Many financial experts say we might be entering into another great depression. If so, are there any tips that we can glean from the past?
I picked up a book from the local library called “The Great Depression by Robert S McElvaine, which was a long read. Here are some of the most interesting sections contained in that book that give us a glimpse into that time period which many families struggled, but also were able to pull themselves through it.
Perhaps the most iconic and symbolic image of the time period is this photo of Florence Owens Thompson, Migrant Mother.
In Unstable Times, What Happens In Europe Will Impact America ” Herbert Hoover contended for the rest of his life that the United States economy was recovering in the spring of 1931, when the collapse of the European banking system plunged this nation, along with the rest of the world, deeper into depression. In fact an extremely modest improvement was registered in the first months of 1931, but stock prices and other indicators hit new lows in April and continued with brief pauses to plunge until the bottom was hit in 1932 and early 1933″ Page 85 The Great Depression Robert S McElvaine
Farmers Would Stick Together Often Buying Each Others Land At Auction Only To Give It Back To The Original Owner “Conditions were particularly bad for farmers, who were now in the second decade of their depression. After the rest of the nation had joined their economic plight, farmers faced an even more difficult situation. By 1932 a bushel of wheat would fetch only 30 cents, down nearly 90 percent from the almost $3 it had brought twelve years earlier. And the farmer now had to deal not only with low prices for his products, but also with a general deflation, the late nineteenth-century nemesis of American agriculture. The combination meant that many farmers, crushed by long-term debt, were threatened by foreclosure. Some met the danger with an old American expedient: direct action. Nooses were suggestively dangled over trees when judges attempted to hold foreclosure sales. In one such incident, an Iowa judge was momentarily hanged; but the farmers revived him and forced him to say: “O Lord, I pray thee, do justice to all men.” Rather than depend upon the Lord to provide justice, other farmers took matters into their own hands. “Penny auctions” were one example of homegrown justice. Neighbors of a bankrupt farmer would prevent—by threat of force if necessary—realistic bids, buy back the farm for a nominal fee (often one dollar), and return it to the original owner. Such actions never became very common, but their repeated occurrence in the heart of the supposedly conservative Middle West gave rise to heightened fears of revolution” Page 135 The Great Depression Robert S McElvaine
Mass Looting Of Grocery Stores ” Organized looting of food became a nationwide phenomenon. In March 1930 over a thousand New Yorkers standing in a Salvation Army breadline suddenly charged two bakery trucks that were making a delivery at a nearby hotel. Bread and pastry were thrown into the street and the hungry men scrambled to get it. It was reported to be common practice for groups of thirty or forty jobless men to enter a store and demand food. “The chain stores as a matter of policy refrained from calling the police in order to keep the incidents out of the papers.” In Detroit, people were often seen looting through broken store windows at night. In the drought-stricken areas of Arkansas in 1931, hungry residents used guns to force Red Cross officials (who seemed more worried about the possibility of non-needy impostors than feeding the desperate) to give out food. Hundreds of incidents like these could be recounted, but even that number would only scratch the surface of the rebellious mood many Americans had reached by 1932. It is almost certain that most of the small acts of lawlessness committed by bands of unemployed men were never recordedbecause in many areas newspapers would not print the stories. The editors, like the chain store managers, feared publicity might precipitate other such actions” Page 92 The Great Depression Robert S McElvaine
Generosity Among The Poor – Several of the Depression survivors Studs Terkel interviewed in the 1960s recalled a spirit of cooperation among the poor. “A lot of times one family would have some food,” Mary Owsley said. “They would divide. And every one would share.” Her daughter, Peggy Terry, expressed the same idea: “But there was a feeling of together.” “Black and white, it didn’t make any difference who you were,” Louis Banks said of hoboes in the Depression, “cause
everybody was poor. All friendly. …” And Kitty McCulloch remembered giving away her husband’s best suit “to a man who had such shabby clothes.” Her husband, she explained, “had three other suits and he didn’t have any. So I gave it to him.” Page 206 The Great Depression Robert S McElvaine
