AN APPALACHIAN NEW DEAL: WEST VIRGINIA IN THE GREAT DEPRESSION

2. Drought and Depression

2 Drought and Depression On Thursday, October 24, 1929, responding to the news of rapidly declining stock prices on the New York Stock Exchange, throngs of Charleston businessmen and stock speculators rushed to the capital city's two main trading centers-Harris Winthrop and Company, and Stein Brothers and Boyce-to watch the ticker tape recite its disheartening news. At noon the ticker announcements escalated from sales of thousands of shares to sales of millions. The market closed at three o'clock, but running more than four hours behind, the ticker did not stop until seven thirty. By the end of the day, many local fortunes had disappeared.1 Economists and historians point out that the stock market crash was not a cause of the Depression but a symptom of the troubles that plagued the national and world economy. For much of the generation that lived through the Depression and certainly for those who were immediately hurt by the crash, Black Thursday served as a historic bench mark and symbol for the beginning of the Depression, but hard times had arrived earlier and in less dramatic fashion in West Virginia's coal camps and small towns and in its rural and agricultural districts.2 As the Depression deepened in West Virginia, it produced conditions that were among the worst in the country. Coalproduction fell from 146 million tons in 1927 to 83.3 million in 1932, and some thirtythree thousand coal industry jobs disappeared, leaving many coal miners and their families trapped in futility and hopelessness. From 1929 to 1932, one hundred banks collapsed, accelerating the rate of bank failure that had already been high in the twenties. Deposits dwindled from $328 million to $213 million. Farmers were devastated not only by the collapse of farm prices but also by adverse weather conditions, including widespread severe drought in the summers of 1930 and 1932 and severe flooding of the Kanawha River in July 1932. Farmers also 28 An Appalachian New Deal suffered from the consequences of long-term misuse and abuse of the land. Manufacturing weathered the early months well, and the value of product actually increased in 1930 by more than $60 million and the average wage also rose slightly. But in 1931, manufacturing also collapsed, as value of product fell some $250 million and wages tumbled.3 The state, county, and municipal governments in West Virginia, like governments everywhere, were stunned by the collapse and illprepared by either philosophy or experience to deal with the crisis that began in 1927, grew in intensity at the end of 1929, and then persisted through months and years. Conventional belief had it that economic downturns were simply necessary and even beneficial characteristics of business cycles. From time to time, "readjustments" were necessary, and experience demonstrated that indeed recovery and resurgence eventually followed downturns. Although the classical economic theory of conventional wisdom did not closely approximate the real world, it had a compelling logic and simplicity that its followers were loath to abandon.Despite the Depression's persistence in the face of the painful readjustments, businessmen and government officials tended to insist on unrealistic policies. The prime example was the nearly universal adherence to the idea of the balanced budget and strict economy in expenditures. In summarizing the vagaries of theories and follies of policies followed at the time, the historian John A. Garraty has expressed what is essentially the view of the Depression-era British economist John Maynard Keynes: "With prices falling, unemployment high, and economic activity stagnating , deliberate deficit financing would have provided salutary stimulation ," but it was the conventional wisdom to maintain rigid economies in order to balance budgets.4 Not only did the practice of "rigid economies" reinforce the deflationary forces in the economy, it supplied governments unwilling to undertake the task of unemployment relief a rationale with which to justify governmental parsimony. The need for relief, however, soon reached proportions beyond the ken of local governments and private charities. Should governments fly in the face of classical theory and attend to the problem with government programs? Did state governments have the knowledge, administrative experience, and competence (what in another context has been called "state capacity")5 to address the issues? If statesmen the world over were baffled by the Depression and often followed wrong-headed policies, it should be no Drought and Depression 29 surprise that state and local officials in West Virginia, who faced...