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Government Intervention: The American Way?


Federal mitts in the market is nothing new.

It could happen: Gordon "Greed is Good" Gekko wearing a beret, waving a stinky Gauloise and sporting a French accent as he berates Wall Street for its latest antics.

A sequel to Wall Street, the 1987 film that introduced Mr. Gekko's financial finagling to the world, is in the works at 20th Century Fox (NWS). The new movie will play out against increased government intervention in the market, a move that would give actor Michael Douglas's laissez-faire character fits.

But the US has a long history of government intervening in the market. Just don't call it "nationalization" - leave that nasty word to the French.

In 1917, Uncle Sam seized the railroads to make sure war supplies and troops moved smoothly during World War I. Bondholders and stockholders were compensated. The railroads were returned to the private sector in 1920, long after the war ended in 1918.

The railroads flourished in private hands and were the center of an industrial economy in the 1920s. After the stock market crash of October 1929, many of the "Relax, it's not so bad" news stories pointed to the continued strength of railroad equipment and supply orders as evidence of a rebound.

During World War II, Uncle Sam seized companies in a range of sectors, including railroads, coal mines and -- get this -- the Montgomery Ward chain of department stores. Why Monty Ward and not Sears? Only a long-forgotten bureaucrat knows for sure.

In 1952, President Truman seized 88 steel mills, arguing that owners were about to provoke an industry-wide strike that would hurt the troops in Korea. The Supreme Court ruled that the action was unconstitutional and overturned Truman's action.
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