Date: 2/16/2009
By EILEEN ALT POWELL
Associated Press Writer
NEW YORK (AP) — When Amy Sokoloff and John Powell were trying to start their art restoration business in New York City, they needed some working capital. But banks weren’t willing to take a chance on them.
“We didn’t own anything — no houses, no cars, we had no collateral,” Sokoloff said. Powell added, “No one wanted to talk to us. They were not interested, and they were not nice about it.”
Sokoloff and Powell ended up on the doorstep of ACCION USA, a not-for-profit group patterned after the Third World microfinance institutions best known for providing money to Moroccan farmers for breeding chickens or to Bangladeshi women for weaving supplies.
The $15,000 loan they got in 2005— which they paid back in two years — got them the sunlit studio where their Chelsea Restoration Associates brings aged, damaged oil paintings back to life. Last fall, after the U.S. downturn began to cut into their business, they went back to ACCION USA for a $25,000 loan, “a tremendous help for cash flow” with an affordable 10.9 percent interest rate, Sokoloff said.
Sokoloff and Powell are among thousands of Americans using microcredit, a financing system originated in the Third World, to help open small businesses or get through rough spots. While the dollar amounts are much bigger in the U.S. than the tiny loans in developing countries — some for less than $10 — the principle is the same: a financial stake that lets people in need better their lives.
Now, with the recession deepening, U.S.-based microlenders say they are seeing an increase in inquiries from would-be borrowers, including startup entrepreneurs seen as too risky by banks and other traditional lenders.
And the still-small U.S. microcredit sector hopes for a boost from the new administration of President Barack Obama.
Obama’s secretary of state, Hillary Clinton, is a big supporter of microfinance, praising it during her confirmation hearing for its ability to “raise standards of living and transform local economies” overseas. Obama also has a personal link to the industry because his late mother, Ann Dunham, was involved in microfinance in Indonesia.
These connections gave raised hopes among microloan advocates that some money from the administration’s $789 billion economic rescue package will filter into their programs. U.S. microlenders already get support from the Small Business Administration and a special Treasury community development fund.
“We’re hoping for more funding” from the government, said Wendy K. Baumann, vice chairman of the Association for Enterprise Opportunity, an advocacy group for microfinance based in Arlington, Virginia.
Microloans have been made in developing countries for more than 30 years. Bangladeshi economist Mohammed Yunis made the first one of about $27 from his own pocket to 42 women who needed to buy bamboo to make furniture. He later formed the Grameen Bank, which is now one of the world’s largest microlenders and shared the 2006 Nobel Peace Prize with the founder.
In 2007, microloans went to some 154 million people worldwide, according to the Microcredit Summit Campaign. Estimates vary, but there are believed to be some $25 billion to $30 billion in small business loans outstanding globally.
In the United States, by contrast, an estimated $100 million in microloans were provided to 13,000 clients by some 250 microlenders in 2007, according Elaine L. Edgcomb, director of an Aspen Institute project on the small loan movement. The average for these loans is about $8,000 in the U.S., she said.
Microlending groups estimated that defaults were a manageable 6 percent to 8 percent before the economy fell into recession but have grown since.
Gina Harman, president of New York-based ACCION USA, the largest of the microlenders in the United States, said that nonprofit groups like hers were “very hands on” with borrowers and admitted “we’re working harder these days to keep people current.”
Harman said that in addition to the unemployed and the underemployed, a big market for microloans in the United States is the immigrant community.
“Self-employment rises in importance for recent immigrants because their alternatives for jobs are limited,” Harman said. Many don’t know English and lack business connections, but come from cultures with strong entrepreneurial skills, she added.
Still, the growth of microfinance in the U.S. has been slow.
Jonathan Morduch, a professor of public policy and economics at New York University’s Wagner Graduate School of Public Service, says one reason is that it’s hard being an entrepreneur in America.
“It’s a lot easier to go to work for someone else, get health benefits and collect a salary,” Morduch said. “And starting a business can be especially hard in the United States because there’s a lot of regulation you don’t have in other places.”
