The Great Depression (13 page)
Read The Great Depression Online
Authors: Benjamin Roth,James Ledbetter,Daniel B. Roth
All classes of professional men (including lawyers) are very hard hit by the depression. Fees have been drastically reduced and most of the men are unable to pay the office rent.
Two good building lots on Selma near Gypsy Lane have (65 ft front each) can be bought for $1000 each. This is about the cost of the improvements. They cost the owner $3250 each and he has since paid for most of the improvements.
It is interesting to note the stringent rules covering withdrawals as set forth in the new passbooks being issued by the Dollar Bank. These rules in brief require notice of withdrawals and in time of stringency gives Board of Directors the right to stop all withdrawals. All withdrawals are payable “in money bank notes at the time current in the City of Youngstown.”
Yo. Sheet & Tube common sells yesterday on the stock exchange at $4 per share. It seems unbelievable. As far as I am personally concerned I think the company will survive the depression and that the opportunity is now on hand to buy stock cheap. The pessimist on the street talks already of receivership. It is hard to believe that this stock comprises the backbone of most of the large fortunes in Youngstown. Without dividends for two years people are selling the stock for actual bread and butter needs.
And still conditions get worse. After a steady decline of over two months the stock market yesterday again plunges down. Railroad averages are down to 1904 levels.
Hoover personally appears before Senate today to demand that the National Budget be balanced with the sales tax and they defy him.
300 war veterans are camped in Washington after “bumming” their way from Oregon—and insist that they will stay until the bonus is passed.
Things are quiet at Dollar Bank but not much new money seems to be coming in on account of restrictions on deposits.
Mahoning County Real Estate Tax Collection comes to a close with only 1 1/2 millions collected out of six million. With the old arrears this makes a total tax delinquency of about 10 million.
Yesterday Congress passes a revenue to “balance the budget” and for awhile stocks spurt up but after a day they are back to old level.
It is reported on pretty good authority today that Yo. Sheet & Tube Co. is losing money at the rate of a million a month.
A tremendous number of casualty and liability insurance companies are going broke in this storm. The life and fire companies are standing firm so far. A prominent insurance man told me that this was because the life & fire companies were limited by law to investments in good bonds, etc. Also the Casualty Cos. expanded
rapidly
in past 10 yrs. with the growth of the automobile.
rapidly
in past 10 yrs. with the growth of the automobile.
Thousands of world war veterans are marching toward Washington to demand that Congress pay them their bonus. They are coming from all parts of the United States. In Cleveland they took possession of the Penn R.R. system until driven away by police. About 100 passed thru Youngstown yesterday. They were orderly and were fed at the bread lines. The bonus if issued would mean the printing of two billion dollars of paper currency and it is feared would result in inflation. With a national election coming next fall, it is possible Congress will listen to their demand.
A good many people are leaving Youngstown to live elsewhere—most of them going to the West Coast. They say Youngstown will never come back. I think they are mistaken and they will find the same situation wherever they go.
For the first time in 30 yrs. the Sheet & Tube fails to pay its preferred dividend. It is selling now: Comm. 5 1/2; pffd—Bid 15 asked 20.
8000 war veterans camped in Washington and refuse to leave until Congress grants their bonus.
For the past two months there has been a complete lull in business activity of all kind. Far worse than any period during the past two years. There is very little bankruptcy even because creditors have found it is useless to push their debtors. I personally think the upturn will come soon—possibly by next fall after the election. Everybody seems to be holding on and expectantly waiting for something to happen.
The stock market continues lower but with very little activity. It seems to me an ideal time to invest money but I may be mistaken again. Railroad stocks and bonds are selling at ridiculous prices but the conservative investor fears a repetition of the receivership period of 1893.
I still think that right now the preferred stocks of good companies is a better investment than the common because the next few years may show small earnings on the common but if the company survives at all, the preferred will go back to par with cumulative dividends. For instance I feel sure that Radio Corporation will survive the storm. Its common sold recently at 2 3/4 and its pffd B at 3 7/8. This pffd B pays $5 ann. dividends. Assuming that the company survives, this preferred should go back to 75 plus the accumulated dividends. The common seems to me more uncertain. I am curious to see how this theory works out but unfortunately (?) have no money to test it.
3/28/38This theory was right. In 1935 Radio B sold at 92 and comm. at 13 3/8. Pfd B is now 40.
I just saw the Youngstown contingent (about 150) of the “Bonus Army Expeditionary Force” start out for Washington to demand payment of the bonus. It was thrilling as well as pathetic. Most of the men wore remnants of their old uniforms such as overseas caps, mess equipment etc. One truck will go all the way to Washington carrying contributed food supplies. Several other trucks carried the men to New Castle. From there they will walk or hitch-hike to Washington. From all parts of U.S. about 50,000 ex-soldiers are concentrating on Washington and there is possibility of trouble. For the most part the men are of the better type and well behaved.
I attended a joint meeting of all Bar Association Committees today with the Judges of Common Pleas Court to devise means to keep the courts open in view of failure of tax collections. A motion was carried that all cases (with a few exceptions) be tried hereafter without a jury—or with a jury of only 8; also that jury pay be reduced to $2 per day. Other suggestions including an effort by the Bar Association to collect the taxes without charge.
