Happy New Year: The Worst Is Over

After a year of economic crisis and political change, buoyant crowds gathered in New York’s Times Square on New Year's Eve to celebrate 1933’s arrival. That evening, a Youngstown, Ohio, lawyer named Benjamin Roth penned a cautiously hopeful line into his diary: "We bid farewell to 1932 without regret and welcome 1933 with a fervent prayer for better days."

The questions everywhere were the same: Has the Great Depression bottomed out? Will the New Year and the new administration restore prosperity? Or will nothing stop the relentless tide of lost jobs, home and farm foreclosures, factory bankruptcies, and bank failures?

Recovery has started, said Harvey C. Couch, the head of the Reconstruction Finance Corporation. "This is going to require time and we must be patient."

Roy Chapin, President Herbert Hoover’s commerce secretary, agreed: "Hysterical, panicky pessimism, where it may have existed among our people, has been replaced by a more American attitude. The dominant mood today is vastly calmer and more rational." Now, he said, "quiet determination rules."

"The low point in the depression was passed last summer, following the raid on this country’s gold and the balancing of the national budget," the New York Times wrote.

The general feeling was that an upswing was imminent.

But General Motors Corp. Chief Executive Officer Alfred Sloan lacked that confidence. In a New Year’s address, he urged Americans facing the Great Depression’s challenges to do so "courageously . . .  not from the standpoint of provincial prejudice, local selfish interest and political expediency." With the nation at a crossroads, Sloan applauded the new administration’s mandate that the power of organized lobbying interests "should no longer be tolerated." Given this goal, the U.S. needed "real leadership of a militant type."

Overseas, French financiers were convinced that Franklin D. Roosevelt’s "assumption of power will certainly improve the situation," the New York Times reported. They expected he would support "the general re-establishment of the gold standard."

London opinion leaders seemed "moderately hopeful," presuming that the "war debts problem will be solved" and that "signs of revival" in British trade would gain momentum, the New York Times reported.

Germans anticipated 1933 with delight. Their stock exchange surged at year’s end. "Frolicking traders jubilantly proclaimed that the depression in Germany has been so scientifically 'organized' as to make it pay," the New York Times wrote. Even better, it seemed as if "the Hitler movement" was crumbling. "Internal revolts, financial worries and the popular reaction against hooliganism have rendered it impotent as a militant party in or out of the Reichstag."

Still, economist Wesley Mitchell, the founder of modern business-cycle theory, reminded Americans that "stark and bitter realities" had to be faced. "Recovery is delayed because of the delay in readjusting the private debt structure, principally the long-term structure connected with the real estate boom." The imbalance between industrial progress and agricultural stagnation, along with the unsteady condition of the banking system, remained worrisome.

Commentator Will Rogers, as so often, captured the nation’s uncertainty in a New Year question-and-answer column.

"Do you think we will get out of this depression just because we got out of all the others? Lots of folks drown that’s been in the water before. . . . Won’t 1933 see a change for the better? I don’t think so. We haven’t suffered enough, the Lord is repaying us for our foolishness during prosperous days. He is not quite ready to let us out of the dog house yet."

(Philip Scranton is a Board of Governors professor of the history of industry and technology at Rutgers University, 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.)

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