Microfinance experts like Alex Counts, president and chief executive of the Grameen Foundation, a Washington, D.C.-based microfinance support group, believe more could be done in America if more money was provided by foundations, wealthy donors and government agencies.
And many entrepreneurs need help getting started, he added.
“In a country like Bangladesh, the key constraint in capital,” Counts said. “In the United States, capital is also a constraint. But there’s also licensing and regulation … and exposing people to business contacts who can buy their products, sell for them.”
As a result, many of the most effective microfinance programs in America have a training component, he said.
“If you support people in developing networks and skills, say in going through the licensing process … then loans in the range of $1,000 to $3,000 are often enough to jump start a small business,” Counts said.
He said, for example, that such loans could help a woman laid off from a restaurant start a home-catering business, or a fired daycare worker start a home-based care service.
Baumann of the Association for Enterprise Opportunity believes more money will become available for microloans.
“Credit is tightening, and more people are coming to us,” she said, adding that this should prompt banks and other big financial institutions “to wake up and figure out how we can partner with them” to support small businesses.
Baumann, who heads the Wisconsin Women’s Business Initiative Corp. in Milwaukee, Wisconsin, said that about 70 percent of the group’s microloans are for startup businesses, with the rest going to small businesses that are expanding or facing cash-flow problems. Despite its name, about a quarter of borrowers are men.
“We fund a lot of service companies — child care, food-related businesses, restaurants,” she said. But there also are manufacturing and construction companies and community-based residential facilities for the elderly.
One recent borrower was Vasyl Lemberskyy, who immigrated to the U.S. from the Ukraine about seven years ago. He lost his first restaurant when the landlord sold the building it was in; a second restaurant failed.
Last year, he and his partners went to Baumann’s group and got a $57,000 loan to open the Transfer Pizzeria Cafe, which relies on local products for its 50-some varieties of pizza.
He was happy dealing with a microlender because he was treated so well.
“They care about new business coming to this city, they care about making a better business environment in Milwaukee, they care about you,” Lemberskyy said.
Copyright 2009 The Associated Press.
Analysis: Nobody wants blame in automakers’ crisis
Date: 12/5/2008
By DAVID ESPO
AP Special Correspondent
WASHINGTON (AP) — Not surprisingly, neither the outgoing Bush administration, President-elect Barack Obama nor the Democratic leaders of Congress wants to be blamed for the loss of a once-proud domestic auto industry and the disappearance of hundreds of thousands of jobs.
But that’s not the same thing as a three-way agreement on legislation to save General Motors Corp., Ford Motor Co., and Chrysler LLC, an accord that presumably could clear the House and Senate with relative ease and be signed into law.
Instead, maneuvering in a sort of political twilight zone, two administrations and the Democratic leaders of Congress all give rhetorical support to the survival of the industry while trying to reassure recession-weary taxpayers there will be no blank check from the federal treasury.
“Nothing concentrates the mind like a death sentence,” Sen. Christopher Dodd, D-Conn., said Thursday at the end of a daylong Senate Banking Committee hearing. “And we’re looking at a death sentence here if we don’t respond intelligently and prudently.”
In the ways of Washington, there are several competing options afloat, each with its own set of supporters.
The White House likes one; Speaker Nancy Pelosi, D-Calif., another. Some Republicans prefer bankruptcy — let the marketplace decide. There’s also a prepackaged bankruptcy option, drawing interest among some Democrats despite opposition from the United Autoworkers Union. Its intent is to permit all three companies to survive.
Detroit’s Big Three, nominally seeking $34 billion in aid, say they would accept a government-run restructuring.
Then there is the hope-the-Federal Reserve-steps-in option, the one that allows the politicians to avoid compromise.
As for the CEOs of the Big Three, they are now on a bizarre sort of government no-fly list, for fear that boarding their corporate jets would invite more ridicule for their role in presiding over the collapse of an entire industry. This time, they drove to the Capitol from Detroit, bearing blueprints for using bailout billions to remake their industry economically viable.
The early reaction was underwhelming.
