MARCH 22, 1934
The country is now threatened by huge national strikes in the auto and railroad industries. The A.F. of L. claims that the codes under the NRA give them the right to the closed shop. Industry has fostered “company unions” and refuses the demand of A.F. of L. for recognition. Industry is apparently willing to fight out the issue either with strikes or in court. A truce of 48 hours has been granted so Pres. Roosevelt can step in.
Radical socialism seems rampant in every class of society but mostly ministers and college professors. This has spread to the working class. They no longer ask for favors but “demand” government work, cancellation of mortgages, reduction of debts, etc. They feel the courts will not permit foreclosure of mortgages or ejectments, etc.
The fact that 2nd mortgages are a poor investment is now conclusively proven by the HOLC refinancing. Every time the property is appraised by government appraisers for the purpose of refinancing with government bonds, the appraisal is so low as to leave nothing for the 2nd mortgage holder. If he refuses to cancel voluntarily, he will be wiped out by foreclosure. Most of the 2nd mortgages held by my clients have proven to be worthless.
The opinion is spreading among thoughtful people that many features of the new deal are not helping recovery but retarding it. “Managed industry” under NRA has opened doors to further management and control of wages, hours, prices, unions, stock-market, etc. Managed currency has been temporarily forgotten but the 59¢ dollar has failed to help. Destruction of farm surplus is questioned. Is it really true that raising wages, cutting hours by these methods will bring prosperity? I think not. It seems to me that natural economic forces would do the job better under fair competition without too much supervision. The stock market remains stagnant at a 95 average.
MARCH 23, 1934
Another truce of 48 hours has been given in the threatened nationwide auto strike. The issue is the closed shop—not wages or hours. In the meanwhile smaller strikes are breaking out all over the country. By unionizing and striking at an important subsidiary of a large corporation the A.F. of L. is able to tie up the whole industry because it can’t operate without the products of that subsidiary.
The period of early recovery in every depression of the past has been marked by big strikes. Labor wants to guarantee itself a proper share of the increased profits. The situation this time is complicated by the NRA which guarantees labor the right to collective bargaining.
APRIL 2, 1934
The auto strike has been settled by appointing an arbitration board. Steel industry raises wages 10%. Rumblings of small strikes are heard all over the country but there is nothing serious in sight.
The retail merchants have just had the best Easter season in five years. Stores were jammed for over a week. The weather was ideal.
Sentiment continues to get better. It may be due partly to the fine spring weather.
The government stops all CWA work and fires thousands of men. They are all going back on the charity list. Due to the increase of this kind of work our Joe went to work today for the Allied Council.
APRIL 11, 1934
Business continues to improve. Youngstown steel mills operate at 58%—best since 1929. Retail trade continues to boom after a fine Easter season. Storerooms on Federal St. are almost all taken—mostly by chain organizations. One of my clients took a lease last week on a store-room near the square and was offered a $5000 bonus for it by an out-of-town jewelry concern.
In spite of all this the law business continues to lag. Also about 6000 men who lost their CWA jobs with the government are again applying to the Allied Council for relief. The stock market remains stationary with an average of about 96. With increasing signs of returning prosperity, I hear less radical talk and business men appear less willing to sponsor government control of their affairs.
APRIL 14, 1934
Investigations and indictments of men high in finance are still the order of the day. Yesterday officials of the Cleveland Union Trust Bank were indicted for “window-dressing” the bank statement just before it closed. They did this by a temporary purchase and sale of ten million in government bonds and held the purchase price as a temporary deposit. No personal gain is shown by any of the men—but merely an attempt to save the bank by improper methods. Because of the change from a Republican to a Democratic administration and because of the demand by the public that somebody be punished—a great many fine men are being indicted because they permitted their good nature to overbalance their common sense. In the stress of 1931 a great many desperate things were done to save banks and corporations from failing. It is hard to see how some of these men could have refused to come to the help of a stricken bank with temporary deposits, etc. It would have been far better for them to personally have let the deflation take its course.
APRIL 20, 1934
Big news for Youngstown. The Dollar Bank and City Banks announce the removal of all restrictions on deposit withdrawals—thus releasing 14 million in bank deposits which have been tied up since the banks closed in 1931.
The banks in the past year have been getting government bonds for their frozen mortgages thru the Home Owners Loan Corporation. In addition to this the government bought 2 1/2 million of preferred shares in the Dollar Bank and 1 1/4 million in the City Bank. In the last analysis therefore the government took over the bad mortgages and loans to keep open the banks. Who will pay for this remains to be seen.
EDITOR’S NOTE
Unfortunately, Volume IV of Roth’s diary was lost. It contained the entries for the second half of 1934 and all of 1935. The year 1935 saw the creation of new waves of New Deal legislation, including the Works Progress Administration—the largest of the New Deal agencies, which would employ 8.5 million Americans in a wide variety of jobs—and the National Labor Relations Act. The landmark Social Security Act was passed that year, providing federal assistance for the elderly for the first time in American history. At the same time, the Supreme Court that year declared the NRA to be an unconstitutional attempt to control commerce. Moreover, as Roth would continue to note, the overall economic situation was far from rosy, even with the unprecedented levels of government action and spending.
