Orange County Register

Hoover via Wikipedia

On Oct. 5, 1931, President Hoover wrote a letter to George L. Harrison, Federal Reserve Board of New York, on that era’s brewing financial crisis. Thanks to the archives at The American Presidency Project at UC Santa Barbara, and blogger Patrick Killelea for pointing it out, here’s a snippet:

“… we are in a degenerating vicious cycle. Economic events of Europe have demoralized our farm produce and security prices. This has given rise to an unsettlement of public mind. There have been in some localities foolish alarm over the stability of our credit structure and considerable withdrawals of currency. In consequence bankers in many other parts of the country in fear of the possibility of such unreasoning demands of depositors have deemed it necessary to place their assets in such liquid form as to enable them to meet drains and runs. To do this they sell securities and restrict credit. The sale of securities demoralizes their price and jeopardizes other banks. The restriction on credit has grown greatly in the past few weeks. There are a multitude of complaints that farmers cannot secure loans for their livestock feeding or to carry their commodities until the markets improve. There are a multitude of complaints of business men that they cannot secure the usual credit to carry their operations on a normal basis and must discharge labor. There are complaints of manufacturers who use agricultural and other raw materials that they cannot secure credits beyond day to day needs with which to lay in their customary seasonal supplies. The effect of this is to thrust on the back of the farmer the load of carrying of the nation’s stocks. The whole cumulative effect is today to decrease prices of commodities and securities and to spread the relations of the debtor and creditor.”

To read the rest of the letter, and Harrison’s reply, CLICK HERE!

Other market meltdown thoughts …

• Stocks rise tentatively after rate cut
• Fed makes emergency half-point rate cut
• Central banks, governments try to contain crisis
• 77 years ago, Herbert Hoover wrote …
• IMF: World economy to slow sharply, led by US
• Oil down after surprise jump in US crude supplies
• Trading on both Russian stock markets halted
• Toyota fighting US woes to meet global sales goals
• Iceland struggles, abandons fixed exchange rate
• Subprime’s prime territory
• Debate: Meg Whitman, Warren Buffett to head U.S. Treasury?
• AIG blasted in Congress for O.C. bash
• Will Obama socialize the financial sector?
• Shameless … even for Barney Frank
• AIG’s St. Regis blowout bill: $443,344
• Anaheim tops in O.C. small business sales
• House panel has former AIG execs on the carpet
• Bernanke talks, market tanks

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