banks which you can say if they had done it differently it might have been better. but when you look at package putting capital into the banks, the stress test and getting the banks to raise capital privately it looks about as good as you can hope in a crisis like this. it looks like it worked as intended despite skepticism.
>> host: meanwhile there is monetary policy which is what the fed normally does. >> guest: the good old days. [laughter] >> host: good old days. and an economy that was collapsing, on employment and bernanke came back to his colleagues at the open market committee that does these things and says we've got to keep going down to zero and they did. and they are still there. why did they do that? >> guest: well, i think that the way the fed usually deals with the small economies cut interest rates. it's easier for people to borrow and the lesson they thought they learned from the past from japan and from the 30's is when things are bad the fed has to do a lot, and it's the on the accelerator. as you know they didn't stop there. they kept coming and found other ways to pour credit into the economy. buying securities in the markets to put money out there.
so this is a grand experiment and frankly we don't yet know how this is going to turn out. some people think this hasn't worked so well that given the amount of credit the fed put in the economy you would expect the economy to be doing better. other people think they put so much in that we are inevitably going to get an outbreak of inflation at the end of this chapter. i don't know what the answer is. i do know that they did some things without -- they thought about them but realized they were taking big risks both economic and political and they did then because they felt the alternative was worse, risking another great depression. >> host: a real catastrophe. now your story in this in the summer of 09 last summer when it is still not clear that the great recession is over all the it looks a little bit better now than it did at the time you took the book off and said i can't keep writing.
>> guest: i barely made it to the summer. it cannot in august. i think i made it in march. >> host: something like that. but by that time economists were saying we are hoping to see positive growth by the end of calendar year and nine. a lot of people were pretty skeptical if that was possible. but it has now happened. do you regard this as evidence that something is working here? >> guest: i think so. we had a big dose of fiscal stimulus. some of which hasn't been spent but the $787 billion stimulus. a good chunk of it has come out and that has helped some. the monetary policy has helped and i think a number of the other lending things the fed has done has helped on the margins and there is kind of license a deep sigh of relief in the economy that okey it's not going to be the catastrophe so things are going the right direction
but they are doing the right direction so slowly that it still feels pretty painful. >> host: there's still an awful lot of people out of work all the last month the unemployment rates didn't rise and that may be as good news. >> guest: we lost -- it is amazing we can basically take out the champagne because we only lost 11,000 jobs. >> host: we haven't gained any yet. >> guest: it is going to take months to thousand or 3,000 gain to get back where we were before. what i usually see is the economy is out of intensive care. it's not healthy yet but it's out of intensive care and that is better than being in the cemetery. >> host: what about the banking system? there's a lot of concern about some of the big banks but more particularly about a lot of the middle sized and smaller banks all around the country especially the ones that hold commercial real-estate because
people are not building buildings in the mall anymore. >> guest: it is a problem this is a crisis. the big banks seem to be getting their act together, some more than others but as i say even citibank is raising capital privately and the concern is moved to smaller banks and midsize banks that have loans in commercial real estate which is collapsed and that means they are taking big losses and we've lost 130 banks so far. most of them but not all of them small and we are probably going to lose more but. these are institutions that lend to businesses who don't have a lot of options for getting money. very big companies if the banks won't lend them money they can sell securities on the capitol markets. but small businesses and medium-sized businesses often can't and i think where it is particularly in to visit you've been a longtime customer and a bank goes under or is sold to somebody else even if you are a
good credit the new bank cannot understand what you do and may be reluctant to sell money. >> host: and infield bank is on the edge they are pulling back your credit even though you've done nothing wrong. >> guest: that is a problem and you know better than mine because i heard you talk about it the recession arrived late, state and local the front but it's there with full force and there is absolutely no reason to believe things are going to get better for state and local governments which are not only important part of our government but important part of our economy. one in every 11 american workers works for a local government and the recession isn't over. >> host: we've had a catastrophe in the economy which isn't over yet and its worldwide. we are not even talking about people who've lost their jobs in other countries. it started here in our financial system. have we learned the lessons that will prevent this from happening again?
