The "Great Depression"  

Posted by Stan Harrington

The Great Depression was not a sudden total collapse of the economics in the United States. In early 1930, credit was ample and available at low rates. By May 1930, auto sales had declined to below the levels of 1928. Consumers, many of whom had suffered severe losses in the stock market the prior year, cut back their expenditures by ten percent. At the same time, a severe drought ravaged the agricultural heartland of the nation beginning the summer of 1930. Prices began to decline, but wages held steady in 1930, then began to drop in 1931. The U.S. Smoot-Hawley Tariff Act of 1930, increased the tariffs on imports. Retaliatory tariffs in countries exporting to the U.S. helped strangle global trade, especially in the oil, rubber, and steel industries. By late in 1930, a steady decline set in as more companies went out of business and the unemployment rates increased. This decline would continue until it bottom out by March 1933.

While doing some research this evening, I was reading my father’s diary. At the time, he was living in the small agricultural community of Benedict Nebraska. His posting of March 4, 1932 came to my attention. It is quoted as follows, “First Day of U.S. Bank Holiday. Rain and sleet – shelled corn at Kealihers. Played 50th hand in game of Razzle Dazzle and gave up in despair. Stayed at Kealihers all night.”

Each day following that entry, he would write at the top of the page “Banks Still Closed”. At the top of the page on March 8th, he wrote Banks still closed, business at stand still.” On March 15th, in very large letters he wrote, “Banks Reopened”. The depression would continue for another year before the recovery would commence.

Seeing these notations made me stop and ask myself, what affect would it have on our current economics if our banks were to take a “holiday” and remain closed for eleven days? What would we do if there were no cash machines, no checks, no credit cards, and no debit cards for that length of time? Although, I do not know for sure, perhaps someone out there that understands the banking regulations could confirm my suspicion. Are the lessons we learned between March 4 and March 15, 1932 the sole reason that our banks today may not be closed for more than three consecutive days?

The Great Depression was hard times, any man that had a job that would pay $1.00 per day felt very fortunate. Today with $1.00 in your hand, you feel fortunate to get a few cents change when you by a candy bar.

This entry was posted on February 9, 2008 at Saturday, February 09, 2008 . You can follow any responses to this entry through the comments feed .

8 comments

I do believe that if we were to experience anything even close to the depression it would be more devastating now than before.
This is why I feel that way.
We now live in an age of excess (and yes, I know I am one. I like my ipod, camera and computer and just recently bought phones for both heath and I). Unfortunately that excess is not in food and necessities so IF the banks were to close I ask myself would we be able to not go to the grocery store for eleven days? How about gas?
While we bought plenty of meat at the store Saturday I know that we do not have enough things to go with it. Gas would definitely be an issue.

2/10/08, 4:55 AM

Hell I have been poor all my life...as long as I got toilet paper and PBJ we will survive...I would miss the things I have recently grown to enjoy...like my computer...and a 30 minute hot shower...and I am used to going 7days without using my debit card...cant use it if you have no money in the account to spend...As for gas...already training my dog to pull the load as walk along enjoying the day...when it is not minus 12.1 out there!!

I remember Grandpa telling stories of the depression...stories of how people would eat one meal a day...boiled cabbage...or potatoes...if they were lucky both...meat and eggs were scarce unless you raised them yourself...that is one of the reasons Grandma always had chickens...her attempt at maintaining her house with minimal need for a grocery store...In todays world a depression would lead to a lot of people thinking suicidal thoughts...so many have based their happiness on material possessions and being able to "achieve more". Glad I left that for dreams (for the most part...)I have had no time for chasing the silver lining when my head has always been in the clouds...

2/10/08, 7:28 AM

Banks now are ran by computers. Paycheck are direct deposit, and most withdrawals electronic. We do not need the banks to "process" our IOU's (or checks). Just because a bank is closed does not mean you can't access your money. There are clearing houses that transfers "money" from bank to bank...person to person...nation to nation. When you swipe your card it does not go to your bank it goes to a clearing house and they route the transaction to you bank.

We live in a "Debit" "Credit" world, pretty little numbers that in up in columns, show us that we spend to much or work to hard. YOUR money is not sitting in your bank. We no longer need those pesty little dollars, symbolizing our success.

Would the closing of banks have the same effect in this day and age? I am not so sure. So much has changed since then. Now if you closed all the Computers and Data sharing that would lead us to mayhem!

2/10/08, 10:51 AM

I am sure you have been watching the government lower the interest rates and play with their numbers trying to keep the value of the dollar. Some say we are already in a recession and headed for another depression, what i want to know is how to protect the value of what little we do have? Any words of wisdom in grandpa's diary?

2/10/08, 11:02 AM

It matters not if we still have access to the banks via the electronic era, there has to be money in those banks to credit the debits or debit the credit. No great wisdom in the diary as to protect what we have, some feel investment in gold is the safe way buty I do not know if Walmart will accept one ounce of gold for a new stereo system. Surprisingly, dad did o.k. during the Depresison, he sold and traded livestock. To earn cash money he rode in rodeos and even boxed for money. Those that lived on farms during the depression had a much easier time than those that depended on wage earning jobs. By the way, the tax incentive package has passed and President Bush should sign i thtis week. Best I can figure it out, most of you will be getting a check for $1,200 plus three hundred dollars for each child. It will be based on your 2007 taxes so file early so you will have your checks by Memorial Day weekend! I wonder if I can claim three dogs dependent children?

2/10/08, 11:14 AM

Can I claim all five of them??

2/10/08, 12:20 PM

It will be based onthe number of dependents that show on your taxes this year - be your own guide!

2/10/08, 1:36 PM

I thought Przac cured the great depression:)

2/21/08, 1:24 AM

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