WEBVTT 00:00:00.000 --> 00:00:03.379 Hello and welcome to The Deep Dive. We are really 00:00:03.379 --> 00:00:05.099 thrilled you're joining us today. Yeah, we've 00:00:05.099 --> 00:00:07.459 got a really fascinating discussion lined up. 00:00:07.540 --> 00:00:10.279 We really do, because our mission today isn't 00:00:10.279 --> 00:00:14.439 just to rehash those dusty textbook black and 00:00:14.439 --> 00:00:17.719 white images of sad stockbrokers in 1929. Right, 00:00:17.820 --> 00:00:19.579 the stuff everyone has already seen a million 00:00:19.579 --> 00:00:22.539 times. Exactly. We are going straight into the 00:00:22.539 --> 00:00:25.420 comprehensive historical sources to explore the 00:00:25.420 --> 00:00:28.820 hidden systemic dominoes that caused the entire 00:00:28.820 --> 00:00:32.479 economy shatter. Perhaps more importantly, we're 00:00:32.479 --> 00:00:35.640 going to uncover the incredible and frankly deeply 00:00:35.640 --> 00:00:38.979 overlooked grassroots survival tactics of everyday 00:00:38.979 --> 00:00:41.060 people. Because that's what this deep dive is 00:00:41.060 --> 00:00:43.140 really about for you, the listener. It's about 00:00:43.140 --> 00:00:45.719 what happens when traditional systems just vanish 00:00:45.719 --> 00:00:47.500 overnight. People don't just sit there. I mean, 00:00:47.500 --> 00:00:50.020 they get incredibly creative and sometimes entirely 00:00:50.020 --> 00:00:52.799 radical just to survive. OK, let's unpack this, 00:00:52.799 --> 00:00:55.479 because today we are going to uncover how a well 00:00:55.479 --> 00:00:59.280 -meaning two cent tax actively accelerated the 00:00:59.280 --> 00:01:01.060 collapse of the American American banking system. 00:01:01.320 --> 00:01:04.280 Which is just wild to think about. It is. And 00:01:04.280 --> 00:01:06.840 how everyday housewives essentially became the 00:01:06.840 --> 00:01:10.010 most fierce, militant economic warriors of an 00:01:10.010 --> 00:01:12.010 entire decade. It's a completely different side 00:01:12.010 --> 00:01:14.049 of the Great Depression. It really is. You know, 00:01:14.049 --> 00:01:17.469 it makes me think of a magnificent towering skyscraper. 00:01:17.730 --> 00:01:20.250 You see the gleaming glass, the polished steel, 00:01:20.290 --> 00:01:23.489 and there is this overwhelming illusion of permanence. 00:01:23.670 --> 00:01:25.010 Right. You just assume it's going to be there 00:01:25.010 --> 00:01:27.069 forever. Exactly. You don't see that the foundation 00:01:27.069 --> 00:01:30.310 was poured over a massive, expanding sinkhole. 00:01:30.510 --> 00:01:33.030 And when that building finally collapses, everyone 00:01:33.030 --> 00:01:35.409 points to the final gust of wind that tipped 00:01:35.409 --> 00:01:38.099 it over. The Wall Street crash. Yeah. The final 00:01:38.099 --> 00:01:41.459 gust of wind, the crash of October 1929. We know 00:01:41.459 --> 00:01:44.200 the famous stats, right? $14 billion vanished 00:01:44.200 --> 00:01:47.040 on Black Tuesday alone. Over $30 billion wiped 00:01:47.040 --> 00:01:50.599 out in a single week, which, to put that in perspective, 00:01:50.760 --> 00:01:52.859 was more than the US had spent on all of World 00:01:52.859 --> 00:01:55.739 War I. Just staggering. But for a listener who 00:01:55.739 --> 00:01:59.060 already knows the basics of the 1929 crash, where 00:01:59.060 --> 00:02:01.920 is the structural rot they aren't seeing? Well, 00:02:01.920 --> 00:02:04.939 what's fascinating here is that for the average 00:02:04.939 --> 00:02:07.209 person, Like the factory worker, the farmer, 00:02:07.329 --> 00:02:10.289 the teacher. The real catastrophe was never the 00:02:10.289 --> 00:02:12.590 stock market. Wait, really? Because that's all 00:02:12.590 --> 00:02:14.789 we ever hear about. I know. But a very small 00:02:14.789 --> 00:02:16.849 fraction of Americans actually owned stock at 00:02:16.849 --> 00:02:19.189 the time. The foundational rot was really the 00:02:19.189 --> 00:02:22.310 banking contagion. To understand why it failed 00:02:22.310 --> 00:02:25.210 so spectacularly, we have to look at the structural 00:02:25.210 --> 00:02:28.669 weakness of the 1920s banking system. Regulations 00:02:28.669 --> 00:02:31.669 were incredibly lax. Totally lax. The required 00:02:31.669 --> 00:02:34.669 capital to start a national bank had been drastically 00:02:34.669 --> 00:02:37.430 lowered. So this led to the creation of thousands 00:02:37.430 --> 00:02:40.930 of very small, completely unregulated rural banks. 