V1931-01G3

Third Grade, 1931-1932

Third Grade Miss Delia Hudson was our teacher, 42 students started & 37 finished her class; I-II-II-IV-V ratings for first mo. were 2-13-13-14-0, for last mo. 3-20-9-5-0. Scores were given for Attitude, Reading, Spelling, English, Arithmetic, Writing, & Music. It's difficult to believe I made "I"s in writing each month, the only good scores, I must have “drawn” each character because my “penmanship” was almost illegible. Again I received U= Unsatisfactory for unnecessary talking.

Crash of 29: We were oblivious that the DJIA (Dow Jones Industrial Average) plummeting from a high of 381 in the third quarter of 1929, my first grade year, to 41 mid 1932 my 4th grade year. We did feel the impact via our parents and their circumstance which affected our class mates. We knew times were tough but didn’t let this effect our having fun while participating in school activities.

Hoover was president and although highly respected as a person the public lost confidence in him and the nations economic well being. Model-A's which had began selling to an eager market we encountering poor sales defaults on car payments, especially in the city.

Happy Days are Here Again: A circus had come to town and set up in the old Chautauqua park across from my grandmother Bobbitt’s. George Gardner, a friend of Dad's was Sheriff and periodically made the rounds to see that all was going well at the circus. Dad had sold our home on Buffalo and we were living in Grandma Bobbitt’s house that year. George Gardner would sometimes park by Grandmothers house while he checked out things at the Circus, he and Dad would visit. We little kids did not have permission to wander about at the circus but we watched the coming and going of many people during the week it was there.

Roosevelt was running for president. I was oblivious to much of this except that someone independent of the circus kept playing the song "Happy Days are Hear Again". Catching snatches of Dad and George’s conversations I found out this was Franklin D Roosevelt’s campaign song. You would have thought everything was just fine, people were enthusiastic about the circus, but even us kids could sense the public concerns.

There was news of people in cities standing in soup lines not able to get work. People became very conservative in their spending, the prices of farm products were going down. Before farmers only worried about the weather, the acts of God, now the acts of man were causing people to loose confidence in the economy. People were very down and Roosevelt’s Campaign Song was just the kind of medicine they needed. Happy Days are Here Again was premature but it certainly brought in votes for this as yet unknown fellow called Franklin D Roosevelt.

The Stock Market Crash of 29' is a major milestone in American history. The events associated with this economic up heavily influenced our lives. All had an immediate awareness of though times – to us young kids we thought the conditions of life we were experiencing were a natural state, the adults knew better and truly suffered trying to keep families housed, fed & clothed.

The economics of the world was in a constant state of flux. There is over-under confidence on the part of investors and over-under correction on the part of the government.

Dow Jones Industrial Average 1920 to 1940

The Crash of 29' The above figure shows the Dow Jones Industrial Average from 1920 to 1940. I've included this in part because it has revealed to me that actual market performance does not match the impression left by the term Crash of 29' and the stories of persons jumping out of windows.

In the immediate time period after WWI the market drifted downward and the nation tried to readjust from war to peace. Then from 1921 to 1927 there was a steady upward climb in the market, going from about 80 to 220, a compound growth rate of 15% per year. Word got around that this was a great way to make money. People began to buy stock on margin at a time when there were few regulations. People could borrow against the stock they held to buy more stock. There was no limit on what percent a bank could loan. Often the bank was protected but the investor could be sold out to pay the loan from the bank, the loss came out of the investors pocket.

From 27' to 29' in the DJIA went from 220 to 381 in about 7 quarters, a compound growth rate of 10% per quarter. This was at a time when money could be borrowed for at 6% per year. Speculators felt they had found the magic way to make money. Then in the fall of 29 major buyers decided to cash in and started selling. The market plunged from 381 to 200 giving up all gains for the prior 2 years. The market rebounded to about 300 in the next quarter. The crash had been a drop of 50% from it's peak; then rebound making it a 25% drop from it's peak. During mid 30' the market stabilized at a value that reflected the growth rate for the 21' to 27' time period. Those who had bought on margin had been wiped out but those who had been long term investors were still in excellent shape for the prior 5 & 10 year time span.

