overturned justice thomas for instance has sort of implied he would like to see that overturned and there might be a majority on the supreme court to do that. >> is in that proceeding still open? it was a couple years ago and there was a lot of concern about the fairness doctrine but the fcc still take that out? >> they could. members of congress to periodically talk about how the fairness doctrine should be reinstated but other members of congress rally in opposition to that a bad idea against the public interest. we have seen a rise in political discourse since the fairness doctrine was abolished 20 years ago. there's more political discourse and on the internet which didn't exist until 1987 when the doctrine was abolished. >> finally commissioner mcdowell, when do you see the fcc having significant action on

the broadband plan? what is next in the line? >> i think in the month of august will be spent with workshops, 20 of them. it will be active. i would like to see the commissioners go across the country and have town halls and do fact gathering to listen to the american public as well. i think as we get into the fall and winter and start to see more interest paid as we get closer to the february 17 deadline in terms of specific time lines i don't have one to offer just yet that might be a better question for the chairman and a i could tell you today after i meet with him but stay tuned. >> d.c. the february 17 the date holding? >> so we have to stick with that and present to congress no later than the 17th. >> commissioner robert mcdowell and amy schatz "the wall street journal." speed

we are airing special book tv programming. first commander times reporter edmund andrews the talks about the decline of the housing market in his book "busted: life inside the great mortgage meltdown." this is almost an hour. >> i would like to start by saying i have been on a kind of media tour for almost two months now. i've been on the today show and 20/20 and colbert. this is the hardest place to book. that must mean this crowd is the most elite audience you could imagine. it took a long time to get here

but i am glad to get here. thank you for coming and hearing about my book. i will give you kind of start with a quick summary of what the book is about and what the point is and talk about some of the things i've learned along the way as the reaction which has been kind of a learning experience in itself. and then we will open it up for questions. as mike said, this book is a highly internet account of my own surreal descent into mortgage media at the height of the house in kabul. i think it's fair to say i had a very unique vantage point as a huge swath of the country was becoming obsessed by the seemingly surefire opportunities posed by soaring home prices and exotic mortgages and clever ways

to borrow lots and lots of money. i have actually written about exotic mortgage as a little bit in early 2004 in the course of covering the federal reserve and macroeconomic policy. at that time seemed to me that we're going to be looking at higher interest rates in early 2004 the fed was getting a raise rate and people were borrowing more and more and more to be able to keep up with housing prices or to drive them even higher and it just seemed there was something that was going to cause problems so i wrote a couple of pieces they were kind cautionary articles what a person knows and whites about isn't necessarily translated into what a person does so in my

case i've fallen in love with patty in the front row mad ne love perhaps in a way only a middle-aged man can. i don't know. but i am still in love with her and sorry, you told me not to say madly in love. she is sick of hearing that but any case that is what happened. i felt very much in love. patty and i both have children and i -- my children were living close by. i was paying huge amounts of child support and we wanted to accommodate her children and have room for mine to come over, kind of the house the into the picture it was a crucial link in making the dream come true. sell in that environment it turned out that it was easier to buy a 450, 460, $500,000

mcmansion than to rent. how bad was my situation? here is how bad. it was -- this is the sort of starting point. this is the basic predicate for the whole adventure. i was not in the position financially to borrow by any normal mortgage lending standard. i was paying about $4,000 a month in child support and alimony which is not to give away the show here but more than half of my take-home pay, substantially more so i had left basically just barely enough to make the mortgage payments on this house we ended up buying. it is the easiest mortgage in the world to get. it wasn't hard. i talked to my real estate agent who said i will give you the name of a guy that specializes in challenging situations.

she did. his name was bob andrews, no relation, and he basically checked one thing quickly, my credit score and at that time it was great. it was a good solid plus 700 credit scored and on the basis of that and the fact i could come up with a 10% down payment, good to go. that is basically all he wanted to know. i had a job, i could come up with a down payment, legitimate down payment of 10% and had a good credit score. nothing else mattered. the rest could be worked out so what i got was a mortgage that was as you may have frequently heard the term a lawyer's loan. it was better than that. it was truly a don't ask don't tell loan. i didn't disclose my income at all. it's amazing, but it was very easy. the whole thing went through

smoothly and even at that time i was kind of astonished and kind of appalled by the fact i could do this, but i'm not trying to defend this on any rational ground. the whole point is it wasn't rational on my part but you get into this mind set and everybody has their own reason for going and getting over their head into debt. in my case it really was about love and wanting to start this chapter in my life. in any case it was easy for me, too easy, to rationalize how this could work. it's kind of magical thinking. if patty earnings this amount of money than we will be okay. i will pay the mortgage and she will pay everything else and will work out okay. when you are in a fever of in the kind you don't want to hear about obstacles, the sort of practical prudent obstacles to

what you're doing. you just want what you want and this brings me to a passage that all i wrote early in the book to give you a flavor -- i think the emotion that goes into -- went into my own activities here as well as i think the emotions that drive lot of people in other words home bonding is a financial decision but emotions can tend -- can often override the sort of rational financial issues and bottom-line we are often bought as rational as we think we are and so, anyway, and chapter 1 of describe confessing kind of my plight in 2007 to

none other than alan greenspan. i was interviewing him on why he shouldn't be blamed for the whole mess and he was explaining to me why he wasn't to blame at all and one of his arguments was that the problem with the mortgage bubble had largely been about fraud and the fed was not equipped as a law enforcement agency and that wrote me the wrong way. i had not defrauded anybody. i had played by their rules and their rules were stupid but i played by them and nobody had d.c. to anybody about what was coming on and that was an important point that the system had been corrupted. it had been pervaded with corruption by this point. and crazy things were allowed to be possible for all of lot of reasons. people at every step in the financial chain were willing to essentially buy lift themselves

and others. in any case, i have just confessed to alan greenspan that i was in this mess and my question to him was shouldn't the government has stopped a vendor from lending to somebody like me? and his answer was well then, his question was have you defaulted yet? at this point in 2007, three years into the mortgage on said no but i'm hanging by my fingernails and he goes well, so these lenders made a judgment based on the fact that they decided you were the kind of guy who would do anything possible to pay that mortgage, and they were right, and you are trying to do everything you can to pay that mortgage. bottomline the problem already made money on you so it worked, enlightened self-interest medicines and no need to have

the government stepped in and stop people like me. immediately after that encounter, and you know, in the process he asked me, you know, why did you do this and he was horrified and appalled that he was hearing this from me. we've known each other a couple of years, just reporter, public official relationship, and i think it was astonishing to him that somebody like me would have engaged in this kind of malarkey. so his question was why did you do it and here is where i would like to pick up. why did i do it? why did we do? why did millions of seemingly sane adults take a leave of their common sense and load up on home mortgages they couldn't possibly manage? why do we jump off the cliff together? we all had our reasons. some were desperate to fulfill the dream of owning our first

home in the middle class. others craved a bigger house, a better neighborhood and still others were dazzled by the seemingly surefire profits from real estate prices. i had to compelling reasons for taking the plunge, the money was there and i was in love. the fever for romance and speculative fever to get rich have a lot in common. both are driven by hunger and the allure of once in a lifetime opportunities. both involved through a series of escalating gambles. the first small and cautious. a sly flirtation or lowball bid on a condo, but each successful pay off emboldens you to raise the stakes and if the conditions are right you can escalate very quickly from harmless flirtation to the dinner, the first kiss, the weekend and ultimately put in your future on the line. and the same can be said for

flipping condos in miami or los vegas, he told the vice seems to confirm the strategy and provide more money to raise the stakes. prudence and patients become dole and pity if you are on a roll it is time for big ideas, bold decisions and heroic leap of faith. it's all about adventure, danger and fantasy and boy was already at that point. i think honestly as we look back on the borrowers who got in trouble, my gut feeling is from having talked to many people most of them would admit they had a feeling, they had a sense what they were doing was a problem, that it was and why is, that they were running high risks and for whatever reason they decided to override their sense of caution and plunge ahead anyhow and we will be debating for years if not

decades why so many people took the plunge but i would argue at the end of the day that it wasn't human nature that changed in 2004, it was the financial system, the financial system had -- was channeling a massive flood of money from around the world. it was cheap money and they were looking for slightly higher yield whatever way they could, risky borrowers or more profitable bar worse and this was the last game in town. we had was a financial system encouraging, enticing, and roping and millions and millions of our worst who just went ahead. as i say, some people had no idea of the mortgages they were taking out. i think many have a sense of the

risk they were taking and figured they were going to get bailed out by the continuing rise, rapid rise of housing prices and some people were like me and said this is crazy but i have got a plan. it can work. whatever. different path but the enabling was the key thing and at the end of the day you have to place the mass of catastrophe on what was going on in the financial institutions and frankly with our regulators in washington we were asleep at the switch for sure. this book has generated a lot of reaction, i would say next. i have gotten flooded by e-mail from far worse -- or worse, homeowners who human me for

writing and opening up because suddenly they didn't feel so alone, so ashamed, so lost in their own troubles and that was one of the most eye opening experiences for me after the book was published come after "the new york times" magazine published an excerpt. i suddenly realized the incredible a ray of people who had gotten in trouble and what kind of people they were because these people were writing me many of them admitted of the that they had made huge mistakes, some of them had terrible luck, some of them have lost jobs or medical problems, all kind of reasons but most of them were very earnest hard-working people who felt terrible about what they had done. these were not greedy or self observed yuppies spending their

time and money snorting cocaine or body and the bmw. most of these people or middle class folks may be lower middle class folks who wanted a house and wanted something for their kids and they either felt that it was possible, it was true what everybody was saying this is the investment couldn't lose or some were afraid they didn't by then it was going to get worse and the house this spring to get further out of reach and i guess, you know, my own -- i never asked anybody to have pity on me for my decisions. i knew what i was getting into. i was not in any way a victim of anybody but there were a lot of people out there and i think that it behooves us all to go easy a little bit on the judgment when you think about the millions of people who've gotten in trouble because everybody has got a story and

they are a lot more sympathetic sometimes when you talk to them in person. the reaction i have gotten as i said have been mixed. i will give you a sampling. i can't -- i didn't -- i wont give you the long extended grants that have come my way but trust me i've gotten a lot of them directly through e-mail and in the blogosphere among the names i have been called, a loser, a lawyer, medish, a jerk, dufus, fraud, irresponsible, greedy, selfish, and the complete i am getting all lot lately is that i don't show any remorse. i guess they haven't used this word but i'm shameless is what they are saying. people are upset i am not saying i'm sorry for what i did and