00:02:41.169 --> 00:02:43.340 And those rural banks were... Well, they were 00:02:43.340 --> 00:02:45.759 entirely propped up by agricultural loans during 00:02:45.759 --> 00:02:48.139 the farming boom of World War One. Precisely. 00:02:48.259 --> 00:02:50.659 And when the war ended, crop prices eventually 00:02:50.659 --> 00:02:53.020 plummeted. Farmers couldn't pay their loans and 00:02:53.020 --> 00:02:55.360 they started defaulting en masse. Leaving the 00:02:55.360 --> 00:02:58.759 banks holding the bag. Exactly. So these thousands 00:02:58.759 --> 00:03:01.180 of tiny banks were certainly holding on to a 00:03:01.180 --> 00:03:05.340 bunch of worthless debt instead of cash. And 00:03:05.340 --> 00:03:08.680 to understand the panic that followed, we have 00:03:08.680 --> 00:03:10.599 to look at the mechanics of fractional reserve 00:03:10.599 --> 00:03:14.120 banking. What economists call the money multiplier. 00:03:14.300 --> 00:03:15.919 Let's break that down for the listener, because 00:03:15.919 --> 00:03:18.979 if I deposit $100 into my local bank, the bank 00:03:18.979 --> 00:03:21.520 manager doesn't just put my specific $100 bill 00:03:21.520 --> 00:03:23.379 into a little wooden box with my name on it. 00:03:23.439 --> 00:03:26.900 Far from it. The bank might keep, say, $10 in 00:03:26.900 --> 00:03:29.819 the vault to cover daily operational withdrawals, 00:03:29.819 --> 00:03:32.900 but they take the other $90 and lend it out to 00:03:32.900 --> 00:03:34.939 a neighbor to buy a tractor or start a business. 00:03:35.419 --> 00:03:37.460 The bank assumes that not everyone will ask for 00:03:37.460 --> 00:03:39.680 their money back on the exact same day. Which 00:03:39.680 --> 00:03:42.479 works fine normally, but in 1930 there was no 00:03:42.479 --> 00:03:45.520 federal deposit insurance, no FDIC. Nothing. 00:03:45.879 --> 00:03:48.379 If your bank closed its doors, your life savings 00:03:48.379 --> 00:03:50.840 were simply gone forever. Wow. So the moment 00:03:50.840 --> 00:03:53.000 people heard a rumor that a local bank was struggling, 00:03:53.500 --> 00:03:56.560 they sprinted to withdraw their cash. Which physically 00:03:56.560 --> 00:03:58.780 breaks the math of the bank. I mean, everyone 00:03:58.780 --> 00:04:00.879 wants their $100 back, but the bank only has 00:04:00.879 --> 00:04:03.979 $10 in the vault. Exactly. The other $90 is tied 00:04:03.979 --> 00:04:06.060 up in a tractor that a farmer can't pay for. 00:04:06.259 --> 00:04:08.990 That reverses the money multiplier. Banks had 00:04:08.990 --> 00:04:11.689 to urgently liquidate assets, right? Calling 00:04:11.689 --> 00:04:14.409 in loans, conducting fire sales. Just to hand 00:04:14.409 --> 00:04:17.709 out physical cash, which, of course, only broadcasted 00:04:17.709 --> 00:04:21.389 their desperation and caused more panic. By 1933, 00:04:22.350 --> 00:04:25.230 11 ,000 out of the 25 ,000 banks in the United 00:04:25.230 --> 00:04:28.689 States had completely failed. 11 ,000? That's 00:04:28.689 --> 00:04:32.069 nearly half the banks. Yes. Wiping out $1 .36 00:04:32.069 --> 00:04:35.269 billion of everyday people's savings. But wait, 00:04:35.269 --> 00:04:37.939 I have to push back here. If it was obvious that 00:04:37.939 --> 00:04:40.439 a sudden terrifying lack of physical cash was 00:04:40.439 --> 00:04:42.560 the problem, why didn't the government just step 00:04:42.560 --> 00:04:45.160 in? You mean act as a lender of last resort? 00:04:45.399 --> 00:04:47.600 Yeah. Just print more money to stabilize the 00:04:47.600 --> 00:04:50.060 banks. That is the logical question. And the 00:04:50.060 --> 00:04:53.040 answer lies in a rigid trap known as the golden 00:04:53.040 --> 00:04:55.980 straightjacket. A golden straightjacket. Yeah. 00:04:56.319 --> 00:04:58.259 What's fascinating here is that the United States 00:04:58.259 --> 00:05:00.500 couldn't just expand the money supply whenever 00:05:00.500 --> 00:05:03.000 it wanted because it was tied to the gold standard. 