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
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," Slate.com's Web site on business and economics. Prior to joining Slate, he was deputy managing editor of CNNMoney.com, 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 $200 Million: 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.