>> guest: i don't think so. there's some things we've learned and it's harder to get a subprime mortgages to can't prove to have income today at least for awhile. >> host: or anyone. [laughter] >> guest: that's the other part. but i think that we are now not a good stage. there's a lot of anchors of there's a lot of rhetoric about beating up on wall street and on the fed or whoever else you think is a kind of irresponsible which is understandable and inevitable in democracy, and i'm glad we have the right to do it there is little consensus with repairs need to be made to the financial system in order to prevent repeat of this so the treasury and fed today do not have any war authority to deal with collapsing financial institution like lehman brothers or aig than they did 15 months ago. they have a choice. bankruptcy like lehman or bailout like aig. and the one thing they've been asking for it seems to me to be
obviously needed is a way to close these institutions so that if we do have another crisis they can do it in a more orderly manner that doesn't put taxpayers so much on the hook. all the other things are it's hard to figure out and there's one set of people that says we shouldn't rush to judgment they will over regulate or we will have unintended consequences if we move too fast. the other set says congress on the act in a crisis. we know there's things wrong with our financial give tory regime. if we don't act now my god the crisis is already fading from our memory. they will never act and so far nothing much has happened. the bill passed the house but it's not going to the senate. ..
for banks about how they behave. and what i see they are is a consensus on the big picture stuff which is of course, but i'm wondering whether or po2 come consensus on the details of what the rules are because banks in germany, france, the uk, u.s., japan, are all somewhat different and their governments tend to want to take the playing field in that direction. it took 12 years to get the last one. so they're certainly a lot of smoke here and there's a lot of talk about this. that's better than not, but i don't think, maybe you disagree,
much urgency to get this fixed. >> host: i guess that's right but maybe i'm a little more optimistic read one thing that seems to be happening in all the major countries is controls on executive conversation. at first our bankers were saying well, they control us. we'll just go over and see. but now others are also putting controls. >> guest: first of all the interesting question about to what extent compensation costs and i think if you did obviously there's some new rule that out to be written so bankers can't take them and bring them into the ditch. there's another question about whether we just pay people and finance too much. postcode yes, i think a lot of us would say yes but it's a little hard to figure out what to do about it.
how do you fix that? >> guest: the thing i wonder out a little bit is why is it easier to beat up on the condition and take aggression or because it covers the fact that they can't come home with the other stuff. and so, if all we did was fix compensation, limit their pay or set up new rules, i don't think i would be very good effort. and so in the uk for instance, it's almost like it would rather talk about bonuses than talk about anything else. and so they can argue about bonuses. it plays well, but i would hope that it's in service of a broader fix. >> host: i went to. >> guest: a lot of things were clearly broken and we can't fix everything that we can fix the things we know of. >> host: i think you make a case well that the system was broken. there were a lot of different dimensions. this is not a book that carries the simple cause.
there were a lot of problems. let me ask you about the choice of the word panic, which is in your title. you call it the great panic. now i associate the word panic with the panic of night team 07 or 81037. it's not a word we've used recently. >> guest: i picked it for exactly that reason. this is exactly night the panic of 1907. it's more like that than what we've seen since. a panic is when there is a loss of confidence in the whole financial system and everybody starts to take their money and because they're afraid they can't trust anybody. so that basically my diagnosis of what it is and was a heartening back to those earlier periods of great instability and
chaos that led congress to create the fed in 1913. the fed was created to do the role that they are doing. >> host: to do what they did in this panic. >> guest: exactly. postell and that's what they did for a long time. just >> guest: >> host: well, i think were out of time. >> guest: thank you, it's been a pleasure.
>> history professor linda gordon recalls life of depression area photographer dorothea lange. the leon leiby center for biography of the a biography of the city university of new york graduate center hosts the hour-long event. >> this book was my first biography and i think it will be my last. biographies are too hard to write. i'm actually a social political historian masquerading a biographer and i've learn that my book along to a category called at the life and times category is back her feet. and in fact, when i began i felt the time would dominate. but the book focused on the political and social culture of the depression, of world war ii, the cold war.
and that the life would be mere illustration. that was not to be. all that history is in the book, but dorothea lange is the star of the story, with her forceful personality she soon moved into the drivers seat and in a certain sense took charge, although i also spent a lot of time arguing with her back and forth for quite a number of years. of course, she didn't write the book. a biography is always got to be one life into another life, in this case mine. although i've written a great deal about gender, this biography forced me to examine more closely how gender works in the life of an individual. and this lecture, for which i'm really grateful for a number of recent, forced me to look back and try to thought what i was doing. and let me warn you or tell you
that's what i'm about to say is not in the book at all. this is kind of a meditation after the fact of the book. now, thinking about the system of gender was particularly complex because he was writing about an artist. and because an artist's work lives after her. and it was produced in one context, but it takes on new meaning in whatever context people then feel later. no matter how stringently we try to exclude contemporary meanings, they intrude. so i'm thinking about this, as was writing about, and you try and retain a double awareness about the past, about that. what dorothea lange lifton and the depression. i make these observations against lange's well. she was no feminist and did not want to have her work discussed in gender categories. she wanted to be a great
photographer. she did not want to be a great woman photographer. that historians should not necessarily try to please their subjects. so, i'm doing it anyways. let me start. there are several levels to what i'm going to talk about. i'm going to talk about the social and political and i'm going to talk about what's in the photographs as we see them today. but i'm going to start with the first one. she was a middle-class child of german immigrants. very middle-class life. when she was seven she got polio. when she was told her parents separated. the physical experience of the polio was certainly painful and terrifying and she emerged with a permanent and small disability. but she was deeply, deeply upset by her father's departure from the household.
