"Those who do not know history are bound to repeat it."
Some of you may know that I love history. I often like to research what happened in the past to better understand current situations. So I decided to look up the Great Depression of 1929. I got out a few text books.
Yes, they are all mine.
I looked up the Great Depression. Now, I did not get into the nity-grity for this blog. Instead I am going to give you a brief outline. No, I am not going to type up a comparison for today. Yes, I made a comparison, but I feel it is more important for others to come to their own conclusions. This saves me the trouble of being wrong.
In 1929 Hoover had run on the platform of helping the agricultural problem. The farmers wanted the federal government to buy surplus produce and sell them abroad. Instead, the government helped farmers use their own organization to market produce more efficiently and adjust supply to demand, but it was too late, the farmers were worse off then ever.
The market value of securities more then tripled between 1925-1929. People began speculating, engaging in risky business venture on the chance that a quick or sizable profit could be made. People began to buy on margin. To buy stock this way one made a small cash down payment and then borrowed the rest from stockbrokers. Brokers' loans to those who had bought on margin exceeded $7 billion. On Thursday, October 24, almost 13 million shares of stocks were traded so frantically the ticker couldn't keep up. As stocks' values dropped below the amounts borrowed to purchase them, brokers demanded that investors repay their loans. If they could not, the brokers offered the stock for sale. Investment bankers tried to shore up market prices by purchasing as many shares as they could. On October 29 some 16 million shares were sold, causing such a collapse that by mid-November the average price of securities had been cut in half. The loss was 355 times the total wages of all Americans that year. Ultimately, it was the failure of banks that hit people the hardest.
The headline in the New York Times on October 30, 1929 was "Stocks Collapse In 16,410,030-Share Day, But Rally At Close Cheers Brokers; Bankers Optimistic, To Continue Aid".
The collapse of the stock market was only the prelude to a catastrophic economic decline from which the United States did not recover for 12 years. Over production was a factor. People started using installment buying. Also, there was under consumption. In the 1920's the rich got richer much faster than the rest of the people. Employment stood still, and workers wages went up at a far slower rate than executive salaries or corporation profits. A prolonged slump in agriculture, which affected the economic life of the entire country was another factor. Huge farm surpluses produced a drop in farm prices so great that farmers often spent more money growing and marketing their products than they received in selling them. Many of the economic policies of the Harding and Coolidge administrations during the 1920's set the stage for problems. Fordney-McCumber tariff and insistence on collecting war debts, interfered with world trade and destroyed foreign markets for American products. The Mellon tax policies aided the upper class.
Most people stopped buying. Manufactures shut down their plants or ran them part-time. Because these jobless workers could not meet mortgage payments or repay loans, they lost their property.
There were other factors, but these are the major ones. Some things are similar to today and others are not. Here was your history lesson. But here is why we learn these lessons, and pour over history books:
So they have a better life.