they are arguing on him being unaccountable for my own decisions and that i should my own feeling is i have plenty of remorse for the decisions we made. i have had my credit score shot to hell, i have blown my savings, i will have a tough time retiring. i would be happy if i could retire by the age of 70 on any kind of income and we may well lose this house, so there is a lot to be sorry about but i don't feel, and this is what makes people mad, i don't like apologizing to the rest of the world for these decisions. i'm sorry. however bad my judgment was and however bad even the judgment of it is pale in comparison to the recklessness that was systematically undertaken by the biggest financial institutions

in the country and i have yet to hear stan o'neill of merrill lynch or chuck prince of citigroup apologize for the recklessness that they unleashed, but we did they do a lot of it and the closer you look at what happened, the more outrageous it becomes. how much time to wipe out? i would like to wrap up in the remaining minutes the things i learned in the course of working on this book that went beyond my own personal saga. almost all of the public attention and debate about my book has been about whether i am a creepo or irresponsible, did i do it right, and i do it wrong, those kind of questions. the real question is not whether

i made her in this judgment. i did. the question is why eight to 10 million or so make horrendous judgments. it's always quick to be the case that some people at any given time are going to borrow more than they should and they are going to get in trouble for it, but has never been the case we have this kind of wreckage at one time. so many people, so overextended in such a compressed period of time and that couldn't happen without the lenders and wall street firms making all that money available to people regardless of the risks that they might entail. the question is what were they thinking? what were they thinking? let's not assume that they are the crux necessarily but what was the rationale and here is where i actually learned a lot.

what i did with this book was tried to report the stories of my own lenders and to some extent the stories of the wall street guys financing of them and the policy makers here in washington like alan greenspan. as much as i would like to dump on washington policymakers, the bush administration and greenspan, and i think that they all deserve a good measure of criticism and blame especially the fed frankly, i think the real issues though our, you know, what was going on in our financial institutions and but i learned was interesting. in short, two of -- i had three mortgages, have had three mortgages. two of the three mortgage lenders and crashed before i missed my first payment. they went out of business before buying first payment when late

and the stories behind them were interesting. the first mortgage lender is the one i would like to dwell on. it is in chapter 3 my linder drinks the kuwait. i go in to the story of this is a company called american home mortgage, which was started in 1988 why a guy named michael strauss. very bright, sort of mortgage broker type. he had built up from his one-man operation in his apartment to by the time i can along a nationwide mortgage lenders issuing about 40 to $50 billion a year in mortgages. it peaked at about a rate of about $60 billion a year in mortgages. they were the tenth biggest mortgage lender in the united states. not countrywide but vague viewed themselves as competitors of country wide and wanted to chase them. they were once a prime lenders. there was no in the business and still no one in the business as

a alt-a linder meaning they were looking for borrowers with good credit, but they wanted to stretch and so these were the borrowers with good credit and we are not going to disclose the messy details of the finances for example, to debt they might have or their debt to income ratio is. so there are specialists and no doc loans, low doc loans where you could state and income and not document, or in my case not even disclose the income at all and just make the loan on the basis of the person's assets and credit scored. we know what happened with me. the interesting story about american home is that as they were growing and white about time i can a customer in 2004 they made a big shift from being a traditional mortgage lender, kind of normal traditional

relatively conservative mortgages to much more exotic alt-a no dak stuff and they also decided that it wasn't good enough just to make loans and then resell them to wall street. let me back up for just one second. the conventional wisdom, and it is true to a great extent, what drove this whole meaning of to the great degree is wall street firms buying shoddy mortgages, turning them into, pulling them into securities, mortgage-backed securities and selling them to investors around the world and the rating agencies would bless these securities with aaa ratings and so we had this enormous machine that god created. all of that is true. all of that is true but there's more to it. what happened in american mortgage case they decided it's not good enough we are making the loans and selling them for

quick profit. we are making a good profit but that's not good enough. we think these are worth allot so what we are going to do is hold them but the only we could hold them because they were not a bank with lots of assets, the only we could hold them is borrow money to hold them, and so what they did starting in 2004 is building a huge leveraged portfolio of their own risky loans, specifically something called option of arms, which are by my reckoning the most evil mortgages created in the entire boom. they are sometimes known as pickup loans, you could pay lots less than even the minimum interest and hold on to your house. what you might or might not know if you were doing that is you were in up thousands of dollars every month in additional debt or deferred interest anyway.

american home mortgage decided they loved these loans so much and they were aggressive about making them that they were going to borrow tons of money in order to be able to hold them so they had a 15 billion-dollar portfolio of these loans they were holding as an investment and ty were leveraged 10-1. i'm sorry, more like 15-1 at the height of things when they felt they had really figured out how this stuff worked. so, when august, 2007 also not and the sub prime market has begun to include because the default rates are zooming up, and august, 2007, as many of you will remember vividly, this is when the credit markets really did seize up. this is the beginning of the financial crisis. happened very fast. the rating agencies basically

acknowledged in mid july that they had misread, you know, billions and billions of dollars worth of subprimal securities backed by some prime loans and everybody began to panic. it was like the emperor has no clothes and people realized that the jig was up so there was a widespread panic. american home mortgage was out of business in a week. they didn't get the point having a losing quarter. there linder said you open an extra couple of billion in collateral because the value is worth a lot less. this is amazing. ..

that was really kind of the extraordinary thing that i learned and they still to this day cannot decide whether some of these institutions like merrill or citigroup or american home mortgage were corrupted and cricket or just stupid. i go back and forth on this in my own head, but i think it tells us something about the nature of a media, that we all like conspiracy theories.

we all like to blame the big financial institutions at the top for being the master manipulators they are, but they can become victims of their own chicanery and in this case they did and they bought their own propaganda and obviously have paid mightily for it. the other startling experience for me in reporting on the story was not about me per se, it was i felt the need to look at the question of how minorities and low-income people were targeted five lenders because it was pretty clear that lenders had gone very aggressively systematically after hispanics and low income black families is

far worse, particularly toward the latter days of the housing bubble and they had been a disproportionate share of bad stuff. what i did was i went on to just right here in the washington area to manassas virginia, which many of you may know is a hot spot, sort of a ground zero in our area for foreclosures. it has had a huge hispanic migration and in the foreclosures were all over the place by 2007 and 2008. i interviewed families, i just could not believe what i was saying. families, one family in particular i met just as they were signing the papers to lose their house to a short sale. and el salvador and family, naturalized american citizens, had owned the house already, had made a 200,000-dollar or so

profit on that house, was persuaded to sell it in by a 700,000-dollar mansion, 700,000-dollar mansion with one of these option arm loans, not knowing how they really worked. when i met them, they were not only giving up the house, they have lost the 70,000-dollar down payment that they had made and of all of their life savings, and they had to start over from scratch. they have moved into a tiny, two-bedroom cottage in downtown manassas and were trying to recoup from there. it turned out that there were lots of stories like that, there and countless other communities. eight is the story we know but when you get up close and personal it is still shocking how her in this this was and it was, the lenders recruiting in

this case spanish-speaking brokers and giving them a great crazy loans, but it was very systematic and it turns out when you look into the academic literature or the government literature, about the pattern of sub-prime lending, not just in the last couple of years but since the late 1990's, study after study after study has shown that any income level for example, blacks are two to three times more likely than whites to be in sub-prime loans. maybe some of that is about credit scores, but they are just too many studies coming up with the same results to let you believe that there isn't, there wasn't something really nasty and concerted about preying on the most, pranked on formable people who were not in a

position to evaluate some of these mortgages well, people who were struggling with the english-language, maybe didn't have college educations, whatever, but the data on the disproportionate patterns in sub-prime lending, which is the easiest thing to measure. it is not the only kind of bad loans. the data on the disproportionate percentage of loans going to people that were sort of outside the mainstream in vulnerable is really shocking and it was ignored. it was ignored for years. people in the housing communities, community advocacy groups have been complaining about this for years. it really wasn't a secret and it was ignored and i just think that is really a dreadful, shocking, shameful piece of business that i hope we deal

with. welch, just ran out of time. please, let me open it up for questions. >> hi, i have two. one is about the past and one is about the future. the one about the past is i don't understand how the federal government missed this for so long. we bought our first and only house in 1980. it was a development that was an 1800 sq. feet, small, not well done, small, well located. we paid $150,000 for it and i thought that was the absolute top of the market. five years before that it did than $75,000 in 1940 it was 17. when it was assessed, not appraised, assessed for $850,000.1800 sq. feet, a small brick house on the little plot, that was crazy. housing prices were going like

this and incomes were absolutely flat. so at some point, there, there were not enough people to afford the houses that were out there at the prices that were there and the prices would continue to drop until there were enough people who could afford to buy them. the big question i have is for the future and that is, all this capital, the best use that could be found for it was to invest in these sub-prime mortgages, basically a nonproductive assets when there are jobless people and a billion poor people in the world, this was the best thing our system could find to invest in? i mean, that capital should have been going somewhere else. >> we were the best investment for the world to invest in. it wasn't just american institutions. this money was flooding in from around the world from china. they were begging for someplace to earn a slightly higher return

and this with this seemingly perfect game of securer lending at a slightly higher yield. it was a figment of our imagination. >> doesn't that suggest that there's something wrong with their capital allocation system, that that is in a free capital market, that is where the capital in supped? it does not produce anything. >> well, clearly we had a huge problem in capital allocation in this country. how you try to fix that is kind of over my pay grade. [laughter] >> it is a very important question. >> it is a hugely important question and one of the things you said that also has struck, it me, something that really not at me in the course of doing this, which was that by any, by a lot of historical statistical measures, housing prices were getting way out of line with historical relationship to income starting in about 1998.

