I've read 279 books in the past four years. Some were awful. Others were incredible. But I took notes on all of them.
I've never known what to do with these notes. Then I got an idea: I'll dump some of the highlights into a weekly article.
The Great Depression: A Diary, is one of the most fascinating books I've ever read. Benjamin Roth, a lawyer, kept a detailed diary from the early 1930s through World War II, observing in detail how the Great Depression affected average people. His son published the diary a few years ago.
Here are six things I learned from the book.
1. Leading up to the depression, the 1920s were pretty wild. Seems similar to the 1990s:
June 5, 1931: As I look back now to the 1922-29 period it seems to me unreal and almost unbelievable. After the war pressure people wanted to have a good time and to spend money. The flapper appeared upon the scene. Women's dresses became shorter and shorter until they hardly reached the knee and in the latter stages of the delirium they wore their stockings rolled and their bare knees rouged. Morality and religion were pushed into the back-ground and in its place came Negro jazz bands and night clubs and all its attendant evils. To an older man it must have seemed inevitable that we were heading for a crash but to most of us it seemed that we were in a "New Era" which would never end.
2. The depression reset expectations of what life is.
July 13, 1932: If it weren't for the suffering that it has caused I would say that the depression has brought with it a good many worthwhile results. Among other things library circulation has trebled and people are once again turning to home pleasures etc. and to simple living. Life has become simple. Women's styles resemble the 1890s and even the bicycle is coming back into favor as a means of transportation.
3. Desperate times causes otherwise good people to get extreme.
April 30, 1933: A miniature "Shay's Rebellion" is taking place in Iowa. Enraged farmers in one place fought 50 deputy sheriffs to prevent a foreclosure sale. In another place they pulled the Judge off the bench during the trial, tied a rope around his neck, abused him, threatened hanging. Finally removed his pants and left him on the highway. These places and several others are now under military control and prompt punishment will be meted out to the wrong-doers. The situation illustrates the attitude of farmers who are losing farms because of deflated dollars and corn selling at 10¢ a bushel.
4. It can always get worse than you think.
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.
March 8, 1933. This was a poor guess. Conditions in 1932 were much worse.
5. Cash is so much more valuable than you think.
July, 1931: Magazines and newspapers are full of articles telling people to buy stocks, real estate etc. at present bargain prices. They say that times are sure to get better and that many big fortunes have been built this way. The trouble is that nobody has any money ...
June, 1933: I am afraid the opportunity to buy a fortune in stocks at about 10¢ on the dollar is past and so far I have been unable to take advantage of it.
August, 1936: This depression has indelibly impressed on my mind one thing, and that is the value of having on hand sufficient capital to cover emergencies. My experience as a lawyer shows that a large proportion of business failures are caused by lack of capital rather than by lack of technical business knowledge.
6. Opportunity is here today, gone today.
September 24, 1936: Most people did not realize the depression was over until a year or more after the turn had been made. If the fellow had waited until 1933-34 when prices were shooting up he could still have bought at bargain prices. In 1932 with stock prices at 10% of normal he could not have gone far wrong in buying stocks with 20 or 30 years earnings record and with a good chance to survive the depression. However, not one man in a million succeeded in doing this and that is why the millionaires club is still exclusive.
Go buy the book. You won't regret it.