The Great "Picnic" of 1929

You read about how Ben Bernanke studied The Great Depression. You never really hear him say "Things look similar to 1929", and cite an example or two. Here is a few historical items he has failed to point out.

The Investment Trusts of the 1920’s were the hedge funds of their time. A 1936 issue of Time Magazine stated;

In the twilight of the 1920's, some $7,000,000,000 worth of investment trusts were floated, according to SEC figures. Their total assets were worth about $2,000,000,000 by the end of last year (1935).

That’s a loss of 71 percent!

One of the players of that time was Goldman Sachs a very familiar name today. John Kenneth Galbraith, in his book "The Great Depression of 1929," wrote;

During 1929 one investment house, Goldman Sachs & Company, organized and sold nearly a billion dollars’ worth of securities in three interconnected investment trusts – Goldman Sachs Trading Corporation; Shenandoah Corporation; and Blue Ridge Corporation. . . . . .All eventually depreciated virtually to nothing.

So the losses in 1930 just from investment trusts would have been about 5 billion. In today’s money, that figures out to somewhere around 500 billion. (I’m using a multiplier of 100 here. Rental housing in 1928 was $20 per month and rent per month in San Marcos (if you’re real lucky) is $2,000 per month).

As for car manufacturers probably a couple hundred bit the dust. The Dusenberg and the Stutz Bearcat were nice little items in their time.

Bank losses from 1929 to 1933 were about 1.3 billion, so that would be about 130 billion in current dollars.

Before the stock market crash of 1929 stocks were valued at 89.7 billion dollars. In 1932 their value had sunk to 15.6 billion. 74 billion dollars vaporized, in today’s money that would be about 7.4 trillion.

Then if you factor in the fact that the population is 2 ½ times bigger today than in 1930 you could realistically double the amounts we are throwing about. So if we look at 1929 in today’s values, they had a loss of between 8 to 20 trillion dollars.

Normally with this sort of discussion there are charts, graphs and tons of supporting documents. Well this was done on the back of an envelope. We have calculated what the Depression of 1929 cost in today’s dollars.

Do you get the feeling that if things get worse, our "recession" could be worse than "The Great 'Picnic' of 1929?"

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