I grew up in the shadow of the Great Depression. No, I wasn’t alive until well after the end of the financial catastrophy. But I still believe that my childhood and early life was strongly influenced by the austerity of those times. All four of my grandparents struggled to make ends meet all through the Dust Bowl of the “Dirty Thirties”. Both of my parents were children in those days.
My grandparents and parents talked about the “Dirty Thirties” on many occasions. How they toiled away trying to raise meager crops and raise their young families. The bedrock of life among most people in those days was profoundly affected by the amount of uncertainty, worry, hunger, disease and pain that so many of them experienced.
For many years, I misunderstood the name “The Great Depression”. I thought that it was all about the severe sadness and emotional depression that people suffered through. It wasn’t until I reached high school age and studied basic economics did I understand the meaning of that term. Still, in the back of my mind, I did associate it with a dire mass public emotional condition.
The flipside of the depression was the economic booming good times of the “Roaring Twenties”. For the most part, life was good and the future looked bright. There was a lot of speculation in the banking industry and the stock markets. Credit was one factor, too. Investors floated loans without collateral. The paybacks were dependent upon the anticipated gains on the stock markets.
When stock prices took an initial dive on October 24th, 1929 investors and bankers began to get a little restless. That day was later termed “Black Thursday”. The downturn became a trend by Friday and into the following week. Then the full-scale crash on Wall Street happened on that day in 1929. It became infamously known as “Black Tuesday”. Thus, the beginnings of the capitalistic financial system failure began its slide down the slippery slope to Black Tuesday on Black Thursday, October 24th, 1929.
Here’s where notions of emotional depression merged with the economic cyclic theory. The nation’s and eventually the world’s business community felt uncertainty. That feeling could lead to mass layoffs. In that mood, employees and workers felt uneasy and worried. They might stop purchasing goods and services. Less consumption, leading to more business failures, leading to more layoffs and runs on the banks. The mood kept spiralling downward until there was nowhere left to go but the very bottom the following Tuesday. Then the mood quickly became the manifestation of gloom and doom. The depressed Wall Street quickly infected the entire nation.
In the aftermath, studies were conducted by the United States Senate to find out why the crash happened and why it was such an extreme event. These studies concluded that measures to prevent panic sales and collusion between commercial banks and investment firms.
Regulations were forthcoming. Primary among them was the Glass- Steagall Act of 1933. This act required the separation of commercial banks and investment banks. Commercial banks are those institutions which receive deposits from their customers and also extend loans to consumers. Invest banks, meanwhile, underwrite, issue and then distribute securities, stocks and bonds. These regulations and safeguards served to prevent other financial disasters.
During the 1980s the political notion became popular that the nation must deregulate everything. The aim by radicals of the day was to trim the Federal Government to the bone. They believed that regulations were hurting the economy. Slowly and surely various industries were deregulated and many public institutions became privatized. By the late 1990s and the earliest years of the 2000s, the banking and investment sectors also became largely deregulated.
Red flags were waving in my mind because I remembered the lessons of my high school and college economics classes. I saw the essential safeguards that protect the nation’s economy being torn away. I was not alone. There were experts warning of financial disaster because of many factors. Including outsourcing labor and banking.
Foremost among the concerns was the deregulation of banking. Now it was becoming more common for commercial and investment banks to merge their operations. Not only were red flags waving, alarm horns were blaring their warnings. Still, the mantra, “deregulate” continued and still does to this day.
We’re in the midst of a Depression-like condition in much of the west. Job growth is stagnant and the economy is floundering. Not only that, but we are experiencing global climate change. The parallels between now and the 1930s are becoming more clear. We have not hit bottom economically yet. I don’t know how much Mother Nature can withstand. We still have some wiggle room with which to work. Now is the time for proactive study, work, regulation and cooperation. Fresh, new thinking is taking place regarding the economy, employment and the environment. Much of this thinking is brilliant and workable.
It’s time to wake up and try out some fresh approaches. If we do, eventually we’ll not only pull out of our tailspin, but we’ll soar to a more equitable, realistic way of life for our civilization.
Ciao
The Blue Jay of Happiness doesn’t care at all for depressions of any sort.
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