by 2003, 2004, i think by 2004 surely, housing prices on average have risen about 40% beyond inflation, and as you say, family incomes for the most part to that period so you have families being stretched more and the housing prices going up more. it couldn't go one, couldn't possibly and there were lots of people pointing this out. merrill lynch, god help them, chief economist, david rosenberg, published a series of pamphlets in 2004 and maybe as early as 2003. one of them had a picture of housing bubbles coming up in front of it and he made the case, this is a bubble, in 2004. nobody wanted to correct the bubble. instead the attitude that you

did nelly bubble until it burst, he didn't want to second-guess the investors and anyway, it would be easier to clean up the mess afterwards then to try to stop the excessive behavior in the course. i think we have now learned that was it that calculation and i am guessing that chairman bernanke is revisiting it quite aggressively. in fact, i think he said that. but, one of the astonishing things is, on some levels it was perfectly obvious that there was the housing bubble, which meant that this could only end in tears and it was ignored. >> thank you. >> i thank you for the candor in this book. is what makes this analysis i think so compelling for many readers. i have a question not dissimilar from the previous one and it is about future and regulation. in this country when we talk

about mortgages and personal finance we are basically talking about consumer protection, the sort of ralph nader airbags, smoking kills you and everyone keeps doing it sort of stuff. latta politicians in this country seem to enjoy demonizing what they called the european welfare state or the nanny state, to put it more succinctly. european attempts to protect consumers seems to be, well massively imperfect, much more thorough then a great deal of regulation in this count that regards consumers from our immature knowledge of this topic. i know your bagram, he spent six years i think in germany covering makar economic policy for the times. wonder if you have a sense whether america and europe are on fundamentally different paths and whether, if that is true of

those paths could never meet again? endesa america have the future as a world leader in consumer protection? >> i wish. you know, i have to admit i can't draw a could accurate comparison between our attempts or lack of a tent set consumer regulation and what germany or other european countries are doing. germany did not have the housing bubble that a lot of the european countries did but i don't think it was fueled by the same kind of mortgages that ours was. my view is, i am not big on financial education. there is a lot of talk about the need for greater financial education, that if people were more literate about the mortgages that they were taking now than we would not have these problems. i think that is probably wishful thinking. i think most people, it is not rocket science to understand the

basic nature of the normal mortgage, and they truly think that most people have a rough idea of what was going on with their mortgage. they may be engaging in wishful thinking but what was happening here is a think about emotional excess, speculative euphoria, things like that that you could have all the financial literacy in the world and they did not care that point. they were just going to go for it, so what they think is, i think the lesson of this is you just have to have the government be in their proactively to say certain kinds of practices aren't allowed, period. they are just too dangerous and we don't care if you are an adult or not. there are certain products that should not be allowed. and, i don't really think it is that hard to draw the line on these things. there is a lot of cuts fetching among financial regulators, or there was during the bubble, especially we don't want to stifle innovation.

nonsense, the bedrock principle, one key one is you do not lend money to wait for word without a demonstrated kind of realistic calculation of that person's ability to repay the loan, and in a lot of ways, and number of ways which is completely jettisoned that concept. it was not just that you could get a loan without documenting your income. you could also get qualified for an outrageously big loan based on the teaser rate, the low teaser rate he would pay for the first two years. that is nuts. you know with those kinds of loans that your real monthly payment is going to get very high after a couple of years. option arms. a family i visited in manassas, virginia, they were paying $2,800 a month. that was the minimum payment and they were backing up $3,000 a month in deferred interest. this is, and they qualified for

that loan on the basis of the initial minimum payments. this is inexcusable nonsense, and it is very easy to just put a stop to it. and, so i think that's there is a common-sense elements to this that we ought to remember, that just that one principle, ability to repay, invoking the principle would have prevented an awful lot of this nightmare. and it doesn't mean that you really, really perfectly identified what's this bar were can repay and what that one can but you have rough guidelines that are pretty fell lead. they are conservative and the harm caused by lost opportunities and financial innovation is small compared to the harm that would be done by millions of people going

bankrupt as a result. so, i think, and i think we are going to go down that road. the fed has actually gain the long way toward putting the kabash on those kinds of mortgages. they don't exist of course right now. you can get one if you want one but eventually it will be possible and we have to address the issue and i sure hope that you know, we get away from this notion that we don't interfere with consenting adults. i think we have to. >> hello. so, i have a question. you said you interviewed alan greenspan? >> yes. >> so epileptically phrase the question. since you said he did not accept fall for anything that is going on right now? >> because basically the way want to frame this is housing prices are a function of two things, your salary and the interest rate and here is the guy the controls both of those things. so the fed meets and i'm sure

everybody has heard on tv, they meet in they can bump up the industry point in the market reacts to that's of the control center straights that he gembara at and the money supply and i think he has been quoted as saying the credit default swaps actually decreased the risk to the market and he admitted-- >> alan greenspan has in the past years though said credit default swaps and those kinds of derivatives should have been regulated. they need to be regulated and he admitted in a theory heartfelt way i thought, before a house committee, that what he thought was kind of an unshakable truth, kind of rational self-interest would keep things in line, had been proven wrong, at least in that kind of context. but to enter your question, again, alan greenspan does not

believe that he or the fed should be blamed for much of the catastrophe. there are two lines of criticism, one that the fed during his tenure left interest rates were too low for too long, therefore fueling more of the housing bubble and rising housing prices and the other line of criticism is that the fed had authority already to reign in an even banned mortgage practices that were considered to be unfair or deceitful and it absolutely have the authority to block the kinds of loans i am talking about here, and the proof of that of course is that they proceeded to do that. after the catastrophe had already happened. >> right, so basically he just said that from i am guessing grantor is that basically the self-interest does not work, that he'd met none of it? >> in a narrow context. i still don't, i still don't

think that mr. greenspan is in any way a fan of regulation and i think he would avoid it in most cases, still. that is a debate we are going to have going forward. >> thank you. >> time for three more here. >> you are to be congratulated for coming forward like this. you should run for president. >> there is a good idea. left's bead the reason i say that is, you haven't mentioned, you haven't mentioned the business schools and we had a president who had a business school education and that didn't seem to help. what if ice would you give to people in the business schools to prevent something like this from happening? >> you know it is funny chavez that come about a month and a half ago i was invited to speak to a business school deans, and

the dean of the school at dartmouth who was the one who led invited me, got up there and he said you know, the problem isn't that we were teaching them the wrong models for all of these securitizations and risk practices. the problem is the word understanding butter models were about. to which i am sorry, and i like the man of law, i think that is baloney. the business schools were absolutely crucial in developing a lot of the really squirrely models that were used to structure sub-prime bank mortgage, sub-prime mortgage-backed securities and it was interesting in that experience, i was just shaking my head. and again, denial of responsibility. i guess we all do that, and a

lot of people accuse me of denying responsibility, so whatever, but yeah, a point well taken. i think they need to think about it. the point isn't that all these clever tactics they are developing in business schools is that, but there is an assumption that you know, that quantitative stock has the sort of any, a certainty to it that dozens and the true caution was never credited. everything about teaching i think was gravitating toward the idea that we can come up with great ideas. and they are great, and not so much attention to the limitations. >> thank you. >> i wanted to touch on the issue you just mentioned actually, a little bit about the ankle of looking at consumer responsibility in the country. you said a lot of readers are frustrated with you and have been commenting negatively to

you. one of the issues that sparked that this i was looking at when you write is with respect your story their of their spending decisions that you mentioned yourself, then you yourself said were little irresponsible and i think there was a beach house or something like that and you indicated that you and your wife weren't quite on the same page about the seriousness of the problem at one point or another. i guess you were bothered about money and she was like, stop by the end bottled the money questions. so, the question comes more to being-- ricci ease a credit everywhere and we see it being manipulated and misused by borrowers and a lot of cases and we see sense to some extent of entitlement. i may not earn money for this but i deserve it and we see this with cars, we can borrow for cars, we can barwick the speicher coy think 90% of all cars are bought on financing now and a lot of times under very bad terms for the bar were but simply because you can make the

payment. we have achieved and indebtedness that rivals that of the great depression. both in your own circumstance and is borrowers, shouldn't we be pointing out a cultural shift that we need to make, a sort of fade, as consumers should we be chastening ourselves towards more responsibility? >> i couldn't agree more. my feeling is that this crisis was not an isolated event. this is the culmination of a trend that had been underway for least 25 years toward ever more clever and more extensive borrowing and higher and higher indebtedness, and it is not to say that borrowing izbet per se oardec izbet per se, but we have become more and more convinced of the country and our institutions are marketing more and more ways to borrow so as the country we got clearly overextended, and here is where i would agree probably with alan

greenspan, that the solution is probably the problem itself, that having been through this we know right now, it has shot up to levels we have not seen for a long time, five or six points and they might go higher and stay high for a while. having been through this it think we are in the midst of a cultural shift right now and that is a good thing in the long-haul, a very good thing, much needed. it is it that thing in the short term. i think we are going to have a very troubled economy for a long time because consumers really are retrenching or rebuilding, repenting. >> thank you. >> hi, i want to thank you for your candidates in the book and for being so open about it. and now having written about the

economy and having experienced the yourself, there is a lot of frustration among people about the fact that the people who are fixing the problem are some of the people who got us into the problem, and there is a lot of different competing theories. right, right. there is a lot of different competing theories from and academia, paul granlund comes to my deneen the people who have been in the field for many years and you may not have a nobel prize in economics or a ph.d. but you know there have been experts and there is a kind of, that sort of academia forces experience question, if you know what they mean like kind of which side do you fall on? do you feel like people who have been doing the research and have gotten the education, that they are more expert and they should come in and fix this or is this kind of the responsibility of the people who really know how it works, now that you have

experienced the yourself and they have had their hands in the trenches of to speak? >> it is a good question and a hard question because you are exactly right, that the people that are trying to deal with the crisis right now and fix these problems were deeply involved in creating the crisis in the first place. they are the experts. they are the experts, and they know how the bodies are buried, they know how the things work. it is a hard problem to get out of. and, but i think that's the way, the people could think about it is-- you know it is not actually that complicated. it is complicated on a really granular level, how the securities were canned stuff but the basic issues and trying to be not so complicated, the more

you look at how the rating agencies conjured up aaa ratings for all of these mortgages, you realize that the conceptual errors were ones that once you realize what they were, its sixth grader would understand them. okay, so i think government and sort of public institutions because sometimes you have industry and institutions, accounting board and people like that come i don't need to be so timid about questioning what it is the industry is doing and i think that public officials wheel, no question about it, be a lot more independent and rigorous and maybe even combative in questioning some of the schemes that are coming up but i have got to tell you that one of the things that might be a bad in decatur here is that--