At the White House, spokeswoman Dana Perino said it’s “too early to say” whether their assessment was correct.
Obama, pointing out that there is only one president at a time, said earlier in the week that the Big Three had “a more serious set of plans” than they did the last time their chiefs testified in front of Congress.
That drew a double-barreled barb from Rep. Barney Frank, D-Mass. chairman of the House Financial Services Committee.
“He’s going to have to be more assertive than he’s been,” Frank said of the president-elect. “At a time of great crisis with mortgage foreclosures and autos, he says we only have one president at a time. I’m afraid that overstates the number of presidents we have. He’s got to remedy that situation.”
The leading Democrats in Congress, Pelosi and Senate Majority Leader Harry Reid put it this way several days ago in a letter to the Detroit carmakers. “The auto companies’ shareholders, business partners and prospective benefactors — the American people — deserve to see a plan that is accountable to taxpayers and that is viable for the long-term.”
The new plans in hand, Sen. Bob Bennett, R-Utah, observed: “to come up with the answer to those complicated questions (in) 72 hours, is something that Congress is frankly not equipped to do.”
Whatever the financial and economic issues, the political knot is a complicated one.
The administration says federal law does not permit the use of any of the $700 billion financial bailout fund to help the auto industry. Instead, aides say President George W. Bush would sign legislation that makes use of $25 billion originally slotted for loans to help the carmakers retool their factories to make environmentally friendlier products.
Pelosi and Reid counter that the Treasury has clear authority to tap the bailout funds if the president chose.
Additionally, Pelosi, allied with environmentalists, opposes the use of the money the administration favors, saying it is already spoken for.
Reid agrees that the administration can and should tap the bailout money, and seems more amenable than the speaker to making use of the funds that Bush has proposed tapping.
Senate Republicans currently control 49 seats and generally support Bush’s point of view, it also appears at present to be the only way for a bailout to pass.
Republicans and Democrats alike, speaking on condition of anonymity, agree that in refusing thus far to compromise, all sides are betting that General Motors and Chrysler, in particular, will survive into the new year.
On Jan. 20, the Bush administration will pass into history, and Democrats will have larger majorities in both houses of Congress than is now the case — and complete responsibility for the fate of auto industry legislation.
Especially, consider Reid’s perspective.
Nearly half of the $700 billion bailout fund has been committed, and helping Detroit almost certainly would require tapping into the second half of the fund — a step that requires a vote in Congress.
Inconveniently, perhaps, Reid will be looking out at five new Democratic senators who opposed the bailout when it cleared Congress last fall.
___
EDITOR’S NOTE — David Espo is AP’s chief congressional correspondent.
Copyright 2008 The Associated Press.
By DAVID ESPO
AP Special Correspondent
WASHINGTON (AP) — Not surprisingly, neither the outgoing Bush administration, President-elect Barack Obama nor the Democratic leaders of Congress wants to be blamed for the loss of a once-proud domestic auto industry and the disappearance of hundreds of thousands of jobs.
But that’s not the same thing as a three-way agreement on legislation to save General Motors Corp., Ford Motor Co., and Chrysler LLC, an accord that presumably could clear the House and Senate with relative ease and be signed into law.
Instead, maneuvering in a sort of political twilight zone, two administrations and the Democratic leaders of Congress all give rhetorical support to the survival of the industry while trying to reassure recession-weary taxpayers there will be no blank check from the federal treasury.
“Nothing concentrates the mind like a death sentence,” Sen. Christopher Dodd, D-Conn., said Thursday at the end of a daylong Senate Banking Committee hearing. “And we’re looking at a death sentence here if we don’t respond intelligently and prudently.”
In the ways of Washington, there are several competing options afloat, each with its own set of supporters.
The White House likes one; Speaker Nancy Pelosi, D-Calif., another. Some Republicans prefer bankruptcy — let the marketplace decide. There’s also a prepackaged bankruptcy option, drawing interest among some Democrats despite opposition from the United Autoworkers Union. Its intent is to permit all three companies to survive.
Detroit’s Big Three, nominally seeking $34 billion in aid, say they would accept a government-run restructuring.