but the biggest blow i think we're how these were simulated and understood. and in this regard her mother's influence was key. her mother was embarrassed by dorothy's disfigured foot and lower leg and by her limp and urged her always to try to disguise them as much as possible. in this way, even her polio experience was gendered because her mother had such anxiety about why her body would look like. when skirts got shorter, dorothea lange began to wear slacks, which was quite unusual and not fashionable at the time. she never again worry skirt i was less than four links. as an adult photographer, laying made many, many, many images of feet and legs. and with her typical magic could make photographs of just feet enormously expressive.
then, her mother also presented a marital separation to her as a desertion and abandonment by their father, although i learned that in fact it was actually more mutual and more ambiguous. i won't go into that story. that's in the book, but the point is that dorothy felt abandoned because this is how her mother felt. she developed such a rage against her father that when she arrived in camp and the scout in 1918 where she was to spend the rest of her life, she adopted her mother's maiden name, which was lange. and she never mentioned her father or his name to anyone, including her two husbands, her children, and her best friends. so lange's experience of her childhood developed her gender identity. she was born with an assertive temperament. another girl might abuse similar
experiences quite differently. from age 12, she used the practice wandering along the streets of new york on the lower east side where she attended middle school and the upper west side where she attended high school and the entire island of manhattan. she may have been alone, but she was extraordinarily strong. this walker in the city was also a didactic, self-taught. she was a mediocre student in school. she did not attend a university, but she discovered all the modest art that was in new york. she taught herself the photography i taking jobs. her first job was at a person and one of those chain of portrait studios where she made cold calls to people trying to sell them portraits. she worked as a receptionist at various photography studios and basically gained on her round these photographic skills.
one of the people she worked for was a very, very noted photographer by the name of arnold genthe and he thought she was very talented and gave her a camera. excuse me, i should have shown that earlier. that is stored the enter younger brother. he was given to me by descendents, i figured she might he anywhere between eight and ten in that picture. she moved to san francisco in 1918 and she opened her own photography studio in an upscale location. within two years she had become the portrait photographer or san francisco's wealthy rp genes. this high velocity success derives from the conjunction of her charismatic personality and a kind of moderate visual sophistication. at first she used, as you see here, at the top picture the
romantic beastie tutorial style that dominated in the 1920's. but she soon began to modernize these pictorial conventions and spelling for those of you who know anything about san francisco history demand at the bottom is one of the most powerful man of his time in san francisco. she attracted delete car amps with a slightly bohemian elegans inner persona enters studios on beyond and in her photographs. she never used the painted backgrounds that were common at the time. she never used props. she discouraged formal poses. she did not even ask her subjects to smile. she used dramatic shadows and unusual angles and created a motion and sometimes mystery by hiring -- hiding and sorry part of her subject. in short, her success derived
from her sensitivity to the class taste of the client she wanted. her work represented in many ways the acme of individualism in portraiture. she used when she learned to suggest or as she would say to reveal individuality in a deep inner life. she endowed her subjects with interiority to use a new word. her clients believed that she had a thing to capture their essences. their education and culture and sensitivity just so much from the images that she made. as she began to do in new york and san francisco she integrated herself into a bohemian arts crowd a major photographer's studio into a meeting place of artists and the more liberal wing of the city's wealthy art patrons. by 1920, a year and not after she arrived there she married
the city's most desirable bachelor artist, peter maynard dixon. and maynard dixon was throughout dorothea lange's life much more famous than he was. he is a western painter has many, many fans. this picture is sell for up to a million dollars. dixon dressed in black with cowboy boots and hat kind of dashing and magnetic figure at the center of the bohemian artist crowd. this small, limping businesswoman had hoped the sexiest man in sentences goes bohemia. during this marriage, lange subordinated herself to maynard. but her props not so unusual among women married to artist. she was not only the exclusive housekeeper and parent. she not only put up with maynard's womanizing and
month-long absence on painting trips, but she was also the main breadwinner for the family. in one sense, the depression forced laying out of the studio and onto the streets in the sense that her clients housetrained and she had extra time on her hands. but she was also chafing in the confines of her studio and her marriage and seems to fuse in her mind. she felt compelled to take her camera into the streets. she was accustomed only to work for higher and at first she felt worried about invading the privacy of straight people or even invoking their hostility. she was gratified when she found that often they did not notice her. later she would understand that she had method for making people not notice her. she said about her early work in the street, i can only say i knew i was looking at something. sometimes you have an inner sense that you are not taking