indicator-- the banking industry is having a lot of success protecting the derivatives market from too much regulation, and i am not come again, i am not against any come i'm not against financial derivatives which to help to hedge risk and so forth but these products were, did make them miss a lot worse, and they were outrageous when we finally understood what was going on with the credit default swaps at places like aig insurance, so what i find a little troubling is that as a lehman case, but reformed lemon let's say, i raised the question, yes, it is very clear that credit default swaps and other kinds of derivatives provide a valuable service in the frameless and allowing things to happen but is the

benefit of that really greater than the potential catastrophes or cost that come from having their risk spread out in so many places that nobody really knows what is going on and you have the more opaque system. we think we have become so clever about dispersing risk and to so many different places that were all covered but obviously we weren't in this last crisis and, and the result was greater risk because it was ending up being just as concentrated as people had feared would be the case otherwise and nobody knew what it was said that the levels were even higher than it would have been otherwise because everybody knew there was a huge problem but they didn't know who was exposed and didn't know whether they could lead to somebody any more in good

conscience, i am talking bank to bank, because the fear levels were legitimately escalating way beyond what it would have been otherwise, so i don't hear anybody asking, i hear relatively few people asking the question on a more basic level. wittes second, credit default swaps,-max spots, do we really need them that much? is the benefit really that much greater than the potential cost down the road? i don't have the answer to that question but i don't hear it being asked a lot. i guess that is that, right? thank you very, very much. [applause] >> our special book tv programming in prime-time continues tuesday on c-span2 with a look at the economy with sherry olson and her book, foreclosed our nation, mortgaging the american dream.

>> our special booktv program and continues with martha sandweiss on your book, passing strange, gilded age tale of love and deception across the color line. the book details the life of the 19th century geologist in surveyor, clarence king live the double-life as a black pullman porter and steelworker in order to marry his african-american wife. this is 45 minutes. >> thank you in thank you for coming out this afternoon. i thought i would introduce you to my story by reading to you from the very beginning of the book. i began my book with a tale that actually take you to the middle of my story, so let me try this

for you. this is how i introduce my readers to my story and i think i will do it with my listeners as well. passing strange, a gilded age tale of love and deception across the color line, the prologue and invented life. edward brown, the census taker moved slowly down north prince street, knocking on each and every door in this neighborhood of queens. it was june 5th, 1900, and mild and sunday in the first ring of the new century and as federal census agents had done once a decade for more than 100 years he was counting americans, compiling a mosaic portrait of the nation. who lives here he asked each resident and what is there color of skin, there's sex, their marital status, their age? for every person residing in the house to recorded a birthplace as well as the birthplaces of their parents and for the foreign-born he noted when they had emigrated to the united

states and whether they were citizens. he wrote down everyone's occupation, asked whether they could read and write and separated the renters and borders from the homeowners. in his careful hand, brown dutifully recorded that data on the pre-printed census sheeds that would eventually find their way to washington and become part of the official 12 census of the united states. queens that census would show was much like the more densely settled community of brooklyn just to the west. it was overwhelmingly white, about 98%. with close to a quarter of those white residents foreign-born. as brown made his way down north prince street he encountered immigrants from germany, england, ireland and poland, the family supported by men who worked as policemen, machinists and clerks ouellette number 50 he met mary chase a 60-year-old widow from rhode island to ran a boarding house and took notifier black housekeeper. he had counted 72 why residents

on the street thus far and peterson who descended from an african-american family residence in new york was the first black person he had encountered. but then he walked next door. he knocked at the large and comfortable home at 48 north prince street. to black servants lived here. phoebe martin with the 33-year-old widow and corrine elkridge was scarcely older than the children she had been hired to watch. it was afternoon and grace, age nine, ada age eight and sidney 86 or home from school perhaps playing with their 3-year-old brother, wallace. whoever answered the door probably invited the census taker into the parlor. neither the servants nor the children could have answered his long list of questions about the family. and so, edward brown entered the home to talk to a debt, todd, the lady of the house. her husband james was a way she

said, so mrs. todd sat down to enter the census agents long list of questions herself. brown hardly need to ask her race. with a glance at her dark complexion and wavy black hair he noted her color of skin as black. mrs. todd reported her parents came from georgia and she informed mr. brown that she could read and write. she said that she was born in georgia in december 1862 pandith brown remembered his history he might have wondered if a debt todd had been born a slave. that question was not on his list and he would not have asked. mrs. todd then told the senses man about her husband. she said that she had married her husband james 18 years earlier in 1882. he was a black man, some 20 years older than her, born in the west indies and had come to the united states in 1870 and

later became a naturalized citizen. now she said he had a job at the traveling steelworker. brown perhaps noted that the house seemed prove mr. todd had done well for himself, even if his job kept him away from his home and his children. mrs. todd explain there had been five. the for threatcom and a child who had died as a toddler. edward brown took pride in the accuracy of his records. in any way in which he filled in the 1,350 blank boxes on each of his senses sheets, recording into being a portrait of the polyglot neighborhood springing up in the borough of queens. and so, he would have been stunned to learn that almost nothing mrs. todd told him was true. to begin with, she had not two years off of for age, a gesture of vanity perhaps and she and her husband had been married for 12 years, not 18. effect of which mrs. todd was

surely aware and ally that seems hard to fathom since the children's ages raise no question about the legitimacy but the other countries were even more-- pia there untruths were more stunning. ver husband was not black. he was not from the west indies. he was not a steelworker, even his name, james todd, was a lie. ada todd was married to clarence king, a celebrated public figure and the person the american secretary of state, john hay, once called the best and brightest man of his generation. king was a larger-than-life character, a western expert lawyer, an accomplished writer and storyteller. he hobnobbed with presidents and congressman, counted some of the nation's most distinguished writers and artists among his closest friends. his physical agility and bravery combined with his keen intellect and with commanded reverends

from those who knew him best. with king the historian henry adams wrote men where not so much their friend as the ideal american they all wanted to be. but of all this, of for husbands tried kennedy and even his real name, ada had not a clue. not until he lay dying of tuberculosis in phoenix in 1901, his last desperate hope did james todd write a letter to his wife and tell her who he really was. so, that is the opening of the book. and i thought i would just stop here and talk about some of the challenges involved in trying to write a story like this. there is first of all the literary and historical challenge really of making the two principles of equal partners of this tale because of clarence king we know much and his wife,

ada copeland todd we know little. we can trace the the memories of his friends, through his letters, there is published writings, through the records of the government agencies for which he served as an in administrative. his race, his social status, his education, his professional career let us know much more about king them in know about most americans born in 1842 in the basic outline of this like is easily told. king was born in newport rhode island to a distinguished family that could trace his ancestry back to the magna carta. is great grandfather was a senator and indeed he helped to establish the smithsonian institution. his grandmother was an abolitionist his work was much admired by your friend, the great frederick douglass. his father was a china trader often gone from home and young clarence scarcely knew his father who died when he was a young boy. clarence king was raised by his mother, a woman who had been

almost 16 when he was born and they were very close. his mother made tremendous sacrifices to get him the best possible education. the move from town to town, boarding school to boarding school and eventually king enrel said yale wert he received the best scientific education anybody could have received in america. when he leaves yale after two years the civil war is raging but king has no desire to fight. instead of going south he decides to go west. he takes the train as far west as you can possibly go to st. joseph, missouri and walks the rest of the way across the continent out to california. he gets to california and meets up with the men of the california state geological survey and spends the next two years getting a scientific education no class from could have provided him, becomes one of the first exports in yosemite and he later writes a bestselling book on the sierra nevada that is the debentures in california.

in january of 1867 when clarence king is scarcely 25 years old, he goes to washington, the civil war is over and he walks into the office of secretary of state edwin stanton and he says, i have a plan to map the west. king by all accounts was whti, smart, persuasive and charming and i would guess though, because he persuaded the secretary of where to put him in charge of something called the 40th parallel expedition which was one of the great surveys that went out after the civil war with botts in this, cartographers, artists, to begin to map the little known territory of the far west and king survey becomes the model for the other surveys including the one taken by john wesley called on the colorado river. eventually king becomes the first director of the geological survey. in 1881 he leaves the job to become an independent mining

consultant and then, in manhattan, in 1887 or 1888 he meets an african-american woman on the street and he tells her that his name is james todd. conversely, conversely the very outline of ada copeland's life is hard to discern. to help us know it, we have no private letters, no published writings, no admiring them wires, no newspaper accounts so we know little. she was born a slave near west point, georgia months before georges seceded from the union and civil war broke out. she lived her earliest years in a chaotic war-torn world and she came of age during reconstruction. somewhere though she learned to read and write, perhaps in one of the freedman's bureau schools that sprang up in georgia after the war. then, what really indicates to me she was an extraordinary person is this.

