October 29th of this year was the 80th anniversary of Black Monday. On Black Tuesday more than a million stock market shares were dumped and from then on it was “Katie-bar-the-door”. Economists tell us that those two days marked the beginning of the Great Depression because the market went into free fall. But those economists haven’t done their homework.
In subsequent months the market rallied, and typical ups and downs were recorded on the charts. The gains and losses meant zilch, however, because the nation’s economy continued its nosedive as consumers stopped spending and stopped borrowing.
We’ve all heard about the hundreds of banks that were shut down, the businesses that went belly up and the massive numbers of unemployed, and all these were the effects of the stock market crash – according to most historians. But the historians haven’t done their homework either.
The stock market crash was just one of the factors that brought on the Great Depression. The unequal distribution of wealth during the 1920s, a doubling of credit between the years 1925 and 1929, stagnant wages, shrinking personal savings, record household debt, and greedy stock market speculation and manipulation late in the decade were even more significant causes and, in fact, were the combination of circumstances that turned the stock market into rubble.
Then the “Katie-bar-the-door” thing happened. As soon as banks and businesses began to fold, jobs disappeared. Unemployment shot up to about 25 percent and there seemed to be no way out of the mess. Attempts were made to bolster the sagging stock market, but to no avail. Things just got worse as time went on.
The Works Progress Administration (WPA) was a nationwide effort to repair, rebuild and renew the country’s “infrastructure”, and it sounded like a good idea. It provided $ 13-a-week wages to millions of the nation’s needy – but except for some “bridges-to-nowhere” and some stone wall boundaries zig-zagging through hill and vale, not much was accomplished. There was no “multiplier-effect” to build on, and it was nothing more than a futile attempt at make-work.
Sound familiar? We’re in the same pickle today. An unequal distribution of wealth, a doubling of credit, stagnant wages, shrinking personal savings, record household debt, greedy stock market speculation and manipulation … it’s deja vu all over again.
With World War II on the drawing boards, however, FDR pulled off an economic miracle. In his attempt to prepare for our entry into the Great War, he instituted the Emergency Shipbuilding Programs, and even before this country joined the hostilities, that massive shipbuilding effort brought the Great Depression to a screeching and unexpected halt.
We’re in a better position to repeat that miracle today. We can repair – and once again dominate – the world’s economy. The only component part missing is “the stroke of a pen …”.