00:05:03.899 --> 00:05:06.879 Every dollar in circulation had be backed by 00:05:06.879 --> 00:05:10.000 a specific amount of physical gold in the government's 00:05:10.000 --> 00:05:13.019 vaults. And because this system was international, 00:05:13.540 --> 00:05:15.860 the U .S. was constantly competing with other 00:05:15.860 --> 00:05:19.160 nations to keep gold inside its borders. So they 00:05:19.160 --> 00:05:21.879 were basically handcuffed by international gold 00:05:21.879 --> 00:05:24.319 flows. Completely. For instance, when France 00:05:24.319 --> 00:05:26.720 decided to raise its interest rates to attract 00:05:26.720 --> 00:05:29.699 global gold to their own vaults, international 00:05:29.699 --> 00:05:32.060 investors started converting their American dollars 00:05:32.060 --> 00:05:34.040 into francs. Because they could get a better 00:05:34.040 --> 00:05:37.339 return in France. Exactly. So to stop this bleeding 00:05:37.339 --> 00:05:39.839 of gold out of the U .S., the Federal Reserve 00:05:39.839 --> 00:05:42.220 felt forced to increase their own interest rates 00:05:42.220 --> 00:05:44.639 to make holding American dollars attractive again. 00:05:44.939 --> 00:05:46.980 But raising interest rates in the middle of a 00:05:46.980 --> 00:05:49.300 massive economic downturn is, I mean, it's the 00:05:49.300 --> 00:05:51.800 exact opposite of what domestic businesses need. 00:05:51.939 --> 00:05:54.079 It makes borrowing money incredibly expensive 00:05:54.079 --> 00:05:56.819 right when companies are desperate for lifelines. 00:05:57.079 --> 00:06:00.180 And that was the fatal flaw. The commitment to 00:06:00.180 --> 00:06:02.339 that golden straight jacket prevented the Federal 00:06:02.339 --> 00:06:05.079 Reserve from expanding the money supply. It turned 00:06:05.079 --> 00:06:08.220 a severe but manageable recession into the Great 00:06:08.220 --> 00:06:10.209 Contraction. Yeah, it was a policy. disaster. 00:06:10.610 --> 00:06:12.670 There's actually a stunning admission about this 00:06:12.670 --> 00:06:16.350 in the source material. In 2002, the former Federal 00:06:16.350 --> 00:06:19.149 Reserve Governor Ben Bernanke gave a speech honoring 00:06:19.149 --> 00:06:21.810 economists Milton Friedman and Anna Schwartz, 00:06:21.930 --> 00:06:24.910 who had extensively studied this failure. Exactly. 00:06:25.089 --> 00:06:28.189 And Bernanke literally apologized. He said, regarding 00:06:28.189 --> 00:06:30.329 the Great Depression, you're right. We did it. 00:06:30.509 --> 00:06:33.389 We're very sorry. But thanks to you, we won't 00:06:33.389 --> 00:06:35.990 do it again. It's a remarkably candid moment 00:06:35.990 --> 00:06:39.019 of historical accountability. Yeah, and you know 00:06:39.019 --> 00:06:41.459 to make matters worse while the Fed was paralyzed 00:06:41.459 --> 00:06:44.300 by gold the Hoover administration tried to balance 00:06:44.300 --> 00:06:47.800 the federal budget Which led to one of the most 00:06:47.800 --> 00:06:51.019 disastrous policy backfires of the era the check 00:06:51.019 --> 00:06:54.339 tax the two cent tax on paper It sounds completely 00:06:54.339 --> 00:06:57.160 harmless in 1932 the government implemented a 00:06:57.160 --> 00:06:59.699 two cent fee on the purchase of all bank checks 00:06:59.699 --> 00:07:02.319 Just to generate a little extra revenue, but 00:07:02.319 --> 00:07:05.139 they completely failed to factor in the psychology 00:07:05.139 --> 00:07:08.269 of a panicked public people were already terrified 00:07:08.269 --> 00:07:10.350 of keeping their money in banks. Right, they 00:07:10.350 --> 00:07:12.990 were already on edge. So to avoid paying this 00:07:12.990 --> 00:07:16.269 new two -cent fee on checks, people simply stopped 00:07:16.269 --> 00:07:18.610 using checks entirely. They switched to doing 00:07:18.610 --> 00:07:21.129 all their daily transactions in physical cash. 00:07:21.370 --> 00:07:23.730 Which means they had to go to their already struggling 00:07:23.730 --> 00:07:26.250 banks and withdraw even more of their deposits 00:07:26.250 --> 00:07:29.329 in paper bills. Precisely. It's like trying to 00:07:29.329 --> 00:07:31.750 put out a fire with a bucket of gasoline. That 00:07:31.750 --> 00:07:33.899 is exactly what it was like. The government took 00:07:33.899 --> 00:07:36.100 a banking system dying from a lack of physical 00:07:36.100 --> 00:07:39.279 cash and passed a tax that incentivized the entire 00:07:39.279 --> 00:07:42.300 population to hoard physical cash. It severely 00:07:42.300 --> 00:07:45.399 contracted the money supply even further, accelerating 00:07:45.399 --> 00:07:49.259 the bank runs. It's a brilliant, tragic example 00:07:49.259 --> 00:07:52.220 of how a failure to understand the mechanics 00:07:52.220 --> 00:07:54.939 of consumer behavior can be fatal to an economy. 