Margin Buyers were Sold Out: When the market took the abrupt hit in the fall of 29, many accounts had to sell stock to pay for borrowed money. When the value of the securities baking the loan began to drop the banks called for more cash or sold the stocks. Unfortunately those with money decided to pull out of the market. In a few days of panic selling and no buyers the prices plunged. It took a drop of 50% from the peak before buyers with cash came into the market to buy what by all standard of the prior 10 years had become low priced.

Buyers Stabilized the Market: Those with money came back into the market and it stabilized at what would seem to be a true market value. We can be certain many very conservative investors were drawing trend lines which gave them a feeling for real market value based on normal times.

In 1930 the Market was still in good shape: The market which is a kind of voting place perceived the economy to still be in good shape. However the crash of 29' had called attention to the fact that there were problems. It was at first easy to blame the problem on speculators buying with borrowed money.

Pessimism Sets In: Though the market recovered back to Normal, the news began to report business status as being half empty as compared to half full. There was a tendency to tell of how bad things were in Europe, the Spanish civil war was under way, there was much fighting in Germany between Communists and Brown Shirts who were to become Nazis. Business men began to play things safe, people began to play it safe. Much was made in the news of the magnitude of the crash, of persons wiped out.

When people put off purchases more people were laid off. Lines of the unemployed began to make the news. Each month there were more unemployed in the cities. The unemployed cut back to the maximum extent on the food they bought. The prices of food & farm products dropped. The effect began to spread to include every state and every home.

The Real Drop, no bottom, not even a name: The worst drop in the DJIA came from the end of 30' till the middle of 32'. In this time period the DJIA went from 250 to 41, down to 16% of it's 30' in two years. The Crash of 29 should be renamed the Catastrophe of 32'. The nations peoples had completely lost confidence. Any business operating on borrowed money were caused to foreclose. Persons with deposits in banks were withdrawing their money to make ends meet. Banks had to foreclose if a business couldn't service the interest on their loan. Marginal banks began to fail. The property put up for security was not worth the value of the loan, depositors wanted their money now.

Dust Storms Compound the Problems: The entire Midwest from Texas to Canada was suffering due to the lack of rain, this triggered dust storms of a magnitude never experienced since man had broken the buffalo grass and planted crops. This came at a time following a food surplus and when persons in the city were in soup lines. Farmers stopped buying when the not only got low prices but now not even a crop.

Eggs to 9 cents a dozen: The economy became so bad you not only couldn't sell pigs, you couldn't even give them away. One of my first jobs was making egg cases at 2 cents each. I was doing good to make 50 cases and earn 1.00 in an eight hour day. These cases held the 9 cents per dozen eggs. Farmers came to town with a few eggs and a can of cream in a car held together with bailing wire. They bought flour from the mill in a printed sack which the Mrs. sewed into a dress. Almost no-one went hungry because even those in town could grow a garden and raise chickens. But few had any spending money, w/o spending money they didn't even buy from Montgomery Ward and Sears as they had since the railroads had pushed west. More persons in the city were put out of work.

Mass exodus from the farms: Those who had borrowed money to start a farm of their own or to expand at the wrong time were caught along with the one who lost all in the stock market. Stinbeck wrote the Grapes of Wrath, and an ex Omaha boy Henry Fonda played the lead roll. Their depiction of difficult times were very real to many. The sound of the Loose Rod in the engine of the old truck while idling, lingers in my ear as if I'd heard it yesterday. Such sounds I heard in the drive as a farmer left off more 9 cent a doz. eggs and I made another 2 cent egg case. A preacher didn't need to preach Hell Fire & Damnation, people saw that every day in the form of another dust storm and shriveled crops.

From 1930 to 1934 as many as 25% of the farmers gave it up and moved to California, at least once there they had escaped the dust storms. Irrigated lands were producing crops.