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Greg's eLetters

Independent insight from one of the industry's foremost expert and the NFIB State of AL and Entire Southern Region Small Business Champion

Economic Lessons From the First Thanksgiving

November 13, 2009


It’s that time of year when we pause to give thanks. This year, we can be thankful that the financial well-being of Americans is improving due to the U.S.’ recovery from the recession and rebound in the markets. The legacy of Thanksgiving goes back to the bountiful harvest in the fall of 1623 that prompted the Governor of Plymouth Bay Colony, William Bradford, to “sett aparte a day of thanksgiving.” The story of that first Thanksgiving may hold important lessons for investors this year.

Conditions were difficult for the Pilgrims during the first few years at Plymouth Bay Colony. Crop yields were poor, and many went hungry. William Bradford wrote that the old English tradition of farming in common—where the harvest was collected and rationed based on need—“was found to breed much confusion and discontent, and retard much imploymet that would have been to their benefite and comforte.” It seems that the younger, healthier, and able-bodied colonists resented not receiving a share of the harvest proportional to their labors and often sat idle. Others were unwilling to work, citing their weak physical condition.

After three years of near starvation Bradford decided to abandon farming in common in the spring of 1623. He set aside a plot of land for each family as their own private property to supply themselves with corn. The result was a bountiful harvest. Governor Bradford wrote that: “This had very good success; for it made all hands very industrious, so as much more corne was planted then other waise would have bene by any means.” Those who previously felt too old or ill to work embraced the idea of enjoying the fruits of their labor, and others became more productive. Years of abundance followed. Eventually the colony produced enough corn to spare and trade for other comforts. The fledging economy was so successful that 24 years later, in 1647, Bradford wrote that: “Any generall wante or famine hath not been amongst them since to this day.”

Today, we have reason to be mindful of the economic principles of that first Thanksgiving nearly 400 years ago. Taxpayers are being asked to collectively bear the costs of bailing out weak companies, from automakers to banks, and the government has taken steps toward a common public plan for health care insurance. As the size of government programs grow and raise the burden on future generations, recalling the long-term benefits of capitalism, incentives for private business, and the entrepreneurial spirit seem more appropriate than ever.

We don’t know what surveys of consumer confidence would have told us about sentiment in the early 1620s, but today conditions for consumers are poor as evidenced by surveys, job losses, and weak income growth. While consumers face a heavy debt burden, businesses generally have good balance sheets, boosted by cost cutting on everything including employment, advertising, capital spending, travel, and inventories. The aggressive cost cutting in corporate America has led to earnings rebound and businesses are looking to reinvest in growth. I expect this renewed pace of business spending to lead to job growth by next year, helping to sustain the recovery in the economy and markets. I hope that soon workers can again enjoy the fruits of their labors with years of abundance and stress the importance of a commitment to your long-term investment strategy. As always, please contact me if you have any questions. I wish you all the best this Thanksgiving.

Sincerely,

Greg

Gregory Powell, CIMA
President/CEO
Wealth Consultant

 

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