00:07:55.360 --> 00:07:57.540 Because Washington was completely paralyzed by 00:07:57.540 --> 00:08:00.180 this gold standard trap and accidentally throwing 00:08:00.180 --> 00:08:02.620 wrenches into the banking system, there was no 00:08:02.620 --> 00:08:05.160 cavalry coming to save the day. Nobody was coming 00:08:05.160 --> 00:08:07.720 to help. Which meant everyday people waking up 00:08:07.720 --> 00:08:11.259 in 1933 to a 25 percent unemployment rate had 00:08:11.259 --> 00:08:13.399 to figure out how to survive completely on their 00:08:13.399 --> 00:08:17.079 own. So, what did that ground level survival 00:08:17.079 --> 00:08:19.620 actually look like for you, the average citizen? 00:08:19.800 --> 00:08:22.180 Well, it looked like a total demographic reversal. 00:08:22.319 --> 00:08:25.879 For decades, the migration trend in America was 00:08:25.879 --> 00:08:28.519 people moving from rural farms into the booming 00:08:28.519 --> 00:08:31.920 urban cities to work in factories. The Depression 00:08:31.920 --> 00:08:34.860 violently snapped that trend in reverse. Millions 00:08:34.860 --> 00:08:36.860 of people started fleeing the cities and heading 00:08:36.860 --> 00:08:39.720 back to rural kinfolk because urban areas offered 00:08:39.720 --> 00:08:42.000 absolutely no food. You can't forage or grow 00:08:42.000 --> 00:08:44.299 crops on a concrete sidewalk. And for those who 00:08:44.299 --> 00:08:46.279 start in the cities or the transient workers 00:08:46.279 --> 00:08:48.460 riding the rails looking for jobs, they built 00:08:48.460 --> 00:08:51.179 their own parallel societies. The Hooverville. 00:08:51.379 --> 00:08:54.919 Yes. These were massive ramshackle shanty towns 00:08:54.919 --> 00:08:57.879 built on vacant lots out of cardboard boxes, 00:08:58.179 --> 00:09:01.200 scrap metal and old tents. People literally constructing 00:09:01.200 --> 00:09:03.159 new neighborhoods out of the debris of the old 00:09:03.159 --> 00:09:05.220 economy. And while these visible signs of poverty 00:09:05.220 --> 00:09:07.539 were everywhere, there were deeply hidden struggles 00:09:07.539 --> 00:09:09.879 that often went unnoticed, particularly for African 00:09:09.879 --> 00:09:13.220 Americans. Because Jim Crow laws and strict segregation 00:09:13.220 --> 00:09:16.639 were in full force. Exactly. While a white transient 00:09:16.639 --> 00:09:18.559 worker might be able to find a bed and a bowl 00:09:18.559 --> 00:09:21.059 of soup in a municipal government -run shelter, 00:09:21.759 --> 00:09:23.720 African Americans were routinely turned away. 00:09:24.279 --> 00:09:26.740 Or they faced the very real threat of racial 00:09:26.740 --> 00:09:28.620 violence if they tried to enter. The government 00:09:28.620 --> 00:09:32.039 safety net, as flimsy as it was, simply didn't 00:09:32.039 --> 00:09:35.100 exist for them. It didn't. They were systematically 00:09:35.100 --> 00:09:37.720 excluded from relief systems, so they had to 00:09:37.720 --> 00:09:39.940 rely almost entirely on their own communities. 00:09:40.500 --> 00:09:42.480 Black -run organizations and community churches 00:09:42.480 --> 00:09:44.759 stepped up to the plate, creating their own soup 00:09:44.759 --> 00:09:47.220 kitchens, mutual aid societies, and shelters. 00:09:47.360 --> 00:09:50.720 Which raises an incredible question. How do people 00:09:50.720 --> 00:09:54.080 living in these DIY pop -up societies, completely 00:09:54.080 --> 00:09:57.000 abandoned by the system, manage to assert any 00:09:57.000 --> 00:09:59.539 sort of control over their lives? By organizing. 00:09:59.840 --> 00:10:02.700 and often by getting incredibly radical. Here's 00:10:02.700 --> 00:10:04.480 where it gets really interesting, because when 00:10:04.480 --> 00:10:07.620 we think of 1930s labor activism, the textbook 00:10:07.620 --> 00:10:10.200 image is men standing on factory strike lines. 00:10:10.360 --> 00:10:12.200 Right, guys with picket signs outside a plant. 00:10:12.360 --> 00:10:16.200 Yeah. But the sources highlight the fierce, large 00:10:16.200 --> 00:10:18.899 -scale activism of working -class women and mothers. 00:10:19.240 --> 00:10:21.740 They were known as the militant housewives. Yes. 00:10:21.940 --> 00:10:24.460 And they completely shattered the long -standing 00:10:24.460 --> 00:10:27.000 misconception that homemakers were passive or 00:10:27.000 --> 00:10:29.700 apolitical. Totally. When market prices for essential 00:10:29.700 --> 00:10:33.159 goods started skyrocketing due to predatory business 00:10:33.159 --> 00:10:36.320 practices, these women realized that their survival 00:10:36.320 --> 00:10:39.059 depended on taking direct, coordinated action. 