American Historian Heather Cox Richardson's poignant letter about the 1929 Stock Market crash, followed by my comments and another reader's comment to me and my reply to that reader:
October 28, 2021
In 1929, October 28 was a Monday, the opening night for New York’s Metropolitan Opera.
Four thousand glittering attendees thronged to the elegant building on foot or in one of a thousand limousines to see Puccini’s Manon Lescaut, the melodramatic story of an innocent French girl seduced by wealth, whose reluctance to leave her riches for true love leads to her arrest, deportation to the wilds of America, and tragic death. Flash bulbs blinded the crowd, gathered to see famous faces and expensive gowns, as photographers recorded the arrivals of the era’s social celebrities.
No one toasting the beginning of the opera season that night knew they were toasting the end of an era.
At ten o’clock the next morning, when the opening gong sounded in the great hall of the New York Stock Exchange, men began to unload their stocks. So fast did trading go that by the end of the day, the ticker recording transactions ran two and a half hours late. When the final tally could be read, it showed that an extraordinary 16,410,030 shares had traded hands, and the market had lost $14 billion. The market had been uneasy for weeks before the twenty-ninth, but Black Tuesday began a slide that seemingly would not end. By mid-November, the industrial average was half of what it had been in September. The economic boom that had fueled the Roaring Twenties was over.
Once the bottom fell out of the stock market, the economy ground down. Manufacturing output dropped to levels lower than those of 1913. The production of pig iron fell to what it had been in the 1890s. Foreign trade dropped by $7 billion, down to just $3 billion. The price of wheat fell from $1.05 a bushel to 39 cents; corn dropped from 81 to 33 cents; cotton fell from 17 to 6 cents a pound. Prices dropped so low that selling crops meant taking a loss, so struggling farmers simply let them rot in the fields. By 1932, over one million people in New York City were unemployed. By 1933, the number of unemployed across the nation rose to 13 million people—one out of every four American workers. Unable to afford rent or pay mortgages, people lived in shelters made of packing boxes.
No one knew how to combat the Great Depression, but wealthy Americans were sure they knew what had caused it. The problem, they said, was that poor Americans refused to work hard enough and were draining the economy. They must be forced to take less. “Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate,” Treasury Secretary Andrew Mellon told President Herbert Hoover. “It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people.”
Slash government spending, agreed the Chicago Tribune: lay off teachers and government workers, and demand that those who remain accept lower wages. Richard Whitney, a former president of the Stock Exchange, told the Senate that the only way to restart the economy was to cut government salaries and veterans’ benefits (although he told them that his own salary—which at sixty thousand dollars was six times higher than theirs—was “very little” and couldn’t be reduced).
President Hoover knew little about finances, let alone how to fix an economic crisis of global proportions. He tried to reverse the economic slide by cutting taxes and reassuring Americans that “the fundamental business of the country, that is, production and distribution of commodities, is on a sound and prosperous basis.” But taxes were already so low that most folks would see only a few extra dollars a year from the cuts, and the fundamental business of the country was not, in fact, sound. When suffering Americans begged for public works programs to provide jobs, Hoover insisted that such programs were a “soak the rich” program that would “enslave” taxpayers, and called instead for private charity.
By the time Hoover’s first term limped to a close, Americans were ready to try a new approach to economic recovery. They refused to reelect Hoover and turned instead to New York Governor Franklin Delano Roosevelt, who promised to use the federal government to provide jobs and a safety net to enable Americans to weather hard times. He promised a “New Deal” for the American people.
FDR’s New Deal employed more than 8.5 million people, built more than 650,000 miles of highways, built or repaired more than 120,000 bridges, and put up more than 125,000 public buildings. It provided a social safety net for ordinary Americans, providing unemployment and disability insurance, as well as aid to widows, orphans, and the elderly. It supported labor and regulated business, banking, and the stock market. It invested in infrastructure, rebuilding roads and bridges, providing electricity to rural areas, and building schools, post offices, airports, and hospitals around the country. When World War II broke out, the new system enabled the United States to defend democracy successfully against fascists.
The new system undercut fascism at home, too, where its adherents had been growing strong, and reminded Americans that when the government supported ordinary people, they could build a strong new future.
I'm an Independent. The truly odd, rhymes with bizarre, thing about the folks who damn the Democrats as socialists, even communists, hell-bent to destroy America, is they pretend to ignore that America is a corporate, for the rich socialist state, which would not survive without the workers they don't want to have a living wage, decent health care, and enough money left over to pursue life, liberty and happiness.
The 1929 stock market crash was a screaming wake up call from heaven and earth that the very rich were not to be trusted with the welfare of everyone else, and yet look at how many Americans today, who are not very rich, nor even rich at all, have turned their lives and souls over to Donald Trump and what the Republican Party has become.
Last night, a mid-fifties woman friend, who views herself as a moderate Democrat, spoke well of Elizabeth Cheney. My friend said the Republicans could win back the White House by running Cheney. I said, I doubt the Republicans will take that leap. My friend said the radical left Democrats are way out of bounds and are causing a great deal of trouble for America, as well. I said I agreed.
My friend said Joe Biden is not doing very well, I said I agreed. She said she wondered if Biden will run for reelection? I said he's still in his first year, but I think he's too old to run for reelection, and too bad the Democrats didn't run him in 2016, instead of Hillary Clinton. I said I figured Obama and the Democrats had made a deal with Hillary, and Biden went along with it.
I said there is more in play than is being talked about. Malevolent supernatural forces have infiltrated both sides, but the Republican side is far more dangerous at this time, moving toward what happened in Nazi Germany. I suggested a book she might read about that: THE SPEAR OF DESTINY, by Trevor Ravenscroft. The book explains how Hitler became infected and enhanced, and the infection spread into his top aides and enhanced them, and they were aware of it. The infection spread into the general German population, who were not aware of it. The same is happening in Donald Trump, his top people and the rest of that side of the political aisle in America.