If you were 21 in 1929

Then you were an adult during the great depression and a teen during the roaring 20s.  You would be 100 years old today.  So this kind of financial greedy stuff I think is rare because it only happens when the last generation who saw it, warn of it, is gone.  The oldest people in my family who lived through the great depression were kids when it happened and it was their parents who were the stressed out people in family, but they act like it was them. It is much different to be a kid during hard times than a bread winner. Anybody ever heard those stories from their relatives?

• If you were 21 in 1929 - historian
  • Recollections of my mother - Backwards typist
    • garment factory - historian
  • Nightmares Of My Mother... (long)sm - m
    • That's excellent- I agree with poster below - Kaydie
    • You could make a great article with that (sm) - MeMT
  • Not being able to buy anything without ration tickets....very scary stories! nm - MeMT
    • My mother still has one of those ration books........ sm - m
      • And everybody did newspaper drives and - Backwards typist

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BOOK:  The Crisis Of The Old Order  By:  Arthur Schlesinger, Jr.

In 1928 and 1929, the nation had reached, it seemed, a permanent plateau of prosperity.  Businesses expanding.  Foreign trade growing.  The stock market was continuing to rise.  And national leadership could not now be in more expert or safer hands.  "I have no fears for the future of our country," said Herbert Hoover in his inaugural address in March 1929.  "It is bright with hope."

There remained a few discordant voices, anxious in the main over the stock market boom.  In spring 1929, Hoover summoned a special session of Congress to deal with these issues.  The session was not a success.  The Board's purpose was to control the flow of commodities to the market; one provision was to control temporary surpluses.  The session adjourned from April to November without taking action on the tariff.  Hoover wanted state public lands and reclamatin projects and related irrigation matters be withdrawn from national control and states to manage these affairs then Federal Government.  President's attitude toward utilities regulation was similar. 

Yet most Americans remained more interested in teh stock market than economic question and the few interest as now beginning to turn into concern. 

Early 1929, Federal Reserve Board under pressures of NY Federal Reserve Bank, finally consented to warn member banks that they should not lend money for speculative purposes.  But did not work.  Some argued that a restrictive policy might well induce deflation.  The board felt it created "a state of mind which breeds depression."  It was certainly true that reducing the interest rate was a clumsy way of combatting THE BOOM.  As long as the stock market offered highest returns, it was bound to have first call on funds.  Higher interest rate would have slowed down investment, cause capitalization process and bring down prices of ALL CAPITAL ASSETS and thus discourage investment.  President Hoover did nothing as he was preoccupied with his own mind and watched the Board run the course.

CHECK THIS OUT!!!  Finally by summer 1929, some danger signs were apparent, STARTLING DECLINE IN BULIDING CONTRACTS.  Residential construction for the entire year SANK.  CONSUMER SPENDING WAS SLACKENING.  By midsummer 1929, building began to fall off, wholesale commodity prices dropped.  In August, Federal Reserve Board finally agreed to raise to 6 percent. In September Stock Exchange price were at the highest.  On October 23, PRICES STARTED FALLING.  WALL STREET WAS SHAKEN.  Anxiety was suddenly infectious.  As panic spread, stocks dropped.  Hoover stated, "The fundamental business of the country, that is production and distribution of commodities is a sound and prosperous basis."  As prices held for a week, bankers QUIETLY fed back into the stock market that they had bought on Black Thursday for further future storms.  

Banks protected themselves against their customers.  On Monday, new explosion of gloom and panic happend.  General Motors stock lost nearly 2 million.  It soon was an avalanche, vast numbers rushing to get out of the market.  By noon, 8 million shares traded hands and by closing time, Exchange had broken all records with 16 million shares.  By mid November the financial community began to survey the wreckage.  New York Stock Exchange had fallen 40 percent in value. 

CAUSE OF THE CRASH:  Management's disposition to maintain prices and inflate profits while holding down wages and raw material prices meant that workers and farmers were denied benefits of increases in their own productivity.  Decline of mass purchasing power (like our real estate in 2005?) as goods flowed out of expanding capital plant in ever greater quantities, less and less cash in the hands of buyers to carry goods off the market.  Seven years of fixed capital investment at high rates had overbuilt productive capacity and had thus saturated the economy.  The slackening of the automotive and building industries.  Businessmen trying TO SAVE THEMSELVES COULD ONLY WRECK THEIR SYSTEM.  Representing the financiers, it had ignored irresponsible practices in the securities of the markets.  Ignored the weight of private debt.  Result was both class and national disaster.