1929

Similarities between the1920s' economy and today's are "remarkable," suggests journalist Andrew Ross Sorkin in 1929 – Inside the Greatest Crash in Wall Street History and How it Shattered a Nation. The prologue lists examples – the flurry of innovations and products that captured the public imagination; consumer reliance on credit, speculation and gambling in the stock market, and increased concentration of wealth. Otherwise, Sorkin applies laser focus to the period between February 1929 and June 1933.

A few differences may be more troubling. 

National debt

To stem crises, the US government tends to borrow freely. National debt spiked during the Great Depression, World War II, the Great Recession that began in 2008 and the Covid pandemic. 

In 1929, the national debt was 16 percent of GDP, increasing to 35 percent by 1933 due to a decline in revenues with business closures and massive unemployment and then 50 percent by the end of the decade. 

Today, the federal debt stands at about $39 trillion, more than 120 percent of GDP, giving policymakers less room to maneuver with more debt issuance that might cushion the blows. 

Also, foreigners held virtually no US debt in 1929. Today, more than 30 percent of the national debt is foreign-held, led by Japan, the United Kingdom, China, Belgium and Canada. 

Interest rates

Widespread demand for such debt, backed by the US government, has contributed to low interest rates in recent years. There are two camps on interest rates: One side argues that ongoing low rates can prevent crises by stimulating the economy in advance. The other maintains that low rates can encourage bubbles and inflation. 

In August 1929 the Federal Reserve acted to contain a swelling stock-market bubble by hiking the primary credit rate, the amount banks were charged for short-term overnight loans, to 6 percent. After the crash, the Federal Reserve swiftly enacted a series of rate cuts, reaching 1.5 percent by June 1931. 

In response to the Covid pandemic and sudden downturn, the Federal Reserve abruptly slashed the primary credit rate in March 2020 from 2.25 percent to a range between zero and 0.25 percent. The country has since struggled with inflation, brought under control through interest rate hikes imposed by the Federal Reserve. 

Inequality

Stock ownership is more entrenched today than it was in 1929. More than 60 percent of Americans now participate in the market compared to less than 5 percent in 1929.  

Fortunately, government reforms launched in the aftermath of the 1929 crash remain in place today including separation of commercial and banking functions, the Federal Deposit Insurance Corporation and guarantees of bank deposits to stop panicked runs on banks, as well as increased transparency for publicly traded companies. Also, more Americans are prepared for crisis: About half hold emergency savings accounts today compared with about 20 percent in 1929. 

Still, the two decades run neck in neck in terms of inequality. “The gulf between the richest 1 percent and the rest of America is the widest it’s been since the Roaring ’20s,” reports the Associated Press. “The very wealthiest Americans earned more than 19 percent of the country’s household income last year – their biggest share since 1928, the year before the stock market crash. And the top 10 percent captured a record 48.2 percent of total earnings last year.”

Tax brackets and rates were different. The top rate in 1929 was about 25 percent for those earning $100,000 or more – worth $1.9 million in today's dollars. By 1932, the Hoover administration hiked the top bracket to 63 percent for any earning $1 million or more. Afterward, Senate hearings exposed that 20 of J.P. Morgan's wealthy partners wrote off losses, with none paying income taxes for 1931 and 1932. 

Today's top bracket is 37 percent for those earning more than $768,7000, filing jointly.

Uncertainty

An uneven economy and volatile markets unnerve Americans with 70 percent anticipating a recession during the next year, as suggested by the Economic Uncertainty Index.  

Sorkin’s book offers a riveting narrative on how the crash unfolded from the point of view of bankers, investors, speculators, presidents and other policymakers, explaining how many failed to anticipate the crash and then scrambled to contain the damage. However, Herbert Hoover deserves more credit for presidential leadership after inheriting problematic policies including low tax rates, protectionist tariffs and easy credit along with low interest rates. 

“To the nation, experiencing the implosion of the stock market felt like watching a heavyweight champion getting knocked out by an untested, unheralded amateur,”  Sorkin writes. "A state of shock set in, accompanied by a paralysis of spirt and loss of confidence. People started questioning all the things they had taken for granted.” He vigorously insists that Herbert Hoover deserves more credit for presidential leadership after inheriting a set of problematic policies including low tax rates, protectionist tariffs and easy credit along with low interest rates – all endorsed by the current US administration. 

Sorkin concludes, “The antidote to irrational exuberance is not regulation by itself, not skepticism, but humility – the humility to know that no system is foolproof, no market fully rational, and no generation exempt.” 

Humility can be found among the stories from our grandparents and great-grandparents who endured the hardships of the Great Depression.    

Foster

 

Foster by Claire Keegan is a compact book, sharp like a punch to the gut, about children's lack of control in this world and a summer of lessons about letting actions speak louder than words. 

Set in Ireland, a girl leaves home for the summer to live with an aunt and uncle who lost their only child. That home stands in stark contrast to the only home she knows, run by an alcoholic father and ever-pregnant mother with a brood of children they can ill afford. The child is open about the family’s money problems, and Mrs. Kinsella asks if her mother would be offended by the couple sending off a few bob. “She wouldn’t, but Da would,” the girl replies.  

