Now and then//1929, 2009//the coming Depression. Part II

By , August 17, 2009 7:25 pm

Now and then//1929, 2009//the coming Depression. Part IIIn part I if this series I wrote of the optimistic outlook expressed by the white House and the many Wall Street Gurus during the last few weeks and rightly so since the stock market has moved from a low of approximately 8900 to mid 9300’s. I then went on to share with you the expressed statements which were been dished out to the American People just before “black Tuesday”. I ended part I with October 29, 1929: Stock Market Crash. Let’s continue with some of the optimistic headline news from 1929: December 5 1929, “the government’s business is in sound condition”; December 28, 1929, “maintenance of a general high level of business in the United States during December was reviewed today by Robert P. Lamont Secretary of commerce, as an indication that American industry had reached a point where a break in New York stock prices does not necessarily mean a national depression”; January 13 1930, reports to the Department of Commerce indicate that business is in a satisfactory condition. I could go on and list more of these “denials” of the grave economic condition our country was in; they number about two per month all the way to November 1930. On January 20, 1931  Calvin Coolidge said “our country is not in good shape”, however the Assistance Secretary of Commerce said on June 9 1931, “the depression has ended”. Sounds familiar, doesn’t it? This is exactly what we are hearing today on a daily basis, conflicting explanations that are half truths, outright lies and mostly political pandering to appease those that “put you in office”. Throughout the years 1931 and 1932 the headlines that were making front page were from month to month very conflicting and confusing depending on who you were listening to. “August 12, 1931 “Henry Ford has shut down his Detroit automobile factories almost completely, At least 75,000 have been thrown out of work” and on July 21 1932  from a Dow Theorist “I believe July 8 1932 was the end of the great bear market”. Even if this theorist had been only half right, what he failed to realize was that the Stock Market Collapse was only one factor impacting conditions in America;  another factor was the “Economic Collapse”. While popular and accepted reasoning dictated that the Stock Market Collapse had created the Economic Collapse, nothing could be further from the truth; the economy had been on a collision course with disaster for about six years (I will finish that thought in part III of this writing). Let’s consider these two thoughts: “June 9 1931 the depression has ended” and “July 21 1932 the end of the bear market”. With very few areas in the nation exempted, the depression lasted 10 years and the nation as a whole did not start to see relief until 1941. Double digit unemployment prevailed from 1933 to 1941. I stated in an earlier writing that unemployment in 1929 was 3.2% and 23.6% by 1932; here is what Central Trust of Illinois had to say in early 1930,  “from the end of 1929 to early 1930 unemployment improvement and good month to month improvement numbers ahead” you see unemployment had gone from 3.2% in 1929 to 8.7% by 1930. A survey of Illinois manufactures found a “slow” but “sure” recovery in business with profits in 1930 as good as 1928 and upward improvement in 1931. We have looked at two very powerful elements responsible for the living “Hell” Americans went through from 1929 to approximately 1941; the “Stock Market Collapse” and the “Economic Collapse”;  there is yet one other factor and we don’t control it. From 1930 to 1933 “Nature” played havoc on almost a third of the nation; there was a severe drought from Arkansas to the Great Plains and of course most of us my age have some remembrance of the “Dust Bowl” which affected Kansas, Oklahoma, Texas, New Mexico and Colorado. While the “Dust Bowl” only lasted three years, it took over ten years for complete recovery from the effects.I will try to finish this writing in part III sometimes next week and talk about possibly revising some previous thoughts I wrote about in January and then again in May; it deals with inflation and deflation.

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