by John Wayne Tucker from JWT’s Journal
The Great Depression of the 1930’s was one of the most disastrous times Americans have ever faced. Unfortunately, there are many who are no longer very well informed regarding the struggles of that time period. So, let’s take a quick look at a brief history and some of the horrific examples of the devastation caused by a genuine economic depression.
Most people believe that the Great Depression stated in 1929 with the collapse of the stock market; the truth is that it started in 1927 with the collapse of the farming industry. However, the actual stock market crash certainly garnered tremendous attention. The Dow dropped from an all time high of $381.17 to $41.22. However, the real tragedy was that the Dow did not recover to pre-crash levels until 1955.
Stock market crashes have happened before and it took men like J.P. Morgan who, using their own money, to bring back the market. Of course, Morgan tried this rescue attempt three times prior to the Great Crash of ’29, but was unable to accomplish the task. While Morgan had, in times past, lent money to New York to keep the government from collapsing, a new era was now ushered in— an era where the government would try to assume responsibility for recovery.
Market recovery actions by the government led to some Constitutionally questionable practices. One of the things that was done was to attempt economic stimulus (sound familiar?). These actions included creating government works projects (WPA) to put people to work in all kinds of jobs. Virtually every state can boast some massive project that was a part of this stimulus. In St. Louis, one of the big stimulus jobs was the digging of River Depere which is a huge sewage ditch and relief backup for flood water from the Mississippi River.
Unfortunately, economists and historians alike agree that the economic stimulus efforts in the past were a failure. Scholars blamed the failure on the governments because it did not put enough money into the program; however, we were limited by the fact that we were on a precious metal standard and could not print money that exceeded the value of gold on hand. We are not hindered by that now, since we are not on any precious metal standard at all. Therefore, we can print trillions of dollars for all kinds of bailouts – this is one of the main reasons that this Depression does not look like a Depression.
I wonder, does anyone really grasp the concept of a “trillion dollars”? Dr. David Jeremiah, pastor of Shadow Mountain Church in San Diego, is one of the few who recognizes this dilemma and gives us a pretty interesting way to grasp the enormity of a trillion dollars. He says, “If you think of it in terms of seconds, a million seconds ago was 12 days ago. A trillion seconds ago was 32,000 years ago.” Does that begin to frighten you?
Now let’s take a look at some of the tragedies of the Great Depression: the unemployment rate was slightly more than 20%. Many people became homeless and lived in cardboard boxes on the streets of the cities. One such box displayed a sign that said, “this is all I have left in the world. I am out looking for work. Please don’t take anything.”
During the Great Depression, many school districts were unable to pay their teachers, so they paid them in IOUs until that no longer was sufficient and the schools closed. Children could not go to school and parents often could no longer afford to feed their children, so they sold them or gave them away to people who had money, in hopes that they would have a better life.
People roamed the country as migrant workers hoping to get a job picking apples or cotton for ten cents per day. My grandfather, a Baptist Minister, built houses with hand tools for fifty cents per day. They rode in old jalopies, if they had them, and often affected repairs on the side of the road by tying a piece of rope on the fan pulleys to replace a broken belt. Others traveled the rails by stealing a ride on the train. Most of them clung to the metal bars on the bottom of the cars, sometimes falling off; freezing and unable to hold on anymore; or fell asleep and fell to their deaths. The loss of income from freeloading riders was considered such a problem that all railroads hired people to push the people from the cars in any way they could, causing them to fall to their deaths.
If one lived on a farm, things were somewhat better. At least, there was food. Even then, government action was sometimes difficult to understand. My mother tells how the government came and took away their pigs and ran them into the river and drowned them. The government also went round the country pouring out thousands of gallons of milk. All of this in the hopes of maintaining price levels. No compensation was ever given to the owners.
Regardless of what the government did, the Depression raged on for over a decade and did not begin to improve until World War II.
Perhaps, you say, we don’t see anything remotely like these things happening. This is just a minor economic setback. Let’s see if we can’t find some important similarities.
Clearly, this list could go on for some time. The point is that we have:
- a significantly high unemployment rate
- government bailouts to the tune of trillions of dollars
- a long term depressed stock market
- people losing their homes
- significantly reduced credit
- small businesses failing at alarming rates
Sadly, there is no foreseeable improvement on the way. In fact, the future is already set for us; with trillions of dollars already printed and massive loans acquired from other countries, we have mortgaged our standard of living and succeeded in making a genuine Depression appear to be a minor economic setback. We have never taken such drastic measures for any minor setbacks in the economy. We have placed our children and grandchildren into an unpayable debt to prevent this from being perceived as a Depression. What is even sadder is that the future of our children and grandchildren will undoubtedly see many of the worst aspects of the Great Depression.
Why are we in this condition? In his book, Aftershock: The Next Economy and America’s Future, Robert B. Reich points out that in 1928, just before the Great Depression, …”1 percent of the populations was paid 23 percent of the nation’s income”…. There are at least two books on the New York Times Best Seller list, at this writing, that describe the economic problems that America faces including the declining middle class. There have been many more books on this issue in recent years.
There is certainly no doubt that the mortgage crisis http://www.youtube.com/user/fiercefreeleancer brought on by greed has had a considerable impact. However, these are not the only issues; I have personally been predicting this meltdown for decades because of unsound basic practices by the federal government such as massively excessive spending, massive foreign aid, and most importantly, the unlimited printing of money. Now we have entered into the age of belief in redistribution of wealth, Socialized Medicine and more government responsibility for your personal issues. This spells disaster for our future.
At the recent G8 summit China, Russia and other countries were calling for a new currency standard. Right now, the U.S. dollar is the global standard, but, not backed by gold any more, is losing its position and will soon be replaced in favor of a new global currency. Add to this the fact that we are now around 4th in the world with respect to standard of living and it is not difficult to see that this is no simple recession that we face. We are seeing literally, the largest transfer of wealth from one nation to other nations that has ever occurred in the history of the world.
My hope is that we learn the truth as citizens and support and vote for as well as demand fiscal responsibility from our government. My prayer is that there are people running for office that really understand these economic dynamics and are committed to correcting them before it is too late, if it is not too late already.
John Wayne Tucker