00:10:39.419 --> 00:10:41.720 The anecdotes from the sources are just mind 00:10:41.720 --> 00:10:44.019 -blowing. Like in Chicago, you had Polish housewives 00:10:44.019 --> 00:10:46.620 who realized that exorbitant meat prices were 00:10:46.620 --> 00:10:49.480 due to corporate price gouging, not actual food 00:10:49.480 --> 00:10:51.659 shortages on the farm. So they took matters into 00:10:51.659 --> 00:10:53.899 their own hands. They literally broke into the 00:10:53.899 --> 00:10:56.399 warehouses of the armor company, doused thousands 00:10:56.399 --> 00:10:59.080 of pounds of hoarded meat with kerosene, and 00:10:59.080 --> 00:11:01.019 set it on fire to force the company's hands. 00:11:01.100 --> 00:11:03.059 Which is just incredible. And take that a step 00:11:03.059 --> 00:11:05.600 further. Look at Cleveland. Black mothers faced 00:11:05.600 --> 00:11:08.759 a local power company that refused to delay shutting 00:11:08.759 --> 00:11:10.659 off electricity for families who couldn't pay 00:11:10.659 --> 00:11:13.460 their bills. So these women mobilized. They did. 00:11:13.679 --> 00:11:15.899 They went out into their neighborhoods and hung 00:11:15.899 --> 00:11:19.919 heavy wet laundry over every single utility line 00:11:19.919 --> 00:11:22.860 until the power company was physically forced 00:11:22.860 --> 00:11:25.279 to turn the electricity back on. I love that. 00:11:25.500 --> 00:11:28.139 They also coordinated sit -ins at local relief 00:11:28.139 --> 00:11:30.519 offices. They would take their crying babies, 00:11:30.919 --> 00:11:33.139 put them right on the caseworkers' desks, and 00:11:33.139 --> 00:11:35.720 flat out refuse to leave until they were given 00:11:35.720 --> 00:11:38.100 free milk for their children. It is brilliant 00:11:38.100 --> 00:11:40.539 and fearless. If we connect this to the bigger 00:11:40.539 --> 00:11:43.379 picture, the downstream effect of that was the 00:11:43.379 --> 00:11:46.809 birth of immense political power. These militant 00:11:46.809 --> 00:11:49.090 housewives weren't just angry individuals lashing 00:11:49.090 --> 00:11:52.110 out randomly. They were forming formal, highly 00:11:52.110 --> 00:11:54.549 structured groups, right? Like the United Council 00:11:54.549 --> 00:11:56.590 of Working Class Women. And the Housewives League 00:11:56.590 --> 00:11:59.500 of Detroit? They pioneered the modern concept 00:11:59.500 --> 00:12:02.700 of the ethical consumer, using massive coordinated 00:12:02.700 --> 00:12:06.059 boycotts to target businesses that price gouge 00:12:06.059 --> 00:12:08.759 or refuse to hire local workers. They proved 00:12:08.759 --> 00:12:11.500 that the domestic sphere, the home, was no longer 00:12:11.500 --> 00:12:14.000 just a quiet space. It was a highly effective 00:12:14.000 --> 00:12:17.440 political battleground. And that fierce desire 00:12:17.440 --> 00:12:20.320 to reclaim control from a broken system didn't 00:12:20.320 --> 00:12:22.659 stop at the grocery store or the power meter. 00:12:23.139 --> 00:12:26.399 It extended into the most intimate parts of life. 00:12:26.669 --> 00:12:29.669 specifically, family planning. This is a vital 00:12:29.669 --> 00:12:32.110 and often completely overlooked chapter of the 00:12:32.110 --> 00:12:35.230 Great Depression. Because of the severe economic 00:12:35.230 --> 00:12:37.850 downturn, families desperately needed to control 00:12:37.850 --> 00:12:40.830 their family sizing. They simply couldn't afford 00:12:40.830 --> 00:12:43.210 to feed another mouth. But under the Comstock 00:12:43.210 --> 00:12:45.389 laws at the time, birth control and abortion 00:12:45.389 --> 00:12:48.289 were entirely illegal. You couldn't even legally 00:12:48.289 --> 00:12:50.429 distribute pamphlets containing information about 00:12:50.429 --> 00:12:53.129 contraception. The human toll of that legal barrier 00:12:53.129 --> 00:12:55.659 was catastrophic. The sources point out that 00:12:55.659 --> 00:12:58.679 maternal mortality actually rose during the Depression. 00:12:58.940 --> 00:13:00.980 Yeah, a study by the New York Academy of Medicine 00:13:00.980 --> 00:13:03.860 found that 12 .8 % of maternal deaths during 00:13:03.860 --> 00:13:06.419 this period were due to septic, self -performed 00:13:06.419 --> 00:13:09.700 abortions. It's tragic. Lower -class women thrust 00:13:09.700 --> 00:13:11.960 into sudden poverty couldn't afford to visit 00:13:11.960 --> 00:13:14.200 the few physicians who might quietly help them, 00:13:14.279 --> 00:13:16.639 so they resorted to desperate, unsafe measures. 