Read The Great Depression Online
Authors: Benjamin Roth,James Ledbetter,Daniel B. Roth
The Great Depression (24 page)
I have been so busy making speeches lately for the NRA that I have little time for anything else. I have been named a committee member of the Mahoning County Bar Association to help the NRA and so far I have been sent out to explain the law to the various trade associations that are being formed. Last week I appeared before the Ohio Hairdressers Association and also before the Sheet Metal Association. Wednesday I speak before the Mahoning Valley Garage Owners Association. The publicity campaign for NRA is getting warm and I will probably be called on every night for awhile. I had some misgivings about the NRA plan but decided that the only patriotic thing to do was to put aside these doubts and try to put the plan across.
Business with me continues stagnant altho there is considerable activity and the streets are crowded with shoppers. Two members of our family got jobs again (the 2 Joes), so apparently the NRA is getting results.
Inflation and the stock market have been temporarily shoved in the background altho I think we will hear from them again in the fall.
The NRA ballyhoo is in full swing. Flag-raising, caravans, speeches, radio, etc. Sunday I am scheduled to give 5 short talks before audiences in downtown movie theaters. Next week I will participate in a sketch over the radio to be given by the bar committee.
It is interesting to follow the course of “controlled inflation” which began in Chile about 18 months ago. For about a year after inflation started business boomed and everybody had money. Then the government started to pay off its huge indebtedness with printing press money and trouble started. Prices began to sky-rocket, strikes broke out because wages did not keep pace and now business seems at the verge of breakdown. It is the history of Germany over again.
The U.S. Agricultural program begins with the slaughtering of millions of hogs so that pork production will be curtailed and prices go up. Also 20% of all cotton, wheat, etc. is being plowed under to prevent overproduction. The U.S. gov’t pays the farmer for his loss. I don’t see how the destruction of basic food supplies can bring back prosperity when so many people are hungry. If inflation comes and there is a food shortage, it won’t be very pleasant.
I just came back from an automobile trip to Wheeling, W.Va. I was amazed at the commercial activity in all the river towns from Steubenville down to Wheeling. Steel mills and coal mines are all humming and the streets of Wheeling were crowded with people. I saw very few vacant homes or stores. I could also see the advantage of a steel plant having its own coal mine on one side and Ohio River transportation on the other. Between Youngstown and Wheeling, however, the small pottery towns were in bad shape. Empty stores and homes and in some places grass growing in the streets.
Labor unions have added over a million members in past few months. Under NRA protection it seems as tho even such industries as steel, automobile and coal will be unionized. The possibilities for labor trouble are enormous.
I talked to an accountant today who has been out of work for 3 1/2 years. In spite of the NRA ballyhoo there are about eleven million unemployed men in the country today.
Roosevelt permits newly mined gold to be exported. The world market rate is about 35% above our currency rate.
The stock market has made very little progress for several weeks. Average at 95.
Times are certainly exciting. The air is full of talk about NRA, codes and labor trouble. The hosiery mills near Philadelphia are on strike and yesterday two strikers are killed and 18 injured. Last night I was sent to Struthers to help organize their NRA drive. Talked to the heads of about 20 organizations and helped them with their plans. In Youngstown last night about 10,000 people attended a huge outdoor mass meeting. Military drills preceded the NRA talk.
It looks now as tho all labor will be unionized under the NRA. So far Henry Ford is the only large manufacturer to refuse to come in. Already Ford cars are being boycotted. One Ford car in Detroit bore the placard “Don’t blame me. I was bought before the NRA.”
I am still skeptical about the ultimate success of the plan.
Yesterday was Labor Day and all over the U.S. huge gatherings of union labor groups hailed the “new deal.” The Democratic Party is now hailed as the Party of the Laboring Man.
I spoke on the NRA to the business men of Campbell last night and helped them organize. Dave Marwick also spoke. As time goes on I am getting more skeptical as to the ultimate success of the NRA. There is too much “chiseling” going on.
Considering the fact that the dollar is worth only about 65¢ in gold, prices of stocks and commodities are still down to bottom if quoted in price of gold. The difficulty is that this cheaper money is harder to get than ever before and does not benefit the ordinary consumer.
I am again forced to the conclusion that this depression will run its full course like every other depression. We have had 4 years of it so far—and that means another year or two of slow uphill progress. I don’t believe NRA or inflation will hasten the process.
The picture of the “New Deal” grows clearer each day. In this picture it seems that the labor group and the farmer group are the best organized and are getting the most benefits. Every decision so far seems to indicate that labor unions will soon include every industry and the open shop will be a thing of the past. In such a situation I believe a strong government agency should be maintained to see that no injustice is done to either labor or capital. The farm group has received many benefits so far but are now clamoring for direct inflation because prices of things they buy have increased faster than their income. Credit inflation is now proceeding in a rapid pace. Also a billion dollars will be loaned to employers under NRA. I believe the issue of more direct inflation will come to a head soon. In the meanwhile my law practice remains stagnant while commodity prices go up at a dizzying pace.
I am still talking for NRA. I spoke the other night to 150 Campbell business and professional men. Talked yesterday to about 1200 high school children and teachers at Campbell Memorial High School.
The demand for direct currency inflation becomes more pronounced each day. It is led by the cotton growers and farmers. They threaten an “inflation” march to Washington. They admit that farm prices are bringing them more money but claim that the increase in the price of things they buy has left them worse off than ever. This is true. I find dollars harder to get than ever before in the depression and prices are up 40 to 100%. So far Roosevelt sticks to credit inflation thru purchase of U.S. Bonds by Federal Reserve Bank.