Then there is the hope-the-Federal Reserve-steps-in option, the one that allows the politicians to avoid compromise.
As for the CEOs of the Big Three, they are now on a bizarre sort of government no-fly list, for fear that boarding their corporate jets would invite more ridicule for their role in presiding over the collapse of an entire industry. This time, they drove to the Capitol from Detroit, bearing blueprints for using bailout billions to remake their industry economically viable.
The early reaction was underwhelming.
At the White House, spokeswoman Dana Perino said it’s “too early to say” whether their assessment was correct.
Obama, pointing out that there is only one president at a time, said earlier in the week that the Big Three had “a more serious set of plans” than they did the last time their chiefs testified in front of Congress.
That drew a double-barreled barb from Rep. Barney Frank, D-Mass. chairman of the House Financial Services Committee.
“He’s going to have to be more assertive than he’s been,” Frank said of the president-elect. “At a time of great crisis with mortgage foreclosures and autos, he says we only have one president at a time. I’m afraid that overstates the number of presidents we have. He’s got to remedy that situation.”
The leading Democrats in Congress, Pelosi and Senate Majority Leader Harry Reid put it this way several days ago in a letter to the Detroit carmakers. “The auto companies’ shareholders, business partners and prospective benefactors — the American people — deserve to see a plan that is accountable to taxpayers and that is viable for the long-term.”
The new plans in hand, Sen. Bob Bennett, R-Utah, observed: “to come up with the answer to those complicated questions (in) 72 hours, is something that Congress is frankly not equipped to do.”
Whatever the financial and economic issues, the political knot is a complicated one.
The administration says federal law does not permit the use of any of the $700 billion financial bailout fund to help the auto industry. Instead, aides say President George W. Bush would sign legislation that makes use of $25 billion originally slotted for loans to help the carmakers retool their factories to make environmentally friendlier products.
Pelosi and Reid counter that the Treasury has clear authority to tap the bailout funds if the president chose.
Additionally, Pelosi, allied with environmentalists, opposes the use of the money the administration favors, saying it is already spoken for.
Reid agrees that the administration can and should tap the bailout money, and seems more amenable than the speaker to making use of the funds that Bush has proposed tapping.
Senate Republicans currently control 49 seats and generally support Bush’s point of view, it also appears at present to be the only way for a bailout to pass.
Republicans and Democrats alike, speaking on condition of anonymity, agree that in refusing thus far to compromise, all sides are betting that General Motors and Chrysler, in particular, will survive into the new year.
On Jan. 20, the Bush administration will pass into history, and Democrats will have larger majorities in both houses of Congress than is now the case — and complete responsibility for the fate of auto industry legislation.
Especially, consider Reid’s perspective.
Nearly half of the $700 billion bailout fund has been committed, and helping Detroit almost certainly would require tapping into the second half of the fund — a step that requires a vote in Congress.
Inconveniently, perhaps, Reid will be looking out at five new Democratic senators who opposed the bailout when it cleared Congress last fall.
___
EDITOR’S NOTE — David Espo is AP’s chief congressional correspondent.
Copyright 2008 The Associated Press.
Federal deficit could hit $1 trillion this year
Date: 11/25/2008
By JIM ABRAMS
Associated Press Writer
WASHINGTON (AP) _ The federal government’s ledger has gone from a surplus just seven years ago to facing a prospect of a $1 trillion deficit next year.
Given those dire financial straits, President-elect Barack Obama said at a news conference Tuesday, “Budget reform is not an option. It’s a necessity.”
But unlike his predecessor President George W. Bush, who in better economic times talked about returning to surpluses by 2012, “balanced budgets” were not in Obama’s vocabulary.
The government’s first obligation, he said, was to spark an economic recovery and put people back to work. To do that, the Democratic-led Congress is expected to have a new stimulus package, costing in the $500 billion range, ready to go when Obama takes office in January.
