Although there are many parallels between the condition of the stock market in pre-October 1929 and its current condition, please concentrate on the parallels between a 1930 and a 1999 spin of a significant event.
The following excerpt is from "distingished economic historian," Broadus Mitchell's
Depression Decade: From New Era through New Deal, 1929-1941 (New York: Rinehart
& Co., Inc., 1947), pp. 31-32, Quoted in David A. Shannon, The Great Depression
(Englewood Cliffs, NJ: Prentice-Hall, 1960).
Public statements at the new year on the business outlook for 1930 damaged more
reputations of forecasters than they bolstered. In the midst of the stock market debacle
two months earlier, prominent persons whose word was apt to be taken--bankers,
industrialists, economists, government officials--had declared their confidence in stocks,
not to mention underlying business soundness. At the beginning of the year more
perspective might be looked for. The optimism excpressed, however, was hardly
representative, for most of those with serious misgivings about the future did not offer
their opinions or ***find them published***. [Emphasis supplied.] Secretary of the
Treasury Andrew W. Mellon committed himself blithely: "I see nothing. . . in the present
situation that is either menacing or warrants pessimism. . . . I have every confidence that
there will be a revival of activity in the spring and that during the coming year the country
will make steady progress."
The White House repored the President as considering "that busiuness could look
forward to the coming year with greater assurance." Willis H. Booth, president of the
Merchant's Association of New York, saw "no fundamental reason" why business should
not find itself again on the upgrade early in 1930.
The Guaranty Trust Company of New York expressed qualified hope: "Although there is
no failure to appreciate the importance of the collapse of stock prices as an influence on
general business or to ignore the historical fact that such a collapse has almost invariably
been followed by a major business recession, emphasis has. . . been placed on certain
fundamental differences between the conditions that exist at present and those that have
usually been witnessed at similar times in the past."
Secretary of Commerce Robert P. Lamont contented himself with listing the gains that
the year 1929 as a whole had registered over 1928 and with predicting prosperioty and
progress "for the long run." He did not say how long the run was to be.
[Former Youngstown, Ohio, Mayor] Joseph L. Heffernan, "The Hungry City: A Mayor's
Experience with Unemployment," The Atlantic Monthly, CXLIX (May, 1932), pp.
538-540. Quoted in David A. Shannon, The Great Depression (Englewood Cliffs, NJ:
Prentice-Hall, 1960).
In December 1929. . . I attended a conference on unemployment. . . . Speaker after
speaker told what his community would do to end the depression and how quickly it
would be done. The unemployed were to be set marching gayly back to work without an
instant's delay, and the two-car garage was to be made ready for further enlargement. . .
.
[In April 1930]. . . I went to Germany. . . saw that the German people were in a bad
way. On returning home , I made a public statement that Germany was on the verge of
economic collapse, and predicted that the depression would take five years to run its
course. Thereupon I asked for a bond issue of $1m for unemployment relief. Many
leading business men went out of their way to show their disapproval. One of them
voiced the opinoin of the majority when he said to me, "You make a bad mistake in
talking about the unemployed. DON'T emphasize hard times and everything will be all
right." An influential newspaper chastised me for 'borrowing trouble'; the depression
would be over, the editor maintained, before relief would be needed.
Discussion dragged on for several months, and the gravity of the situation was so
deliberately misrepresented by the entire business community that when the bond issue
finally came to a ballot, in November 1930, it was voted down.
Thus we passed into the early days of 1931--fourteen months after the first
collapse--with no relief in sight except that which was provided by the orthodox charities.
Not a single move had been made looking toward action by a united community. . . .
I have cited these instances from my experience as mayor of an industrial city because they illustrate perfectly the state of mind which has been America's greatest handicap in dealing with the depression. Everyone will remember the assurances that were freely given out in November and December, 1929. by the highest authorities in government and business. The country, we were told, was 'fundamentally sound.' Nevertheless, general unemployment continued to increase through the winter. Then in the spring of 1939 it was predicted that we might expect an upward turn any minute.
Yet the summer slid past with hope unfulfilled. Winter came again, and conditions had grown steadily worse; still nothing was done, because we were reluctant to face the truth. Our leaders, having made a bad guess in the beginning, have been unwilling to admit their error. With the foolish consistency which is the hobgoblin of little minds, they have persistently rejected reality and allowed our people to suffer by pretending that all would be well on the morrow.
Old Git (anon@spamproblems.com), May 28, 1999
greenspun.com
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