ARBOR WEALTH: Roosevelt, Guthrie and The Color of Money

Staff Writer
The Destin Log

First in a Series

“From the redwood forest to the Gulf Stream waters

This land was made for you and me.” from “This Land is Your Land” written by Woody Guthrie

Have you watched any of the PBS documentary series by Ken Burns on the Roosevelt family? The historic, grainy film of Theodore Roosevelt traversing the countryside on horseback, inspecting a steam shovel in the Panama Canal and gesturing emphatically in political speeches is remarkable. Yosemite’s towering redwoods and giant sequoias and the vistas of the Grand Canyon are accessible today because of Roosevelt’s desire that future generations be allowed to enjoy such natural grandeur. 

Inserting the federal government into the role of arbiter in the 1902 coal strike, however, was a much more controversial use of executive power. Anthracite coal miners had not enjoyed a pay raise in some 20 years, and mine owners steadfastly refused to negotiate with the miners’ union. 

With the country facing the prospect of a long winter without adequate coal supplies to heat businesses and homes, Roosevelt intervened, first by threatening to nationalize the mining companies. Eventually a 10 percent pay increase (the miners had lobbied for 20 percent) and a nine-hour day (the miners had lobbied for an eight-hour, six-day work week) were negotiated. 

Roosevelt’s use of executive authority was historic and his actions established a precedent whose shock waves are still being felt today. How so? Six years ago markets were floundering in the worst economic crisis since the Great Depression. The government actively entered the crisis, saving some corporations but not others; creating a bond-buying program that influenced markets; and holding interest rates at a sustained, low level in an attempt to reinflate the stock market and to encourage mortgage lending.

Today it’s not just the executive branch, but other governmental bodies whose actions cause markets to react.  Whether we agree or disagree with particular uses of executive authority or actions by, say, the Federal Reserve vis-à-vis the economy, is immaterial. Indeed, government may be too much with us. But to ignore the far reaching implications of government actions designed to influence the economy is to do so at one’s own economic peril, regardless of one’s politics.  It’s not blue states or red, as in votes. It’s green, as in the color of money.

When Federal Reserve Chair Yellen attempts to establish a consensus on how best to wean ourselves from Quantitative Easing, markets are impacted.  Analyzing these actions intelligently and applying this knowledge to investment accounts is what matters.  Astute portfolio managers see Shinzo Abe in the early stages of the Japanese version of Quantitative Easing and consider the possibility that the Japanese “Fed” will drive markets in the same fashion that they have been influenced here. 

Margaret R. McDowell, ChFC, AIF, a syndicated economic columnist, is the founder of Arbor Wealth Management, LLC, (850-608-6121 —, a “fee-only” registered investment advisory firm located near Sandestin. This column should not be considered personalized investment advice and provides no assurance that any specific strategy or investment will be suitable or profitable for an investor.