Three anecdotes about the U.S. have caught my attention in recent weeks:
#1
The president’s inaugural address included the word “reform” twice.
Almost immediately after, the country learned what the president meant. Author James Patton writes:
“The sun had not gone down upon the day of his inauguration before it was known in all official circles in Washington that the ‘reform’ alluded to in the inaugural address meant a removal from office of all who had conspicuously opposed.”
Patton added that “reform” would include the “appointment to office of those who had conspicuously aided the election of the new president.”
The government soon shed 20% of the federal workforce. Author Donald B. Cole notes that the president removed “more officials in one year than all preceding presidents had in the previous forty.” Patton added, “So numerous were the removals in the city of Washington that the business of the place seems paralyzed.”
The year was 1829. The president was Andrew Jackson.
#2
A select group of companies dominated America’s attention – and their investments.
These household brands represented the best of our country’s ingenuity. Innovative technology and efficient product development defined their businesses. They grew rapidly.
Much of the world admired them.
Almost in lockstep, the U.S. stock market had also risen. For most of several consecutive decades, in fact. Many people started to feel like their investments could only move in one direction.
With the growth trajectories of these blue-chip companies, how could it not?
Eight Wall Street analysts told the New York Times, “Virtually everybody believes the market will move somewhat higher.” One finance executive even said, “The economy is becoming less and less vulnerable to big booms and big busts.”
But then the world changed.
The president’s decisions created uncertainty for the country, including for the economy. Inflation increased. People switched from optimistic to fearful.
And the stock market entered a bear market that lasted for nearly two years. Over that time, the S&P 500 – the 500 largest U.S. stocks – fell by about 48%.
The year was 1973. The president was Richard Nixon.
#3
The Republican party had just regained control of both the U.S. House and Senate. Down the street at the White House, the president issued yet another executive order.
This particular executive order established a “loyalty program.” The U.S. government would now “investigate the political sympathies, affiliations, and memberships of all federal employees.”
The order read:
“Although the loyalty of by far the overwhelming majority of all Government employees is beyond question, the presence within the Government service of any disloyal or subversive person constitutes a threat to our democratic process.”
Over the next five and a half years, “authorities conducted almost five million background checks on federal employees.” Journalist Clay Risen adds:
“The F.B.I. followed up with in-depth investigations into more than 26,000 federal workers; 560 were fired, and another 6,800 resigned or withdrew their applications.
About .01 percent of all federal workers were fired for ideological reasons. That might not sound like much, but that’s all it took to set off a wave of anticipatory obedience. [It] pressured an entire generation of federal workers into putting their heads down, keeping their mouths shut, and renouncing interest in progressive ideas.”
The year was 1947. The president was Harry Truman.
Mark Twain may have said that history rhymes, but doesn’t repeat itself. Karl Marx believed that history reappears first as tragedy, then as farce.
We can’t know what this history says about our future. Many positive developments followed these tumultuous years. But your life, and your finances, may feel more uncertain to you now than several months ago.
To me, there’s some comfort in hearing that’s happened before.
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About the author: Kevin Mahoney, CFP®
Hi, I’m Kevin. I’m a financial advisor in Washington, DC. I’m also the founder of Illumint, an independent financial planning company in the District that specializes in financial planning for Millennials like you. I empower our generation with the confidence to invest an inheritance, financial gift, or extra savings. If you’re new to Financially Well, welcome – you now have access to the leading finance podcast for Millennials. I encourage you to read, watch, or listen to the ideas I’ve shared about making your money work for you. And then when you’re ready, please send me your thoughts & questions!