some how in 1880s she is a young woman in her early 20s. she moved north to new york. i believe by yourself. this was extraordinarily rare at this time. very few african-american people from the area around georgia were moving north during this period and certainly very few women were. some melanie your she gets the job as a nursemaid which meant she is probably living in the home of for white employers and somewhere on the street in 1888 she madam man named james todd who told her at that time that he was a pullman porter. to reconstruct ada copeland todd's life we have only this, the information she gave to the doctors who filled out her children's birth certificates, the information she gave to the people that compiled the city directories and the stories she told the census man. not until 1933, three decades after king's death, then she'd leave more than the faintest trace of a historical record

when she goes to court to claim the money she believed he had left her. so what little we know, to reconstruct ada's life we need to work through direction. we can talk about the childhood by trying to understand what life was like for their children born into slavery in georgia during this period and much of our understanding of for life as a married woman comes through as well. for example we can know what she thought of a particular day that we can know that on a hot summer day when she opened her when does she would smell the odors from the slaughterhouse across the street. we can no that on a cold winter day when a blizzard felt the utility lines, her apartment would be cold and that would have been dark. but, her public stories about her marriage, those tales she so-- called the census taker are more easily known than the private story she told herself. if the inequities, the inequities in the historical

record make this a difficult tale to tell, so to do this silences that's around the story. clarence king fahd to ensure that no paper trail of his secret life would exist. no pictures of him with his wife exist. no pisa paper beers both his signature, either one, and hers. they married in a private ceremony conducted by ada's minister from the episcopal church but king never went to city hall to write his name on an official marriage license and he made sure that the pupil gold wedding band he gave to her would not be inscribed on the inside. he was a celebrated storyteller, but trust me he left behind no stories about his secret life. is well-to-do friends in newport in manhattan thought him the most eligible bachelor in all of new york. they never knew about ada, and she of course never knew about his public life as clarence

king. so, to tell a story like this presents a particular challenge to a historian. trust me, many times when i was working on this story i want to be a novelist. i wanted to be, i wanted to know what was going on in their heads. i wanted to be able to say everything but i don't have that kind of knowledge and i don't have self-confidence to be a novelist. i am an historian. i live and die by my footnotes so this is a historian tale. i have tried to lay out what i know and tried to signal to you, my readers, when making inference from something i know, when i can't quite be the narrator i wish i could be so you will find when i-- you read this book that i sometimes use historical speculation. i say, she might have wondered, perhaps they recalled, they would have gone. you can tell when you read this book when i know something and

when i am speculating. i might also add that i'm not a cycle biographer, and it is just not the kind of historian i am. if some of you are cycle by arg frus you can have a heyday with it. [laughter] so let me just speak to a moment to some of the larger stories that i think this tale tells. one of them is certainly a story about how privacy functioned in a different way in the late 19th century than it does now. in all honesty one of the things that got me thinking about doing this book with the clinton scandals. here was the story about a public figure who committed an indiscretion in the privacy of his own office that lasted 30 minutes and the story went around the world. but here, the book i was writing was about a man who lived a double-life for 13 years and no one ever caught him out. what was different about the late 19th century? no radio, no television, no

computers. there were daily newspapers that they were almost never illustrated. there were many stories in newspapers about clarence king but never with a photograph that his wife might have recognized. it is a story i think that could that happen perhaps only in new york city of american cities, a city that was large, that had very distinct neighborhoods, very distinct african-american neighborhoods that that particular moment. it is a city that had lots of public transportation. there are trolleys that let people move back and forth between one part of the city and another. and, king's life was unable by to peculiar new york city institutions. one kravitch hanselman clubs and two, presidential hotels. he belonged to tennent 12 clubs and this is where he met his business friends and this is where he entertained. this is even where he received his mail and he rented a suite

of rooms in residential hotels. in the late 19th century these were very respectable places for upper-class people to live. you could live quite well without having to hire servants of your own but what this meant was king could just disappear and nobody would know it. the mail would be in the club, nobody would notice the lights were on in the hotel room, the friends he entertained at lunch did not know where he went next. many other cities didn't have the structure that really enabled him to have this sort of secret double-life. certainly the book is also a story about race and how raised works in america. when king in copeland married in 1888 in new york city, there were no laws on the book that said it was illegal for a black person to marry a white person, but clarence king i don't believe could face up to the social center that would have been his. he loves his life of privilege. he was attached to his

well-to-do friends and honestly, the only way he could be the black man named james todd was to be the white man named clarence king. only clarence king could go out and some of the world to earn the money to bring home to his wife and children. clarence king was the man who could not afford scandal. his work depended on his good reputation. so, king had his own reasons for wanting to keep these two lives private. why did he tell ada copeland that he was a black man? ayn peakey uwe i think he was trying to protect her. with she believed she was married to a white man her life was a little complicated. we if she believes she was married to a light skinned man of african-american descent, she was living up the social ladder a little bit and life was a lot easier for her so there is a tender protective chester i think in what he did. but, how could be passed across the color line?

clarence king had sandy blond hair, a very light complexion many have blue eyes. but, he married ada copeland in a tda during the jim crow era of american life and as many of you likely no after a host of laws sprang up particularly in the southern states that attempted to define what race was and these laws said that if one of your eight great-grandparents' was black you were legally black and you were writing in the gym coat-- so your identity did not hinge necessarily on what you look like so much as it might depend on your ancestry or the context of your life. all pullman porters were black and of clarence king said he was a pullman porter and wore a pullman porter scope he probably was a black man. i sometimes think that his whiteness was the best proof that he could be a black man because honestly of you look like that why would you say you

were black unless you really work? [laughter] is shifting meanings of race in american life haunted his family for another three generations. king's two daughters married in 1913 and leaving their dark complected mother, they went to city hall in new york city, each wearing for the other on a legal marriage forum that the bride was a white girl. two years later their brothers registered for the draft in world war i and they were assigned to jim crow regimens as black soldiers. ada king brace your grandchildren, raised her granddaughter and a black world. the grow was very light complected. she corrupt to live in a white world and in the 1950 she was afraid to have a baby because the human stain, for a better african-american ancestry might make itself visible. she adopted to white infants and those of the only descendants of this family alive today.

so, the story offers an instructive tale about the meanings of rates in american life. i think it also offers a story about the ways in which stories are told and not told in american history. in the early 1950's a professor at columbia named thurmond wilkins rode a tremendous biography of clarence king. i could never begin to replicate the sort of research he did on this project. but he shared the dilemma of many a biographer whose deep loyalty to his subject precludes an analysis of the more problematic parts of that subject life and fate biography of some 400 pages, four or five pages allude to the fact that king had a relationship with an african-american woman that lasted 13 years. indeed he had and indeed if this weather for had done a little bit more hallmark he could have taken the subway to queens and

interviewed 80 king. aidid king lived until 1964 live to be 103, which made her one of the very last americans to have been born into slavery. ada king lived from civil war to civil-rights, and she lived the last 63 years of her life in a home that can then secretly bought for her by clarence king's friend who had been abraham lincoln's secretary instead by lincoln side when he signed the emancipation proclamation. just to bring you up-to-date on the rest of the story, king dies in 1901. ada king claims her husband's name. she starts calling herself ada king. she changes her children's names. every month for 32 years to get the check in the mail and she understands that this check or believes this check comes from the trust fund her husband

signed up for her. but she is getting to be an elderly woman and she wants to have this trust fund. she does not need this money doled out to her month after month. she works with seven lawyers, eight lawyers trying to get her day in court and it takes her 32 years to get there. finally in 1933 she goes to court in new york city and she reads her husband's love letters out loud in a new york city court rim. the black press is all over it. the white press is all over. it is an extraordinary story of nonie scandal but the judge rules, correctly i believe that clarence king was broke when he died. he never did provide for his wife and his children and it turns out that the money that is supported this family for 32 years came from king's good friend, john hay who was secretary of state at the time of his death and then his widow and then their children. it was charity and it was hush money and meant to protect the reputation of their friend and to keep the story from ever coming to light.

so, since 1933 scholars have known that clarence king did marry this baughman, that they had a live together but they had not known much about it and they have not passed very many questions. most of the work that has been done on king up until now was focused on his scientific career and questions about him as an explorer, as a geologist. but, historians always write with the concerns of the president-- present uppermost mind and that began this book several years i could imagine we would have an african-american president, but they did begin this but in a moment where americans were beginning to talk about rates and feeling more open about addressing these particular issues so i turned to clarence king's life prepared to answer different questions and i'm the first person to uncover the fact that he tried to live a secret life as a black man himself.

in the end, i think this is a kealy american story. this is a story that took root on the in a society where-- determine one's legal rights and social opportunities. in the in this is a story that exposes the deep fissures of race and class the cut to the landscape of american life, cracks as deep and enduring is the geological features that the explorer king which map on his tracks across the continent. risk that are in the end even harder to explain. i think i'm going to stop there and i think a lot of you have questions, and i can't wait to answer them. if you have questions just stepped up to the mic over here. ..

was that normal for the time, but the family some were living together? >> i think it was rather unusual, this woman who is 103 is in her house with her children in the 80's. it was a very close family.

>> [inaudible] >> i don't think -- i'm sure it happened with many families. i don't think most american families live that way now. right. >> a fascinating story. in some of the more recent works on clarence king, i think of patricia o'toole's book, the five parts about the relationship of king, john hayes and his wife, henry adams and his wife. o'toole tries to get at some of king's predilection so in terms of his view about race and the attractiveness of women of color. i realize you don't want to spend a lot of time was

psychoanalyzing, but do you have any feeling as to what some of the drivers might have been for king taking that step? >> good question. i think we can say two things. one is you can say king is a racial romantic. he definitely romanticizes women of color. his friends in manhattan consider him the most eligible bachelor around and are always trying to set him up with white women at dinner parties at elite clubs and nice homes and king has no interest in these women. he imagines that when men of color and he's attracted at different moments to indian women in california, to native hawaii and women in hawaii, when he meets in cuba. he sees these people as more spontaneous, more natural than, as closer to nature, and i will leave it to the cycle by a perverse to deal with the fact they are also very different from his mother. [laughter]

to his mother was a hypochondriac who became quite dependent on him and he was actually quite attractive i think in part to ada copeland because she was so sufficient and independent romantics light of king's character it's also fair to say he had extremely radical views about race. his views about race was so radical his friends dismissed them as a joke. he once told a friend that miscegenation is the future of america. the friend laughed off but king had five children so he was doing his best here. [laughter] but he also wrote an extraordinary s.a. and 8085 which is the sort of nader of american race relations. and he was reviewing the plans that different architects submitted for a new monument to president grant led was going to be built, the new grant tomb to be built in new york and everybody said we really need an american style of architecture.

and king wrote an extra mary essay and said there can be no american-style until there is an american race. until there is no more german and english, white and negro. he really imagine the future of america was the kind of multi-cultural world we are becoming today. so in one sense he's a backward making romantic and all the other hand can imagine him as a forward-looking radical in terms of his ideas about racial mixing >> what got you started pursuing the story? >> i read the biography of king many years ago in graduate school and its stock. it bothered me that someone would write it l. murphy of someone and dismiss a 13 year old, a 13 year long married

relationship, a wife with whom he had five children would dismiss that in four pages. it had to be more important part of this man's life and a few years ago i decided to see what i could find and so of you may know a few years ago a various companies began digitizing the american census records. and all the census data collected in the united states up through 1930 is now digitized and accessible to you on your computers. it's extraordinary. you can tell from my opening anecdote what i did with that kind of information. but i decided to look up this family and see what i could fight and in about five minutes i found a census record of king living under his pseudonym calling himself a black man and at that moment i had to write this story. it was like being struck by lightning. i had to figure this out and sort out how it could happen.

