Read The Great Depression Online
Authors: Benjamin Roth,James Ledbetter,Daniel B. Roth
The Great Depression (27 page)
All in all 1933 has been a terrible year for everybody. From January to March business was at a standstill while everybody waited for the new President to come in. Then came the closing of the banks all over the country. The balance of the year was exciting enough with talk of inflation, NRA, AAA, etc. but very little actual business. The coming year will probably see considerable debate on the currency question and on other Roosevelt measures, but all in all I feel optimistic and think there will be considerable improvement. President Roosevelt is still the idol of the great mass of people and receives over a million New Year greetings. It is almost dangerous to question any of his theories or statements.
The stock market closed the year with an average of 90 as contrasted with an average of 49 at the end of 1932.
In a recent message to Congress dealing with the Budget, Pres. Roosevelt revealed that a deficit of over six billion has been incurred by the “new deal” since March 1933 and four billion more by deficit can be expected in 1934. The government expects to float a $10 billion bond issue in the next few months to cover this.
Interesting question. Can such a huge loan be floated? Will stabilization be necessary first so the public will buy the bonds? Are we heading for inflation? This deficit will bring U.S. indebtedness to the huge total of $32 billion.
James Truslow Adams in his
March of American Democracy
points out that the 1873 panic lasted 5 full years and recovery started in the 6th year. After 1879 came fairly good business until 1884 when a short panic of a year or so took place. Then business was good until 1890. From 1890 to 1893 was a period of falling agricultural prices, grumbling about monetary greatness, etc. strikes and finally the crash in 1893. The 1893 panic really lasted only about 3 years.
March of American Democracy
points out that the 1873 panic lasted 5 full years and recovery started in the 6th year. After 1879 came fairly good business until 1884 when a short panic of a year or so took place. Then business was good until 1890. From 1890 to 1893 was a period of falling agricultural prices, grumbling about monetary greatness, etc. strikes and finally the crash in 1893. The 1893 panic really lasted only about 3 years.
When FDR legalized beer sales within the first days of his administration in March 1933, bands played “Happy Days Are Here Again” in Times Square in New York City. The Twenty-first Amendment, repealing the Eighteenth Amendment’sban on alcohol, was fully ratified on December 5, 1933, just weeks before many New Year’s parties like this one in New York City on January 1, 1934. (©Bettmann/CORBIS)
U.S. Panic Records 1873 to Date1873-1879 Major panic. Recovery in 1879. 1880-1884 Good times. 1884-1885 Short panic. 1885-1890 Good times. 1891-1893 Falling prices and warning of panic. 1893-1896 Panic. 1897-1901 Good times. 1901-1902 Short panic. 1902-1907 Good times 1907-1908 Short panic but severe. 1908-1914 Good times. 1914 Panic threatened but stopped by war. 1914-1921 War time prosperity. 1921 Primary war panic. 1922-1929 Good times. 1929-1935 Panic.
As to the future???1940 A short panic. 1950 A major panic.
An important monetary development took place today. President Roosevelt asked Congress:
1. To devalue the gold dollar to between 50% and 60%.
2. Permit the government to seize about $3 1/2 billion in gold now held in the vaults of the Federal Reserve Banks. The government would pay for it at the old rate of $20.67 per ounce as contrasted to the market of $34.50. Immediate results would be:1. Government would make an immediate profit of over $4 billion.2. Government could issue about $10 billion more currency using this $4 billion gold increase as a 40% backing.3. The possibility of rising prices has become more certain.
The entire situation has exciting possibilities and is being discussed on every street corner. Everybody is trying to figure out how it will affect them personally. The stock market is booming again.
The House of Representatives passed the 50-60 devaluation gold bill by an overwhelming vote of 360 to 40. There was almost no debate. It will now go to the Senate. The stock market went up about 7 points since the announcement and is still strong.
It seems that this is a good time to buy out a “sick business” and nurse it back to health by putting in new capital, adding new products, etc. Many businesses which were worthwhile before the depression can now be bought for a song.
My brother Joe is out of work again. Morris is still employed by the government (CWA) as a draftsman in the city engineering department. But his hours have been cut from 48 to 30. All CWA work will probably stop in a few weeks for lack of funds. This will put unemployment back where it was before.
A storm of protest is sweeping over USA over stopping CWA work by which thousands of men are employed by the government on public improvements (about 40,000 in Cleveland and 12,000 in Youngstown). The government is paying out about 75 million per week for this. To continue much longer will bankrupt the nation. On the other hand private industry has not improved and cannot absorb these men. The people have gotten used to looking to the government for help and the average man does not stop to consider where the money is coming from or how it is to be paid back.
Congress has passed the gold bill and it is believed that the President will formally devalue the dollar in the next few days. As a result, the stock market boomed yesterday and averages went up to 102.
Today however the stock market was irregular and receded. The stock market has not yet penetrated the inflation high of last July.
