Financial Issues in the 1930's Former social reformer, abolitionist, and slave, Frederick Douglas once proclaimed, “If there is no struggle, there is no progress.” This quote connects directly to the financial crisis in the 1930's because the entire decade was a struggle for all. Many people were in debt, or had little to no money. They sold almost all their belongings, including their houses, just to get a small amount of money in order to use on more essential things like food and water. Although the financial issues caused struggle, it also helped the future. It taught Americans about the importance of money and why they have to be smarter with it. There are still issues with finance to this day, but not nearly as severe as they were in the 1930's. The finance was progress for the people of America; it just took years of struggle to make that progress happen. During the 1930's, many issues occurred with money; people were in debt; banks started to head downhill and be less successful; and, people used different types of currency instead of the regular U.S. Dollar. The financial issues from this decade caused many issues for years to come. Throughout the 1930's, the types of money used were different than how it is used in present times. Before the stock market crash hit, there were 6 different types of currency in the United States. Those were United States Notes, Gold Certificates notes, National Bank Notes, Silver Certificates, Federal Bank Notes, and Federal Reserve Notes. All of these notes ranges from prices as low as $1.00 to as high as $10,000. After the Great Depression, only three remained. Those being United States Notes, Silver Certificates, and Federal reserve notes. These notes were signed by Andrew W. Mellon. Mellon was often called “the greatest Secretary of Treasury” since Alexander Hamilton. He helped distribute money, reduce war debts and income taxes. (Six kinds of United States Currency 3) These notes were also starting to get designed differently. The United States’ large sized currency was replaced with small sized notes. There were also different designs on the notes. As stated in the article, “All the small notes featured a portrait of Washington for the $1 note, Jefferson for $2, Lincoln for $5, Hamilton for $10, Jackson for $20, Grant for $50, Franklin for $100, McKinley for $500, Cleveland for $1000, Madison for $5000, and Chase for the $10,000. When one series of $100,000 notes was issued (1934 Gold Certificates), Wilson was put on them.” (2) This talks about the specific people placed on each of the notes. The portraits were often called “dead presidents” even though Alexander Hamilton, Benjamin Franklin, and Salmon Chase were never presidents of the United States. Some large notes included other historical figures like Martha Washington and James Monroe, but were never printed on small notes. Therefore, the types of money was changed drastically from prior years in both appearance and value. Furthermore, banks had trouble maintaining themselves through the 1930's. At the beginning of the economic depression, banks all throughout the nation started to fail at alarming rates. In the first 10 months of the 1930's, 744 banks had failed. Ten times the average amount of 70 banks annually in the 1920's. Throughout 1930's, a total of about 9,000 banks failed. It is estimated that 4,000 banks had failed in 1933 alone. As a result, $140 billion had been lost between 1933 and the start of the economic depression in 1929. Some towns during this time period had one or more banks, but most towns had at least one. Banks either merged with one another, or just failed, resulting in loss of money for the people (“Bank Failures during the 1930s Great Depression” 1). This led President Franklin Roosevelt to close the banks right after his inauguration. He closed all banks in the country for a 3 day cooling off period. This was called a national “bank holiday.” As President Roosevelt gave his speech in 1933 about his inaugural address. “Roosevelt identified two immediate objectives: getting people back to work and ‘strict supervision of all banking and credits and investments.’ (Roosevelt 1933)” (Jabaily 2). Once Roosevelt stated this, the following day cabinet members joined the Treasury and Federal Reserve Officials in order to create and prepare the groundwork for the national bank holiday. This gave banks time to make adjustments in order to maintain themselves more dependable. An example of this is the Milwaukee ministers. They agreed not to pass around collection plates until the crisis was over. Also, the First Baptist Church in El Paso Texas started to allow I.O.U. notes to be handed in. Other things such as fines for crimes were also changed in order to help the financial situation. Instead of paying $2 to $5 fines, people had to serve one-day sentences for their crimes. Although all of these changes had been made to help out people who had lost their money, no reprieves were made for those who owed federal income taxes. (3) Henceforth, trying to keep the banks maintained within what the law and government states. Not only did banks have trouble maintaining themselves, but most people were struggling with the debt situation. Firstly, farmers were angry about debt and bankruptcy that took their farms away. The price of a bushel of corn was about 8 to 10 cents during this time period, not giving farmers much to live off of. Some farmers even wanted the government to step in so that farm families can live in their homes still. An example of one of these protests was in Le Mars, Iowa, when a mob of angry farmers marched into a courthouse, dragged the judge off the bench, and drove him out of town. These farmers demanded that no more cases were made to make a farmer lose their farm. Once he refused, they threatened to hang him. Farmers in the 1930's also started the “Farm Strike.” This was another protest that prevented dairy trucks from taking products made of milk into the cities and towns. “The government pass the Agricultural Adjustment Act (AAA) of 1933 which set limits on the size of crops and herds farmers could produce. Those farmer that agreed to limit production were paid subsidy.” (The Great Depression Hits Farms and Cities in the 1930's 1). This helped cities and towns get food while farmers were able to provide for themselves and pay taxes and debts. People in cities and towns also had many troubles during this time of debt. As factories and stores shut down, many workers had lost the jobs they once had. In Dubuque, Iowa, 2,200 people lost their jobs between 1927 and 1934. As this happened, only 13 new businesses had opened, giving 300 people jobs. That made 1,900 people still without jobs. The Dubuque railroads gave 600 more people jobs in 1931. In 1934, there were only approximately 25 jobs left. People also were forced to sign up for government welfare. Before the Great Depression occurred, people found it disgraceful to sign up for government welfare. Once families were faced with starvation, some men ended up signing up, which was quite painful for them. One of the biggest issues for town and city dwellers was the lack of food. They weren’t able to grow food like farmer could, so many families went hungry. In some larger cities, there were soup kitchens that gave free food to families in need. Cold winters also gave city dwellers issues since they couldn’t afford coal. (2) President Roosevelt also called forth some more acts in order to help families regain jobs that they couldn’t have otherwise. The Work Progress Association (WPA) hired men to work on public projects such as parks, roads, bridges, etc. There was also a Civilization Conservation Corps (CCC) which hired teenage boys to work so they could provide for their families. These boys lived in barracks and worked on parks. Their small salary was sent back to their family, since they had necessities provided for them at the barracks. (History.com Staff 7) President Roosevelt did much more for the people of America during this time period. He was a reassuring voice for most people in the country. He sparked the idea of a project called the New Deal. It was a collection of government projects and experiments that aimed to return prosperity and dignity back to Americans. The New Deal was also a part of an attempt to stabilize the economy and provide jobs for the suffering. Some examples of acts that he passed were the ending of prohibition on beer, the Social Security Act which guaranteed pensions to millions of Americans. And the Wagner Act which prevented businesses from treating their workers poorly. Although President Franklin Roosevelt did all of these things in order to end the Depression Era, people continued to struggle for many more years. Hence, many issues were caused by the financial crisis all throughout the 1930's. The types of money and the processes of their designs were changed so money could be saved on the manufacturing and worth of paper money was also affected. In addition thousands of banks failed while others struggled to maintain themselves. And, debt caused people in both cities and towns to suffer. However it was because of the people going through the struggles and suffering that brought a better financial system that we use today.
