News From The Great Depression

Written By Brian Hicks

Posted July 23, 2009




Here’s a look at a great website I came across recently called News from 1930.  It is a fascinating look at the daily headlines in the Wall Street Journal on a corresponding day 79 years ago.

I find it interesting because by July 1930 the economic crisis was only 10 months old and the stock market was down by only 36%. But as history has shown us, these clips come from a time when The Great Depression was just getting started.

As for Wall Street, the stock market didn’t actually bottom until two years later, which makes the “green shoots” nature of some of these stories kind of eerie.

But whether you are bullish or bearish, these stories from way back when are sure to entertain. It’s a really great site.

Here’s a sampling of the news from this week in 1930…

News from July 23, 1930:

  •   Administration members reported telling Wall Street that business has turned corner, and should curve slowly upward until winter, becoming clearest in October. No forecast beyond that ventured. However, administration strenuously denies rumors of using “its influence to bring about organized support for the stock market.”
  •    Irving Trust July review says we may be entering “ultimate pit of the depression;” sees mostly bad news in June, including declines in most lines of business, lower commodity prices, stock market declines, and possible tariff reprisals. Nevertheless, advises remembering that “It is always darkest before dawn.”
  •   Sentiment improved by market support yesterday. Conservative observers still advise buying on dips and selling rallies, but if market can get above previous resistance, would be considered confirmation of uptrend and convert many observers to the bull side.
  • Rail freight loadings for week ended July 12 were 915,985 cars, down 150,429 from 1929 and 108,940 from 1928, but up 123,844 from July 4 holiday week.

From July 22, 1930

  • Federal expenditures have gone from about $300M to $4.8B in less than 50 years; state and local expenditures have likewise enormously increased since the war. Much of this is used for vital services including schools, water systems, roads, etc, but not all of it is justified on the basis of results. For example, $250M so far has been spent on the Farm Board, “and the result has been like pouring water through a sieve;” yet one senator wants to give it a billion. “Herein is the fault of legislative bodies in ordering public expenditures. They do not have to make the budget balance and care little about the responsibility on those who have that delightful task.”
  • Radio Corp. license extended to television, suggesting systems may be coming sooner than the anticipated 5 years.

From July 21, 2009

  •   Harvard Economic Survey predicts business upturn in second half; cites increase in construction projects, stock market improvement, steadier commodity prices.
  •   Officials from several large companies operating plants in Erie, PA, including GE and Hammermill Paper, say that although employment is down from 1929 they’re beginning to see better business and expect to recall many workers within 30-60 days.
  • Governor R.A. Young of Fed. Reserve Bd. warns banks to be careful about the increasing amount of loans against securities. About the crash last fall, says: “there is food for serious thought in the fact that, under our excellent banking system … we nevertheless came to the brink of a collapse, had to resort to heroic action to prevent a panic, and were not able to avoid … severe liquidation and what appears to be a business depression. Is this unavoidable? Is it necessary for this country to go through periods of reckless exuberance, accompanied by enormous credit expansion and fantastic levels of money rates that profoundly disturb the financial structure not only here but all over the world?” The cost of these episodes is paid in unemployment and worldwide depression. Reminds banks that security loans are safe only if a liquid market exists for the security; large scale sales can cause a drop in value, “and there is no telling when such a drop may terminate and what catastrophe may follow …” Calls on banks not to assume Fed will always be able to help them, since its resources are “not inexhaustible.”
  • Hornblower & Weeks issue special letter with theme “Buy sound, standard American stocks now.” Predict seasonal recovery and higher stock prices this year, say that stocks can’t continually decline in the face of cheap money, commodities, and abundant labor. “Investors will not leave money on deposit for any length of time at 1.5% interest when sound dividend paying stocks can be purchased to net from 5% to 6%.”


By the way, if you haven’t ever read this story about the cause of The Great Depression by former Fed Chairman, Marriner S. Eccles, you should. Because every time I read it I feel like I’ve seen a ghost.

History is fascinating. You know there really is nothing new under the sun.

Related Articles:

The Great Depression’s Ben Bernanke

A Fair Comparison? Probably Not.

Warren Buffett says the economy is in a ‘shambles’

Stephen Roach’s Outlook: “A rude awakening”

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