Big news for Youngstown. The U.S. Army Engineers have approved the canal for Youngstown. It is hoped to build it with government money as a Public Works project and thus eliminate the red tape of getting an appropriation from Congress. It will be 27 feet wide and run from the Ohio and Beaver Rivers at Rochester, Pa. to Struthers. Total cost estimated at about $40 million.
The past few days has seen considerable excitement on monetary questions. The President formally devalues the dollar to 59.04% of its former value, making gold worth 35 per ounce. The stock market rushes up from an average of 99 to 104. Yesterday, however, it starts down again caused mostly by the precarious continuation of the gold standard in France. In the meanwhile millions of dollars worth of gold are being rushed by the fastest ships from Europe to America. This is caused by two reasons: 1. To take advantage of the higher price of gold over here. 2. To speculate in American securities which are expected to rise with prices. In addition to this, considerable gold is coming back which was scared away at the time we went off the gold standard.
Everybody is optimistic and prospects for spring look good. Both steel and automobile trades are the best in years.
Rioting takes place in France and conditions border on revolution. This is the 8th time the government has changed in past two years. It is feared that either Communism or Fascism will gain control. In the past year France just started to feel the real depression. Inflation caused by other countries going off the gold has aggravated the situation. Her people are too excitable to take a thing like this quietly. There is no telling where it will end.
The European situation gets steadily worse and another war threatens. Revolution has broken out in both Austria and France and several thousands are killed. In Austria it seems to be a struggle between the Socialists, the Communists and Fascism or Nazi-ism. In the meanwhile, Italy collects troops on the Austrian border.
In the U.S. the situation is very little changed except that spring business is better. My own business remains stagnant. Even tho’ the dollar has been devalued 40% it has so far made very little practical difference. It still buys $1.29 merchandise as compared to 1923 but the income of the average man is much less.
Stocks fluctuate in a narrow range with average about 100: Truscon 8; S&T 29; U.S. Steel 56.
A year has passed since Roosevelt inaugurated his “new deal.” Through various agencies he created the government has poured huge amounts of money to help industry, the banks, and people in distress. It is said that today almost 1 out of every 4 people is being supported by the government. It seems impossible to stop and to continue means disastrous inflation. Private industry has so far failed to respond and for awhile even the deflated dollar is forgotten. The following are only a few of the governmental agencies created to spend money:
P.W.A.—Public Works Administration—To remedy unemployment by gov’t building of canals, etc.C.W.A.—Civil Works Administration—Hiring men on gov’t pay to work on local sewer projects, etc.A.A.A.—Agricultural Admin.—Helps farmer and pays him not to raise surplus wheat, cotton, etc.N.R.A.—Nat’l Recovery Admin—Controls industry, wages, hours, etc. and puts blue eagle on all who obey.
Roosevelt is as popular today as a year ago. His following with the working class is tremendous. It seems he and the Democrats will be in power for some time. Socialism is now accepted calmly by ministers, professors, etc. and it is amazing to me to see how calmly most people accept drastic government regulation. Personally I am convinced this reform wave will pass and we will return to the old order with some of the abuses remedied.
None of the professional classes have benefitted from the new deal. My law practice is still at rock bottom—altho there is plenty of work but no remuneration. I believe the laboring class has benefited most of all.
Business in general is fundamentally better although with so much shouting and excitement it is difficult to know the real state of affairs. Banks are all open but not making loans. Most foreclosures have been stopped by government loans thru the Home Loan Corporation. All in all it has been an exciting and eventful year with every citizen keenly interested in government.
The spring advance continues and merchants are looking for a big spring season. It also seems to me that law practice shows a few signs of awakening from its long slumber.
Within the past two months chain stores have been taking leases on Federal St. stores and very few are now available at low rentals. The tendency of landlords everywhere is to boost rentals in anticipation of better business. The only cloud in the picture is the possibility of a nationwide strike in the automobile business.
I also think we are beginning to see a reversal of trend against those policies of Roosevelt that smack of socialism.
EDITOR’S NOTEEmpowered by section 7(a) of the National Industry Recovery Act, union organizers signed up thousands of workers at plants and mills across the country. In 1934 alone more than eighteen hundred strikes ensued involving almost 1.5 million workers demanding better wages and an improved working environment. Their actions met with much violence at times, as the National Guard or local police were deployed to break up the strikes. From textile workers in Massachusetts and Georgia to autoworkers in Toledo and longshoremen in San Francisco, hundreds of union strikers were injured, some killed, in their fight for better working conditions. Roosevelt responded in June 1934 by creating the National Labor Relations Board to mediate the talks between labor unions and business leaders. But the board found it was powerless to enforce rulings. Roosevelt ultimately accepted the fact that employees and management couldn’t rely on mediation to come to an agreement on their own. In 1938 Roosevelt would sign the Fair Labor Standards Act as one way to resolve some disputes, with the federal government stepping in to create a national minimum wage and maximum forty-hour workweek.
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