This Week in the Great Depression: Echoes

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Welcome to "This Week in the Great Depression." It's the fall of 1931, and Britain just weeks ago abandoned the gold standard. Nervous dollar holders have made a raid on U.S. bullion, with almost $450 million earmarked for shipment in less than a month.

Rumors from Berlin suggest that the Soviet Union is about to default on many millions in deutsch mark debt for equipment and materiel shipped east in the 1920s. Worse, Germany's guarantees against nonpayment are worthless, as its coffers are nearly empty. Apparently, the USSR won't transfer any funds that are due to the U.K., France and the U.S. either. Britain's Malayalam Plantations recently announced they had begun closing all their rubber estates in South India due to low prices, keeping their "valuable European staff" while dismissing local workers who had tended their 19,000-acre sites.

President Herbert Hoover, meanwhile, was trying to "step in at the eleventh hour to avert disaster," this time a renewed decline in stock values. As the attached graphic shows, the Dow charted a ragged slide -- peaks and valleys that slumped from 381 to 86 by late 1931, and to less than half that by mid-1932. Hoover called for an international agreement to defer payments on war debts and reparations, which he hoped would stop the downward momentum.

Elsewhere in the U.S., the only prosperous economic sector was distributing illegal booze, as citizens almost everywhere did their best to defy or ignore Prohibition. Blurred vision might have been some comfort for farmers witnessing fading commodity prices, worsened by a crop overhang from 1930, unsold millions of bales and bushels put into storage, awaiting market improvements.

Worse, banks in the U.S. and Europe began refusing payments to foreign account-holders, limiting withdrawals or closing their doors, spreading panic and triggering runs as depositors lined up to try to get their money out. Surely, the economy couldn’t get any worse. But it did.

Over the next year and more, we plan to continue marking the 80th anniversary of the Depression by revisiting it week by week, starting in 1931. We hope to give a real-time feel for the era -- its controversies and disasters and the innovations that enlivened the decade's business and economic landscape.

Many have suggested that we're in another depression today. It's certainly true that from all angles, our current economic mess is big, historically big, and we hope that getting some perspective on it by reviewing the 1930s might be instructive.

We'll strive on this blog to see the Great Depression as an unfolding and interacting series of dynamics, rather than a mass of facts. The world was changing rapidly in 1931, generally not for the better, and the direction and speed of those changes are what we hope to share with you. As one of my colleagues, Andrew Popp of the University of Liverpool, noted recently: "We go in search of a world where history comes into being." Exactly.

(Philip Scranton is a Board of Governors Professor of the History of Industry and Technology at the University of Rutgers at Camden and the editor-in-chief of Enterprise and Society. The opinions expressed are his own.)

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

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Philip Scranton at

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Timothy Lavin at