The Elite Wouldn’t Donate A Dime Of Their Earnings – “Not only were the businessmen blamed for causing the Depression, their attitudes during the crisis showed them to be even more
heartless and selfish than did the increasing revelations of their past shady dealings. While many poverty-stricken workers were contributing part of their meager wages to help the unemployed, the wealthy often refused to make any sacrifice. Henry Ford, erstwhile champion of high wages, insisted that businessmen had no responsibility for the jobless. Such prominent financiers as
Albert Wiggin of the Chase National Bank and J. P. Morgan manipulated their incomes through such devices as the pretended sale of stock to their wives, so that they paid not a penny of tax in the early years of the Depression. The Depression grew worse almost by the day in 1932” Page 121 The Great Depression Robert S McElvaine
Many Were Hungry Enough To Eat Weeds –” Relatively few people literally starved, but genuine hunger was widespread. One study of health in eight cities found that families with a fully employed member had 66 percent less illness than those of the unemployed. Desperate people took desperate steps to feed themselves. In rural areas hungry people sometimes turned to eating weeds. Less appetizing were the urban scenes of men digging through garbage cans and city dumps. A Chicago widow followed the practice of removing her glasses before using rotting meat; in this way she avoided seeing the maggots she was eating. Many of the nation’s more fortunate people were genuinely concerned about the plight of the unemployed. Generous contributions to local relief funds made this point clear. Some of the philanthropic impulses of the well off were more ambiguous, though. Several proposals were made, for example, to feed the unemployed with leftovers from the tables of the affluent. In 1932 a mid western newspaperman suggested that the needy be fed with ”the side dishes of vegetables, half bowls of soup, half cups of coffee, portions of rolls . . . and all the rest that is left on plates by restaurant patrons.” Some suggestions were undoubtedly made tongue in cheek, but similar ideas were actually put into practice in some localities. Princeton University’s eating clubs were among those generous enough to send their table scraps to the poor.” Page 81 The Great Depression Robert S McElvaine
They Eliminated Mass Amounts Of Food In Order To Increase Farm Prices – “Roosevelt signed the Farm Relief Act, and the Emergency Farm Mortgage Act, into law on May 12, 1933………Many other Americans never even understood the program’s rationale. Particularly appalling to many was the slaughter of some 6 million piglets and 200,000 sows, and the plowing under of 10 million acres of cotton. What sense did it make to destroy food in a nation where millions were hungry and a world where hundreds of millions were starving?……….The AAA and the Dust Bowl combined to increase farm prices by 50 percent during Roosevelt’s first term. Although raising prices had been the main objective, this limited success was hardly enough. Farm income did not again reach its poor 1929 level until the end of the Depression in 1941”
“The international crisis of 1931, like that of 1914, began in Austria. In May it was announced in Vienna that a major bank, the Kreditanstalt had lost during the preceding year an amount equal to the total of its capital reserves. The bank remained open with assistance from the Rothschilds, the Austrian government, and the Austrian Nationalhank.” Page 85 The Great Depression Robert S McElvaine
Through The Prosperity Of The 20’s, Banks Were Starting To Fail “Even in the prosperous twenties nearly 7000 banks had failed. Most of these, however, were small “country” banks and their failures were scarcely noticed in the prosperity decade. In 1930 the situation worsened. There were IMS failures that year, including the large Bank of the United States in New York. Now it was every banker for himself. Strong banks tried to solidify their own positions (which, in a semantic paradox, they did by increasing their liquidity) rather than trying to save their weaker brothers. Most bankers were “unreconstructed individualists,” believers in the mystical forces of the market. They would not lift a finger to help the banks that were going under because they viewed the latter as “bad” banks that deserved their fate. This was all well and good, except that banking is built to an extraordinary extent upon confidence. Depositors were unable to distinguish the good bankers from the bad and came to distrust them all. More than 2000 banks failed in 1931″