anything away from anyone, their privacy, their dignity, or their wholeness. i'm such self reassurance, herbal photographic future rested. documentary photography is then connected her to an extraordinary man who became her second husband and partner or the rest of her life, paul taylor, a progressive agricultural economist who taught at university of bert are you educated her about class and race exploitation and brought her into the extraordinary photographic project for new deals farm security administration. there is nothing like a sense to our great loss. for six years, a small and amazingly hard-working group of about a dozen photographers made several hundred dollars and photographs of american rural life. the project was initiated to create granda for's new deal, but expanded to create a
democratic nature of the rural united states, one that emphasized those who did the work of farming, rather than the owners of the great plantations of mississippi and california. there's several paradoxes in lange's life including the fact that this quintessential city girl ended up working for the department of agriculture. never even having envisioned a farm when she was hired. but my favorite of the paradoxes is the way it turns around a typical story of women's emancipation and the usual story you start with a woman who was a dependent on her has spanned and to gradually works her way into perhaps getting a profession, getting his job, have an income of around and feeling independent. lange reversed it. she got the upper committee to
become a great photographer when she married a second husband who would support her on his academic salary from the university of california. and released her from the responsibility of earning for her whole family. and it was a large family because when we put the two families together, she had two children of her own and four stepchildren. okay, now i said i was good to talk first about the personal and then about the social historic. but of course historians among us know that it's impact impossible to separate the personal from the social historical. but some episodes are more constrained by the social than others. so i want to illustrate by sketching out one account of lange's, one aspect of her life and that his mother. when she married maynard dixon she inherited a 10-year-old stepdaughter, constants. the girl was furious at dorothy
from the start. she had lost first or mentally ill alcoholic mother and then had been for a time her father's only about. maynard instead of providing reassurance to constants when he decided to marry again immediately turned over to dorothy a full charge and rather quickly after the marriage resumed his old tattered but take them on, long trips into the desert. dorothy was flying high with their studio practice and did not want to be stuck at home while maynard and his friends to socialize in italian restaurant so she had her own resentments of this dependent to a suddenly thrust upon her. or whatever the reasons were, she was unable to mother this unhappy girl and they had a terribly, terribly angry and violent relationship.
her work was then harder still when her and maynard's two sons were born. sorry, that comes later you can look at it now. as with constacie she turned over the two boys entirely to dorothea and had no responsibility for and. when the marriage was beginning to erode and the boys were seven and four years old dorothy and maynard made the first of many decisions to place their children in foster care. her divorce, remarriage, and her job confirms the practice and between 1932 and 1940 all these children, all six of them, her two and the four stepchildren weren't paid foster care placements were part of those years from a couple of weeks to three or four months at a time. dan dixon, the oldest son, recalled his feelings to me when
i interviewed him about how we felt when his mother and father would come to visit and i quote dan dixon. i remember standing outside the place where we lived waiting and waiting for that black model age to appear and when the day was over i would remember watching it go, weeping and weeping as the red taillights receded. in writing about lange, i had to wreck in this pain. i have discussed it with many, many friends and not a single one of them was a parent can imagine doing such a thing. but as a historian and obliged to put her son's resentment and recollect it sadness into the context of the 1930's and it standards about mother, child bonding. employed mothers spent frequently sought childcare problems by turning to relatives, neighbors, foster parents, and institutions in that order. poor mothers often place their
children in orphanages, temporarily or in foster homes for those who could afford to pay. the rich send their children of course to boarding school and often did this started out very, very young ages. or they have full-time live-in nannies. although day nurseries were becoming more common, they were rare in the 1930's and furthermore full-time daycare at that time carried the stigma of a charity and was characterized by overcrowding, by rigid discipline and poor hygiene. are there more, the child development experts of the time held that foster care was the superior choice and a daycare center they resent us in an orphanage children will be cared for by strangers who were responsible for groups of children. in foster care by contrast holdren have a mother and a family, possibly even a father. ironically the child development wisdom of the time also was somewhat contradict to return s.