That’s on top of the hundreds of billions already spent or committed by Treasury and the Federal Reserve to revive the moribund financial markets. On Tuesday the government announced two new programs providing $800 billion to help unfreeze the market for consumer debt and to make mortgage loans cheaper and more available.
All that, in the short term, will send the deficit into the stratosphere.
Budget hawks were stunned when the federal deficit hit a record $455 billion in fiscal 2008, which ended Sept. 30, more than double the previous year’s deficit. But now, even the fiscally conservative say another doubling, to $1 trillion or more, may be inevitable if the economy is to be rescued.
James Horney, director for federal fiscal policy at the Center on Budget and Policy Priorities, said it was “pretty likely” that this year’s deficit will approach $1 trillion. Big deficits can’t be helped in bad times, he said, as the government is required to spend more to help the needy and stimulate the economy even as tax revenues decline.
“The question, of course, is what’s the alternative?” Horney said. If the government doesn’t move to stimulate the economy, “the outcome could be much worse.”
Obama made clear Tuesday that he will take a hard look at the budget once the economic ship is righted.
“We can’t sustain a system that bleeds billions of taxpayer dollars on programs that have outlived their usefulness or exist solely because of the power of politicians, lobbyists or interest groups. We simply can’t afford it.
“This isn’t about big government or small government. It’s about building a smarter government that focuses on what works,” he said.
Josh Gordon, policy director of the Concord Coalition, a budget watchdog group, found it encouraging that Obama was discussing reform and noted that — just as Republicans may be in the best situation to cut military spending — “a Democratic president might be in the best position to convince Congress of the need to cut ineffective programs.”
But he also pointed out that domestic discretionary spending is only a small part of the overall federal budget dominated by military and entitlement programs such as Medicare and Medicaid, and that every program has its “specific patrons and specific interest groups” defending it.
While nobody likes a deficit, many economists agree that heavy federal government spending — on food stamps or unemployment benefits or public works projects — may be necessary to keep economies moving in times of recession or war.
The problem is that this time Washington was racking up massive deficits even before the current economic downturn.
The government recorded surpluses in the fiscal years 1998 through 2001. But that all changed once Bush was in office a year. Saddled with costs from the Sept. 11 attacks plus the tax cuts he pushed through Congress, Bush took the $127 billion surplus he inherited from former President Bill Clinton and turned it into a $159 billion deficit the following year. Then wars in Iraq and Afghanistan and more tax cuts swelled it to $413 billion in 2004, a record until $454.8 billion for the fiscal 2008 year that ended Sept. 30.
The White House Office of Management and Budget in July estimated the 2009 deficit at $482 billion, but that doesn’t take into account possible losses down the road from loans and investments made under the $700 billion financial rescue plan enacted in October or other efforts to bail out stricken financial institutions.
The Congressional Budget Office put the deficit in October, the first month of fiscal 2009, at a staggering $232 billion. Its figure included $115 billion in bank stock purchases the Treasury Department made as part of the financial bailout.
The deficit “could easily exceed $1 trillion in fiscal 2009 and go even higher in 2010,” Mark Zandi, chief economist and co-founder of Moody’s Economy.com, said at Senate Budget Committee hearings last week. He said borrowing by the Treasury could top $2 trillion this year.
Borrowing adds to the national debt, the money the federal government owes to states, corporations, individuals and foreign countries such as China and Japan that buy U.S. Treasury notes, bonds and other debt instruments. The debt, which stood at about $5.7 trillion in 2007, topped the $10 trillion mark in October and now stands at about $10.6 trillion.
Copyright 2008 The Associated Press.
By JIM ABRAMS
Associated Press Writer
WASHINGTON (AP) _ The federal government’s ledger has gone from a surplus just seven years ago to facing a prospect of a $1 trillion deficit next year.
Given those dire financial straits, President-elect Barack Obama said at a news conference Tuesday, “Budget reform is not an option. It’s a necessity.”
But unlike his predecessor President George W. Bush, who in better economic times talked about returning to surpluses by 2012, “balanced budgets” were not in Obama’s vocabulary.
