Politics & Policy

While We Quake Over Katrina . . .

. . . we should brush up on our history.

Hurricane Katrina and the tragic aftermath for the city of New Orleans have, in a matter of days, already become the stuff of legend. The disaster is universally believed to be “unprecedented” — the “biggest national disaster in American history.”

Such beliefs energize the media’s morbid round-the-clock sensationalism, and make the Washington blame-game so much more delicious to play. But these beliefs are, in fact, just legend. The reality is that America has faced and successfully overcome a disaster that was greater than the New Orleans flood in almost every dimension. It was one that took more lives, left as many people homeless, and destroyed more wealth than Hurricane Katrina. And it involved all the same “unprecedented” incidents of civil violence, failures of first responders, government incompetence, and racial undertones.

It was the great San Francisco earthquake and fire of 1906, almost exactly a century ago. It’s proof that everything that’s old will one day be new again.

When the earthquake struck San Francisco at dawn on April 18, 1906, the city held about 400,000 people — not so different from the 485,000 in New Orleans a century later. The quake, and the fire that followed, left from 225,000 to 300,000 homeless, which likely exceeds the number that will turn out to have been left homeless in New Orleans by Katrina.

The official death-toll in San Francisco in 1906 was 478. But a century of research puts the number far higher. Gladys Hansen, retired chief archivist of the City of San Francisco, who has spent a long lifetime studying the quake, puts the verifiable death-toll above 3,000. Despite early fears that the New Orleans death-toll could reach 10,000, it now appears, thankfully, that the actual count will be only a fraction of San Francisco’s.

Damage from the San Francisco quake and fire is estimated at $400 million, not adjusting for inflation. That represented 1.4 percent of America’s gross domestic product at the time. To exceed that fraction of present-day GDP, damage from Katrina would have to reach $170 billion. Given the current frenzy in Washington, that much money may end up getting thrown at New Orleans over the coming years. But it well exceeds even the wildest estimates of actual damages.

Another indicator of relative economic impact is that the stock market fell 10 percent immediately following the 1906 earthquake. It rose following Katrina.

The San Francisco quake was every bit as “widely predicted” as the New Orleans flood. Mark Twain had lived through and written about the great San Francisco quake of 1865. And before the 1906 quake, local real estate interests even complained that “Eastern newspaper letter-writers and newspaper editors” were making California out to be “one of the most dangerous earthquake countries in the world.”

The performance of first responders in 1906 was as dubious as it was in 2005. Half the San Francisco policemen and firemen walked off the job, leaving whole districts virtually unprotected and unpatrolled. The U. S. Army, which had two infantry divisions stationed right in the city, could not coordinate emergency response with the mayor. Mayor Schmitz and Brigadier General Funston despised each other.

With dubious authority, the Army set about dynamiting scores of buildings that had not yet burned, hoping to create a firebreak. Critics claimed that this actually spread the fire faster, with the force of the blasts launching burning embers in all directions.

The looting and other civil violence in New Orleans that shocked the nation was far worse in San Francisco. Crowds looted homes and stores as the spreading fire approached and engulfed them, ransacked hospitals for drugs, and cannibalized the few belongings of the tens of thousands of refugees. Most shocking of all, some of the worst looting was done by Army and California National Guard troops, especially in San Francisco’s Chinatown.

The mayor posted a “shoot to kill” order and emergency workers followed it — including firemen who had to kill muggers who were attacking evacuees pulled from burning buildings. The official history is that no looters were killed. But James Baker of the Museum of the City of San Francisco believes that the number killed, including Army and National Guard troops shot by their own men, rivals the official count of 478 deaths overall.

The lesson, both then as now, is that it is very difficult for people and institutions to respond effectively to sudden catastrophes of great scope. Mistakes will be made, and sins will be committed — and even the most ideal response will likely be inadequate.

While the catastrophe in New Orleans and the Gulf Coast is tragic, it is not unique or unprecedented in any way. There has been worse. For those who did their best and put themselves in harm’s way in order to respond, let there be praise for their efforts and criticisms for their shortcomings. But they deserve no unique or unprecedented blame.

– Donald Luskin is chief investment officer of Trend Macrolytics LLC, an independent economics and investment-research firm. He welcomes your visit to his blog and your comments at don@trendmacro.com.


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