I read the book Since Yesterday: The 1930s in America. It's a fantastic read by historian Fredrick Lewis Allen about life in America during the Great Depression.
Here are six things I learned from the book.
1. The Great Depression began in 1929. But even in 1930, most economists were oblivious to how bad things were:
When the substantial and well-informed citizens who belonged to the National Economic League were polled in January, 1930, as to what they considered the "paramount problems of the United States for 1930," their vote put the following problems at the head of the list: 1. Administration of Justice; 2. Prohibition; 3. Lawlessness, Disrespect for Law; 4. Crime; 5. Law Enforcement; 6. World Peace -- and they put Unemployment down in eighteenth place! Even a year later, in January, 1931, "Unemployment, Economic Stabilization" had moved up only to fourth place, following Prohibition, Administration of Justice, and Lawlessness.
2. Ordinary people were pretty calm during the crash and the first few years after. Then, they panicked:
It is not usually during a collapse that men rebel, but after it. There had been riots and hunger-marches here and there but on the whole the orderliness of the country had been striking, all things considered. Yet men could not be expected to sit still forever in the expectation that an economic system which they did not understand would right itself. The ferment of dissatisfaction was working in many places and taking many forms, and here and there it was beginning to break sharply through the orderly surface of society.
3. Once people realized how bad things were, they took the law into their own hands:
They threatened judges in bankruptcy cases; in one case a mob dragged a judge from his courtroom, beat him, hanged him by the neck till he fainted -- and all because he was carrying out the law. These farmers were not revolutionists. On the contrary, most of them were by habit conservative men. They were simply striking back in rage at the impersonal forces which had brought them to their present pass.
4. People came together to make the system work in their favor:
They lost patience with the laws of bankruptcy. If a man sees a neighbor of his, a formerly successful farmer, a substantial, hard-working citizen with a family, coming out of the office of the referee in bankruptcy stripped of everything but an old team of horses, a wagon, a few dogs and hogs, and a few sticks of furniture, he is likely to see red. Marching to the scene of the next foreclosure sale, these farmers would drive off prospective bidders, gather densely about the auctioneer, bid in horses at 25 cents apiece, cows at 10 cents, fat hogs at a nickel -- and the next morning would return their purchases to the former owner.
5. Just like 2008, the government had to balance protecting the financial system while helping everyday people:
What is certain is that at a time of such widespread suffering no democratic government could seem to be aiding the financiers and seem to be simultaneously disregarding the plight of its humbler citizens without losing the confidence of the public. For the days had passed when men who lost their jobs could take their working tools elsewhere and contrive an independent living, or cultivate a garden patch and thus keep body and soul together, or go West and begin again on the frontier. When they lost their jobs they were helpless. Desperately they turned for aid to the only agency responsible to them for righting the wrongs done them by a blindly operating economic society: they turned to the government. How could they endorse a government which gave them -- for all they could see -- not bread, but a stone?
6. As poverty became the norm, people took desperate measures to make a buck:
In 1938 a Gallup poll revealed that during the preceding year an estimated 29 per cent of the American people -- meaning, one supposes, adults -- had taken part in church lotteries (presumably including bingo parties), 26 per cent had played punch boards, 23 per cent had played slot machines, 21 per cent had played cards for money, 19 per cent had bet on elections, 13 per cent had taken sweepstakes tickets, 10 per cent had bet on horse races, and 9 per cent had indulged in numbers games. There were no Gallup polls in the preceding decade, but one wonders if any score even approaching that would have been made in the nineteen-twenties -- unless, perhaps, playing the stock market and buying Florida real estate had been included in the gambles.
Go buy the book here. It's great.
Contact Morgan Housel at firstname.lastname@example.org. The Motley Fool has a disclosure policy.