00:13:16.820 --> 00:13:19.120 But where the legal system failed to protect 00:13:19.120 --> 00:13:22.679 citizens, an incredible underground capitalist 00:13:22.679 --> 00:13:25.659 workaround emerged. I look at it almost like 00:13:25.659 --> 00:13:28.340 prohibition -era speakeasies, but for healthcare. 00:13:28.519 --> 00:13:30.679 That's a great way to put it. Since it was illegal 00:13:30.679 --> 00:13:32.919 to sell products for the stated purpose of birth 00:13:32.919 --> 00:13:35.980 control, companies heavily masked them. They 00:13:35.980 --> 00:13:39.179 created a massive loophole by marketing contraceptives 00:13:39.179 --> 00:13:41.820 as feminine hygiene products. Or selling them 00:13:41.820 --> 00:13:44.700 with vague promises of protection and dependability. 00:13:45.220 --> 00:13:47.879 And in 1930, a legal verdict actually allowed 00:13:47.879 --> 00:13:50.679 companies to advertise these products as long 00:13:50.679 --> 00:13:53.159 as their stated sole purpose wasn't birth control. 00:13:53.340 --> 00:13:56.169 And the market absolutely exploded. to meet the 00:13:56.169 --> 00:13:58.549 crushing demand. It did. Department stores started 00:13:58.549 --> 00:14:01.669 creating private, discreet shopping spaces specifically 00:14:01.669 --> 00:14:04.110 for women to purchase these items away from the 00:14:04.110 --> 00:14:06.309 main aisles. Think about the sheer scale of that 00:14:06.309 --> 00:14:09.570 underground economy. By 1930, the sales of female 00:14:09.570 --> 00:14:11.909 contraceptives actually outnumbered condoms by 00:14:11.909 --> 00:14:14.870 five to one. And by 1940, the market size had 00:14:14.870 --> 00:14:17.169 tripled. It shows how even when the government 00:14:17.169 --> 00:14:20.129 criminalizes a basic survival need, people will 00:14:20.129 --> 00:14:22.570 invariably find a way to meet that demand. It 00:14:22.570 --> 00:14:25.149 was a quiet rebellion, but a necessary one for 00:14:25.149 --> 00:14:28.210 the survival of millions of families. So we've 00:14:28.210 --> 00:14:30.610 explored the collapse, the paralysis of the gold 00:14:30.610 --> 00:14:34.169 standard, the DIY survival, and these massive 00:14:34.169 --> 00:14:37.710 underground economies. How does a nation actually 00:14:37.710 --> 00:14:40.250 break out of this cycle? How did the government 00:14:40.250 --> 00:14:43.090 finally pivot away from the old rules? Well, 00:14:43.090 --> 00:14:45.230 it started with a fundamental shift in philosophy 00:14:45.230 --> 00:14:48.269 under Franklin D. Roosevelt's New Deal in 1933. 00:14:48.950 --> 00:14:51.529 FDR recognized that the traditional hands -off 00:14:51.529 --> 00:14:54.309 approach wasn't working. He aggressively tackled 00:14:54.309 --> 00:14:56.809 that golden straight jacket head -on. In a series 00:14:56.809 --> 00:14:59.230 of sweeping moves, he effectively suspended the 00:14:59.230 --> 00:15:01.779 gold standard. He required citizens to turn in 00:15:01.779 --> 00:15:03.740 their gold, coin, and bullion to the Federal 00:15:03.740 --> 00:15:07.580 Reserve for a set price of $20 .67 an ounce. 00:15:07.740 --> 00:15:10.419 And forbade the export of gold entirely. Exactly. 00:15:10.600 --> 00:15:12.860 This unlocked the Federal Reserve finally allowing 00:15:12.860 --> 00:15:14.860 the government to inflate the money supply and 00:15:14.860 --> 00:15:16.940 stimulate the economy. And then we see the rollout 00:15:16.940 --> 00:15:19.179 of the famous alphabet agencies, right? Things 00:15:19.179 --> 00:15:21.860 like the Civilian Conservation Corps, the CCC, 00:15:22.120 --> 00:15:24.600 and the Works Progress Administration, the WPA. 00:15:25.139 --> 00:15:27.779 Yes. They essentially made the federal government 00:15:27.779 --> 00:15:30.820 the employer of last resort. The psychological 00:15:30.820 --> 00:15:33.840 shift of that alone is staggering. Imagine being 00:15:33.840 --> 00:15:36.120 a 19 -year -old kid from a starving family in 00:15:36.120 --> 00:15:39.100 an urban center. Suddenly, the federal government 00:15:39.100 --> 00:15:41.799 puts you on a train, sends you to a forest in 00:15:41.799 --> 00:15:44.440 Montana to plant trees or build national park 00:15:44.440 --> 00:15:47.500 trails. They feed you three meals a day and send 00:15:47.500 --> 00:15:50.340 $25 a month directly back to your parents. It 00:15:50.340 --> 00:15:53.320 was a massive mobilization of unskilled labor. 