that separation and shifting caretakers were not inevitably germanic for children so long as their fundamental physical needs were met. although many experts today considered children's emotional and developmental need for funding exclusively with one or two parents to be a timeless and irreducible fact of human nature that is simply not what child hood experts thought in the 1930's. lange felt enormous anguish and guilt about this. she developed symptoms of severe ulcers that would cause her so much pain in the later years and ultimately lead to her death. but let us look at this a little more closely. her children were also maynard. and he did not share any of these feelings of guilt. after the divorce he visited them very rarely and advanced not one which have flexibility for them not even financial responsibility. they were entirely supported by
lang and her new husband. just as striking, paul taylor had three children and he also handed them over to dorothea and thought it was like to but in foster care. yet none of these children and to talk to all of those who were alive. none of them blame their fathers at all. this is however entirely understandable. in 1935, few people thought fathers had caretaking responsibilities for children. but i want to say that lange's and guilt from placing at the children derives not just from feeling like a bad mother, but also from something even more unspeakable to her and that was ambition. that's most on womanly of drives. when she was offered the job at farm security should not hesitate the moment although she knew it would mean not seen her children for months at a time.
she knew she was a bad mother, but her ambition in some ways hit itself, not only from others but from her to a variety of identities and consciousness through which she disguised it. until well after world war ii, she never admitted to a desire to be an artist. she considered herself a tradesman to use her word. studio photography often functioned as a camouflage for ambition because it allowed women to work at home and it allows them to trivialize the significance of their work. lange's chief defense against recognizing her own admission to the form of experiencing her drive as if it came from somewhere else from a force beyond her control. she often spoke of herself in the passive. she called herself a channel, a cipher, a person that can be used for lots of things. either all quotes from dorothea.
her denial extended to the way she discussed placing out her children as if she had no responsibility for making it happen and i quote from her, if the boys hadn't been taken from me by circumstances, she wrote. and yet, while she faced the daunting gender norms of her time should not only charged ahead that made herself a second marriage with a husband from having. if you'll excuse my technical innards. all taylor, the professor, exhibited only pride and encouragement or her ambition, never for a moment how she should stay home and mind the children. he absolutely does she was a genius and he adored her for it. another unique spin on the conventional story of women's emancipation, find the right husband. now a few words about the politics of gender and the federal government in general and in lange's job and the
struggles of the period. these are images of two new deal murals. and i chose them because they are typical. i think they reflect visually what i'm about to say about policy, which is that virtually every new deal program rested on conservative assumptions about gender. even the emergency relief programs, either excluded women or excluded them from public jobs and confined them to puny relief payments. or if they did give them jobs, they limited them to make work jobs such as sewing matcher says in federal sweatshops. the big reform programs, social security, the wagner relation jack thomas excluded from coverage almost all men of color and women of all races.
lange's employer was one of the most discriminatory federal agencies. it was at the time the biggest operation of the federal government, bigger even than the defense department, then the cold war department. its definition of its constituency rested upon gender, racial, and class assumptions and considered foreign women not as farmers, but as farmers wise. it ignored farmworkers and serve the interest of large growers within the department of agriculture this farm security agency that lange works were constituted an enclave of radicals who sought to help the needs of ruined small family farmers of tenant farmers, sharecroppers and migrant farmworkers, the group said they must devastated by the depression. and not surprisingly, the fsa, from security was under constant attack not only from congress but also from the more powerful man in the department of
agriculture. as the only female photographer until marion post wolcott was hired by the project and its very last years, lange's salary was lower than that of far less experienced men on the job she was caught in a double bind. she was on the one hand treated discriminatorily as a woman but on the other hand she was expected to work like a man. that is a man who had a wife. for example, all the other fsa photographers who were on the road for months at a time took their wives and occasionally their girlfriends along as unpaid assistants on the road. lange who needed help the most i might point out higher to the son of a friend who was a great photographer himself and paid him out of her own pocket and out of her own $3 a day per diem allotment. she'd bought meals for him too.
drew paul taylor, lange had been influenced by the labor movements notably the san francisco strike of 1934, but also the great agricultural strikes out california's central and imperial valleys. i think a lot of people may remember from our own lifetimes the struggle that ended with the creation of the united farm workers. we forget or not realize that there were many failed struggles in the 1920's and 30's of migrant farmworkers to unions. and several cases, the big growers arranged to get hundreds of their men deputized by county sheriffs, so as to be able to beat up strikers come agitators from even journalists in federal mediators. rovers built private stockades in which they locked up their opponents without charges.