Finance In the 1930’s Jamais Cascio, an author and futurist of San Francisco Bay, once proclaimed, “Resilience is all about being able to overcome the unexpected. Sustainability is about survival. The goal of resilience is to thrive.” These words demonstrate that resilience to occurring events and tragedies allows strength and development. In the 1930’s, the Great Depression shook the very structure of America and its economy. Though things were unstable, America managed to resist going into further chaos, despite not having the best or most sustainable of lives. The problems of the 1930’s were caused by finance, and created many struggles for everyone, including the rich and poor. Many things were different, such as the type of currency, the income and the salary a family earned, and the banks themselves. Because of this, finance was a devastation in the 1930’s that had a major impact on America. To start, different types of of currency were used in America to compensate for the chaos within the economy. These various types of dollars and currency were known as scrips. The website http://depressionscrip.com/ explains, “Paper, cardboard, wood, metal tokens, leather, clam shells and even parchment made from fish skin was used.” The currency was created in hopes to make a temporary form of money until things got better, but it was barely efficient because of the variation in value and type. It helped to recover some commerce, even with its problems. It is also said, “Some scrip issues, of course, are more credible than others. The power, productive capacity and faithfulness of the issuer are factors which affect the credibility and market acceptance of a local scrip issue.” This shows the strain that America underwent in its attempts to fix the economy, as the values and currencies were all printed and thought of differently. It substituted money, but was not as reliable. There were also dollars and depression notes that were used during the decade, other than scrips. During the Great Depression, there were six types of paper currency, though three ceased to exist after the crash, and two would die out in the following decades (Six Kinds of Currency 1). Overall, there were multiple types of currency in the 1930s, affecting the remains of trade and commerce. Secondly, another major piece of finance in the 1930’s were the salary and income that a family would earn. Most workers, like bricklayers, electricians, and ironworkers made $1.30 an hour, while doctors made $1.50 an hour, and cooks made $0.35 an hour (Byrne 1). Many people struggled throughout the Great Depression, but most could survive the harsh time if they had an occupation or job. Unfortunately, the time was known for its unemployment, where many could not get by in their lives. Without work being offered, or wages being given, many families would be in poverty, unable to support themselves. To try and improve the economy, the Fair Labor Standards Act was introduced in 1938, with the first minimum wage of $0.25 an hour (1).The 1930’s were harsh and filled with despair from the crash, though things began to recover and change for the better as the years passed by. The act was put in place to help repair the economy and help alleviate the pressure of many suffering families that had been affected. Salary and income was a large part of the 1930’s that left an impression on our country and our commerce today. Lastly, the banks played a major role in the economy of the 1930’s, having suffered and changed throughout the decade. When the crash began, hundreds and thousands of customers went to withdraw their deposits from the bank, and the lack of money for lending and loaning was ruined while farmers and families suffered (Bank Failures 1). It shows how the banks of the 1930’s had been strained, and how the financial crisis only worsened. With all the money being withdrawn, the many banks were forced to close. It stated in the article, “By 1933, 11,000 of the nation's 25,000 had disappeared.” The pressure on the banks were overwhelming, and many were forced to close due to the economic crisis. There was a huge loss of money from the failure, making lives more difficult and the trust in banks very poor. Many people during the Great Depression were known for stashing and hiding money when they could no longer rely on the banks. In summary, banks left behind a severe effect on America during the 1930’s. In conclusion, finance was a crisis in the 1930’s and had a major impact on America. Things were different, such as the types of currency circulating the economy, the salary and income that a family could earn, and the banks themselves. Jamais Cascio had stated, “The goal of resilience is to thrive.” America had a difficult time in the 1930’s, full of strife and despair, though they did not collapse, and remained strong. The country recovered, continuing to progress and grow throughout history to be the place we live today.
This is an example of the type of money used when it was used in the 1930s and the 1920s, especially before the Great Depression hit
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This is an example of what a bank would look like at the beginning of the Great Depression. People were rushing to take their money out of banks.
This is an example of a type of depression scrip that may have been used, especially because of the lack of resources.
When people figured out that banks were starting to fail, thousands among thousands of people went to banks to withdraw their deposits.