The government’s first obligation, he said, was to spark an economic recovery and put people back to work. To do that, the Democratic-led Congress is expected to have a new stimulus package, costing in the $500 billion range, ready to go when Obama takes office in January.
That’s on top of the hundreds of billions already spent or committed by Treasury and the Federal Reserve to revive the moribund financial markets. On Tuesday the government announced two new programs providing $800 billion to help unfreeze the market for consumer debt and to make mortgage loans cheaper and more available.
All that, in the short term, will send the deficit into the stratosphere.
Budget hawks were stunned when the federal deficit hit a record $455 billion in fiscal 2008, which ended Sept. 30, more than double the previous year’s deficit. But now, even the fiscally conservative say another doubling, to $1 trillion or more, may be inevitable if the economy is to be rescued.
James Horney, director for federal fiscal policy at the Center on Budget and Policy Priorities, said it was “pretty likely” that this year’s deficit will approach $1 trillion. Big deficits can’t be helped in bad times, he said, as the government is required to spend more to help the needy and stimulate the economy even as tax revenues decline.
“The question, of course, is what’s the alternative?” Horney said. If the government doesn’t move to stimulate the economy, “the outcome could be much worse.”
Obama made clear Tuesday that he will take a hard look at the budget once the economic ship is righted.
“We can’t sustain a system that bleeds billions of taxpayer dollars on programs that have outlived their usefulness or exist solely because of the power of politicians, lobbyists or interest groups. We simply can’t afford it.
“This isn’t about big government or small government. It’s about building a smarter government that focuses on what works,” he said.
Josh Gordon, policy director of the Concord Coalition, a budget watchdog group, found it encouraging that Obama was discussing reform and noted that — just as Republicans may be in the best situation to cut military spending — “a Democratic president might be in the best position to convince Congress of the need to cut ineffective programs.”
But he also pointed out that domestic discretionary spending is only a small part of the overall federal budget dominated by military and entitlement programs such as Medicare and Medicaid, and that every program has its “specific patrons and specific interest groups” defending it.
While nobody likes a deficit, many economists agree that heavy federal government spending — on food stamps or unemployment benefits or public works projects — may be necessary to keep economies moving in times of recession or war.
The problem is that this time Washington was racking up massive deficits even before the current economic downturn.
The government recorded surpluses in the fiscal years 1998 through 2001. But that all changed once Bush was in office a year. Saddled with costs from the Sept. 11 attacks plus the tax cuts he pushed through Congress, Bush took the $127 billion surplus he inherited from former President Bill Clinton and turned it into a $159 billion deficit the following year. Then wars in Iraq and Afghanistan and more tax cuts swelled it to $413 billion in 2004, a record until $454.8 billion for the fiscal 2008 year that ended Sept. 30.
The White House Office of Management and Budget in July estimated the 2009 deficit at $482 billion, but that doesn’t take into account possible losses down the road from loans and investments made under the $700 billion financial rescue plan enacted in October or other efforts to bail out stricken financial institutions.
The Congressional Budget Office put the deficit in October, the first month of fiscal 2009, at a staggering $232 billion. Its figure included $115 billion in bank stock purchases the Treasury Department made as part of the financial bailout.
The deficit “could easily exceed $1 trillion in fiscal 2009 and go even higher in 2010,” Mark Zandi, chief economist and co-founder of Moody’s Economy.com, said at Senate Budget Committee hearings last week. He said borrowing by the Treasury could top $2 trillion this year.
Borrowing adds to the national debt, the money the federal government owes to states, corporations, individuals and foreign countries such as China and Japan that buy U.S. Treasury notes, bonds and other debt instruments. The debt, which stood at about $5.7 trillion in 2007, topped the $10 trillion mark in October and now stands at about $10.6 trillion.
Copyright 2008 The Associated Press.
For Depression survivors, meltdown means reminder
Date: 10/29/2008
By MEGAN K. SCOTT
Associated Press Writer
Copyright 2008 The Associated Press.
By MEGAN K. SCOTT
Associated Press Writer
NEW YORK (AP) _ The words have been repeated over and over: This is the worst financial crisis since the Great Depression.
