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What makes this book important are its clear similarities to the events of today. In fact, it's hard to read the book and not get the two eras a little confused. Bank closings? Check. Recovery Act bills and government spending? Check. Bankruptcy? Check. Foreclosures and federal foreclosure prevention programs? Check. Partial and full takeovers of industry? Check. Smaller paychecks every year? Yep. (While the editors admit to the release of the book being spurred by the current economic crisis, the cyclical nature of this type of event means the book would actually have been just as important in 1999 or 2006 as it is today.)
Beginning in June 1931, Benjamin Roth recorded in a series of notebooks his observations on the events in Youngstown, Ohio. Highlighted are the sad state of his legal practice throughout the depression years, bank closings and reopenings, steel production levels, growth in the ranks of the unemployed, and extreme deflation in the early years of the depression. Though having no investments of his own, Roth recorded stock prices and dividend payments, and much of the discussion surrounds the best way to have invested if he had been able. Roth worries most about a period of strong inflation spurred by the policies of the Roosevelt administration and about middle-class professionals such as him being bypassed by the growing recovery, but also about the anti-Semitism of the campaign by Republican Alfred M. Landon in the 1936 presidential election, Hitler's takeover of Europe, government control, socialism, losing the gold standard and the rise of organized labor, especially when it led to strikes and violent confrontation in Youngstown. He worries, too, about collecting what is due his practice without causing hardship.
I know little about investing, but Roth's progression through the years of the depression is evident. At first, he believes that government bonds would have been the only safe strategy; later fears of inflation push him toward stocks, preferred and common. When the recovery stumbled greatly in mid 1937, he comes to believe that only having a pot of cash available and shifting among different strategies the follow the curve of boom and bust is prudent. In the end, he aligns himself somewhere between the speculators who he blames for the crash and the long-term, bonds-only investor he would have been earlier in the crisis.
Roth's theorizing about investment strategy is nothing more, because he is too short on cash to do anything with his ideas. (While the book offers few details, the late 1940s and following decades were more profitable for Roth and his law office, which is still in operation with his son and editor at the helm. Roth and his wife also left behind the Benjamin W. and Marion B. Roth Foundation, a charitable organization.) What he offers in addition to his hypothetical musings on where to allocate non-existent savings is a picture of depression-era concern and struggle among the middle, professional class -- not the union workers, not the migrant fruit pickers and not the stockbrokers driven to despair by losing everything. It is an important perspective.
The parallels to today are rampant, despite the obvious changes over the years. I find it hard to sympathize when Roth complains that only the working class is getting the benefits of the recovery, this due to federal requirements for shorter work days, increased pay and recognition of unions. The fear of socialism because of government spending I do not share, but many do today; bold government spending is what ended the Great Depression, though only when war gave the administration full license to do so. What I do share with Roth is resentment of those who play with the market as speculators, not as investors. He makes that distinction clear, and the blame is just as evident. Along with deregulation, those speculating in real estate, bad real estate loans and petroleum futures share a great deal of the responsibility for the fact that millions of us now make less money than we did two years ago, and that college graduates cannot find jobs, and that many formerly employed no longer have any job or are working well beneath their abilities. Yet he leaves room in his view of the market for a person not to hide his savings away but to invest it in growing business and government bonds, putting it to work while reaping the benefits -- but in a way that is both responsible and prudent.
I read this book in 24 hours. The format of short diary entries combined with the thrill of following the ups and downs of Roth's community and the country in light of today's situation made it easy. I'd recommend you pick it up and do the same.
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BOOK REVIEW: Benjamin Roth's 'The Great Depression: A Diary' Brings Nation's Greatest Financial Meltdown to Life
Reviewed By David M. Kinchen
The 'forgotten men' of today are the doctors, lawyers, insurance men, etc. They are down and out and can do very little about it. -- Benjamin Roth, diary entry Nov. 10, 1933
Image removed by sender.That refrain -- echoing Franklin D. Roosevelt's "Forgotten Man" radio speech of April 7, 1932, when he was still governor of New York -- runs through Benjamin Roth's "The Great Depression: A Diary" (PublicAffairs, $15.95 quality paperback, 288 pages, edited by James Ledbetter and Daniel B. Roth, with an introduction by Ledbetter) much as the Mahoning River runs through Roth's hometown of Youngstown, Ohio.
Benjamin Roth was born in New York City in 1894 but he moved with his family while still very young to Youngstown. He received a law degree and moved back to Youngstown after serving as an army officer during World War I. When the stock market crashed in 1929, he had been practicing law for about ten years, representing local businesses for the most part. After nearly two years, he began to grasp the magnitude of what had happened to American economic life, and he began writing down his impressions in a diary that he maintained intermittently until he died in 1978.
