The "Great Depression"
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.