did you ever find out why she changed the date of the marriage, she told the census taker something different? >> i don't really know but you are getting out an important question which is what did she know and when did she know it? brann king net net copeland ki told her he was a pullman porter. pullman portrs were always black. and every time she felt the birth certificate for her children she explained her husband was a pullman porter born in boston. when the census taker can to her house and she tells the slice she says her husband is a

traveling steelworker. that's okay, people can change jobs. that's all right. but she also told the census man that he is from the west indies and you cannot be born both in baltimore and the west indies. so what was that about? ma eight pherae about -- i have a couple furies here. ada king had to wonder why she never met her husband's family. she had to wonder why she never met his friends and she had to wonder why she never went out into the world into his places although he always came back to her role in brooklyn and leader and flashing. she might have imagined her very light skinned husband was passing for white in the workplace and therefore she shouldn't be seen of land and too much. we don't really know. but the west indian light-colored west indians often shaded towards lightness.

if you are a person of mixed ancestry from the west indies you live in a different space in new york city than people who are american-born african-americans and i sometimes think they invented that together so they could move into flashing which was a nice neighborhood. there were not that many black people living there and it was easier to explain to the person whom they were venting their house the reason he looked fair is he was from the west indies and it was easier for them to move into the neighborhood that way. so she was complicity to a certain degree what was going on but when king is on his deathbed and writes a letter he says my name is not james todd is clarence king and then he says write this in the family bible in case you forget. my gosh how can you forget such a stunning revelation? he directs his wife to change the children's names so that this prove to me she didn't know what was going on.

and if i can share one other anecdote about her that suggests to me she thought she was married to a black man one of my great frustrations writing this book is it has been impossible to find the new york city's wonderful black newspaper called the new york age for the 1990's. all of the copies for the decade are basically disappeared and scholars have not been able to find them but i was able to find one copy from 1900 and so fortuitously for me and the flashing gossip column is a story about ada todd and the story is on new year's day, 1900 she hosted a party at her house to welcome the new century and not being a novelist i swear i could never have invented this but it's true, it was a masquerade party. [laughter] bought her willingness to invite a black society reporter to cover her party suggests to me she felt she was a black woman married to a light skinned black man and was ready to step out into the world.

>> how did you recognize the census data other than the man you found was in fact the same person? >> who he was married to, the children's names, i had other verification they lived at this address from city directories and so forth. >> why would the children never release their story? how active was the kkk and queens where they reside with their mother? and laws hayes semper fi st forward in this matter, or what was -- was there any -- on sure hayes had a story. i just get the feeling of that. >> part of your question concerns hayes. he confided in blonde friend and his life about this complicated

double game he was doing, a man named james gardner, a geologist involved in some of the western surveys with king. they had been a boy who befriends, and gardiner kind of doesn't know what to do when his friend dies. carter has money but he isn't a terribly wealthy man and what is he supposed to do with this woman who comes to his office saying i want my husband's trust funds so gardiner goes to john hayes secretary of state at the time and had married a wealthy woman and he had posted limitless financial resources and says you need to help me out and hayes provides the money at that point. you asked a question about the children as well. i found the family's great granddaughter. she's about my age and the extraordinary thing is she trembly remembers speed line copeland todd king. it's great to sit down with

somebody who remembers growing up with a woman who'd been born into slavery. i feel lucky to have come that close to these stories but when clarence king died his children were under the age of ten said they didn't really grow up with memories of their fathers they could hand down. >> [inaudible] >> i think that king's well-to-do white friends couldn't deal with the story coming out. they wanted to protect their friends reputation but the other thing is if he were to discover your closest friend had such a powerful secret and you had never known it reflects poorly on your friendship. you didn't know each other and as you thought so i think his friends responded the best they could by saying we will take care of the family but we don't want to talk about it. they did the ogle bowl thing i think. -- the honorable thing i fink. >> when he wrote the letter to

her and said change, you know, put the name in the bible, change the children's names did she have any idea who clarence king was? >> that's a good question. she could accept the fact her husband was named clarence king but that might not some of the bills for her. it might not signal he was a man who had dinner at the white house who was best friends with some of the leading writers and artists of the day. i don't know how she learned that. but over the years as she began pursuing and it's an extraordinary story in and of itself she comes in contact with amazing lawyers. at one point she hires the first black man who argued the case of the supreme court. another moment she hires a lawyer who was the best friend of james johnson the writer that road autobiography of an expert manner which is the great book about passing an american life and ada king's lawyer was the

person responsible in that book. the harder she fights to get her money the more she has to be realizing her husband had very powerful white friends who are trying not to let this come out in public. so i think she thinks out along the way pretty well. she was a very tough, resourceful person. >> i was brought up in -- [inaudible] one of the things in the 1920's and 1930's, one of the things that really stymied me is how black man and new york city and harlem didn't have a chance but black women or any woman in other words i was irish. my mother could get a job in 30 is a hell of a lot easier than my father.

and my background of my father had a little bit of schooling, but a lot of people around me in the 1930's were all schooled. in other words, in the financial city for many white or black to come there without a lot of schooling for a financial city, in other words there was a great deal of the i think everybody in harlem, whoever the hell they were, on average, italian, jew, black, they had a lot of sympathy for each other. great deal because they had lots of trouble and the financial city, the oldest channel, the people who have been blessed by the dynasty family and all kind

of -- in other words, they were terribly tormented on all kind of levels as well as race. >> it's difficult to move to a place like new york when you don't have marketable skills or connections and that is what i think makes ada copeland's story remarkable. she found her feet, found a job, and from her husband and a middle class life she never could have imagined for herself as a girl. >> [inaudible] -- in my opinion the man in this city because the marketplace was so much that you be very well educated and not come from a gray area or farm background dumped in the city -- [inaudible] i think we all sympathize with each other. >> that's an excellent point. yeah.

>> one thing that's not completely clear to me is did todd actually works for the railroad or was that his cover story? >> that was a cover story. but there was one great moment i forget what year when there was a big pullman porter strike and clarence king was out west and couldn't get to where he was supposed to be so there was this one moment james todd and clarence king had the same excuse for not being home. it was perfect. [laughter] any more questions? >> [inaudible] >> i'm not quite ready to say. i'm playing around with a few ideas. >> i know this hasn't been out

that long but have you had any very strong reactions to the book, either positive or negative because race is still very much an issue in this country even with our amazing progress in terms of the election. i think, probably wouldn't have had a good chance had he been not half white. and another thing that has come up, people are still struggling with that and i am wondering if, because i don't know if any of hayes's family is alive or king's but have you had any this oral reactions to your book in any direction? >> happily the response has been positive but i have heard amazing stories from people. i heard from one person who identified herself as african-american and said the river in my family always was my great-grandfather was a white man but told everybody he was black because you wanted to marry my great-grandmother and

be part of this family and hearing your story i think our family story is probably true. i have heard from two descendants of james gardiner, king's good friend who helped the family get mauney after his death. and i certainly heard from lots of african-american people who remind me passing is a common story in american story didn't come history but it's mostly passing going the other direction. the idea is to move towards privilege, and king moving from white to black is passing away from privilege and that is certainly what makes the story so remarkable. thank you very much for coming tonight. [applause]

amity shlaes three examines the financial history of the great depression and critiques the new deal in her book, "the forgotten man: a new history of the great depression." the author argues it was the fortitude of the individual citizen and not president roosevelt's economic plan that sustained people's rapid depression. she recounts the lives of these individuals as well as the proponents and critics of the new deal. amity shlaes discusses her book with nick gillespie, editor-in-chief of reason

magazine. >> host: in your great new book, "the forgotten man: a new history of the great depression," utah cobb the acknowledgements for a new history of the depression. existing accounts as you point out in your introduction tend to fall into one of the following camps and there are the people who generally support fdr and his and hoover's interventions into the economy and society as stephen of fascism and communism after the stock market crash and and 29 the depression kicking in a few years later and additionally help people in the support of camp what we might call talk about how the 30 is intervention kind of corrective a morally corrupt 1920's economic boom which was widespread. then but critics who tend to fall into another camp that federal responses especially by hoover tightening the money

supply by the federal reserve smoot-hawley tariff, which kind of blocked american trade from doing much actually caused the depression which was then extended and exacerbated by fdr's subsequent new deal programs, etc.. so your book is, the subtitle is a new history of the great depression. how does your book fit into these existing arguments, and what new are you bringing to our understanding of the depression? >> guest: one of the important things about the argument is it is all about keynesian is and whether government spending can cure the economy when it's ill for the short term and long term and scholars overlook the cost of uncertainty would recall now as the unknown unknowns and an economy and because both administrations especially the roosevelt administration was so unpredictable that hurt the economy. when i looked back and saw the extent i was astounded. so uncertainties a factor that i thought needed to be explored.

people who said i will not invest on till i know what is going to happen. >> host: it's not just i know what's going to happen in the economy but what the government is going to do. >> guest: the government was very unpredictable. everyone overlooked the cost. you hear the phrase called persistent experimentation and we learned that was good. somebody had to do something but when i saw in the years especially the second half of the depression was the cost it was the second thing, too, which is there is a school of economics called public choice theory that says very simply government is no better or worse than a business. it's a competitor. >> host: and it doesn't have moral high ground but seeks to maximize, you know, what it controls or its market share. >> guest: absolutely. sometimes on the review of u.s. and incrustation image. it will keep anything. it wants to survive. and it can be a campbell. when you look back at the 30's when you discover if you use the

public choice lines is the extent it wasn't about a virtuous government and bad business people but rather about people in office using the office to compete with a private sector for power and much of that struggle in the book literally at here in the power business, and utilities because there's something about power that attracts a certain people and of course as i go through you will see in the book the government wins and private company loses in the tennessee valley authority. >> i want to get the point we talk about wendell willkie who emerges as an unlikely or unexpected hero in the book and was a power utility executive who fought with five tva. two things quickly: what -- public choice economics or analysis did not really accessed certainly during the 30's and 40's. can you give a quick intellectual history of where it comes from? >> guest: i am afraid i am also good at that but what i

will say some of it comes from the left. there was an italic and who wrote about it who influenced very much our public choice, the inventor of modern public choice, james buchanan the nobel prize winner. so you can even find it among the marxist which says the power, the colonial power, the government is problematic and can hurt the little man and talking and aggregates whether you are a free market year or a more state oriented person is destructive because life isn't about aggregates and managing an economy, it is often from the top with individual and walls is with a small man and i think public choice focuses on that as well. >> host: you also -- i want you to explain your tidily little bit but one of the things that is striking about your book and reminds me of another depression document, the u.s.a. trilogy, where you weeds and a lot of people at the highest

