The Messenger - Unit VI

Two men dock a store in a Hooseville

11/03/1933 Seattle

Two homeless men rob a small shop near the port armed with an ax

The event took place shortly before 7:00 p.m. on March 6, when there was only one person on the place. The 16-year-old boy saw two men, in their 40s, enter, one carrying an ax. As soon as they arrived, the two subjects began to scream, demanding all the money there was and threatened by breaking a table. The boy tells how he gave the money raised, near 8 dollars, and the thieves left without anyone noticing the noise.

Surely the police will do nothing, they are not usually involved in what happens in the Hoovervilles, where homeless people and unemployed people live on the threshold of absolute poverty. Since the stock market crash a few years ago, these neighborhoods have been spreading on the outskirts of all the big cities in the country, without going any further, Seattle has 8 different ones.

But how could the situation end up like that? Let's go back a few years. In 1919, United States won the Great War and became the first world power, ledding to what is possibly our best and most rewarding decade, the roaring 1920s. Back then, Charles Mitchell created a system where people could pay a bond and, after some time, the State would return the money with interests. Banks saw this as a good idea and are starting to market new products and helping people access this capital. Everyone wanted to try, but not all of them could because they didn’t have experience, so Mitchell opened brokerage agencies, places where anyone could invest in the stock market, you paid and they gave you a paper to validate your process. This access was very simple and anyone could get into it, getting in debt with this system. In this way, large profits could be obtained with a small capital, money that was usually lent but since you were going to earn a large part, you could pay off that debt without any problem. According to calculations, almost 2/3 of the money invested in Wall St. was borrowed money. The stock market could go up or down according to the demand, but people were willing to pay, demand grew a lot and stock increased. Everything was going great, but this was inflating the prices each time and "an inflationary bubble" started to appear later in 1922, Paul Warburg warned the people that this bubble could break due to the absurd increase of the actions, but nobody listened to him while the were following their "American dream". But the bubble continued getting bigger. 

Wall St.´s stock market on 23rd October 1929

One of the many suicides occurred to the situation

On October 23 the stock market suffered a great blow as the value fell in a single session by 7%, but this was only the first warning of what would happen next day. Next day, people wanted to sell more than 1 million in a few minutes, so the price ended being a third of their value and there were hardly any buyers, and it was impossible to cover the titles purchased with previously since no one could afford them, banks could barely give 10% of what they should. On Tuesday, October 29, the stock market index fell as it never had before. Factories were being closed, leaving people without their jobs and most of them ended up on misery when their lost their savings as the banks went bankrupt. This spread to South America, Europe and even Australia, increasing unemployment and poverty.

Some workers unemployed demanding work

Heads of the banks, like Thomas Lamont, Albert Sigan or Richard Whitney tried to save the situation, and they succeeded. For a few days. The previous president, Herbert Hoover, didn’t know how to handle the problem, causing him to lose the elections and leaving the situation to his opponent, Franklin D. Roosevelt. He has not been in power for more than a few days and has already applied quite severe measures from his New Deal program, which seeks short-term measures, such as the exceptional closure of all banks or the Emergency Banking Act, now we can only wait and hope that the situation improves.