Currently, there seems to be no shortage of bricks for our wall of worry.
- Higher interest rates, coupled with a negatively sloped yield curve, are troublesome.
- Our nation’s growing public debt is a problem.
- The lack of leadership in our nation’s public and private institution is worrisome.
- While inflation is coming down, prices aren’t, and that is a real concern for U.S. consumers.
However, all of these economically important things seem to pale to insignificance when you reflect upon the original intent of what we now know as Veteran’s Day. From 1926 to 1954, the Federal holiday was called Armistice Day, which was a day to reflect on the American lives lost in the First World War. It is still know by that name in France, Belgium, the Commonwealth Countries and many others.
In his proclamation originally calling for a day of remembrance, President Woodrow Wilson said the following:
Mark that, because it will likely be the only time you will ever see me quote Wilson.
For the close-to-three decades we observed Armistice Day in the United States, it was a more somber, more reflective, occasion than the current holiday. That makes perfect sense. In the early 1950s, the First World War was roughly as distant as the first Gulf War in 1990-91 is today.
As bad as the latter was, the former was far more nightmarish in its scope. So much so, at the time, people referred to it as “the war to end all wars.”
If only that were true.
While warfare has always been brutal, the ease with which armies were able to mow each other down shocked even the most hawkish. By the time the dust settled and the smoke cleared, anywhere from 15-22 million were dead and at least a similar amount wounded. Historians will never know the true number, or even get close to it.
Even so, the numbers for some battles were absolutely staggering. For instance, the Battle of the Somme claimed roughly 1.2 million casualties of all sorts. The little known (to Americans) Brusilov Offense resulted in losses of anywhere from 1.2 to 1.9 million, no one will ever know due to the poor record keeping of the Russians and Austro-Hungarians. Then, there were other bloodbaths like Verdun, Passchendaele, the Serbian Offense, the Marne, the Spring Offense, Gallipoli, and the Hundred Days Offense which left depressingly large numbers of dead and maimed.
To say any notion of warfare being heroic or romantic mostly went out the window from 1914-1918 would be an understatement.
For me, this is best summed up in a war poem by a Canadian Lieutenant Colonel named John McCrae. He participated in the Second Battle of Ypres, a relative skirmish with only 100,000 casualties, which was a nightmare famed, if that is the right word, for the use of chlorine gas.
Being a trained medical officer, McRae would perform burials. During one he performed for a close friend after the conclusion of the battle (late April 1915), he noticed how poppies had started to grow despite the carnage. The next day, he wrote the following verse, known as In Flanders Fields:
In Flanders Fields, the poppies blow
Between the crosses, row on row,
That mark our place; and in the sky
The larks, still bravely singing, fly
Scarce heard amid the guns below.
We are the dead. Short days ago
We lived, felt dawn, saw sunset glow,
Loved and were loved, and now we lie,
In Flanders fields.
Take up our quarrel with the foe:
To you from failing hands we throw
The torch; be yours to hold it high.
If ye break faith with us who die
We shall not sleep, though poppies grow
In Flanders fields.
Largely due to the poignancy of the poem, people around the world wear poppies, or some sort of facsimile, on their chest on Armistice Day. Obviously, this is relatively uncommon here in the United States, but you might see one occasionally. Regardless, now you will know, if you didn’t previously, why William, Kate, Charles, Emmanuel Macron, Meloni and other dignitaries will be wearing red flowers at somber ceremonies over the weekend.
As for the name itself and when it is celebrated? The name comes from, well, the armistice which effectively stopped armed hostilities with Germany, the principal power in the Central Powers. The Allies had previously signed other armistices with Bulgaria, the Ottoman Empire and Austro-Hungary (or what remained of it).
Now, although the warring parties had signed the armistice by 6:00 am (central European time), it didn’t take effect until 11:00 am. I suppose they saw some sort of significance about the fighting stopping on the 11th hour of the 11th day of the 11th month. Unfortunately, there were an additional 11,000 casualties, and close to 3,000 deaths, that last day of the war.
Interestingly, in some ways, battles from a century ago still rage in Flanders, Belgium. Each year, during the planting and harvesting seasons, farmers still unearth over 100 metric tons of unexploded ordinance from the Great War (over 220,000 pounds). Yes, there is still the occasional casualty and/or death. These don’t make it to the official death tolls from the war.
Obviously, this blog is a departure from the norm. The reason being is pretty simple.
We are somehow supposed to “forgive and forget,” or at least people are prone to tell me since I seem to have the memory of an elephant. However, I strongly believe “those that don’t learn from history are doomed to repeat it.” Other good ones are “the past is the best predictor of the future we have,” “the past is generally prologue,” and “history tends to repeat itself.”
Such is the case with warfare as it is with inflation and interest rates.
- If you flood the financial markets with cash, prices will go up.
- If you spend more than you make, you will have to borrow the shortfall.
- The more you borrow, the more you will ordinarily have to pay for it.
- Prices tend to go up in an elevator and come down using the stairs.
- Periods of weak leadership will end when strong leadership appears.
The list is endless.
However, we have lived through it numerous times throughout the centuries. Although we would like to believe “this time is different,” the results are usually predictable.
Higher interest rates
The economy can eventually get used to the higher cost of money. It has in the past, and it should in the future…hopefully by the 3rd quarter of next year. Washington will continue to borrow as much money as it can until no one wants to buy it. It might be painful for some, but that is just the way it goes. So, don’t let inevitably find you flat-footed. Our nation has always suffered through periods of weak leadership until a strong leader arrives. Always. Finally, prices ultimately are a function of supply and demand. There is just no way of getting around it.
As for war
Unfortunately, it will likely always be with us. However, the more we learn from history, perhaps we will be less capricious about engaging it in the future.
That was, and is, the original intent of Armistice Day.
Thank you for your continued support. As always, I hope this newsletter finds you and your family well. May your blessings outweigh your sorrows on this any and every day. Also, please be sure to tune into our podcast, Trading Perspectives, which is available on every platform.
John Norris
Chief Economist
Please note, nothing in this newsletter should be considered or otherwise construed as an offer to buy or sell investment services or securities of any type. Any individual action you might take from reading this newsletter is at your own risk. My opinion, as those of our Investment Committee, is subject to change without notice. Finally, the opinions expressed herein are not necessarily those of the rest of the associates and/or shareholders of Oakworth Capital Bank or the official position of the company itself.