A little economic history -- Parallels for our time

[JDPriestly]

In 1931:

President Hoover says in March that "prosperity is just around the corner," but financial panic and economic depression engulf most of the world. Vienna's Kreditanstalt comes under pressure in the spring, but the government refuses to abandon the gold standard lest a drop in the value of the schilling magnify the burden of Austria's foreign-currency-dominated debt and raise the specter of hyperinflation. It appeals for help to neighboring countries and to the new Bank for International Settlements, but when little help is forthcoming the government supports the Kreditanstalt with a large infusion of freshly-printed domestic currency; a flight of capital quickly depletes Austria's gold and foreign exchange reserves. The Kreditanstalt goes bankrupt May 11, possibly as a result of French opposition to an Austro-Hungarian credit union, and the panic spreads to Germany, where the Darmstadter und National Bank closes. Between 30 and 40 percent of the German workforce is jobless. The Danatbank goes into bankruptcy July 13, precipitating a general closing of German banks that continues until August 5.
. . . .
http://www.answers.com/topic/1931
***
(My summary of facts: The ongoing miners' strike in Harlan County, Ky. flares into a gun-fight between strikers and authorities. Republicans suggest letting the free markets do their thing.)

***
Britain receives a French-American loan August 1, but London and Glasgow have riots September 10 to protest government economy measures, naval units mutiny September 15 to protest pay cuts, the pound sterling is devalued September 20 from $4.86 to $3.49, and Britain is forced to abandon the gold standard once again September 21.

Detroit lays off another 100,000 workers as motorcar sales collapse, reducing employment in auto plants to 250,000, down from 475,000 in 1929. Two out of three Detroit workers (and eight out of 10 Detroit blacks) are totally or partially unemployed; the situation will improve somewhat, but unemployment will remain high in Detroit until 1942 (see 1933).
. . . .
U.S. unemployment tops 8 million. Men and women in New York's Harlem compete with dogs and cats for the contents of garbage cans. Hunger marchers petition the White House December 7 for a guarantee of employment at a minimum wage but are turned away. President Hoover was U.S. food administrator from 1917 to 1918, but he opposes suggestions that the federal government distribute food to the needy, insisting that charitable organizations will provide what is needed, and while American Red Cross dietitians offer advice on how to eat economically, the Red Cross refuses to use its funds to help the unemployed (see Lewis, 1932).

http://www.answers.com/topic/1931

There's lots more.

And here is a view of history from a slightly different angle:

Meanwhile, the financial crisis in Europe gathered pace. Austria's largest bank, the Credit-Anstalt, declared bankruptcy; this was in the context of negotiations over the proposed Austro-German customs union. With the threat of bankruptcy looming, the Austrian Government asked Paris for a loan; the French made the loan conditional upon the Austrians renouncing the proposed customs union. The Austrians would have conceded but Montague Norman, the Governor of the Bank of England, then announced an unconditional seven day credit of �4.5m to the Austrians on 16th June, thus antagonising the French. However, the failure of Credit-Anstalt started the chain reaction of crisis throughout the European banking system as bank after bank sought to improve its liquidity by encashing foreign balances. French financial withdrawals from Germany and the announcement in May 1931 of a forthcoming huge budget deficit created a crisis of confidence in the German market. There were large withdrawals of American short-term loans during May and June totalling RM760m (�35m); the raising of the Bank Rate to 7% only increased the flight. The threat to the German financial institutions caused serious alarm in America; General Dawes reporting to President Hoover that American loans to Germany were in the region of $500bn. Hoover in response announced on 20th June a one-year moratorium on war loans including reparations, which created a surge of confidence - lasting one week. The French objected to the American plan, announced without consulting them; the French Foreign Minister, Briand, reported to the German Ambassador that "no French Cabinet could have survived if it had simply accepted the Hoover memorandum as proposed." There was a renewed crisis in Germany, and on 3rd July Nordwolle, a giant German industrial combine, failed, and this brought on the failure of the big banks. On 15th July the Reichsbank declared exchange controls. Until 15th July the Bank of England benefited from the German crisis, and gained gold, but in the next two weeks it lost �33m of gold and �33m of foreign exchange. In fact between 15th July and 20th September, when England was forced off the gold standard, the Bank lost a total of �33m in gold and �180m in foreign exchange. The flight from the pound was greatest in the last two weeks of July. The withdrawals at this time were not due to a crisis of confidence in the pound, which came later. Some attribute the withdrawals to the publication of the Macmillan Report on 13th July, but this report was not mentioned in the American and French press. The most likely explanation is that foreign investors were attempting to restore liquidity following the collapse of their investments in Germany. The British finance houses had �90m in deposit in Germany and �50m in deposit in Central Europe, so withdrawals from London would expose the London market at a time when London could not encash its deposits in Germany. The Hoover initiative was too late. After a fortnight of negotiations with the French the Hoover moratorium was agreed upon, but it was too late to prevent the collapse of the German banking system. MacDonald invited the Americans, Germans and French to a conference in London on 20th July; but the French were unwilling to cooperate with this initiative unless the Germans abandoned the proposed customs union with Austria. The British successfully arranged credits of �25m with both the Bank of France and the American Federal Reserve Bank, announcing these on 1st August 1931.

http://www.blacksacademy.net/content/3842.html

[Mojorabbit]

1. Chilling

To similar for my peace of mind.

[Truth4Justice]

2. But as was pointed out in another thread people lived close and there was no US police state...

to jail all the people that had to break laws just to stay alive.

In fact, if things get bad enough, I am sure many people will break the laws knowing that they will get three hots and a cot in jail.

[knitter4democracy]

3. Detroit's in a similar position again.

Massive unemployment, far worse than the "official" number suggest. Automakers laying off left and right and closing plants every week, all of which spiral outward throughout the state as suppliers and restaurants and such are affected.