So how did you survive the worst week the stock market has ever had? It is not a good thing when a long-standing record of financial rout from 1933 is bested, but what are you going to do? It happened.
I spent my time thinking of the economics and history that I learned in school but mostly I recalled some family lore to tide me through the shock.
Neither one of my grandfathers came out of the Depression unscathed and unscarred, but they got off more lightly than many did.
Both men were middle aged and had families. They had left their family farms at a young age to take their chances in the big city of St. Paul, Minn., in the early 20th century.
On the Harper side there is the story of Texaco stock. What my grandfather was thinking I don’t know, but he acquired some at some point before the great crash in 1929. What was the family lore?
Well, he wasn’t leveraged, so he wasn’t forced out of the market. He simply held it until 1949 when he broke even. At that point he sold it and never looked back.
I can only imagine what he might think about today’s world of 401(k) plans and talk of privatizing Social Security.
My other grandfather from my mother’s side of the family owned no stock. But he did have money in a bank that failed. How much? I don’t know. Perhaps it was too painful to recall or perhaps he didn’t think a young child knew what it meant. He died when I was 7.
Interestingly, in 1933 this very same grandfather went back to the farm and tried to make a go of it. He gave that up by 1936, but not before my mother learned about preparing live chickens for the dinner table. She didn’t do it, but she sure remembered the process and for me it was simply a funny story growing up.
The financial press reports that many Americans were like deer in headlights with the severe fall in the stock market in 2008. Do my recollections indicate I am suffering the same symptoms? Could be.
Then there is coin collecting. I picked a 1929 Saint-Gaudens $20 as the Item of the Week for this issue. Why not?
This might be a good place to recount a little history. The Item of the Week mentions Franklin D. Roosevelt’s Gold Recall Order, but does not say why he issued it.
The President and his advisers felt that the best way to combat the devastating wave of falling prices was to devalue the dollar and introduce some inflation.
In those days, the dollar was a legally defined quantity of gold. To devalue, the gold quantity was decreased. Roosevelt didn’t want speculators profiting from the devaluation, so he called in gold coins and Gold Certificates.
He got quite a bit back, but collectors were able to keep examples of gold coins for their collections. It might have helped that his Treasury secretary, William Woodin was a coin collector and the President was an avid stamp collector.
In early 1934, the dollar was devalued by 59 percent. The official price went from $20.67 when he took office to $35. One odd consequence is the United States bought so much gold it became the largest holder of gold in the world, a title it still has, though it holds less than half of its peak holdings.