The Great Depression Read online

  Wheat sells today at 45¢ and corn at 42¢. This is the lowest since 1855. I went to the fruit market house this evening. It was almost deserted. The farmers cannot sell their produce because men are not working and it has become popular for each family to have its own vegetable garden.

  AUGUST 6, 1931

  At a public sale by the sheriff today on foreclosure by the bank, the Carosella home at 1915 Elm St. was offered for the third time but no buyer found. It could be bought for $4400—and is really worth conservatively $7500. In 1929 the owner thought it was worth $11,000.

  8/14/52

  The same house today at 1915 Elm is still in good condition and is worth about $12,000.

  AUGUST 7, 1931

  Business is at an absolute standstill and the big stores are deserted even tho they are all running sales and almost giving the merchandise away. Since the Home Savings & Loan Co. and other loan companies stopped paying out, nobody has any money and everybody seems scared and blue. We seem to have touched bottom in Youngstown and it hardly seems possible that things could get worse.

  3/8/33

  This was a poor guess. Conditions in 1932 were much worse.

  AUGUST 8, 1931

  My brother Morris has been out of work now for almost 2 years and can’t find a thing to do. He is an engineer and draftsman. Jerome Burger was laid off by by the Truscon Steel Co. two months ago and is not very optimistic. Joe is still at Truscon but is afraid for his job. He says the air is tense and men are being discharged every day.

  The Chicago Tribune announces that 100 theaters in Chicago and vicinity will close up. This is because of the tremendous overbuilding of theaters during the last 5 years of the boom. Each producer built his own chain of theaters and bought the real estate at fancy prices. Now they are going broke. In Youngstown movie admissions have dropped from 60¢ to 35¢.

  AUGUST 9, 1931

  Professional men have been hard hit by the depression. This is particularly true of doctors and dentists. Their overhead is high and collections are impossible. One doctor smoothed a dollar bill out on his desk the other day and said that was all the money he had taken in for a week. Lawyers are almost as badly off and most are not taking in enough to pay. We have been helped a little by bankruptcy and foreclosure work which followed in the wake of the depression but most of it does not pay because the assets are worthless. Most professional men for the past two years have been living on money borrowed on insurance policies, etc. The only work that comes in now are impossible collections on a contingent fee basis. Everybody is digging up old claims and trying to realize on them. Tempers are short and people are distrustful and suspicious. There is nothing to do but work harder for less money and cut expenses to the bone.

  8/26/36

  I am re-reading this when the depression is about over. Professional men have not yet had a break. In normal times the average professional man makes just a living and lives up to the limit of his income because he must dress well, etc. In times of depression he not only fails to make a living but has no surplus capital to buy bargains in stocks and real estate. I see now how very important it is for the professional man to build up a surplus in normal times. A surplus capital of $2500 wisely invested during the depression might have meant financial security for the rest of his life. Without it he is at the mercy of the economic winds. His practice suffers and he has no chance of rising above the level of the ordinary practitioner who lives from day to day and from hand to mouth.

  AUGUST 10, 1931

  I note in today’s Legal News that the Kirsch home on Coronada Ave. is being foreclosed by the bank on a $7500 mortgage. It can be bought for the price of the mortgage and is worth $10000. This and many other bargains are being offered today. The Legal News carries advertisements today of 78 sheriff sales to be held within the next 30 days. In almost every case, the properties will be bought back by the bank for the 1st mortgage plus taxes and court costs. There are no bona fide bidders. Among the properties offered for sale is the old Gallagher property—corner Ardale and Rayen—132 front running back to Erie RR. and appraised at $3000.

  8/26/36

  The Kirsch property was bought eventually by the U—family for about $7500 but instead of using cash they used Home Savings & Loan Co. pass books which were selling at 50¢ on the dollar. This family has bought much real estate this way and in the next few years will reap a harvest.

  6/28/62

  The U—family bought half of East Federal St. at sheriff sales in the 1930s. However down-town real estate has gone to pot because of the growth of suburban shopping centers. The U—family still owns half of E. Federal St. but the buildings are empty and they cannot sell.

  7/10/70

  Almost all of E. Federal has been purchased by Urban Renewal at modest prices. The stores are vacant or have been torn down. The cheap E. Federal stores have moved to W. Federal and the good stores have moved to the suburbs.

  AUGUST 17, 1931

  I just came back from a short stay at Geneva-on-the-Lake. Summer resorts seem to be particularly hard hit. Hotels are empty and everybody is bidding for business at cut-rate prices. This is a good time to buy summer resort homes or even large mansions of the rich people. Nobody wants them at any price because they are too expensive to carry. Many formerly rich families are living in the chauffeur quarters above the garage while the mansion stands closed.