00:15:53.779 --> 00:15:56.179 Add to that the passage of the Social Security 00:15:56.179 --> 00:15:59.159 Act in 1935, which created the foundation of 00:15:59.159 --> 00:16:01.799 the modern welfare state. It was transformative, 00:16:02.100 --> 00:16:04.600 but You know, we need to impartially look at 00:16:04.600 --> 00:16:07.200 the sources here, because the New Deal was not 00:16:07.200 --> 00:16:09.840 universally beloved. Right. And it didn't immediately 00:16:09.840 --> 00:16:12.480 cure the economy. It faced fierce conservative 00:16:12.480 --> 00:16:14.860 pushback, particularly from the business community. 00:16:14.919 --> 00:16:17.720 From their perspective, FDR's policies were hostile 00:16:17.720 --> 00:16:19.960 to business expansion. Because they argued that 00:16:19.960 --> 00:16:22.399 the new regulations stifled free enterprise. 00:16:22.440 --> 00:16:24.720 Yes, and that they gave far too much negotiating 00:16:24.720 --> 00:16:27.299 power to labor unions, which made corporate leaders 00:16:27.299 --> 00:16:29.639 hesitant to invest capital or hire new workers. 00:16:29.899 --> 00:16:31.879 And this tension between government spending 00:16:31.879 --> 00:16:34.980 and business confidence actually led to a severe 00:16:34.980 --> 00:16:39.039 backslide. By 1936, the economy was finally looking 00:16:39.039 --> 00:16:42.379 up, but then the Roosevelt recession hit in 1937 00:16:42.379 --> 00:16:45.340 and 1938. That's right. The Federal Reserve, 00:16:45.659 --> 00:16:47.639 perhaps getting a bit too confident in the recovery, 00:16:48.240 --> 00:16:50.440 prematurely doubled reserve requirements to tighten 00:16:50.440 --> 00:16:52.620 the money supply and prevent inflation. Well, 00:16:52.620 --> 00:16:55.820 simultaneously, FDR cut federal spending to try 00:16:55.820 --> 00:16:58.259 and appease critics and balance the budget. And 00:16:58.259 --> 00:17:01.059 the result was immediate and brutal. Industrial 00:17:01.059 --> 00:17:03.539 production plummeted and unemployment spiked 00:17:03.539 --> 00:17:06.680 right back up to 19 percent. Yeah, it proved 00:17:06.680 --> 00:17:09.259 just how fragile the recovery really was and 00:17:09.259 --> 00:17:11.759 validated the fears of many who felt the economy 00:17:11.759 --> 00:17:14.200 wasn't standing on its own two feet yet. So if 00:17:14.200 --> 00:17:16.539 the New Deal stabilized the patient but didn't 00:17:16.539 --> 00:17:19.359 fully cure the disease, what finally ended the 00:17:19.359 --> 00:17:23.579 unemployment crisis for good? When World War 00:17:23.579 --> 00:17:25.700 II broke out, the federal government began pumping 00:17:25.700 --> 00:17:29.319 massive, unprecedented investments into new factories 00:17:29.319 --> 00:17:31.700 for round -the -clock munitions production. And 00:17:31.700 --> 00:17:35.119 this mobilization forced a massive societal shift, 00:17:35.539 --> 00:17:39.759 too. In 1941, Roosevelt issued Executive Order 00:17:39.759 --> 00:17:43.640 8802, which officially banned racial discrimination 00:17:43.640 --> 00:17:46.980 in war -related employment. Suddenly, the structural 00:17:46.980 --> 00:17:49.619 walls that had kept minorities, women and older 00:17:49.619 --> 00:17:52.500 workers out of the lucrative factory jobs were 00:17:52.500 --> 00:17:55.740 dramatically lowered. But the real economic magic 00:17:55.740 --> 00:17:58.819 bullet here was the specific mechanism of how 00:17:58.819 --> 00:18:01.180 the military contracts were structured. They 00:18:01.180 --> 00:18:04.059 used something called cost plus contracts. Yes, 00:18:04.059 --> 00:18:06.160 this is crucial. OK, let me try to puzzle out 00:18:06.160 --> 00:18:08.880 the mechanism on this. Under a cost plus contract, 00:18:09.019 --> 00:18:11.279 the government promises to pay a factory for 00:18:11.279 --> 00:18:13.980 all of its manufacturing costs, plus a guaranteed 00:18:13.980 --> 00:18:16.539 percentage of those costs as pure profit. Right. 00:18:16.940 --> 00:18:19.099 Wait, so if I'm a factory owner, the more I pay 00:18:19.099 --> 00:18:21.549 my workers, the higher my overall operating costs 00:18:21.549 --> 00:18:24.210 are. And since my profit is a guaranteed percentage 00:18:24.210 --> 00:18:26.769 of my costs, paying my workers more actually 00:18:26.769 --> 00:18:29.250 increases my own bottom line profit because the 00:18:29.250 --> 00:18:31.589 government is footing the entire bill. You nailed 00:18:31.589 --> 00:18:34.130 it. It completely inverted the usual capitalist 00:18:34.130 --> 00:18:36.049 incentive to keep wages low. That's amazing. 