level of power, whether we are talking about andrew mellon or franklin roosevelt members of roosevelt's cabinet and poor people, both poor people as well as working class weaves together nicely. and by focusing on that the optus lee is one of the things you are bringing to at our understanding, its impact on day-to-day life and individuals. talk about where the forgotten man comes from essey title. >> guest: forgotten man is what we know from roosevelt. on 1982 at the lucky strike hour he gave a speech written by raybould, his said pfizer and he was the man you'd want your dinner table today to read a wonderful man. in that speech, roosevelt spoke of the forgotten man at the bottom of the economic pyramid. and he wrote to his sister he wasn't sure where he had gotten the phrase but it was in the air because there was a problem it's

before when they were children in such men were children and the 18 eighties and nineties there was a famous book collection of essays called the forgotten man, and a famous individual lector called the forgotten man and the author was a professor called william graham sumner and he had a different forgotten man. he put it algebraic way. he said eight wants to help ex, that is of a philanthropic and pulse, help x being the man at the bottom, and be wants to help ex, there's nothing wrong with that. we all have the charity or for lampert becomes a problem when a and b get together and pass a dubious all that the worse this see into funding the may be good project forex. c is the forgotten man who prays who is not thought of. and that ring a bell with me because i think it has to do with today when we can talk

about this later but when you look at of the election and see great power houses, the democratic powerhouse, hilary, the republican powerhouse, maybe mccain, maybe someone else, and the individual boater says where do i fit into this? i feel like a forgotten man. there is something about this election beginning to unfold. and also, given our entitlement challenges, the forgotten man in the future will be the next generation who will pay for what roosevelt created "the forgotten man," i thought it which obviously was pulling off of roosevelt speech there's the 36 william powell movie with carole lombard which william powell, the manservant and then at a fairly striking representation of poverty takes carol lombard

to like hooverville or eight hobo town in new york and there's a lot of discussion of "the forgotten man" in that. >> guest: that is a wonderful movie. i recommend it. it is sort of the joke, they have to find a forgotten man, a scavenger hunt. she goes to the sad hooverville and the report which did exist where there was terrible poverty and callers want a sort of pet and reforms the family because they are lost in their wealth and the message of the film isn't 1i would agree with. it is wealth caracas, maybe that is true, but that there is something intensely virtuous about the poverty of the very poor man and that is superior to the wealthy man and we have that in our work religion but i am not sure it is entirely true. the message is the forgotten man is great and somehow transcend and economics is bad because economics created the wealth for

the family come now to analyze the movie too much, so economics isn't bad. economics is good especially for the forgotten man who can come out of hooverville so it is a wonderful movie and there is a song, "the forgotten man," so this is something that meant a lot to people of the time and when roosevelt people debated hoover people or other right-wing people they were all familiar with william graham sumner, the so they said you have the wrong forgotten man. the forgotten man is the one waiting for the recovery you are not delivering or you are preventing and i like that because it plays all the way through the book, all the way through the history. >> host: one of the things you talk about particularly in the beginning is hoover and roosevelt are not that different. obviously what is much more successful and the other is a politician but they share a certain types of mentalities and a share certain types of policy. can you talk about what hoover

did or the hoover administration that was all and then how fdr change that or i'd have did it or just cried of glom onto it. >> guest: it's amazing how much temperament matters and roosevelt was said to have a first-class temperament. >> host: what did that mean? >> guest: what does that mean, i will get to that. and hoover's casey was a good man and electing him was like electing bill gates or electing mike bloomberg or electing, let's see, as a mother, maybe ross perot, some other capitalist figure president. the country said we want a businessman to rationalize the country and there was nothing wrong with some aspects of that but he had an unfortunate -- >> host: he was also an engineer -- >> guest: he was an engineer, yes. but he was a control freak, that was the temper my problem. so hoover would rather have control as president and do what was right. that's a harsh thing to say but

it's happening over and over again. he also -- >> host: people wanted that in 1928 though? did that make sense okay i want a control freak after everything goes to hell -- why were in 1928 why were people looking for an engineer who could control things who was famous for helping flood victims and just creating a large scale -- >> guest: i don't think they fought with them as a control freak. it was let's get that private sector something he has that gates has the google founders have, let's get brolin for president -- >> host: romilly? >> guest: i will. let's move that thing over here without realizing it doesn't go over. government is a different animal and he also had this enormous talent and organizing humanitarian efforts.

we have the recent flood in our mind for was an analogous terrible flood in 1927 which hoover managed so that helped elect him. >> host: and he was commerce secretary. >> guest: and he was commerce secretary but when the crash happened he did bad things. one, called business together and said don't drop wages or prices, and therefore he did not give business a free rein to handle what was happening to them which was a downturn and effectively the choice was for them to close. they were going to do with the leader said. he signed this smoot-hawley tariff -- >> host: was that unprecedented where a president with -- one of the interesting things we should talk about is the kind of underlining political economic assumptions of the 20s and 30's versus now which have changed substantially even if policies haven't. was it on her love for a president to call business leaders together and say i can't do this legally yet but i want you to not drop wages. i don't want you to fire

anybody, had that happened before? >> guest: it was last heard of. when you look at this crash you see and distinction to the early crash at the beginning of the decade which was sharp contraction. so on and plymouth changes, everything very fast, and in that contraction they more or less left the economy alone so this was different. >> host: what happens is if there is a crash the business this are quite shut down and might reduce wages and fire people but they do what they can -- >> guest: he didn't like that compromise, not to harp on that, he also signed a bad tariff would send a terrible international -- this is where i -- it was in the republican platform, republicans like tariffs at that point. it was wrong but they did. so -- >> host: why did they? >> guest: they had a misunderstanding it was good for business. it's not good for business

generally, it is good for the businessman who has influence with congress so that's how it came about. but he probably knew better. he had lived in london, and asia, he generated significant economic growth for globalization. this was a period analogous to the 20's and that is my next book, the twenties. it was a wonderful period in terms of growth and people getting things they hadn't gotten before in strange places. he lived in the international london. and he had a thousand professors write to him sinking don't sign this, it's bad, smoot-hawley, even some from his own universities, stanford. and yet he signed it -- >> host: to have a massive academic sector we try and to influence policy in a direct way? >> guest: know why don't think so but it was certainly strong, relatively strong. so there he was. he signed many other mall so great things.

one thing the markets blamed for that he doesn't deserve blame is people say he ought to have spent it as a keynesian world and the government would have made the economy grow by remember when we say that the government was very small. it was smaller than the federal government, smaller than the states and localities to or 3% like that, 3.5 -- >> host: of gross domestic, so about 18 -- >> guest: we often talk about this, does the federal government. so the idea the mighty government could through spending change the country is a false memory or false retrospective. >> host: at that point the government wasn't even keeping the statistics. >> guest: they didn't like to keep unemployment statistics because they didn't want a political football and maybe they were right about the political football aspect. the states kept some data and frances perkins who would later become roosevelt's labor

secretary -- >> host: and the first woman in the cabinet. >> guest: first in the cabinet, she jousted with to for because she pulled out her new york state and was interested in having the data and maybe it was relatively accurate and she said your data is not good, mr. president. and it was all over the times for months. >> host: and perkins was from new york as was obvious the roosevelt. new york i think it is hard for people now, and i'm from new york so i like to read this but new york was more than twice as big as any other state in terms of electoral votes. it was a population magnate etc. >> guest: new york was the california. new york turned elections, so yes it had the most. and roosevelt had done very well, he won an e election as governor. so she was his adviser and the date all the things they wanted to do in the federal government on the new york level first.

different programs. so the visas of the book is who furred and roosevelt are alike and many advisers noticed this and said we just did what the hoovered team would have done any way or we just did what we had done in new york so the idea roosevelt alone did this stuff i think there was a whole progressive movement. >> host: so you have hoover, a lot of things telling businesses they can't adjust in response to an economic downturn, and smoot-hawley which not only causes of imports coming that effectively means american goods can't be exported. at the federal reserve level, how old was the fed at that point? >> guest: the fed was young and had been founded in the teens. they didn't know what they were doing, nidaros felt or hoover understood the country was in deflationary. they were having money drought. bank problems were a large factor, too and you get into a theology its favorite aspect of the trout are big problems made it so much worse and

international factor there were depressions and other places, the squabble contraction was part of it but i don't think they really understood what was going on with money or the you could create more money. they were in the gold standard culture but there was a professor i came to know and like in the period was irving fisher and he would go around and say basically there must be more money. the town certainly knew because in the book you'll see pictures of the script they created. they made their own money and manufactured it and -- >> host: the one in salt lake was the dollar? >> guest: they often have a moral component in salt like the had a currency called the valores and that is a mormon area and one of the reasons that there are eckert echols who later became the fed chairman feared so well and rescue the banks like the movies he bluffed out the window and that ellerbe loft and people behaved and went away and the bank did not

collapse. one reason that happened is because the fake money which wasn't eccles but somebody else's book also in the mormon culture the bank. the mormons listened to other mormons and when a mormon told you not to withdraw your money you would think twice. >> host: with a sinking don't withdraw your money because it is still in here or don't withdraw your money because that will just destroy everything? >> guest: there's always laughing so somewhere in between. everything is fine, it's your murfs that cause the trouble commandeered a customer, come back another day. at that is technically true because no bank, really do banks have all the money. that is how most function. >> host: is the widespread consensus among economists now is what the fed should have done rather than raising interest rates making money more difficult to obtain the should have done nothing or low word --

>> guest: were mauney -- the concept we have today, much of the book is history, it's not economics but open market operations where the government buys or sells bonds to inject money or soak up money from the economy wasn't specially developed at the time and the gold standard function differently and if you want to make an argument against the gold standard this is the example, the louisianan katrina flood of gold standard policy, the absolute worst picture you can get of gold standard is this period because people did go hungry. >> host: lowercase and then talk about roosevelt. hoover has a terrible four years and he gets kicked out with extreme prejudice, right? he gets smoked by fdr who among other things also lifts prohibition, right? >> guest: right and that was part of the sale was the knowledge that he would do that and of course as we know there were revenues that came and these were a significant event,

the revenues. in the 32 election roosevelt gave liquor and in the 36 election he gave spending. >> host: ok so -- >> guest: he always had a gift. >> host: how did he extent, or then you know, really kind of put anything hoover might have been doing on steroids for the economy? what was his depression solution? >> guest: the basic solution plan that any responsible president would have done is to rearrange the banks, help sort them out, create credit mechanisms, create loan mechanisms come help with mortgages and we have some of those today. even three of the securities exchange commission -- >> host: which you are generally in favor of. >> guest: this is not a totally libertarian book. i think it's okay to have the fed and the fcc and clearer rules in the game. >> host: because they limit the on certainty than even a bad policy that's certain.