  AUGUST 17, 1931

  Today’s Vindicator carries the news that four of the largest commercial banks in Toledo, Ohio closed their doors (total deposits over $100 million). Also that eleven Savings & Loan companies in Toledo stopped paying out money. The conclusion seems clear that savings and loan companies are not good places to deposit money even tho they pay a high rate of interest.

  I had lunch and a talk with Russell McKay of the Home Savings and Loan Co. He is not very optimistic about the near future. Says that the City of Toledo is completely tied up for lack of money. Money is either in hoarding or tied up in closed banks and business is crippled. He does not think bank money will be released for a long time. He also fears that people who owe money on mortgages will withhold their payments and thus make the situation worse. Foreclosure does not help much because there is no re-sale market. The bank simply becomes the owner of the real estate. Moratoriums of one year are being considered on mortgage payments in many states.

  8/26/36

  Looking back now it is clear that the Toledo bank failures were but a fore-runner of the closing of the Youngstown banks later and of the National Bank holiday in March 1933. Very few people foresaw. We could not believe that Youngstown banks like the Dollar Bank, the Commercial and the City Banks would close their doors. We thought it could not happen here—and yet it did. It is cheering however to note that both Toledo and Youngstown survived the bank closings and are prosperous cities again with bright futures. In the Commercial and Dollar Banks the depositors lost nothing. In the City Bank they lost about 40% altho even for that they hold certificates against questionable assets.

  AUGUST 18, 1931

  This town is fast becoming panic-stricken. Everybody is talking about the depression and wondering where it will end. The failure of the four big Toledo banks and the stoppage of withdrawals by practically all of the Savings and Loan companies has tied up everything. There is no money in circulation and all business is at a standstill. Dr. W—our family dentist stopped me today and urged me to continue to send my family in for dental work even tho we could not pay promptly. This was a very unusual thing for him to do but people have simply stopped worrying about dental needs. If a tooth aches they have it extracted but neglect all other dental services that might be expensive.

  Today’s Legal News recites that vacant lots on Main St. in Wickliffe sold for taxes at $25 each. I did not bid on them because each carries future special tax assessments of $200. I suppose I will be sorry 10 years from now.

  10/30/41

  I am not sorry I did not buy the lots. Vacant residential lots in Youngstown
have not been a good investment unless you build on them at once and get a return on your investment. If those Wickliffe lots had been purchased at $25 each in 1931 they would be worth less today than the original $25 investment plus accumulated taxes and interest for 10 years.

  AUGUST 19, 1931

  Another large bank in Toledo closes its doors today. This leaves only two open banks in this hard-hit city. The Federal Reserve Bank of Cleveland announces that it will back these two banks to the limit and rushes 11 million in gold down there to meet the steady withdrawals.

  EDITOR’S NOTE

  The strain on charitable organizations, in Roth’s Youngstown as elsewhere, was tremendous. Without public assistance programs to help the poor and out of work feed their families in the 1920s, charities stood on the front lines. Until the Great Depression, joblessness was usually perceived as a temporary setback; if a man tried hard enough to get another job, his need for charity would end. Family members, ethnic communities, or neighbors came to his aid until he “got back on his feet.” Neighbors or relatives would contribute a dollar apiece to feed a down-and-out family; churches or private charities provided meals.

  But the sheer volume of the needy in the first few years of the Depression tapped the normal capabilities of these organizations. In Youngstown the Allied Council, the local charity, handed out relief to 100 people in August 1931. By September 4 they handled 1,150 desperate calls. Furthermore, initiatives that raised funds in the past had dried up: A fund in Detroit that needed $3.5 million in 1931, for example, could raise only $645,000. On this score, President Hoover was tragically out of touch. In the winter of 1930-1931 he felt the country’s unified “‘sense of voluntary organization and community service’ could take care of the unemployed,” according to Arthur Schlesinger Jr. About a year later, in late 1931, President Hoover did create the Organization for Unemployment Relief to help drive the wealthy to donate money to private charities, but he simply did not believe the government needed to directly assist the unemployed. For one, Hoover considered it the responsibility of local communities to handle and feed their own out-of-work citizens. But he was also afraid that any federal assistance would provide an excuse for the wealthy in America to stop providing charity and funds to the needy “have-nots” in their communities. Amazingly, many Americans sided with Hoover on this topic in the early days of the Depression.

  AUGUST 20, 1931

  The Allied Council—the charity organization of Youngstown—has been busy during the depression handing out grocery orders. When I came to work this morning I counted about 50 of them coming down the steps that lead to the office. The elevator man tells me this happens every day and that people start drifting in at about 7 A.M. Many of them look well fed and are probably taking advantage of the situation. The city is planning a bond issue to provide for relief needs this winter. Hold-ups and killings are becoming more frequent and it becomes dangerous to walk the streets after dark.

