We have nationalized companies before

The International Herald Tribune explains to the world that the U.S. has history of intervention, including nationalizing companies. The article notes that whereas the term “nationalizing” is OK to use in Europe, we aren’t supposed to use that word in Americca:

In other countries, the government bank-investment programs are routinely called nationalization programs. But that is not likely in America, where nationalization is a word to avoid, given the cultural aversion to anything that hints of socialism.

“Putting this plan on the table makes a lot of sense, but you can’t call it nationalization here,” said Simon Johnson, an economist at the Massachusetts Institute of Technology’s Sloan School of Management. “In France, it is fine, but not in the United States.”

In times of war and national emergency, Washington has not hesitated. In 1917, the government seized the railroads to make sure goods, armaments and troops moved smoothly in the interests of national defense during World War I. Bondholders and stockholders were compensated, and railroads were returned to private ownership in 1920, after the war ended.

During World War II, Washington seized dozens of companies including railroads, coal mines and, briefly, the Montgomery Ward department store chain. In 1952, President Harry Truman seized 88 steel mills across the country, asserting that unyielding owners were determined to provoke an industry-wide strike that would cripple the Korean War effort. That forced nationalization did not last long, since the Supreme Court ruled the action an unconstitutional abuse of presidential power.

In banking, the U.S. government stepped in to take an 80 percent stake in the Continental Illinois National Bank and Trust in 1984. Continental Illinois failed in part because of bad oil-patch loans in Oklahoma and Texas. As one of the country’s top 10 banks, Continental Illinois was deemed “too big to fail” by regulators, who feared wider turmoil in the financial markets. Continental was sold to Bank of America in 1994.

Yet the nearest precedent for the plan the Treasury is weighing, finance experts say, is the investments made by the Reconstruction Finance Corporation in the 1930s. The agency, established in 1932, not only made loans to distressed banks but also bought stock in 6,000 banks, at a total cost of about $3 billion, said Richard Sylla, an economist and financial historian at the Stern School of Business at New York University.

A similar effort these days, in proportion to the current economy, would be $400 to $500 billion, Sylla said.

When the economy eventually stabilized, the government sold the stock to private investors or the banks themselves.

That program was a good one, experts say, but the U.S. government moved too slowly to deal with the financial crisis, which precipitated and lengthened the Great Depression. The lesson of history, it seems, is for Washington to move quickly in times of economic crisis to revive the patient.

So we did it before, though it was once ruled unconstitutional and an abuse of presidential power. Doesn’t that constitute a legal precedent? Why does this not make me feel better?

About Gene Veith

Professor of Literature at Patrick Henry College, the Director of the Cranach Institute at Concordia Theological Seminary, a columnist for World Magazine and TableTalk, and the author of 18 books on different facets of Christianity & Culture.

  • FW

    a rose by any other name is still a rose. and about that smell……

    in any other country senator kennedy would be called a socialist. here we play games with words don´t we?

    even conservatives.

    Bush and cheney for example are radicals in their views on executive power and their views on privacy and wiretapping and judicial review and habeus corpus and torture and international law and treaties obligations and nationalizations and any number of issues. I could make a strong , strong case that they are at least as radical as any of the current crop of democrats. Only bush´s (almost correct) position on abortion allows so called conservatives to grade the man on the curve.

    I could make a similar case for roberts and alioto.

    we americans tend to find comfort in labeling things. especially those we oppose. I agree with someone who once said that as soon as someone starts piling on adjectives and labels, they have admitted that they have lost the argument of ideas.

    people who use terms as “radical” in front of the word liberal and “ultra” or “right-wing” or “religious” in front of conservative etc, betray their lack of ideas and open mindedness.

    try for a week to remove all modifying adjectives when describing the policies of those you oppose. see how that feels. it forces and disciplines one to focus on real issues I think.

  • Matt C.

    Fw,

    I think you may be a little unfair towards labels and those who use them. They can be abused and substituted for actual thought, certainly, but they can be used appropriately as well.

    Many topics (including politics in a nation with 300 million people) require generalization to discuss effectively. Labels are an essential part of this. Imagine having to reproduce the entire communist manifesto every time you refer to an individual’s views instead of just calling him a liberal. :) I joke on the example, but surely you get the point?

    The word games we play with labels are certainly detrimental to discourse, but getting rid of labels won’t help any more than getting rid of words in general would.

  • http://www.bikebubba.blogspot.com Bike Bubba

    Let me rephrase FW: a cowpie by any other name…..

    I fail to lay my finger upon the clause of Article 1 that allows Congress to do this.

  • James

    Probably because your conclusions were argued from principle and not pragmatism like this article. Hence, someone who responds to my convictions with “Yeah, yeah, I hear you, but it works.” is to miss the principles altogether.

    I wouldn’t feel better if my principles were ignored either. Perhaps in this bail-out plan we’ve eclipsed one form of instant gratification (personal) for another (national).

  • FW

    #2 matt

    i think you missed my point or, more likely I was unclear.

    liberal and conservative can be useful terms. labels are in fact necessary to some extent. but people tend to go beyond that…. eg… “radical liberal” ultra-conservative” in a way that is more rhetoric and manipulative than substance. why not just liberal or conservative rather than piling on multiple modifiers? pure and simple: manipulation. is someone a freedom fighter or a terrorist? that depends on what exactly?


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