When inflation talk first started, the stock market boomed every time the word was mentioned. This is no longer true. Both the stock market, industry and the value of the dollar have been receding for several weeks. Last week the value of the dollar went to a low of 63¢.
Personally I am more concerned than ever that prosperity will return only when we stop tampering with the dollar. Business is afraid of all this uncertainty.
More than 70,000 men are on strike in the coal fields of Western Pennsylvania and West Virginia. The movement is spreading rapidly to the steel mills which also own independent coal mines.
I spoke yesterday to an audience of almost 3000 people on the NRA at an open-air meeting in Struthers Yellow Creek Park. Altogether I have so far addressed over 20,000 people on the subject. It has been mighty fine experience for me. In spite of this, as time goes on I grow more skeptical about the ultimate outcome of the program.
The strike situation grows worse and spreads from the coal fields to the steel industry.
The government starts a huge program of “credit inflation.” Millions of dollars are being loaned to industry, banks, slum elimination, etc. In France this credit inflation preceded direct currency inflation.
In the meanwhile business is flat again after 2 months of hectic buying on fear of inflation and higher prices. The average citizen earning $16 per week finds he can buy less now than before. Prices are so high as to bring on a buyer’s strike.
The stock market has been drifting aimlessly for several weeks with a downward tendency.
In the last 6 weeks (under NRA) the American Federation of Labor has increased its membership from 500,000 to over four million. It is now demanding a 30-hour week and higher wages instead of the 40 hour week mentioned in most of the codes.
Strikes continue to hold the center of attention. 75,000 coal miners are still on strike in Pennsylvania and Illinois. Violence has appeared and state militia have been called out. Also thousands of steel workers are on strike in Wheeling-Steubenville district. Here also militia have been called out. So far the Youngstown area has been clear but this morning pickets appeared at Republic Steel. Police are watching the pickets. Technical recognition of the unions is the cause for striking rather than wages or hours. It is hard to believe that men can be reduced to strike after 3 years of idleness.
In the meanwhile business remains flat and dull with no fall pick-up. The NRA starts a 12 week “buy now” campaign with a lot of ballyhoo. Most people don’t have to be urged to buy—but haven’t the money.
The stock market has been stagnant for about 6 weeks with an average of 90. Bonds continue strong.
The monetary question is quiet while the government continues its credit expansion program by buying U.S. bonds and lending huge sums for public works and private industry. The NRA has failed to produce promised results.
Two years ago tomorrow the 3 large local banks closed their doors. The money on deposit there is still frozen tight even tho the banks are open.
A good many Youngstown people doubled their money recently by a speculation in Central Loan Co. pass books. They bought at about 22 and are selling today at 45. The rise in price caused by receiver filing application in court to be permitted to exchange mortgages and real estate for pass books. Here again we have proof that it is wise for the investor to have liquid assets on hand so he can take advantage of these opportunities. A small fund could be kept for this special purpose.
I am still talking on NRA. Tonight I speak at a banquet of auto accessory dealers and Sunday afternoon I speak before a group of bakers.
I just finished reading a book called
Mellon’s Millions
. In all their business ventures they conservatively built up huge cash surpluses during time of prosperity. When a panic came they were able to absorb competitors for a song. During prosperous days their corporations advanced steadily but during depression they advanced by leaps and bounds. They showed rare business judgment. For instance they sold their ship-building company for an enormous price in 1917 at the height of the war boom—but the market for ships was gutted by time war ended. In 1930 they sold McClintic-Marshall Steel Co. to Bethlehem for an enormous price and on top of that Bethlehem assumed 12 million of McClintic Bonds. Since 1930 no steel co. has ever earned interest on bonds.
Mellon’s Millions
. In all their business ventures they conservatively built up huge cash surpluses during time of prosperity. When a panic came they were able to absorb competitors for a song. During prosperous days their corporations advanced steadily but during depression they advanced by leaps and bounds. They showed rare business judgment. For instance they sold their ship-building company for an enormous price in 1917 at the height of the war boom—but the market for ships was gutted by time war ended. In 1930 they sold McClintic-Marshall Steel Co. to Bethlehem for an enormous price and on top of that Bethlehem assumed 12 million of McClintic Bonds. Since 1930 no steel co. has ever earned interest on bonds.
On Monday the stock market fell in one day from an average of 89 to 74. Yesterday it climbed back again to 81. Wall Street seems to have concluded that there will be no radical printing-press inflation in the next few weeks. In the meanwhile business continues stagnant and no fall rise.
I am still delivering speeches for NRA. Talked last night in Sebring at an open-air meeting before more than 5000 people. The speaking program was preceded by a parade with over 100 floats, 16 bands, a flag-raising by Legionnaires, singing of patriotic songs, etc. It was an inspiring demonstration. Other speakers included Congressman John J. Cooper and Dave Marwick, the local NRA leader.
Two big announcements were made last week:
1. U.S. takes steps to recognize Russia. It is thought this will help our foreign trade.
2. U.S. will establish a gold market and the gov’t will buy and sell gold in order to raise prices. Some think it means a “rubber dollar.” Others think it means inflation. In theory, if government pays $40 per ounce as contrasted to old price of $20 per ounce, the dollar becomes worth 50¢ and prices should rise accordingly. It is too complex for me and I have my doubts. In meanwhile stock market goes up on these two items of news.
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