VOLUME V
1936
JANUARY 2, 1936
This is Volume V of a series of personal notes I have made from time to time concerning the panic which began in October 1929.
When I started these notes it never occurred to me that the depression would last more than two years. We are now in the beginning of the seventh year and the road is not yet clear—with the possibility of inflation ahead. We seem to be emerging from the panic, industry is picking up, etc.—but so much of it has been created by artificial spending that it is difficult to know just where we stand. Industrial production is only 10% below normal and the steel mills are operating at about 54%.
At this point a very brief review of events so far might clear the picture. President Hoover took office in March 1929 and the big stock market crash came a few months later in October 1929. Hoover did everything he could but to no avail. The stock market started a decline in October 1929 which continued intermittently until the summer of 1932. At that time good stocks and bonds were selling at 5% and 10% of their 1929 prices. Sheet and Tube had fallen from 175 to 6; Republic from 140 to 2; U.S. Steel from 200 to 20; Western Union sold at 13; Penn RR at 6, etc. Along with this, business was at a stand-still. Bank runs were starting; more than 40,000 people in Youngstown were in bread lines. It was a terrible time. In the meanwhile the voice of the demagog began to be heard throughout the land. Socialism, Communism, more equitable distribution of wealth, new currency and other panaceas became ordinary table talk.
8/12/46
We had very little inflation during the past ten years although it has been widely discussed. Prices are now pretty high because of post-war inflation but are being held down—especially rents—by the OPA [wartime Office of Price Administration]. Nothing very severe has happened yet government debt is now close to $300 billion and still going up.
12/1/55
The 1939 dollar is now worth about 52¢. The Dow Industrials are at 485. Business is booming and there is talk of more inflation. Lincoln and Cadillac cars sell above $5000. Fords and Chevrolets at $2500 up. House prices of 1939 have about doubled. The government debt is still about $300 billion and the budget will be balanced because a record business year has brought in record tax collections.
7/1/73
Inflation is still raging—at rate of 6% each year. Food prices are out of sight. Apples, oranges, etc. about 10¢ each. 1939 dollar worth about 25¢. Gold sells at $12 per oz. Cadillac cars $8000 up. Dow at 880 and stock prices going down. Gold stocks and “growth” stocks have been good investments.
In November 1932 the people repudiated President Hoover and elected as President Franklin D. Roosevelt, a Democrat. He was elected on the promise of a “New Deal” for the forgotten man.
From November 1932 to March 1933 when Roosevelt took office conditions grew steadily worse. Hoover could do nothing because a Democratic Congress and the Democratic nominee refused to cooperate. The country simply waited. In the meanwhile banks began to close all over the country and an avalanche was started early in 1933 when the governor of Michigan declared a bank holiday closing every bank in Michigan. The fever spread rapidly and on the day Roosevelt took his office every bank in the country and every stock exchange was closed.
President Roosevelt inaugurated his New Deal with dramatic vigor and from that day to this the country has been dizzy with new laws and restrictions. He devalued the dollar, opened the banks under Federal restrictions, passed the NRA, the AAA, the CWA, the WPA and about twenty other recovery agencies which became known by the first letters of the name. All of these measures poured out government money to help broken down industries, to feed the poor, to restrict production and to control the economic life of the country. The entire New Deal was tinged with the color of socialism and with the idea of a managed economy.
For the first two years of his term President Roosevelt was the idol of the people and his smile and pleasant radio voice captivated everybody. Congress became his willing tool and without question passed every law he asked for even tho its constitutionality was doubtful.
During the last year Roosevelt has lost much of his popularity. For one thing, the New Deal has not worked out as he promised. For another thing he has placed the country in debt—we now owe about $35 billion—so that we will have either inflation and repudiation or perhaps many years of heavy taxation.
For another thing the Supreme Court has almost smashed the New Deal by declaring one law after the other unconstitutional. The gold devaluation act was sustained but in such a way as to be a slap at the administration. The NRA and other acts were held clearly unconstitutional and Roosevelt was told in clear terms that without an amendment to the Constitution he could not control and regulate the economic life of the country. Roosevelt then threatened to start a movement to amend the Constitution but so far it has not materialized. This is election year and the campaign has already started. The issues will be largely economic. A poll taken by the
Literary Digest
shows about 60% of the people opposed to the New Deal.
7/7/52
The debt is about $295 billion.
6/10/68
The debt is $385 billion.
7/8/72
The gov’t debt is over $425 billion and going up.
In March 1935 the stock market began a steady rise which continues until the present day. It is recognized by most economists as being based on real industrial improvement which marks the end of the depression. There has not been a real break since March. It seems to me that we are about due for a set-back.
I am personally very much concerned with the question of inflation and it seems to me there is a grave possibility it will come unless the government at once balances its budget. With an election coming this seems out of the question. Every year since Roosevelt took office has seen us deeper in debt. We now owe $35 billion and 1936 seems to promise more spending than ever because it is an election year. The soldiers’ bonus has an excellent chance of passing and will require a further expenditure of two billion. Relief, subsidies to farmers take additional millions and before the end of the next fiscal year the debt will probably amount to $37 billion—the greatest peace-time debt of all time. In the meanwhile taxes are not coming in and there is no effort to lay new taxes because it would be political suicide.