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IDAHO-
H 1970
left-
Wldo W<>rld
Photo,
Right
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.4mbossodor
Collt9e
Photo1
Surplus potatoes were feeding the poor in 1938 (left), feeding the flames
in 1970 (right). In spite of record welfare rolls, scattered poverty and hunger
in America, and a worldwide shortage of potatoes, these ldaho farmers had
no profitable market for their crop.
causes
express themselves in the nation's
economic picture?
Statistician Roger Babson, who suc–
cessfully prcdicted both the 1920 and
1929 crashes, has made this point clear
over more than half a century of
eco–
nomic forecasts, and dozens of books on
the subject. In essence, he said the tech–
nical statistics that economists watch
are only wall
thermometers
telling
the present "temperature" of today's
economy.
If
you want to scc what thc tempera–
ture of the future will be, Babson coun·
scled, look at the barometer reading -
the
u•a;
pcople as a whole are dealing
with each other and how they live their
own lives. In other words, are workers
producing more, are employee ancl shop–
lifting thefts clown, are we borrowing
less, is the federal economy in the
black?
On such readings of the economy,
Babson was virtually the only major
13
economist to foresee the serious crash.
The top economists scoffecl when he
saicl, on September 5, 1929, "Sooner or
later a crash is coming and
it
may be
terrific ... factories will shut clown ...
meo will be thrown out of work ... the
vicious cirde will get in full swing and
the result will be a serious business
depreuion"
(John Kenneth Galbraith,
The Great Crash,
Houghton-Miffiin,
1955, pp. 89·90).
Government economists, on the other
hancl, seemingly clamberecl over each
other to reassure the many paper-thin
speculators that such
ta1k
was impos·
sible, unthinkable, perhaps even un–
American. "Don't Sell America Short"
was a common aphorism in 1929.
The Money Scramble
But hacl the economists looked at the
furnace room - at the basic
social or
moral
problems expressing themselves
economically
they would have
KNOWN
sorne kind of a "crash" was
coming. Had the ecooomists based their
forecast on the
materialistic
attitude of
most Americans, they would have seen
the handwriting on the wall.
The root motivation was greed, but
the main
specific
cause of the 1929
Depression in particular was "that
prí–
vate indebtedneu
was increasing faster
than earning power, that purchasing
was not keeping pace with produc–
tion . .." (Bining and Kleen,
op. cit.,
p.
452).
In other words, pcople had bought so
many items on time payments, that they
couldn't aiford any more - even on
installments
!
The people were "bought
out" while the newly installed assembly
lines were producing record oumbers of
new gadgets.
In 1929, there was a surplus of
goodJ,
but almost no buying power (money).
The situation in America today is dif–
ferent- too few American-made goods
are chasing too much available money.
One causes depression, the other infla.
tion. Both are equally catastrophic to a
nation.
What then are the chances for a new
kind of "depression"?
Today, America and the West still
have not learned their lesson. Money