The situation in the County has almost reached a breakdown. The whole county government has already been reduced to a skeleton and even this will collapse when present fund is used up next November. Former City Solicitor Carl Armstrong said in a very effective speech: “By next December the city of Youngstown will be feeding a bread line of 30,000 people. There is no money for juries or courts and these must wait while the people are fed. If this is not done we will witness a collapse of law and order this coming winter.” He also predicted that the real depression would start this coming winter and would last another two years. Other talks along the same line pictured a similar situation in other cities with no money to operate the schools, courts, etc.
I cannot agree with this dismal picture. I think the turn for the better will come within the next six months and that there will be no such break-down as is predicted. If I am wrong there will be h—to pay because things cannot go along this way much longer.
It is very disagreeable as well as unprofitable to practice laws these days. The work is of a destructive nature such as foreclosure, receivership and bankruptcies. Estates are dragged out interminably because they can’t be liquidated, particularly as to the real estate. Nothing can be brought to a conclusion and even jury verdicts have been affected. As to fees—well they have shrunken beyond recognition and in some cases we are offered pass books on closed banks etc.
It is now clear to me that in normal times the average person does business with about 25% his own capital and the other 75% of borrowed credit. This is particularly true of big corporations who got their capital thru bond issues or bank loans. When the crash came the bank called their loans—people stopped buying bonds—and many bond issues defaulted because they were not even earning interest charges. U.S. Steel at the height of the boom pd off its entire bond issue and now is an outstanding example of good financing.
O.P.M. (Other People’s Money—or credit) are the three most powerful letters in business but must be wisely and moderately used. Most of the banks are now almost liquid and these vast resources will soon again be loaned out for business expansion. To use these funds for business expansion and yet with moderation is the height of good business management. To operate today without access to such credits is almost impossible in this day of big business.
The Dome Theater closed its doors. This makes three dark theaters lying idle on West Federal St.
These are stirring days and in spite of our troubles it is good to be alive. I am reminded often of the days of the world war when families and businesses were mercilessly uprooted and broken. It is the same today. Fundamentals are being changed and new foundations are being placed for what we all hope will be a new era of prosperity. Amongst many of our friends—formerly safe from want—it has become a daily problem to supply their family with food and shelter. A little money today and a lot of courage will go a long way to guarantee the future.
I listened over the radio last night to the Democratic National Convention which is dead-locked over the selection of a presidential candidate. The speakers blame the depression entirely on the mis-rule of the Republican Party. Both parties adopt a plank advocating repeal of 18th Amendment but the Democratic plank is more drastic including a demand for “beer and light wine” at once.
I just returned from visit to Struthers by bus. It is heart-sickening to see the deserted houses and stores and buildings falling to pieces for lack of repairs. Almost all stores are boarded up and more than half of the houses are vacant. Both Campbell and Struthers seem harder hit than Youngstown.
It is just announced that the last of our closed banks—The City Trust & Savings Bank—will open its doors on July 14. This is made possible by a loan of $2,300,000 from the U.S. Reconstruction Finance Corp. and by permitting depositors to withdraw only 10% balance when available. Several depositors contested the opening.
Except for the re-opening of all of our closed banks there has not been the slightest sign of revival. In fact for past 6 months things have been moving downward. Almost everybody is down to a point where it is a problem to get money for bread and butter bills.
H. R. Hopper—who led the fight to get City Bank Depositors to sign proxies—has been named president. He was formerly an automobile dealer. Carl Ullman headed Dollar Bank reorganization committee and was named executive vice president.
We drove up to Geneva-on-the-Lake Sunday. The place is deserted and yet prices for cottages have not been reduced by much.
A small store opens on E. Federal St. called “Men’s 15 cent Shop.” Here can be bought neckties, socks etc. for 15¢.
One of the tragedies of this depression is the fact that young college and professional school graduates are unable to get placed. Some have been looking for work for two years and others are driving bakery wagons, clerking in stores, etc. They are getting cynical. The number of lawyers in Youngstown has almost tripled in past 10 years and of doctors has doubled.
As far as I am personally concerned this depression has been a “postgraduate” course for me in economics and public finance. It has caused me to read widely of economic subjects and for the first time I am following, intelligently and with intense interest, the doings of Congress and the coming national election. This interest in books and economic subjects has been followed by history and biography. I am now completing the reading of Beveridge’s
Life of John Marshall
and have gotten quite a kick out of it because it fits right into the present political picture with the Democratic Party appealing to the half-starved “forgotten man” and pleading “state rights” on the prohibition question. If it weren’t for the suffering that it has caused I would say that the depression has brought with it a good many worthwhile results. Among other things library circulation has trebled and people are once again turning to home pleasures etc. and to simple living.
Life of John Marshall
and have gotten quite a kick out of it because it fits right into the present political picture with the Democratic Party appealing to the half-starved “forgotten man” and pleading “state rights” on the prohibition question. If it weren’t for the suffering that it has caused I would say that the depression has brought with it a good many worthwhile results. Among other things library circulation has trebled and people are once again turning to home pleasures etc. and to simple living.
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