link tried several times to photograph these strikes and always failed. her disability meant that she could not move quickly, especially when burdened with heavy cameras and they show these because i want to remind you why cameras looked like. she never used 35-millimeter cameras. she used these very, very large and heavy view cameras and whenever possible also used a tripod. so she had a lot to lug around. photojournalist robert i. said immensely if your pictures aren't good enough, you're not close enough. lying could not get close enough. and none of her pictures of these strikes another similar conflicts turned out well. now i think this failure had a lot to do with gender, as well as with disability. the violence terrified lange and she withdrew. the labor movements of the 1930's often assumed very macho tax dates, discourses, and even
strategies. i'm interested in organizing women, the cia organizing committees insulated themselves from the alternative organizing strategies that women sometimes brought to the floor. while the class balance of the 1930's was almost exclusively employer generated, and it nevertheless had the effect of excluding women. however timid she might have been physically, in mind and in spirits, lange was extraordinarily grave. she defied not only gender but racial conventions as evidence in her photography of people of color, influenced from her san francisco days by your close friend consuelo cannot do an extraordinary photographer that some of you may be familiar with. and of course by paul taylor who was in the 1920's virtually the only anglo scholar studying exit
can americans. her consciousness grew from traveling through the valley and learning about how migrant farm workers were treated. her antiracist development then grew further through her work in the southern states through north carolina to mississippi, photographing sharecroppers. for the french security she made more photographs of people of color, approximately one third of her total output than any other photographer until gordon parks joined the staff at the very, very and. this fact about her extensive photography is not well known because she did not own or control any of this photography and was all the property of the federal government. she was supposed to send a raw
underdeveloped film to washington. they in turn distributed free of charge the media and they decided what to distribute. and they distributed what they considered acceptable to the mainstream. a few years later, when she tried once again to do something that she controlled, she defied not only the u.s. government and unanimous public opinion but also deprive the organized left to which many of her friends belonged in her risky photographic opposition to the internment of japanese americans which i don't have time to go into now, that will just let you know if you're interested that a few years back also with norton i put out a photography book about a collection of her photographs of the japanese internment. it is called him pounded and that is a pun because it is
about them pounding people but about the fact that her photographs were him pounded by the u.s. army which used to distribute them. now i want to turn to the photography at 12. at the outset, from security photographers@midwest to show and its conditions. to make pictures of falling apart barns, soil erosion, of the dust bowl of new and old farming methods. lange would influence the projects whole legacy through her views of portraiture which is what she did and in a certain sense oliver photography was portrait photography. in part, she simply took the same camera, the same eye that she had turned on the rich and directed it towards the poor. producing portraits that individualize her subjects and therefore made them interesting and memorable to the viewer, even as she illustrated their
depression. instead of the blank backgrounds as she used in the studio, she now produced images of individuals in their social content. and this i think with much of the secrets of the popularity of the farm security images that they showed not massive, but individuals. not sociological generations, by particular stories. in doing this, lange was feminizing the field. just to show you a couple of examples of earlier documentary photography, the work of jp greece and lewis stein tended to show either context or face is, but both. baritone like that of walker evans was cool and ignorant in comparison to the emotional key and seductiveness of lang langlange's. people are usually photographed
frontally, immobile, sometimes dignified but never flirtatious, conversationally, or expressive weird evidence coolness was an entirely gendered manner. he had a favorite phrase. he referred to photographing babies as a synonym for selling out artistic integrity. lange wanted personality, activity, and emotion in her photographs. moreover, there are no lange photographs of unlovely people. no doubt she may have passed over some subjects, but more importantly she made her subjects lovely and if we have time in the questions i contact you about how she did that. the understanding of portraiture she took from the studio, which in her words is that a portrait is a collaboration between
photographer and a subject. and that therefore as a result objects have a perfect right to expect flattering images of themselves. she applied that same principle to the people she photographed the forefront security and in her later documentary work. this departure from documentary so-called objectivity a very much contested subject in photography could also be read as gendered. it arrived again from this stereotypically female approach to portrait photography as a personable service to the client. not so distant that the time, it was considered quite closely related to interior decoration or fashion and makeup consultation and photography. by placing the documentary at the service of reform was a male as wealthy female proverb dress and one that perfectly paralleled her husband's social
science. taylor's strong sense of responsibility, not just to document, but also to correct the injustices and suffering for scholarship and covered have been characteristic of the whole field of social science and the progressive era and was now being reinvigorated during the depression. now, i've said that there are ways in which lange's that was quintessentially feminine, but i think we have to be on our guard against it analyses of her work as feminine. critics have deployed some of the worst gender clichés. reading off a strong emotional content of her work as intuitive in a way such to be characteristic of women. some quotes here it dorothea lange lived instinctively photographed. an artist like dorothea lange, a
making of a great perfect anonymous language is great about what she can do the build beside making herself available for that trick of grace. another described her as a piece of white photosensitive paper or like in an exposed which light and shadow marked impressions. my point here is not to deny the gendered aspects of her work, but to challenge categorizing it as instinctive, far from a passive receptor she was an assertive visual intellectual, disciplined and self-conscious, working systematically to develop a photography that could be maximally communicative and. her years in the studio custom her to the finest controls, controls of lighting, positioning subjects, of camera angles, speed, aperture and
timing. i just wanted to give you one little example. the first one i show is the famous maynard is the product of her taking either six or seven experts photographs of that same group of people. working her way gradually and carefully toward the one she liked best. and that doesn't count all the exposures she would have thrown away. she carefully planned every photographs, often made a dozen exposures of a single scene. those who observed her unanimously remarked on how slow she was entered tempo was over determined by her disability, by her large cameras, by the need to calculate light. there were no light meters yet in the 1930's.
