Tag Archive | "Herbert Hoover"

How “Great” Is This Recession?

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Great Depression

History has a habit of repeating itself, maybe in not exactly the same sequence. Today’s fiscal woes are a reflection of the Great Depression of the twentieth century.  An economic tailspin ending in financial disaster and many suicides, the Depression began with the collapse of Wall Street in 1929 as a result of greed and speculative trading.  Overnight, millionaires became paupers and America’s lifestyle altered drastically.  President Herbert Hoover turned a blind eye to the situation, erroneously treating it as a market change that would correct itself:  an entire decade would pass before the market rebounded.

 

Wall Street’s collapse impacted the banking industry, which was short on cash. As rumors of a banking failure ran rampant, depositors rushed to retrieve their savings.  It was like that scene from the film It’s a Wonderful Life, where everyone in the small town demanded to pull their money out of George Bailey’s Savings and Loan — except that the 1929 reality was driven by millions of depositors.  Their actions created a domino effect, toppling banking institutions nationwide and causing the economy to hit rock bottom.

 

Unemployment skyrocketed as businesses struggled to stay afloat.  With no income, the housing market took a nosedive; thousands of people lost their homes and farms to foreclosures.  Mother Nature added to the havoc, bringing drought and dust storms that plagued America’s farmlands.  Fearing that all this horror was the wrath of God, people all across the country prayed for forgiveness.  Most of all, they prayed for deliverance.

 

The difference between the Great Depression of the 1930’s and the Great Recession of 2008-09 was that the government did not extend bailouts during the earlier crash.  In addition, insured savings accounts, unemployment insurance, credit cards, and Social Security did not exist.  The future looked bleak in the ’30’s for those who had not jumped out of windows.

 

Franklin Delano Roosevelt succeeded Hoover as our nation’s President, inheriting the daunting task of national recovery.  Roosevelt realized the answer to solving the problem lay in the spending power of the people.  To stimulate their spending, he passed the NRA (National Recovery Act), the WPA (Works Project Administration), and the CCC (Civilian Conservation Corps).  He also instituted the SEC (Securities Exchange Commission) and the FDIC (Federal Deposit Insurance Corporation).  Roosevelt charged these organizations with the following tasks:

 

The WPA – Getting Americans back into the workforce and earning incomes.

 

The CCC – Taking young, indigent men off the streets to work on public projects.

 

The SEC – Overseeing financial institutions to ensure that they did not engage in fraudulent practices.

 

The FDIC – To bring trust back to the banking industry, so that depositors would reopen their savings accounts.

 

FDR also set up food banks to put food on the table of many starving and undernourished Americans.  He used the radio to broadcast his “Fireside Chats” and thus became a calming and authoritative voice during hard times.

 

As time passed, the President also enacted Social Security. This was a mandatory savings plan designed to enable those who retired at age 65 to enjoy their twilight in dignity.  All of these were the legacy of FDR, the only President in the history of the United States to be elected for four terms.

 

Despite his best efforts to jump-start economy, the Great Depression dragged on.  Its only solution was World War ll.  With the enactment of the draft and the demand for equipment and supplies needed to fight the war, the economy boomed.  Happy days were here again!

 

I lived through the Great Depression and witnessed men begging for food on the streets on cold wintry nights.   I remember how my mother made them sandwiches and hot drinks, and allowed them to sit in the entryway of our row house, out of the biting wind to enjoy the small offerings that must have seemed like manna to them.

 

The saying goes that “out of something bad comes something good.”  The Great Depression brought families together to enjoy each other’s company.  Holidays were anticipated with relish because it meant sitting around the dining room table for a good meal with several generations of our families.  In some respects, we may be a bit better off today with this current recession.  But in others, such as family intimacy and expressions of gratitude for what we still have, we are lacking. 

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