For those who lived through that turbulent time, the statement sparks more than a history lesson. They experienced the bank closures, the bread lines and the sudden disappearance of available work.
What was life like for them? And what are their fears about what is to come? The Associated Press interviewed several people who lived through the Depression to find out how bad things can get — and appreciate our relative affluence today.
Here are their stories, edited from their own words:
EATING IN SOUP KITCHENS
NAME: Esther Pulliam-Torres, 79, New York
HER STORY: I was born in Des Moines, Iowa. When I first came to New York people were so surprised that black people lived in Iowa. My mother was a domestic. I never knew my father.
When I was younger, I remember going to the soup kitchen and I had a red bucket and I would go and they would fill my bucket with soup and I would take it home. I remember we ate a lot of cornmeal, cornmeal pancakes, cornmeal bread. I remember bread was cheap.
I have often thought back to the time when I was in the line with that red bucket because I really loved that red bucket.
As a senior, I’m on the opposite end now. On the one end, I was a child. On the other end, I’m an adult. At that time, I didn’t know anything. Now I do.
I’m worried because in terms of my Social Security, what’s going to happen if they decide to change the way we get it? That’s something I really depend on. I earned it. I worked hard for it.
BEGGING AND BANK FAILURES
NAME: Fran Marshall, 90, Upper Arlington, Ohio
HER STORY: The Depression was really, really bad in 1933. Of course it started in 1929. Then it got worse and worse. My father was a lawyer for two banks in New York. During the Depression, the two banks started to fail. He was so upset over it, he went into a mental depression and he never got out of it. It was a sad thing. He died in a mental institution.
People were trying to get their money out. The banks finally closed and that was the end of it. There was no more money. The government didn’t bail out people back then.
I remember the long lines of people standing in line for bread or soup. They were hungry. There were a lot more people begging back then. We haven’t gotten to that yet. God help us if we do.
We would feed people who came to the door asking for food. My mother would sit them down on the back porch and always fed them. She would give them eggs and toast. She never turned anyone away. My mother was good with money and because my father was a lawyer at one time, his law partner gave her $10 a week, when my father was ill.
In 1937 or 38, we had to move out of our brick house and across the street. We lived in an apartment upstairs and had to look down to the home we had once owned. That was tough.
I don’t worry about bread lines and bank closures coming back. I really don’t think it can get that bad. Look at the way the government has stepped in and the government didn’t step in like that way back during the Depression.
I think it’s safer today. But it’s scary. The whole thing.
TENT CITIES AND BREAD LINES
NAME: Philip Flash, 90, of Mercer Island, Wash.
HIS STORY: I grew up in Seattle. My dad was a tailor — he had a little shop. My mother helped dad in the store.
It was very, very hard, although I must admit that my sister and I never missed a meal. We lived in an apartment. I slept in the dining room. My sister in the living room and my parents in the bedroom.
One of the significant things that I can recall during the Depression was tent city down on the waterfront. People lived in shacks. There were hundreds of them out there.
Things were relatively inexpensive, but people just didn’t have any money. Many jobs just kind of disintegrated. If people had a source of income, they were very, very fortunate. They had bread lines, where you could, if you were down and out, get a meal.
One day my father said that there were some jobs in the sawmills. He left the store and never went back. My mother operated it for a couple of years. Things got worse and she had to give it up. I guess it just wasn’t paying for itself.
I’m real concerned about what’s going on today. We’ll come out of this, but it might take some time. I might not even see the day when it gets back to normal because I don’t know long it will take.
FARMING AND HARDSHIP
NAME: Louise McGee, 90, of Tiffin, Ohio
HER STORY: We lived on a farm and of course we didn’t have it too awful because dad raised a lot of our food. You only had one potato and a few vegetables. There were five of us girls. We worked out in the field the same as the boys. He farmed 80 acres.
One year we had to kill all the little pigs and burn the corn because there was a disease.
My parents didn’t have any money. Period. Not back in that time. The grain they could sell, you didn’t hardly get anything for it. Dad took our weeds and made flour. He took corn and had it ground and we had cornmeal.
