Coronavirus: it’s not the Great Depression!
PUBLISHED: 14:11 14 April 2020 | UPDATED: 14:11 14 April 2020
Steinbeck’s classic, Grapes of Wrath, is set in an era we shall never see again, says Peter Sharkey.
With plenty of time on our hands and absolutely no interest in watching any more television than is absolutely necessary, the enforced period of inactivity has resulted in many of us voraciously devouring books we’ve always intended reading but never had the time. Personally, while I’ve tackled a couple of titles I should have read decades ago, the two most enjoyable books have been ones I did read last century, Catcher In The Rye, by JD Salinger and The Grapes of Wrath by John Steinbeck.
Whereas Salinger’s classic novel took me a while to read when I was first introduced to it, I read it in two sittings second time around. Steinbeck’s powerful work, by contrast, reminded me what a fine writer he was (he won the Nobel prize for literature) and just how bad conditions were in the wake of the Wall Street crash in 1929 which ultimately led to the Great Depression. I longed for the novel to go on, deliberately rationing myself to a set number of pages each day; it is, without doubt, the best book I’ve ever read.
Born in 1902, Steinbeck grew up in a lush, fertile Californian valley, winning a place at Stanford University, though he left without taking a degree to work as a labourer and journalist in New York. His three best-known works, produced in the late 1930s, focused primarily on California’s labouring classes: In Dubious Battle (1936), Of Mice and Men (1937), The Grapes of Wrath in 1939 and the impact the Depression had had on their lives.
By the time Grapes of Wrath was published, of course, the world was on the cusp of a global war that would last six long years, the effective consequence of economic depression triggered by the Wall Street Crash of October 1929.
The Depression also lasted for half a dozen years and Steinbeck witnessed first-hand the impact of failing banks (half of all US banks failed between 1929-35) as unemployment soared to 25%, house prices plummeted by 30% and international trade fell by 65%.
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America’s economic pain had a disastrous knock-on effect as demand for European-manufactured goods slumped. As production fell, so unemployment soared and, as a major exporting nation, Britain felt the full force of contracting international trade. By the early 1920s, unemployment levels breached the 3 million mark; in the north of England, south Wales and Scotland, more than 70% of people were out of work.
It was the era of the Jarrow March and burgeoning political unrest; moreover, there was little in the form of social welfare provision, while slums were a filthy, commonplace feature of every city in the land. If things were bad in the States, they were equally bad here.
We should remember this as some commentators begin to compare the likely post-Covid-19 impact to that of the 1930s.
What makes the current extended period of inactivity markedly different from that of the Depression is that this is not the result of banking excess (as was the case in 2007-08) or a collapse in market confidence (1929-35). Instead, the downturn in economic activity is government imposed.Admittedly, this doesn’t mean that once the virus has been tamed and life returns to normal, everything in our economic and social garden will suddenly be rosy. For a start, the nation will harbour enormous debts (though nowhere near what they were in percentage terms following World War II), which will eventually result in the introduction of taxes designed to transfer wealth from society’s richest to the state. The definition of ‘wealthiest’ will be particularly broad.
But if global trade can be resurrected and companies resume operations and start reporting profits, there’s every chance that within a year or two (yes, it could take that long), we’ll be able to look back and allocate the Coronavirus crisis a place in history. Let’s hope it’s not a prominent one because the one thing we should be anxious to avoid is what Steinbeck called “the armies of bitterness…all going the same way. And they’ll all walk together, and there’ll be a dead terror from it.”
Assuming we can, this could be a perfect opportunity for bold investors.
TAM Asset Management Ltd offer investors the opportunity to invest their savings in Investment ISA portfolios comprising a variety of different funds pursuing long-term cautious, balanced or adventurous strategies. For further details, please visit the MoneyMapp website. Please note: with investing, your capital is at risk.
For more financial advice, check out Peter Sharkey’s regular column, The Week In Numbers.
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