Edna Kinsella clearly dislikes her sister’s husband, Dan, blaming him for the family’s impoverishment and slovenly ways. But John Kinsella is a peacemaker. His goal is to get along with the child and he understands that requires the father’s agreement. 

The contrast between the two homes is unnerving, and the child observes, “I am in a spot where I can never be  what I always am nor turn into what I could be.”

She finds the new home strange, as life with the Kinsellas is a balance, with new freedoms and responsibilities. But regarded as an individual whose opinion matters, the child quickly comes to appreciate the Kinsellas, who have no trouble extending love beyond the boundaries of close family. She immediately observes the mutual respect and trust the childless couple have for each other. John Kinsella respects his wife, and explains that women have a gift for detecting eventualities. “A good woman can look far down the line and smell what’s coming before a man even gets a sniff of it.” 

Of course, accidents happen, and the couple is calm and forgiving. Kinsella turns ordinary tasks, like collecting the mail, into little games. Life is orderly, comfortable despite unspoken grief over the son who died. 

The couple feels guilt over the loss of the son, who died chasing the family dog into a slurry, and Edna Kinsella wonders how her sister could have parted with her daughter, trusting care with another, especially a woman who lost her son. 

With love comes the fear and pain of loss. The Kinsellas and the girl understand their time together is fleeting, unlikely to be replicated by the child's own parents. 

One night, John takes his nieces on a walk by the sea under a brilliant moon. “Kinsella takes my hand in his. As soon as he takes it, I realize my father has never once held my hand, and some part of me wants Kinsella to let me go so I won’t have to feel this. It’s a hard feeling but as we walk along I begin to settle in an let the difference between my life at home and the one I have her be.”

People long to trust others, but there is only one way to find out. The girl spends a short time with a neighbor of the Kinsellas, and the woman simultaneously spews gossip about the couple's dead son while pecking for more. Kinsella explains his wife “wants to find the good in others, and sometimes her way of finding that is to trust them, hoping she’ll not be disappointed, but sometimes she is.” 

The man then advises the girl to limit what she tells others. "You don’t ever have to say anything…. Many a man’s lost much just because he missed a perfect opportunity to say nothing.” 

Over a few short weeks, the girl learns much about generosity, patience and the ability to keep a confidence.

Through most of the book, the girl remains nameless although John Kinsella once refers to her as Petal, a name that may be a real name or not, as ephemeral and sweet as a loving closeness that spans one short summer. 

Abuse

 

Four people, strangers, are connected via serial pedophiles, or as the book jacket of The Elements by John Boyne suggests: an enabler, an accomplice, a perpetrator and the victim. In this book and in real life, such crimes reverberate for years, even after imprisonment or death. 

The use of first-person narratives ensures surprises; life stories unfold and connections emerge along with flaws, regrets, excuses and pain. As one character notes, “from the moment we arrive on the planet the universe is against us, conspiring to drown us, set us on fire, bury us in the earth, our spirits floating off into the atmosphere.”    

Hard lessons emerge. 

1. A setting loathed by one character can be a refuge for another, often hinging on age and life experience. Two protagonists leave a remote island in Ireland by ferry, leading to a brief encounter between two protagonists, a teenager fleeing an abusive father and a mother who had months before headed to the island after losing a daughter to suicide to escape scandal, one of many women “fleeing the misdeeds of the men they trusted.” The boy who despised the place asks the middle-aged woman if the island gave her what she needed and responds in the affirmative, adding “she must “figure out how to use its gifts.” 

2. Escaping the darkest episodes of one’s past is a constant battle that requires a mixture of fury and forgiveness and, later, determination and distractions. Advice can come from strange sources. The middle-aged woman prepares to confront her own failings and broken relationships in Dublin, but the boy urges that she leave the past behind, going somewhere no one knows her to start again. The woman is “surprised to hear such sensible advice from a boy who can’t be more than seventeen.” 

3. Advice, easy to dispense, rarely provides comfort. The young man offers advice to the fellow traveler, but she only poses questions, perhaps because of her own failings as a mother. She is in awe how he is open to a new future, “breathless for the life he’s entering into, and I hope that he will not know pain or betrayal or disappointment, but of course he will because he’s alive and that’s the price we pay.” 

4. A severely abused child may never feel worthy of love. “I think sometimes there are people who are destined never to have anyone fall in love with them. It doesn’t matter what they look like, how they behave, how much money they have, how much kindness exists in their heart…. There’s some aspect of them, something inherent, something indefinable, that makes people turn away. And I think I’m one of them.” 

5. Suffering can lead to self-destruction or horrific revenge on others who bear no responsibility at all. Abused children become adults who cannot trust others, often second-guessing every move. 

6. The release of truth after years of suffering and questions may be cathartic. The truth serves as a warning for other potential abuse, may stop t he cycle as well as alert loved ones and new friends who did not know about the conflict within. 

But others must listen. Relaying the truth and acceptance by others, the combination is the only way that adults who suffered abuse as children can prepare for what one victim calls a “second life, “one that I will embrace when I feel the  strength and confidence to do so.”