Goodbye, Yellow Brick Road !

“Toto, this certainly isn’t Kansas anymore?!”
… Dorothy from the “Wizard of Oz”
November 17, 2008

The holiday season officially began at the Saut household last weekend, for as I sat down in front of the TV to catch up on some overdue reading, the movie “The Wizard of Oz” appeared. Followers of our work know that three movies really put us in the holiday mood. “The Wizard of Oz” is always first, as well as prior to Thanksgiving. Following Turkey Day comes Frank Capra’s 1946 Christmas classic “It’s a Wonderful Life,” whose theme of a collapsing bank threatening to leave its president George Bailey destitute should resonate with participants as well today as it did in 1946. Finally, usually a few weeks before Christmas, comes George Seaton’s 1947 movie “Miracle on 34th Street.” This morning, however, we focus on “The Wizard of Oz.”

While most people know “The Wizard of Oz” as one of the most popular films ever made, what is little known is that the book was based on an economic and political commentary surrounding the debate over “sound money” that occurred in the late 1800s. Indeed, L. Frank Baum’s book was penned in 1900 following unrest in the agriculture arena due to the debate between gold, silver, and the dollar standard. The book, therefore, is supposedly an allegory of these historical events, making the events easier to understand. In said book, Dorothy represents traditional American values. The Scarecrow portrays the American farmer, while the Tin Man represents the workers, and the Cowardly Lion depicts William Jennings Bryan. Recall that at the time Mr. Bryan was the official standard bearer for the “silver movement,” as well as the unsuccessful Democratic presidential candidate of 1896 who gave the “Crucified on the Cross of Gold” speech at that year’s Democratic National Convention. Interestingly, in the original story Dorothy’s slippers were made of silver, not ruby, implying that silver was the Populists’ solution to the nation’s econ omic woes. Meanwhile, the Yellow Brick Road was the gold standard, and Toto (Dorothy’s faithful dog) represented the Prohibitionists, who were an important part of the silverite coalition. The Wicked Witch of the West symbolizes President William McKinley; and the Wizard is Mark Hanna, who was the chairman of the Republican Party and made promises that he could not keep. Obviously, “Oz” is the abbreviation for “ounce.”

Plainly, the turmoil following the “1873 Coinage Act,” the “Sherman Silver Purchase Act of 1890,” and the subsequent panic, and depression, of 1893 left the phrase “time for a change” swirling across the country as citizens struggled to correct the numerous wrong-footed plans/schemes that were so hastily conceived by the country’s then elected “nimnods.” If that sounds familiar, it should, because as repeatedly noted in these missives following the Bear Stearns bailout a similar series of hastily conceived reactive, rather than thoughtfully conceived proactive, “plans” have been enacted only to subsequently find that they should have been constructed better. That happened again last week as Treasury Secretary Hank Paulson abandoned the Treasury’s plan/scheme to buy toxic assets under the original TARP legislation in lieu of “capital injections.” Ladies and gentlemen, this is a stunning reversal by “stammerin’ Hank,” who made “toxic asset” purchases the centerpiece of the $700 billion Troubled Asset Relief Program (TARP). His switch-and-bait tactics caused “howls” from Congress about how ANYONE can be rational when the “powers that be” change the rules of the game at whim?!