>> guest: right. but there were other things that were not in his platform that he did in the hundred days and i was the sort of problem and the central to work changing the economics of becker culture and saying we will pay you not to produce. we will limit supply either by palau wing under an acreage or something and the other complex things. >> host: where did that come from because the agricultural policy -- he was always talking about helping people but that he actually sent for prices at a time people were going hungry so this is, you know, not exactly what i think the typical kind of fdr devotees fully understands. >> guest: you have the interest groups and individual. the interest groups of farmers that wanted the high prices they had before a ground war one and that a significant drop in ad prices, 30 or 40%. >> host: another culture had taken it in the 20's.

>> guest: even through the twenties we might say looking back may be more of america should have moved to the city faster which is what it eventually anyhow. >> host: the 1920 census is the first i believe people lived in cities and towns, so the people were moving to the cities. >> guest: right, he expanded that. roosevelt was elected in part by the farm vote. he put henry wallace, a figure they knew as agriculture secretary and they made a bunch of fools they also put a tax on middle man on the theory that would help the farmers and middle men got in the way of efficiency rather than help deficiency contrary to what we think today and then there was an analogous beast in the business world, the national recovery administration that a bunch of philosophy and copying a little bit britain, copy and definitely the german cartel system, shom bader noticed that as in the book also what stalin

was doing. you want to recall stalin at the time they didn't know he was a monster or at least not so much and very naive they copied stalin and in the book i trace how some of the characters go to the soviet union and are boiled over bye stalin and get six hours with him and they came back and you see them especially rex tugwell either from fascist italy or stolen. >> host: the administration in the mentioned in the book based dustin national retardation act it's often called months running america etc.. what was revolutionary about that? and how did that play out? >> guest: america was supposed to be about the little man, the forgotten man but this was a cartel arrangements where big companies wrote codes that made it hard for a little companies to survive, and i tell this story straight forward economically but also through a

family to in the end challenged the nra. >> host: and this is the schechter brothers? let's talk about them and links in a couple of minutes. >> guest: in a couple of minutes. the nra think tank had a look at the nra which was a whole bunch of rules in every state, sort of a mixture of government and industry where industry was supposedly self-governing but not really and it went on and this big think tank, big right-wing think tank conclude after a thousand pages it was retarding recovery and the name of the think tank was the brookings institution. so roosevelt from all over the place had people telling this isn't working and it was even julie challenged in the supreme court and lost and had to be disbanded. >> host: and it was an attempt to government regulate and virtually oversee all aspects of the economy. >> guest: the difference between the two is the agricultural stuff survived, but that was a tremendous blow, and

in retrospect a wonderful important blow for us now with the supreme court stock when it set no national recovery administration for the business sector. there were other components, social components, child labor, labor components that became the wackier act -- lakner act but the rules of thing, that didn't come back quite the same way -- >> host: it was very popular, wasn't it, i mean all along the common man to the extent we can gauge that? >> guest: the nra was public? >> host: the individual businesses and people didn't like that roosevelt, did he ever go through in terms of the extent they had surveys, was he ever unpopular? >> guest: roosevelt wasn't on popular especially in that period. the nra was like -- the depression was like a natural disaster. all old rules were off. you suspend disbelief as they say. and we will just get through

this time as an war and other writers have written quite a bit about that, robert higgs for example. they said we have to get through and the emblem was the eagle and led by general johnson and we will have to get through even if it is it was not a war and the monetary event was mysterious but solvable. we know what was soluble now and we had the economy that allowed to function, with a little bit less disruption it. >> host: one thing, michaelene, the german cartel system, the soviet union, in some way was the new deal inevitable because it was the american experience was part of that least in the developed world at that time or the industrialized world everybody had something like this in the rise of collectivism of state action there is a recent book that came out last year in

english by wolfgang about mussolini and hitler and so in some way was the american experience wrapped up in this larger moment of collectivism? >> guest: absolutely. there was a romance with a copy of scale. states are inefficient. if you have 50 flowers blooming it's a federalist state. if you have 50 flowers blooming you have a messy garden. the was the sense that the government couldn't go further unless there was standardization. even now use e-business and fighting -- just make the rules. >> host: the rules have to come from outside authority, they won't be generated by industries or customers or anything. >> guest: right, and probably of the fallacy of that was only government can supply the capitol. money drought, deflation, and there was this idea that the big good things of the government has enough money to do but in the book i also argue that

america need not necessarily had such a large new deal as it did. and that it was sort of an accident of history many of roosevelt's advisers were scholars of what happened and actually i call them pilgrims, they had a lot of faith in what happened abroad and maybe in the u.s.. >> host: when we come back let's talk about that. >> host: you were talking a bit about what was called the brains trust originally and then got shortened and the common parlance to a brain trust that

roosevelt created around him a bunch of mostly academics was to have a connection to columbia university. rex tugwell who was a new deal agency operations, he and a bunch of his friends in 1927 took a very interesting and retrospectively bazaar don't get to the soviet union during i guess the year of the sock and city trial and he and most colleagues were bowled over by what they saw. talk a little about the chapter in your book that is a stunning piece of kind of historical recreation of who went over there, what did they see and what did they bring back to the u.s.? >> guest: i will also say why i wrote this. when i looked at the new deal i saw the influence of these european entities from russia to italy was not here in the local. it was important. and in our standard history, we had always more the sort of set

it aside, and they were influenced by and if you set more than you were age read later. these people were not working for moscow. they were new republic authors. they were like people we know. but they were influenced by moscow. so, -- >> host: as well as italy -- >> guest: as well as italy and over on the right if you look at forbes covered you will see rosellini. >> host: recently? >> guest: no, in the 20's. americans were interested what was happening abroad and these were relatively left-wing professors. unemployment was way down there. so they're left-wing arguments didn't have much reverberation at home and so in 1927 they go on a trip to the soviet union. it is time the u.s. doesn't recognize the soviet union so it is an unofficial trip and a number of ways and one american labor doesn't like the soviet union either so they were a labor delegation that was an

official. the unions knew it was probably wrong what was happening and they didn't want part of it. that wasn't there kind of work not tenured faculty the red carpet and stalin rex tugwell, an interesting professor from columbia who i followed through the entire book. a very good hearted man who meant well and believed and again the economy of scale and his background was agriculture. another was paul douglas of chicago who later became senator paul buckles, a man of great integrity, was a labor professor at the time and had -- >> host: if you ever see a chicago? >> guest: university of chicago. where he had seen men lose their arms blogging and taking care of them and he believed in a

stronger government, an unemployment insurance and so on. the third one was called brofee, trying to think who else. another was the paul krugman of the day or maybe samuelson, named stuart chase, a journalist, accountant who wrote about economics everywhere. very famous. they went over and had a good time and rex tugwell salles the farms and there were villages put up for them. >> host: this is the period stalin basically had consolidated power and was starting the collectivization process. >> guest: it was before the bad stuff was known. the war seemed to be over so no economic policy. he seemed to be more moderate, socialism in one country. stalin's agenda was to get american labor and they had this six hours plus interview with him and they also got to see trotsky and the didier array and he wore a white suit and what stalin -- or they debated and

stuart chase wrote a book too and his book was several books but one of them was called a new deal and it appeared in 1932 and the last sentence of a new deal is why should russians have all the fun in the world? so you see the continuity. they certainly wanted roosevelt to recognize the union which they did so this is part of the history and we should acknowledge it. also important to remember is the trial and execution were very controversy. these were anarchists probably, the execution -- or freedom of expression, they were executed while the people were in russia so will the russians used socle and vanzetti and said you don't have social justice in your country and they did side of roger baldwin, the founders of the aclu, i didn't name them all

-- >> host: but then he came back turned off by the trip might quicks or relatively recently he became a pretty staunch anti-communist. >> guest: they were ambivalent but they were inspired by the scale of the thing. stuart chase said they salted away the economy and i just say where you find the test upon them is how they reacted in the purge trials a decade later, and i do follow their reactions. paul douglas had talked to a young woman he was going through divorce at the time. he talked to a young woman who made a big impression on him and he -- she told him it was free and the soviet union, he debated her so she wrote down her name and his notebook and ten years later read in "the new york times" he sees she is one of the people who liquidated, and that was a huge turning point for him and he wrote that he had some regret for his small role in recognizing the soviet union. so they all reacted differently.

>> host: and again even the soviet union -- not to exempt individuals from both the ability to move history or to be responsible for their own actions -- all of this was kind of -- there was a wave of industrialization and kind of the aggregation of people in cities, bigger businesses, industries of scale. much happening throughout the industrialized world, it? >> guest: the idea was everything must be a factory. you try for a factory which actually they have become. sometimes the u.s. government was of interest were there wasn't the capitol in the u.s. and the soviet union but lowercase people and say we will give you more acres than you can get in the u.s. to do your farm factory experiment. so there was this interchange and competition. the soviet union were building a dam, well, what the u.s. build this good of hoover dam -- space race. >> host: or before they even began. there was also the fear -- if you look back at some kind of free-market economist like

ludwig von mises at the time talking about how you didn't need outside direction of the economy, that was a real minority position at that point, right? and people, everybody seemed to agree, or kind of the world view was things have gotten too complex and sophisticated quickly in this modern world and we need people to make sure the trains ran on time here and there was an overarching set of rules that would restrict the messiness and inefficiency to straitjacket individuals to do what was right for the assembly line. >> guest: of the government could marshal the capitol and make something comprehensive. and that's been disproven by the internet most recently. i don't think we could have imagined the internet what i rise by itself or with some government funding -- >> host: eight exfoliates out -- >> guest: in this organic way.