Back now with Day to Day, I'm Madeleine Brand. It's President's Day, so let's talk about presidents and the economy and the old axiom that presidents don't have much control over the economy is not always true. Marketplace's Matthew Algeo joins us now. Matthew, first of all, when did presidents really began to pay attention to the economy? Did George Washington, for example, have a team of economic advisers?
Eh, no, he did not; in fact, George Washington hardly had any advisers at all. He pretty much ran the government all by himself compared to today's presidents. Presidential historian Richard Shenkman told me that it really wasn't until the civil war that presidents began to pay much attention to the economy.
All of a sudden, Abraham Lincoln was faced with the challenge of how he was going to raise money to fund the civil war and that required issuing of a greenbacks and inflating the money supply and going into the bond market and that they involved the president very much in economic policy. But interestingly enough, after the civil war, there was a long period when presidents were less inclined to get involved in the nation's economy,their approaches more or less hands-off, laissez-faire (法文:放任,自由主义), pardon my French.
What changed that?
The great depression of the 1930s changed that policy. When the depression hit, it became apparent that the government and the president would have to become more involved in the nation's economy. Of course Franklin Roosevelt was the president at that time and he pretty much set the standard for presidents becoming involved in the economy. He set up bureaucracies to control big businesses, the Securities and Exchange Commission is one example. And of course FDR also set up the one program that still has a direct economic impact on practically every American, that is social security.
Indeed, we are debating that now, and when it comes to a larger economy, things like interest rates, how much power do presidents really have?
It depends. A lot of things are out of the presidents' control. Presidents don't have direct control over interest rates, for example. But they certainly do have the power to influence the economy in many ways. Richard Shenkman told me that stocks can fall when a president so much as catches a cold.
Presidential behavior can clearly have an impact on the economy. If a president wants to talk down the dollar, they can send out their Treasury Secretary or they can themselves get out there and do it and that can have an instant impact.
And that is why it's not really fair to say the president doesn't have much control over the economy that we probably doesn't have as much control as he would like.
And Madeleine in the Marketplace newsroom today, we are taking a look at New York's bid to host the 2012 Olympic games. Matthew Algeo of Public Radio's daily business show, Marketplace. And Marketplace joins us regularly at this time for our discussions about money and business. It's produced by American Public Media and thanks Matthew.
You are welcome.