US Senate in Washington, DC, replaced its non-dial phones with dial telephones
in 1930, the first year of the Great Depression. Three weeks after their
installation, Senator Carter Glass introduced a resolution to have them torn out
and replaced with the older phones. Noting that operators’ jobs would be lost, he
expressed true moral indignation against the new phones:
I ask unanimous consent to take from the table Senate resolution 74 directing
the sergeant at arms to have these abominable dial telephones taken out on the
Senate side … I object to being transformed into one of the employes of the
telephone company without compensation.32
His resolution passed, and the dial phones were removed. It is hard to imagine
that such a resolution would have passed if the nation had not been experiencing
high unemployment. This story fed a contagious economic narrative that helped
augment the atmosphere of fear associated with the contraction in aggregate
demand during the Great Depression.
The loss of jobs to robots (that is, automation) became a major explanation of
the Great Depression, and, hence, a perceived major cause of it. An article in the
Los Angeles Times in 1931 was one of many that explained this idea:
Whenever a man is replaced by a machine a consumer is lost; for the man is
deprived of the means of paying for what he consumes. The greater the
number of Robots employed, the less is the demand for what they produce for
men cannot consume what they cannot pay for.
This condition is inescapable. No political panaceas can alleviate this
purely human distress.33
Even if the man hasn’t lost his job yet, he will consume less owing to the
prospect or possibility of losing his job. The US presidential candidate who lost
to Herbert Hoover in 1928, Al Smith, wrote in the Boston Globe in 1931:
We know now that much unemployment can be directly traced to the growing
use of machinery intended to replace man power.… The human psychology
of it is simple and understandable to everybody. A man who is not sure of his
job will not spend his money. He will rather hoard it and it is difficult to
blame him for so doing as against the day of want.34
Albert Einstein, the world’s most celebrated physicist, believed this narrative

in 1933, at the very bottom of the Great Depression, saying the Great Depression
was the result of technical progress:
According to my conviction it cannot be doubted that the severe economic
depression is to be traced back for the most part to internal economic causes;
the improvement in the apparatus of production through technical invention
and organization has decreased the need for human labor, and thereby caused
the elimination of a part of labor from the economic circuit, and thereby
caused a progressive decrease in the purchasing power of the consumers.35
By that time, people had begun to label labor-saving inventions as “robots,” even
if there were no mechanical men to be seen. One article in the Los Angeles Times
in early 1931, about a year into the Great Depression, said that robots then were
already the “equivalent of 80 million hand-workers in the United States alone,”
while the male labor force was only 40 million.36

A Word Is Born: Technocracy
By 1932, the bottom of the stock market decline, the US stock market had lost
over 80% of its 1929 value in less than three years. We have to ask: Why did
people value the market at such a low level? A big part of the answer was a
narrative that went viral: modern industry could now produce more goods than
people would ever want to buy, leading to an inevitable and persistent surplus.
This new narrative became associated with two new words that left ordinary
people out of the economic picture: technocracy, a society that is commanded by
technicians, and technocrat, one of these now-powerful technicians. These
words weren’t new to the 1930s. They had been used occasionally in the 1920s
to refer to a theory that the government should be run by scientists who could
assure world peace. Thorstein Veblen had written a book, The Engineers and the
Price System, during the previous depression, 1920–21, that envisioned a world
run by a “soviet of technicians.” But the words took on a new meaning with the
explosion and duration of unemployment by the early 1930s. A Columbia
University group with revolutionary pretensions called itself “Technocracy.” Led
by engineer Howard Scott, it was composed of scientists from across the United
States. By 1933, Scott was as famous as movie stars of that day.
The technocracy movement created its own jargon and proposed a new kind
of money, electric dollars. As explained in a 1933 book, The A B C of
Technocracy, written under the supervision of Howard Scott and published under
the pseudonym Frank Arkright, electric dollars represented units of energy. The
name Arkright appears to have been inspired by the life of Richard Arkwright,
the inventor of the spinning frame, a water-powered spinning machine that
displaced jobs and resulted in antimachinery riots in 1779. The Arkright book
and its ideas went viral, particularly with the idea that modern science would
soon transform the economy, even eliminating money as we know it. The story
has many similarities to the Bitcoin story, right down to the use of a pseudonym,
Frank Arkright, like Satoshi Nakamoto.
According to The A B C of Technocracy, the US economy had an installed
capacity of a billion horsepower. It also stated that one horsepower equals ten
men’s labor and that running the machinery for the ten laborers required only
two eight-hour days a week. Thus the book gave credence to the idea that the
rising unemployment of the Great Depression was the beginning of an alarming