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"Since yesterday"

Discussion in 'General Discussion' started by Tango3, Sep 19, 2008.

  1. Tango3

    Tango3 Aimless wanderer

    a free (e-book)on the 1929 crash by someone who was there,Link found on the "latoc" board:

    againoff latoc:

    "Hoover had tried to keep hands off the economic machinery of the country, to permit a supposedly flexible system to make its own adjustments of supply and demand.

    ... But no natural adjustment could be reached unless the burdens of debt could also be naturally reduced through bankruptcies. And in America, as in other parts of the world, the economic system had now become so complex and interdependent that the possible consequences of widespread bankruptcy -- to the banks, the insurance companies, the great holding-company systems, and the multitudes of people dependent upon them -- had become too appalling to contemplate.

    The theoretically necessary adjustment became a practically unbearable adjustment.

    Therefore Hoover was driven to the point of intervening to protect the debt structure -- first by easing temporarily the pressure of international debts without canceling them, and second by buttressing the banks and big corporations with Federal funds.

    Thus a theoretically flexible economic structure became rigid at a vital point. The debt burden remained almost undiminished. Bowing under the weight of debt -- and other rigid costs -- business thereupon slowed still further. As it slowed, it discharged workers or put them on reduced hours, thereby reducing purchasing power and intensifying the crisis.

    It wasn't until several years after the market crash that the runs on the banks began.

    Again and again during the preceding year or two there had been local bank panics; the Federal Reserve had come to the rescue, RFC money had been poured in, and a total collapse had been averted.

    Now a new panic was beginning, and it was beyond the power of these agencies to stop. Perhaps the newspaper publication of the facts about RFC loans was a factor in bringing about this panic -- though to say this is to beg the question whether a banking system dependent upon secret loans from a democratic government is not already in an indefensible position.

    Probably the banks would have collapsed anyhow, so widely had their funds been invested in questionable bonds and mortgages, so widely had they been mismanaged through holding companies and through affiliation with investment companies, so lax were the standards imposed upon them in many states, and so great was the strain upon the national economy of sustaining the weight of obligations which rested in their hands. At any rate, here at the heart of the national debt-and-credit structure a great rift appeared -- and quickly widened.

    ... All over the country there began a whispering, barely audible at first, then louder and louder: "Trouble's coming. They say there's a run on the trust company down the street. Better get your money out of the bank."

    The murmur ran among the bankers: "Trouble's coming. Better sell some bonds and get cash before it's too late. Better withdraw your balances on deposit in New York."

    It ran among the men of wealth: "Better put everything into cash. Get gold if you can."

    It spread to Europe: "Better get gold out of the United States. Better sell the dollar."

    The financial machinery of the country began to freeze into rigidity, the industrial and commercial machinery to slow down. Nor was there anything that Hoover could do to stop the panic. Laboring ceaselessly, sleeping no more than five hours a night, he saw all the ground he had gained since June being lost.

    Let us look for a moment at the pile of wreckage.

    In it we find the assumption that well-favored young men and women, coming out of school or college, could presently get jobs as a matter of course; the assumption that ambition, hard work, loyalty to the firm, and the knack of salesmanship would bring personal success; the assumption that poverty (outside of the farm belt and a few distressed communities) was pretty surely the result of incompetence, ignorance, or very special misfortune, and should be attended to chiefly by local charities; the assumption that one could invest one's savings in "good bonds" and be assured of a stable income thereafter, or invest them in the "blue-chip" stocks of "our leading American corporations" with a dizzying chance of appreciation; the assumption that the big men of Wall Street were economic seers, business forecasters could forecast, and business cycles followed nice orderly rhythms; and the assumption that the American economic system was sure of a great and inspiring growth.

    Not everybody, of course, had believed all of these things. Yet so many people had based upon one or more of them their personal conceptions of their status and function in society that the shock of seeing them go to smash was terrific.

    Consider what happened to the pride of the business executive who had instinctively valued himself, as a person, by his salary and position -- only to see both of them go; to the banker who found that the advice he had been giving for years was made ridiculous by the turn of events, and that the code of conduct he had lived by was now under attack as crooked; to the clerk or laborer who had given his deepest loyalty to "the company" -- only to be thrown out on the street; to the family who had saved their pennies, decade after decade, against a "rainy day" -- only to see a torrent of rain sweep every penny away; to the housewife whose ideal picture of herself had been of a person who "had nice things" and was giving her children "advantages," economic and social -- and who now saw this picture smashed beyond recognition; and to the men and women of all stations in life who had believed that if you were virtuous and industrious you would of course be rewarded with plenty -- and who now were driven to the wall.

    On what could they now rely? In what could they now believe?
  2. ghrit

    ghrit Ambulatory anachronism Administrator Founding Member

    Then, as now, only in themselves and God.

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