many expert photographers can appear to work extensively because they operate very quickly as a result of years of part days. lange had the speed in her eye but not in her body. after she began working with all taylor she read extensively in world economics and sociology and listen to his explanations before picking up a camera. her of her exposure, not to mention her every maneuver in the darkroom was the result of study and part is. now it is true that lange sometimes characterized her work in styles as instinctive, but she was wrong. many artists experience their perceptions this way. males as well as females. moreover, in performing an exaggerated intuitiveness, lange was manifesting her guilt and fear of her own ambition and mastery. far more important i think than what she said however is what a photograph shows. as a formidable lange expert
sally stein has shown, her photography repeatedly displays a transgressive miss towards gendered warrants, although it seems conceivable to me that lange herself might not have recognized it. while the popular of the new joe blanton clung to them. pictured women in those meals as domestics. while the popular front artistic icon stereotypes women as helpmates and earth mothers, lange visualize women as independent and often conflict it. this is a photograph not from the depression, but a study she did of defense shipbuilding plants in richmond, california. her depression went on a shirt the edged film, often delicate
but always tough. her work shows women at hard labor in the fields as often as men. her rural subject matter was part of what was responsible because a division of labor was less common among farm working people which was very, very common for women to work in the fields and to follow the point i stayed before because women are farmers as well as farmers wives. quintessentially a photographer of labor she did not show rural women as wives but as rural proletarians. his take applies not only to women working in the field, but also to their domestic labor. and are often searing photographs of the living conditions of farmworkers, she showed how women struggled, even while camped in the field to create a semblance of order.
this is one of my favorite of a genre that lange did, although it is not well known, but this is a still life of the makeshift kitchen that a woman who was a migrant farm worker has created, where she lives is literally nothing but a canvas leaned to supported by a couple steaks. it's an extraordinary photograph because if you look at a very, very closely, there's a tremendous amount of information about what these people ate, about what they owned, how they managed. hundreds of live photographs pointed out how they try to create kitchens and bedrooms, how they coped and bathe children and wash clothes while living in cars, tents, lean to's, or sharecropper houses without water, heat, or furniture is. they are doing nothing less than creating similar ovation out of
wilderness. in her words, lange articulated conventional gender ideas. she said she often believed how she had unique functions for which they were destined in unique ways of seeing. the winding through her maternal photographs, there's always a subversive dimension. she made many madonnas. this is one of them, but obviously this is not a typical madonna. interestingly enough, she almost never photographs whole nuclear family unit. there are mostly fatherless. mother and child for the central couple. a common refrain during the depression and also pointed out by: it's a madonna, a common motif in the vernacular christian culture in which she was raised and which most americans lived. but lange's madonnas are really starving. their toughness does not
disappear. they are sometimes like a relic of soviet women. they can do everything and however heard the conditions, they will survive and defend their children. fragile and soft, as this nursing mother may be, there is no mistaking his steely determination in her eyes. in fact, for lange, it was often represented as a burden. it seemed to require constant vigilance against danger. it would of course be able to trace this anxiety back to lange's own guilt about her children and leave it at that. and i'm not convinced by that reductionism. the insistent combination of strength and anxiety is also a mode of recognizing mothering as hard labor and recognizing mothers as workers. even her quintessential madonna, the photograph i showed first, the one that's known as my grandmother actually shows a woman who was turned away from
her children, rather than towards them. her photographs of pregnancy are particularly striking. these images were still being polite if not indecent in the 1930's some of you may be aware that for example, no pregnant woman was allowed to hold a job that either appearing in public if she were pregnant. it would be several decades before public images of pregnancy became respectable. lange made quite a few portraits of visibly regnant women and are not maternal clichés. some have ambivalent or negative attitudes about their pregnancies, not surprising at all in the depression conditions, but still a big step away from this sentimentalized joy that it associated with usual images of motherhood.
