Depression, Recession, Downturn—Whatever

Ancient Wisdom

My grandfather once said something to me around 1970 that I have never forgotten. He was born in my house in 1890 (or rather, I in his)—twenty years after his grandmother built the present home. He farmed continuously without a day lost to sickness from 1908, when he graduated from the local high school (the same one my children and I went to—but, of course, not the same school either [but that is an entirely different story]), until 48 hours before he died in 1976.

He had plenty of stories about the Depression. It started for farmers, he said, really in the early 1920s, when the boom prices and easy credit of the immediate post-Great War years led to rapid expansion in the planting of trees and vines, more debt, and—well, we all now know the familiar story. By 1933 he said sixteen relatives were living in the house, and another ten or so in various barns and sheds (the farm was only 120 acres).


They ate, he said, communal meals, worked a communal garden and met up in the evening after completing assigned “chores.” (I remember as a child a canned fruit storage room with concrete walls in the shed with old jars with tape on them labeled ‘freestone peaches—1933′, red plums 1936′).More...

Sometimes he would get a telegraph message delivered to go down to the local train station to pick up another jobless second cousin or sister-in-law. This was pretty much standard, he told, me until 1941 and the onset on the war when the bad times abruptly ended, and suddenly non-perishable items like raisins were needed overseas, labor was short, and nearly all his male relatives, from 18-40, disappeared into uniform and went off to Europe and the Pacific. (My uncle Beldon was injured on the Philippines, Holt died right after Normandy (I saw his grave at Hamm), another uncle went to Alaska, my father and his cousin to the Pacific, and so on).

My maternal grandfather was a rather eccentric farmer (in the 1940s he re-mortgaged his farm, right at the tail end of the Depression, in order to send his daughters to Stanford University). As I look back at some 55 years on his land, I confess I’m beginning to think that I haven’t met too many wiser souls, who combined abstract learning with knowledge of the stars, winds, smells in the air, flight of birds and geese, natural sense of barometric pressures to predict weather or compare climate with years past. In any case, back to the Depression.

He would drive me around in the late 1960s and early 1970s in his1946 international pick-up and point out the grand rural Victorian homes, built around 1918-19 that had bankrupt the farmer-owners, point out the farmers and packers who in reprehensible fashion sorta, kinda stole Japanese land during the war (and those fewer who had helped save the farms for their interned owners), and explained how some farmers on very poor soil had survived the Depression, while others on rich loam had gone under (yes, of course, character and industriousness and acceptance of tragedy with both resignation and determination were the keys, he said to survival).

In whispers, he also mentioned on our rural drives the names of local grandees (this was, again 1970) whose fathers in the late 1920s had burned down their majestic homes or barns (and even their wooden raisin trays) to garner pre-Depression insurance cash coverage. (I though of Balzac’s “Behind every fortune lies a great crime”.)

But back to that one quote. He said—and although it has been almost 40 years ago I remember it verbatim—“I guess the Depression was not all that bad if you had a job”. Of course, he didn’t mean farming raisins, whose prices had crashed from around $300 a ton to about $30 (he later told me he had not made a profit from 1924 until 1942). Rather, he knew Post Office workers, teachers, and railroad people who had secure jobs with steady income. And as he tried to explain, while his income had dived by 90% and most of the packers and shippers had gone broke, others employed perhaps only took a 10% cut. And because suddenly everything from gas to food to rent was dirt-cheap, the 75% who had jobs survived in good fashion (“good” meaning far better than current conditions in the former Third World in Africa and Latin America). Of course, he mentioned that no one had any of the opportunities present in the 1970s, but his point was that there was more to the Depression than one thinks; and while he had suffered terribly not all those in town had.

I was reminded of all that the other day. I rode a bike by dozens of MacMansions in Fresno—all up for sale for about $400,000, way down from their original $700,000, and thought “They are still too high—who can come up with $80,000 cash for a down payment, and another $2,000 plus per month payment?”

Things seemed pretty bad as I counted over 100 ‘For Sale” signs in a mere five mile stretch. I collated my own status. The equity on the farm is way down. I figure I lost about the last 5 years of 401(k) contributions— omnis effusus labor as Virgil says of Orpheus in the Georgics or as my favorite singer Mark Knopfler sings: “And if it’s all for nothing. All the road running it’s been in vain.” The Tribune Media outlet for whom I write a weekly syndicated column has declared bankruptcy, and some of the payments have been reduced and metered through a federal bankruptcy judge. Invitations for both public speaking and free-lance writing are way down, and compensation is reduced. Book advances in New York are either nonexistent or depressed. We are facing many cuts here at the Hoover Institution, given the natural reduction in the endowment. Until recently I was up to well over $10,000 in owed money by various groups for whom I have written or spoken for, but who have not paid. Farm prices are going back down, and the rent (I now lease out my 45 acres) scarcely covers the taxes, irrigation fees, insurance, and infrastructure maintenance. Some members of my family are either out of work or worried they soon will be. So in some sense, whatever we call the downturn is very real.

Yet like 93% of work-age Americans I still have a job, and thus, as my grandfather reminded me of others in town, things for those still working are not catastrophic. Gas is way down—indeed the country is saving hundreds of billions of dollars in reduced oil importation fees as a barrel crashed from $150 to below $40 (some stimulus!). Interest rates are coming down. Food is lower. Propane and natural gas are cheaper. For those who can meet a $500 or so monthly payment, there are real steals on cars. I get phone solicitations to buy everything from washers to frozen steaks in bulk. I saw a used boat the other day on the way to the mountains whose ridiculously low price did not seem real? If any young people have jobs, housing is finally affordable—and getting cheaper.

So what are we in? Mostly a time of psychological depression and waiting—but hardly a depression as my grandfather knew it, when he once bragged to me that for two years they had eaten everything—poultry, eggs, milk, vegetables, fruit, juices—but bread and coffee from what they grew and raised.

What we are talking about is a reduction in excess, not mass deprivation. Our worries over foreclosure are really about that 5-10% of the home owning populace that came into their own, when ownership rates rose from about 58% of the population to over 62%, and who often bought homes too large under dubious circumstances, predicated on expectations of always rising equity.

So fat is the United States, that things can get a lot worse before we are back to 1933. My grandfather’s final advice as we would end these drives? “Be sure to get a job in town—or better yet two—just in case those times come back…”

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