I worked for other people who needed my help when I got older. The women had babies. I would go and work for them. You were lucky if you got three or four dollars a week. I gave that to my family.
In 1938, I got married to a farmer. It was kind of rough the first couple of years. In 1940, he joined the Army.
If something doesn’t straighten out, we’ll have another hard Depression like we had back then.
There are going to be a lot of people out of work and government is going to have to furnish food for them. There’ll be a lot more stealing and stuff then there was back then.
I’m on Social Security and I moved in with my son and his wife. I have got it pretty good right now. But when you go through it once, you do kind of wonder.
OUT OF WORK
NAME: Marty Evans, 80, Boca Raton, Fla.
HIS STORY: I was born in Philadelphia. My father owned a grocery store. That didn’t last once things got really tough. He allowed people to buy on credit. They couldn’t pay. He lost that business.
We moved to New York and he worked in the food business. Then we moved back to Philadelphia. My father borrowed some money, bought a truck and went around collecting batteries and tires and selling the m.
I remember things being really tight. I remember not being able to get that ice cream cone I wanted so badly from time to time. I remember being taught to be very careful with my clothes. I remember my mother having to go to work. She was a salesperson in department stores, which left me in charge of my younger brother.
I don’t think it’s going to get to the point where it was back then. You know anything is possible, but as clumsy as the powers that be are, at least they are doing something today that they didn’t do in ’29.
I’m not as free as I was two years ago. I clip coupons now out of the newspaper. My wife is recovering from a stroke; even with the insurance, medical bills are murder. Medication is another story.
If I had to, absolutely I would go back to work. But then who the heck is going to hire me?
CHILI MAC FOR 20 CENTS
NAME: George Eckhoff, 95, Seattle
HIS STORY: It was bad. We had to dig up rent money and go around to the meat market and get a soup bone for a dime maybe to make up some soup and scrounge up some vegetables. I remember seeing lines of people trying to get their money out of the bank. And of course the bread lines.
My dad was out of work. I delivered telegrams. That helped quite a bit.
We had clothing and shoes — food was the hard part. I used to get a tip now and then. I could get my own meals when I was working. I could get a chili mac and a nice piece of French bread for 20 cents.
I had an idea this was coming on. I read the news. They are overbuilding — they did that before the Depression. A lot of buildings didn’t get finished.
I don’t know how people will make it this time. Everything is up so high. We could get food pretty cheap. You can’t do that now.
WILL THERE BE ANYTHING LEFT?
NAME: Ruth Swan, 92, Washington, D.C.
HER STORY: The day that the crash came, I lived in a coal mining town in Pennsylvania. My dad was in the real estate business, but he also had a lot of stocks on margin (borrowing money from a broker to buy stock). I remember he was home all day long on the telephone. I can still see him sitting at the telephone.
My dad tried to find other real estate activity in the area but was not successful. Nobody was buying and nobody was selling. My dad was lucky. He came from a big family. He was one of 12 children and he borrowed money to keep us going.
So we did not starve, we were not deprived, but it was a difficult time I’m sure for my mother and father.
He had a driver take him to New York up and down all the real estate places and he finally got a job. So the year that I graduated college in 1937, he moved the whole family plus the maid to New York City.
It’s not cheap living here (in a senior community). But what can I do? I just want to be able to continue to pay for what I have to pay for while I’m alive, and of course, I save money for the kids, but who knows if there is going to be anything left?
Copyright 2008 The Associated Press.
White House to banks: Start lending now
Date: 10/28/2008
WASHINGTON (AP) — An impatient White House prodded banks and other financial companies Tuesday to quit hoarding billions of dollars flowing into their vaults from Washington and start making more loans.
Hoping to thaw the credit freeze that has chilled the economy, the Bush administration sent banks an unmistakable message to put aside fears and open up loan windows for cash-starved businesses and consumers who have pulled back on spending.
While there are limits to Washington’s power to affect banks’ behavior, the White House decided it was time to use its bully pulpit.
Copyright 2008 The Associated Press.