The Great Depression (10 page)
Read The Great Depression Online
Authors: Benjamin Roth,James Ledbetter,Daniel B. Roth
Banks in Canton, Massillon, Alliance and Pittsburgh closed yesterday. Included were two old banks—The Harter National of Canton and the Monongahela of Pittsburgh.
At a mass meeting last night at South High an attempt was made to reopen the city banks by urging depositors to buy new stock with 25% of their deposits and to agree to let the balance remain for an agreed period of 1 to 3 years.
Pessimism grows deeper locally and little hope is held out for re-opening the banks altho new plans spring up every day. It is interesting to watch the list of daily real estate and mortgage transfers. Most of our established families were stock-holders in the banks and every day sees a half dozen transfers to wife or child or a large mortgage.
I am told that 200 young priests have been sent here from Cleveland to make a house-to-house canvas to help re-open the City Bank. The bank was favored by a large number of Jewish and Catholic depositors.
Sermons are being delivered in all the churches urging courage. A large bill-board is being erected on the public square with the caption “forward Youngstown.” I attended services at Rodef Sholom Temple last night and it was crowded. It seems true that religion and the church grow stronger in adversity.
It is unbelievable that in one year so many old established fortunes in Youngstown could be swept away. I can find very little to criticize in their list of investments. They relied on local bank stocks, Sheet & Tube, Republic and Bank deposits. They might possibly be criticized for not selling all their Sheet & Tube Common and Republic Common at boom prices in 1929 and switching to good bonds. Also they might be criticized for holding too much bank stock entirely or in one community. If Youngstown went bad, all their investments went bad. On the other hand they had held all these investments for over 25 years and had grown rich on them. The only conclusion I can come to is that at least half of the investor’s money should be in good bonds. Also the double liability attached to bank stocks is a dangerous feature.
The situation remains the same and the banks remain closed. The latest howl comes from school teachers who have not been paid since school started. They must wait until the bonding company pays bank losses. The same situation exists in Chicago and other cities.
Small banks in Kinsman and several other little nearby towns closed yesterday. Akron and Dayton get organized to bring in outside capital to prevent a situation such as exists now in Toledo and Youngstown.
The Union Trust of Dayton—one of its largest banks—closed yesterday. Also one of the largest labor union banks in New York has closed. The National Credit Bank proposed by Pres. Hoover has failed to function so far. More talk of “bi-metalism” as a remedy for the depression and also of Russian-Japanese-Chinese War. About 500 unemployed held a meeting on the front steps of the courthouse today and demanded a “dole” of $1 per week. No signs of business improvement in sight.
Banks continue to close all over the state. Yesterday the Farmers Bank of Mansfield closed its doors. This is where Jake banked. All discussion in Youngstown about re-opening the banks has died down. “Hunger Meetings” are being held daily in front of courthouse, City Hall and our Square.
During past week wheat went up from 40¢ to 80¢ per bushel. Stocks also push up and claim is made that in 1873 and in 1893 the turn for better came with the rise in wheat and the removal of fear that U.S. would go off gold standard. There seems to be little danger of this.
Japan is practically at war with China and Russia and ignores League of Nations warning. In past month Japan sent 75 million gold to U.S. presumably in preparation for purchase of war munitions.
It is really funny to see professional men “pull in their horns.” Those who became “specialists” during the boom by taking a 3 months trip to Europe are now back in general practice. A good many doctors and dentists have given up their down-town office and are using their home. Same with lawyers. It is the old story of expanding too far and living too high.
Practically every country club including the Youngstown Country Club has closed for the winter.
Things remain at a standstill. There is no money in circulation, the stores and business places are deserted and everybody seems to have given up their initiative. The banks are still closed, school teachers are unpaid and there is no money to pay salaries of county and city officials. There is some talk about issuing scrip against bank deposits. Vacant store-rooms on W Federal St. are on the increase and half-price sales are numerous.
Russia-China-Japan seem to be actually at war with over 1000 killed to date and the League of Nations seems helpless. Because of this war scare the price of wheat and of silver has trebled in the past week. All of these countries are on a silver basis.
There will be a meeting tonight of the Congregation Rodef Sholom to consider ways and means. Both the temple funds and the members funds are tied up in the banks. The choir has been fired and other economies affected but this does not seem enough. The same is true of other churches and institutions.
The congregational meeting at Rodef Sholom Temple last night was very “blue.” Money tied up in banks, members dropping out, reducing dues or not paying at all, etc. Entire budget is cut down and various resolutions passed promising co-operation. Rabbi Philo’s salary cut from $10,000 to $8,500.
Hoover launches another national bank system to rediscount small mtges. It is like the National Credit Corporation which will rediscount commercial loans not eligible for Federal Reserve Banks. One mortgage discount bank will be established in each Federal Reserve District—capital to be supplied by the member banks.
Another bank in Toledo voluntarily quit business and tells the depositors to come and get their money.
The bi-metalism argument rages hot. Bryan advocated a ratio of 16 to 1 but at present the ratio of 22 to 1 is being advocated. At present prices silver is about 70 times cheaper than gold but its price is rising due to buying of Japan and China.
