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I entered the family in September 1929 (thereby causing the entire stock market to crash, according to my parents!).
Father Charles Coughlin
How much debt is too much debt—for a household, a company, or a government? What is the most secure way to guarantee return on an investment without exposure to excessive risk (whatever excessive risk is)? How much can government prop up private enterprise without creating a moral hazard that hinders market dynamism? Why can’t economies continue to expand at a steady, manageable pace without lapsing into destructive boom-and-bust cycles?
Roth’s diary is a reminder that our economic security, individually and collectively, always rests on a complex interaction of market forces, politics, consumer perception, and the impact of unforeseen (and sometimes unforeseeable) events.
Another client had 10 buildings razed because he could not collect rents and the taxes are exorbitant. This is a popular way to reduce taxes.
The wise investor will disregard the day-by-day fluctuations of the stock market or real estate market and base his buying and selling on these long periods of rise and fall. Above all, and I repeat it again and again—he must have liquid capital in time of depression to buy the bargains and then he must sell before the next crash.
Then there is a great deal of talk about socialism and Communism and revolution. It all seems silly to me. Everything will work itself out without these radical changes. The depression has loosed all the radical thinkers who call themselves “liberals.” The true liberal and conservative has been silenced and is in disgrace.
This scarcity of money is what makes people think if more money were printed business would be better. This is a false and vicious theory.
OCTOBER 6, 1931 The big new zeppelin made in Akron just flew over Youngstown in a trial flight. It is the biggest thing I ever saw. It makes one wonder what will be the future of travel by air.
Bonus March
Now that I am experiencing the 1929 panic I can see how those men felt and I now agree with them. Banks and large corporations will continue to fail in great crises but our ultimate faith must be in the government.”
JANUARY 12, 1933 Gasoline is selling at 14¢ per gallon. Out of this 5¢ goes to Ohio tax; 3¢ to the retail gasoline station owner; 2¢ to wholesaler and 4¢ to cost of distribution and transportation and production.
Ohio and other states now pass a law to restrict withdrawals from life insurance companies. Loans cannot be made now on policies except to pay premiums. In case of necessity loans are limited to $100. Nothing is said about payment of death claims or trust funds.
Bank depositors, holders of liberty bonds and other high grade bonds are just beginning to waken to dangers of inflation. They ask where they can put their money with safety. There appears to be no answer to this as long as the dollar can be tampered with.
Roosevelt continues to suggest plan after plan for the control of industry and labor by the government.
He was always a fascist
JUNE 1, 1933 In looking back over the 3 months since Roosevelt became President it seems that the U.S. has traveled a long way toward some form of socialism or managed economy.
Inflation is a terrible thing and I hope it will never come to America. It penalizes saving and changes the entire outlook of the prudent investor from government bonds, life insurance, etc. to speculative stocks and commodities.
In fact, currency inflation has made it so only stock investing consistently keeps pace with price inflation
The whole recovery has been so spectacular as to be almost unbelievable. Because so much of it is based on inflation theories I have doubted its permanency. The next few months ought to tell the story.
Again and again during this depression it is driven home to me that opportunity is a stern goddess who passes up those who are unprepared with liquid capital.
The U.S. Agricultural program begins with the slaughtering of millions of hogs so that pork production will be curtailed and prices go up. Also 20% of all cotton, wheat, etc. is being plowed under to prevent overproduction. The U.S. gov’t pays the farmer for his loss. I don’t see how the destruction of basic food supplies can bring back prosperity when so many people are hungry.
Personally I am more concerned than ever that prosperity will return only when we stop tampering with the dollar. Business is afraid of all this uncertainty.
Loyalty to the President ceases to be a virtue when he violates basic laws which may bring great harm to the country.
Roosevelt is building up a tremendous following but is also building a huge government indebtedness which will someday be paid.
The people have gotten used to looking to the government for help and the average man does not stop to consider where the money is coming from or how it is to be paid back.
Roosevelt is as popular today as a year ago. His following with the working class is tremendous. It seems he and the Democrats will be in power for some time. Socialism is now accepted calmly by ministers, professors, etc. and it is amazing to me to see how calmly most people accept drastic government regulation.
The worst feature of it all is that people are no longer worried about government spending.
they do not seem to realize that printing press money lays the most vicious tax of all.
It is this persistent conversion of bond money into stocks which has sustained the long up-swing in the market.
This case as so many others shows clearly that to build an estate it is necessary first of all to get money by saving it and secondly it is most important to invest these savings so that they will increase and work for you without losing the principal.
1. First learn to save or accumulate money. 2. Learn how to hold these savings by avoiding speculation. 3. Learn how to make this money work for you thru conservative investments.
You will be told that this new depression is different because of government control, etc. but as long as human nature is the same and people like to speculate, it is probable that in the future, economic booms and depressions will come and go as in the past.
Each time in a depression new theories and “New Deals” are tried out but rarely do they seem to change the basic structure of the economic cycle.
Congress meets in special session and all kinds of plans are urged to help business. The real need is for cessation of government spending—balanced budget—and a return to the orthodox theories of economics.
If the patience and care used in a real estate investment were used in making a stock investment, there would be much greater chance of success.
Defenses
This whole section is excellent
Business will always come back. It will remain neither depressed nor exalted.
The investor should consider his work as a business or profession—his capital is most precious and must not be lost or tied up.
The investor must be hot in action—cold in thought.
After 8 years of “pump priming” and other trick methods of bringing back prosperity, it is my conclusion that none of them are any good.
This tax plus rising costs may result in a situation where industry works full gear but earns very little. This is one of the reasons why stocks have not increased with rising production.
10/10/52 War debt is $270 billion and the 1939 dollar is now worth 52¢.
This is the result of currency inflation and it continues