like many female photographers, she made many pictures of children, far more than the male firm security photographers. some of her children are just cute and lively and displaying the standard appeal of children for viewers of photography, although not so common among pictures of people of color that are being shown. but many of them are also not so happy. i find her pictures exquisitely sensitive to the complex emotional lives of children, taking even children seriously as individuals. this is just a particularly striking correlation. the girl at the top is part of a migrant farm worker family in the state of oregon picking hops. the girl at the bottom, taken two decades later, if a
palestinian girl from a time when she was traveling around the world doing a lot of photography and asia. these children are typically not with their parents, perhaps neglected, but it's so likely by circumstances beyond the control of a caring parent. her view of poor rural children like her view of the mothers was not charged with the motion about her own children and her own childhood. her identification as both neglect did in the collector adds to the visual outrage embedded in the many images she made of child labor and exploitation. but my hunch is that many of these children very hard lives actually functioned for her in a contradictory direction. on the one hand, making the deprivation she saw that the deprivation she thought made her own children's pain less intense
and her own guilt less keen. on the other hand, daily encounters of sick and happy children capture from escaping out unawareness of children suffering. perhaps most unconventional are lange's many images of fathers with children. we might call them the donnas. there are so many of these and they are so unusual for the time. these images are exceptionally tender, quite possibly more so than the mother child images. her sensitivity to fathers may be another product of her travels in the countryside, since close father child relations are a common aspect of rural life when children are not as separated from their fathers as they are in cities. what's interesting is that they
are not only tender, but there's quite a number of pictures like the one on i guess it's your right, just like it's my right, that show so much joy. the one on the right is one of my favorites. it's basically a picture of a migrant farm worker who has just returned to where they're camped out from a hard days work in the field and has just completely delighted by being greeted so effusively by two children and a little dog. now, the presence of a child gives a father dignity because he becomes responsible and therefore gains authority. but when they appeared together with their wives, lange's fathers are often in weekend positions. i don't have a picture to show you of that. in fact, the jack did men as i call them ari lang depression
specialty. they sometimes stand alone, they brewed in groups, on street corners. you sit on stoops, they bend over park benches, etc. but even these dejected guys are not unattractive and they are by no means a object. they are graceful and soft and as if she were finding the positive side of male disempowerment. she showed idle unemployed men is worried and despondent, get absolutely manly always attentive to masculine ways of handling humiliation and her father of japanese internment she was particularly sensitive to teenage boys. and that quote from something she wrote. they were the ones that really hurt me the most, the teenage boys who didn't know what they were. what she meant by that if they felt they were american, but now the american government is saying they're not american. the older people had more of a
way, she said, of being very dignified in such a situation and asking questions, but these americanized boys were allowed and they were rowdy and they were frightened. she repeated this double subversion and her extraordinary photography of people of color. racial liberals of the time typically perceived subordinate of nonwhite as persecuted innocents, racist while them as deprived lazy, and stupid. but both groups call them have somehow depleted. and if you want an example of what i'm talking about, look at monarch are quite. you have seen their faces. it's quite, quite upsetting in its racism. lange's images stand out for the
lack of pity, their lack of objective vacation of their lack of exoticism. just as with her white subjects, she often sits from below in order to heighten the dignity of her subjects. for your lange, poverty and social subordination even when expressed in bodily deference did not obscure a person's energy, purposefulness, and above all complexity. her subjects are competitive, restrained, even cerebral. the photographs of nonwhite women are often more charming than those of men. they are less depressed but never simple. perhaps what makes a lange portrait most riveting as the subjects retain a zone of reserve. those who look down on their subjects as many photographers that lange dead, believed i think that they knew their subjects, new them entirely, knew who would they were and what they were like.
lange's photographs suggest, i think, that the photographer does not understand everything about her subjects. they remain a mystery. and this may be their most respectable and challenging message. to repeat, lange was no feminist, though i've often wondered what your thoughts would have been had she lived just a few years longer in time to experience the second wave of women's rights movements. she died in 1965. her photography when considered with the gender questions we can ask today seems almost to suggest a questioning and awareness of contradictions that is only barely subterranean. i suspect that this consciousness or possibly unconsciousness was not unique to lange, but could be found among many women whose lives and work in the 1930's in part because the depression, simply could not fit the gender
structures that the depression and the new deal era were trying to reaffirm. it is just possible that artists like lange were especially touched with the ross spot created by this lack of a fit. and i want to suggest that despite the absence of any feminist actors in that period, surely its roots would be found in the 1930's. and that's it. thank you so much. [applause] i'd be just delighted to have questions or comments or arguments or whatever. >> a couple of questions rd