Strong rumor that the Mellons of Pittsburgh will come to Youngstown—place a three million mortgage on the Dollar-First buildings and re-open the banks. This would be a bargain for them for they would have good security for the money they advanced and get control of the banks for nothing.
Everything is still at a stand-still. The banks remain closed and business is worse if anything. We bought apples Sunday for 30¢ per bushel. Drove thru Niles and Warren and were impressed by the number of vacant stores on the main street. The same is true of Youngstown with many chain stores leaving. Movie prices are down to 25¢ and the State Theater is closed “temporarily.”
Business as usual—and that is rotten. Large delegation of Youngstown goes to St. Louis to urge the canal matter. The weather remains unbelievably warm and we have had no winter. A large crowd of 400 or 500 men still assembles each morning in front of City Hall hoping for a day’s work.
Stocks are going down again to lowest point in 15 yrs. And in some cases (rails) all time record lows: West. Union 52; U.S. Steel 58; Sheet & Tube 22; Beth St. 25, etc. There is more talk of script and bi-metalism.
EDITOR’S NOTEEven traditionally secure industries witnessed a quick, sharp decline in business between 1929 and 1932. Construction of residential properties, for example, saw an 82 percent drop in those years. U.S. Steel Corporation, headquartered near Youngstown in Pittsburgh and founded by Andrew Carnegie, J. P. Morgan, and Charles Schwab, had cut 75 percent of its workforce to part-time hours in 1931. By September of that year it had adopted a 10 percent wage reduction. Other industries quickly followed the example of U.S. Steel. Another 1.7 million workers experienced similar cuts in their wages within ten days.The beleaguered agricultural sector fared even worse. Farmers had experienced a downturn as early as 1920. From 1910 to about 1920, and especially during World War I, there seemed to be a nearly endless need for the food that American farmers provided. Farms grew bigger and output increased, as the demand in hungry, war-torn Europe seemed insatiable. But after the war, though the postwar consumer culture created profits in the business sector, Americans simply couldn’t consume all the surplus of wheat, corn, dairy, or beef that the farmers were accustomed to producing and selling. Farmers saw their gross agricultural income fall to $10.5 billion in 1921 from $17.7 billion in 1919. Wheat prices, for example, had gone from $2.19 a bushel in 1919 to $1.05 in 1929. Farmers, however, didn’t reduce their production even as prices plummeted. So President Hoover, in contrast to his slow response to the banking and unemployment situation, enacted the Agricultural Marketing Act of 1929 to handle the glut of production and try to raise the price of agricultural commodities. This policy created the Federal Farm Board, armed with $500 million to develop agricultural cooperatives and stabilization corporations to keep prices steady and store surplus produce as a means to heighten demand and raise prices.Only the effort did not save the farmers. As the new era gave way to the Great Depression, farmers’ plight had moved beyond the price of milk. Their debt had ballooned from $3.2 billion in 1910 to $8.4 billion in 1920. Farmers financed much of the expansion during the good times by remortgaging their properties with easy loans from banks. They also snatched up modern plows, cultivators, tractors, and other equipment aimed at boosting productivity when demand was high on credit from farming companies. By 1932 many farmers could barely afford the seed to plant on their land to feed even their own families.
The Wabash Railroad goes into receivership. Also the other R.R.s are all in bad shape. Local banks are still closed and very little hope of opening. Stocks continue to go down to new low records. U.S. Steel and Western Union are both selling at 50 and Atcheson (Topeka & Santa Fe Railroad) pays $10 div. on a price below 87.
The weather has turned bitter cold for the first time this winter and there is much suffering. About 1000 unemployed were lined up at 6 A.M. today in front of City Hall hoping to get a day’s work. Business is at a standstill although a little Xmas shopping appeared last Saturday.
A party from Detroit tells me that conditions are far worse there than in Youngstown. Real estate bonds and large family hotels etc. have become worthless and at foreclosure sale these large hotels etc. sell for less than land value. In some cases the large buildings have been destroyed rather than pay taxes. Likewise Detroit had its bank failures.
Four large railroad companies fail to pay dividends yesterday—including New York Central—for first time since 1870. Stocks go to new lows. Some samples are NYCRR 24; Penn R. R. 20; U.S. Steel 46; Western Union 43; Yo. Sh. & Tube 20; Republic St. 5 5/8.
Many old businesses are going to the wall and many of them lived thru 5 previous panics but never saw anything like this.
A very conservative young married man with a large family to support tells me that during the past 10 years he succeeded in paying off the mortgage on his house. A few weeks ago, he placed a new mortgage on it for $5000 and invested the proceeds in good stocks for long-term investment. I think in two or three years he will show a handsome profit. It is generally believed that good stocks and bonds can now be bought at very attractive prices. The difficulty is that nobody has the cash to buy.
According to this morning’s paper the new Japanese government abandons the gold standard. This makes a total of 15 countries that have gone off the gold standard. France and U.S. are the only 2 large countries remaining on the gold standard. China has always had silver money—the Scandinavian countries and India followed England and report has it that Canada will do the same thing. There is very little danger that U.S. will follow suit.
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