Youngstown, midway between New York City and Chicago and about halfway between Cleveland and Pittsburgh, was a thriving industrial city of about 170,000 people at the time of the October 1929 stock market crash. Today it has about 78,000 residents, with legendary employers like Youngstown Sheet & Tube Co. long gone. (A personal note: I worked in the quality control department of YS&T's mill in Lake County, Indiana for about a year in the mid-1960s, before I joined the reportorial staff of the Hammond (IN) Times in January 1966). If Pittsburgh and Chicago were the centers of Big Steel, Youngstown was home to "Little Steel" companies like Youngstown Sheet and Tube and Republic Steel.
Most of the entries cover the period from 1931 to the end of 1941, after the Pearl Harbor attack and the declaration of war against the U.S. by Hitler's Germany and Mussolini's Italy on Dec. 11, 1941. Roth interjects brief updates with dates in the 1940s, 1950s and even the 1970s, and the editors provide background essays to explain some of the events Roth writes about. All in all, the package is an excellent brief introduction to the Great Depression, with anecdotes that will resonate with today's readers.
In addition to his comments about the lack of work for lawyers, doctors, dentists and other professionals during the entire period of his evocative diary, Roth records the travails of working class people at a time of industrial strife and massive unemployment. He doesn't neglect the plight of farmers in Ohio and other Midwestern farm belt states, including the epicenter of farm foreclosures, the state of Iowa. Roth devotes a great deal of space in his diary to real estate, which must have been a big part of his law firm's business before October 1929 -- and very little after with the almost total collapse of the nation's real estate industry.
Roth was a Republican who voted for Hoover's re-election in 1932 when FDR won in a landslide, and for Alf Landon in 1936 when FDR swamped Landon in an even bigger landslide. In 1940 Roth campaigned for GOP Presidential candidate Wendell Willkie on a "no third term" for FDR campaign. Although he worked for the Mahoning County NRA, his beliefs that the New Deal was a socialist plot against America pervade the diary. Like people today, Roth struggled to understand how the world's largest economy could collapse so quickly after the events of October 1929. He obviously had plenty of time to read sitting in his frequently empty law offices and he cites dozens of books that he perused to educate himself about finance, investing and economics.
Here's Roth's entry for March 8, 1933, four days after FDR's inauguration:
We are greeted by a very dramatic announcement this morning. At 1:30 a.m. this morning as his first official act, President Roosevelt issues a proclamation ordering every bank in the United States to close for four days -- including the U.S. Treasury and the Federal Reserve Banks. It now appears that during the past two weeks foreign countries and domestic depositors have withdrawn gold from the U.S. Treasury at an alarming rate. This proclamation also forbids exportation of gold. As a result of this announcement the U.S. will be technically off the gold standard for four days. I don't see how the government can resume gold payments at the end of that time because all Europe will be waiting at the Treasury doors to withdraw gold. In Youngstown every bank and loan company is closed to all business and large placards in the windows bear notice of the President's proclamation. Everybody is fearful of the immediate future. In the meantime all over U.S. plans re (sic) going forward to issue scrip against bank deposits. Likewise every stock exchange in the country is closed.
It's important to remember than before the passage of the Banking Act of 1933 -- commonly called the Glass-Steagall Act for its congressional sponsors -- later in 1933, there was no federal insurance on bank deposits. Glass-Steagall separated "boring" commercial banking and "risky" investment banking and created the Federal Deposit Insurance Corp. Most of Glass-Steagall was discarded in the latter part of the Clinton Administration, but the FDIC was retained.
The repeal of the Glass-Steagall Act of 1933 effectively removed the "Chinese Wall" that previously existed between Wall Street investment banks and depository banks and has been blamed by some -- including the present reviewer -- for exacerbating the damage caused by the collapse of the subprime mortgage market that led to the current financial crisis.
About the editors: James Ledbetter is the editor of "The Big Money," [...] Web site on business and economics. Prior to joining Slate, he was deputy managing editor of [...]a financial news site. His most recent book is Dispatches for the New York Tribune: Selected Journalism of Karl Marx. He is also the author of Starving to Death on $ [...]: The Short, Absurd Life of The Industry Standard and Made Possible By...: The Death of Public Broadcasting in the United States. He lives in New York, NY. Daniel Roth is a son of Benjamin Roth and is the chairman of the law firm of Roth, Blair, Roberts, Strasfeld & Lodge in Youngstown, Ohio. He is the co-founder of National Data Processing Corporation and the co-founder, Chairman and CEO of Torent, Inc (formerly Toro Enterprises, Inc.) He divides his time between Youngstown, Ohio and Florida.