An article in the July 26, 1929 issue of the TIMES NEWS is rather interesting.
As most of you know, the big stock market crash that led to the Great Depression occurred in October 1929.This is what was written four months before that financial catastrophe:"Just as the present time, many mercantile houses that do business on a credit system are passing through a very serious crisis. Some of the proprietors of the small grocery and meat stores are being hard put to finance their business and probably some of them are on the verge of ruin commercially."This business of easy credits is one of the most extraordinary features of the present time and has led many families into a financial wilderness from which they never shall be able to extract themselves."The story is told of a local family that having bought a radio on the down payment plan, he next sought to purchase an automobile by the simple expedient of offering the radio as the down payment on the car."The article tells how the family continued accumulating debt and couldn't pay their bill that they ran up with the local grocery store.A later paragraph reads, "The trouble is that families are still living up to peak wage conditions of a few years back. They are slow to realize there has been a serious slump and when suspensions such as the present 'vacation period' occurs, the grocer, the butcher, the milk man and others are left holding the bag."We're not jumping to conclusions or analyzing the above article. But we can see parallels in what's happening today. Many people today are having harder times paying for things they bought on credit, such as cars. We especially see the above true in the housing market today.Reasons include easy credit and a higher credit limit that was available when families had higher paying jobs before the Recession hit.Reading the above, it is obvious that we're in scary times, and that using tax dollars to bail out industries amounts merely to increasing the indebtedness on the public. Increasing indebtedness means more difficulty in paying back the debt we already have incurred. This isn't computation of a math genius. It's common sense.What's the answer?For one thing, reviewing the past might help us understand the present and work to avoid financial catastrophe for the future.By RON GOWERrgower@tnonline.com