Dear editor:
On September 3, 1929, the Dow hit a record high of 381. On October 29, the market dropped to 230. By 1932 it had lost over 80% of its value. By 1933 on half of all U. S. banks had failed and unemployment was at 30% of the workforce.
Speculation in the market, large bank loans that could not be liquidated, and low margin requirements were some of the causes of the crash. Seven of the ten biggest up days in the market in the twentieth century were in the 1930's, but the Dow did not return to 1929 levels until nearly a decade after Roosevelt died in 1945.
The stock crash did not cause the depression but did accelerate the global economic collapse. Deflation, the collapse of Europe, the transition from agriculture to industrialization, and the Dust Bowl all were factors. But the biggest problem was the intervention of government. Hoover ordered wages up, passed a high tariff, and raised taxes. Roosevelt created regulatory, aid, and relief agencies based on the premise that only government could bring about recovery.
Some of Roosevelt's efforts helped (if you had a government job), but others, such as the National Recovery Administration caused damage as it sought to solve monetary challenges by price setting and stringent rules that hurt business. Some laws were so broad that no one knew how they would be interpreted. Capital was frightened and this hesitation arrested growth.
Roosevelt increased government spending, increased the power of the unions (Wagner Act) , set farm prices, fought with the Supreme Court, went off the Gold Standard, added IRS agents, suppressed utilities, and limited oil production.
Under Hoover, and Roosevelt, from 1929 to 1940, government intervention helped to make the Depression Great. It was a period of a struggle between the public and private sectors. This struggle continues today and its outcome will determine whether this Republic will survive.
Sincerely,
Dean Berry
Warren