This Week in the Great Depression -- New Year's Blues: Echoes

a | A

December, not April, was the cruelest month in 1931. U.S. stock markets cratered, and railway shares were “breaking to the lowest levels in the history of the Dow-Jones averages,” the Wall Street Journal noted on New Year’s Day, 1932. Shares of industrial companies followed them down. In the bond market, “new financing reached the vanishing point in the final quarter.”

Brazil’s Coffee Council planned to destroy 600,000 tons from the harvest. Japan abandoned the gold standard at mid-month, and the U.S. Department of Agriculture reported that 1931 crop values had fallen by 30 percent from a year earlier. In the midst of “one of the worst gold scares in history," the boats that usually carried gold across the Atlantic were overburdened and slower vessels had to be pressed into service.

With fears spreading about where the economy was headed, eminent Americans offered their counsel to the public. Michigan Senator James Couzens, a Republican, said: “Any man who makes predictions without many qualifications and reservations is a fool," and then assured citizens that 1932 would be better than 1931.

Senator David Reed, a Pennsylvania Republican, opined: “The chief thing wrong is fear. I learned during the war that fear is a passing emotion. The economic fear of the country will pass.”

In Mississippi, Senator Pat Harrison, a Democrat, preached austerity: “Government expenditures, under the influence of extravagance and wastefulness ... have mounted to exorbitant figures. Careful economies must be employed.”

Alfred P. Sloan, the president of General Motors Co., argued that recovery depended on “the desire to possess and the willingness to work to possess. The mere fact that the economic machinery we are using to capitalize on these fundamentals is more or less out of order is inconsequential.”

President Herbert Hoover said: “The world is suffering more from frozen confidence than from frozen securities.”

Humorist L. H. Robbins responded in the New York Times with vernacular doggerel, modeled on James Whitcomb Riley’s poem “When the Frost is on the Punkin.” It resonates both with that year’s troubles and with today’s:

When the confidence is frosted and the money’s in the sock,
And they’s nothing goin’ forward but the tickin’ of the clock,
And the pessimists are clackin’ like a lot of startled hens,
And the anarchists are shoutin’ hallylooyer in their dens,
Oh, it’s then the time a feller should be actin’ at his best,
He should spend his bottom dollar, and his top, and all the rest,
And he shouldn’t go complainin’, spreadin’ gloom around the block,
When the confidence is frosted and the cash is in the sock.

Though prosperity is over till some other golden year,
They’s something kinda’ bracin’-like in times like these ones here.
Of course we miss the joy rides, and the gettin’-rich with ease,
And the feelin’ proud as Croesus, and the frolic and the sprees;
But they’s pride in standin’ steady through the shadows and the haze,
They’s credit just in talkin’ up the sunny, brighter days.
We can bring ’em in a minute, we can break this hammerlock,
When our courage is defrosted and we empty out the sock.

Courage would be needed in 1932. Happy New Year, all.

(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. He writes "This Week in the Great Depression" for the Echoes blog. 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.

To contact the author of this story:
Philip Scranton at

To contact the editor responsible for this story:
Timothy Lavin at