00:18:36.170 --> 00:18:38.569 It directly incentivized companies to hire hundreds 00:18:38.569 --> 00:18:41.089 of thousands of unskilled workers, train them 00:18:41.089 --> 00:18:43.990 at government expense, and pay them soaring competitive 00:18:43.990 --> 00:18:47.380 wages. That combination of massive government 00:18:47.380 --> 00:18:49.640 spending and the structural incentive to maximize 00:18:49.640 --> 00:18:52.400 payrolls finally drove the unemployment rate 00:18:52.400 --> 00:18:55.799 below 2 % by 1943. So what does this all mean? 00:18:55.980 --> 00:18:57.880 When we look back at this entire journey, it 00:18:57.880 --> 00:19:00.000 becomes clear that the Great Depression isn't 00:19:00.000 --> 00:19:01.880 just a story about a bunch of tickers dropping 00:19:01.880 --> 00:19:04.859 on a stock market floor in 1929. It really isn't. 00:19:05.079 --> 00:19:07.200 It is a profound lesson for you, the listener, 00:19:07.660 --> 00:19:10.460 about the sheer fragility of rigid economic systems. 00:19:11.119 --> 00:19:13.640 We saw how the inflexible golden straight jacket 00:19:13.640 --> 00:19:16.720 handcuffed a nation, how the psychological danger 00:19:16.720 --> 00:19:18.859 of financial contagion can wipe out a decade 00:19:18.859 --> 00:19:21.440 of savings, and how a well -meaning two -cent 00:19:21.440 --> 00:19:24.259 check tax can inadvertently cause a nationwide 00:19:24.259 --> 00:19:26.700 hoarding of physical cash. All of those macro 00:19:26.700 --> 00:19:29.680 failures piling up. But above all, it is a testament 00:19:29.680 --> 00:19:32.400 to the awe -inspiring resilience of everyday 00:19:32.400 --> 00:19:35.690 communities. When the massive institutions failed, 00:19:36.269 --> 00:19:37.950 people fought back, whether they were Polish 00:19:37.950 --> 00:19:40.890 housewives burning meat to protest price gouging, 00:19:41.210 --> 00:19:44.029 black mothers taking over utility lines, or women 00:19:44.029 --> 00:19:46.410 creating a massive underground family planning 00:19:46.410 --> 00:19:49.490 economy just to keep their families afloat. And 00:19:49.490 --> 00:19:51.849 as we wrap up, I want to leave you with one final 00:19:51.849 --> 00:19:54.529 fascinating paradox from the historical data 00:19:54.529 --> 00:19:57.769 to ponder. OK, when you look at the period between 00:19:57.769 --> 00:20:02.500 1929 and 1933. The absolute nadir of the depression 00:20:02.500 --> 00:20:05.599 in the nation was facing immense poverty, widespread 00:20:05.599 --> 00:20:08.630 malnutrition, and climbing suicide rates. A completely 00:20:08.630 --> 00:20:11.470 bleak picture. And yet, during that exact same 00:20:11.470 --> 00:20:13.829 four -year window, the overall life expectancy 00:20:13.829 --> 00:20:15.690 in the United States actually increased from 00:20:15.690 --> 00:20:18.930 57 years to 63 years. Wait, really? That is completely 00:20:18.930 --> 00:20:21.109 counterintuitive. It is. Furthermore, this era 00:20:21.109 --> 00:20:23.930 of unprecedented economic devastation saw a massive 00:20:23.930 --> 00:20:25.849 surge in the adoption of household innovations. 00:20:26.349 --> 00:20:28.750 Things like electric refrigerators, sulfur antibiotics, 00:20:28.970 --> 00:20:30.950 and even the widespread popularity of board games 00:20:30.950 --> 00:20:33.230 became household staples in America during the 00:20:33.230 --> 00:20:35.599 deep poverty of the 1930s. I want you to chew 00:20:35.599 --> 00:20:37.940 on that contradiction for a moment. How does 00:20:37.940 --> 00:20:41.440 an era of absolute crushing economic collapse 00:20:41.440 --> 00:20:44.779 simultaneously forge an environment that extends 00:20:44.779 --> 00:20:47.740 human life and breeds such enduring household 00:20:47.740 --> 00:20:50.000 innovation? It's a question that really makes 00:20:50.000 --> 00:20:52.619 you reevaluate what drives progress. What does 00:20:52.619 --> 00:20:55.200 that reveal about human resilience when the traditional 00:20:55.200 --> 00:20:58.299 economy simply stops functioning? Perhaps it 00:20:58.299 --> 00:21:00.819 tells us that when the gleaming skyscraper finally 00:21:00.819 --> 00:21:03.279 sinks into the ground, humanity doesn't just 00:21:03.279 --> 00:21:05.619 disappear into the rubble. We scavenge the steel, 00:21:05.819 --> 00:21:08.480 we pitch a tent on the ruins, and we start figuring 00:21:08.480 --> 00:21:11.420 out a new, better way to survive. Thank you so 00:21:11.420 --> 00:21:13.200 much for joining us on this deep dive. We'll 00:21:13.200 --> 00:21:13.880 catch you next time.