  AUGUST 20, 1931

  This morning a client 65 years of age came into the office and we had a long talk about his personal affairs. He had been in the liquor business and in 1921 when Prohibition put an end to his activity he had accumulated about $200,000 in liquid cash. He is now broke except for some worthless real estate. He became a prey to high pressure salesmen of worthless stocks, tried one business after the other, speculated in real estate and in many ways tried to make more money quickly. We discussed 7 or 8 other men to whom the same thing happened. Not one was able to hold his money. They were good saloonkeepers but had not learned how to keep their money or to make it work for them. They knew absolutely nothing about sound investments and were not satisfied with a moderate return of 4% or 5%. I asked him what he would do again in the same circumstances. With tears in his eyes he said he would preserve and protect the principal at all hazards. He would invest safely for a small but certain return. On $8,000 a year, he could have lived well in Youngstown and he and his family would have had the peace of mind that financial security can bring. He was particularly rabid against his investments in real estate.

  AUGUST 21, 1931

  The Union Savings Bank of Warren closes its doors today. It was one of the oldest in the community. People seem to have lost all confidence in banks and are quietly withdrawing their funds and putting it in safety vaults. It is impossible to say how far the movement will go. In Youngstown just now the Commercial Bank seems to be the strongest with 50% liquidity. The other banks are not so good with about 20% liquidity. Government and postal savings are popular today.

  AUGUST 22, 1931

  Things are happening fast and the people are getting more demoralized each day. Two more large commercial banks in Warren and one Savings & Loan Co. closed their doors. Nate got back from his vacation yesterday and said his personal account was tied up and also a commercial account he uses in his business and consisting of money that belongs to clients. His personal account was not much but the other was more substantial.

  This morning about 100 men were standing in line before the Allied Council Headquarters waiting to get grocery orders. The line grows longer each day.

  Just heard that the bank at Cortland closed today. The closing of a bank in a city seems to drag down banks in the small communities nearby.

  AUGUST 22, 1931

  There is a quiet but steady stream of depositors at every bank in Youngstown this morning quietly withdrawing their funds. The closing of banks in Toledo and Warren received much publicity and distrust of all banks is growing like a cancer. It is a movement which feeds on itself and is hard to stop. At the Dollar and Union Banks there are about 4 or 5 depositors at each withdrawal window. There is no excitement but a quiet look of intensity on the faces of both depositors and bank officials. Even the strongest banks can’t keep this up long. They do not have enough cash to pay everybody. Much of their funds are invested in railroad bonds and other securities which were once considered gilt-edged but are now selling below par so that the banks cannot afford to liquidate. Investments like mortgages are frozen tight. There is clearly something wrong with our banking system which permits such a situation to come about. It is hard to rent a safety box today because there has been such a demand by hoarders. Actually the liquid cash of the bank is being transferred from the bank vaults to the private safety vaults where it is taken out of circulation and becomes sterilized.

  AUGUST 25, 1931

  I talked today to Serena Shlesinger who works for the Allied Council. She tells me they had 750 applicants for charity on one day of last week and had 300 on another day.

  Everybody is afraid of the banks. Both in Warren and Youngstown the depositors are withdrawing money—the thing simply cannot go on. I tried to warn W. W. Z. who is a large depositor but he laughed at me. Nate transferred his office account to the Commercial Bank at Youngstown so he can continue his business.

  AUGUST 26, 1931

  Good properties on almost every business street in the city are being offered for sale by the sheriff. Oh! If I only had some money. As little as $1000 or $1500 in cash would swing the deal if the buyer is willing to assume the mortgage. I am still hoping I can pick up some of these bargains before the depression is over but unless a lucky large fee comes in I do not see how it can be done.

  International politics are boiling but I cannot quite understand everything that is going on. Germany is on the verge of financial bankruptcy and is asking for delay and cancellation of war debts. England is in the same position and yesterday Prime Minister MacDonald resigned. France seems to be richer than ever and is using every advantage to crush Germany.

  AUGUST 29, 1931

  The Legal News advertises a foreclosure against Dr. B—covering about 5 apartment buildings in poor neighborhoods. The mortgage is $12000 and the whole thing can be bought for this amount. Four years ago, the owner was willing to sacrifice the property for $45000 and thought it was worth $75000. In normal times the rental income was $1000 per month. This is another example why a professional
man should not invest in low-grade real estate. It takes almost full time to collect the rent, make the repairs, etc. The overhead is high and he is fortunate if he makes 6% clear over a period of years with nothing for his labor. Properties of this kind seldom have a speculative value.