Reflections by comrade Fidel
THE GREAT CRISIS OF THE 1930s
Although it may sound simple, it is a very difficult subject to explain. The U.S. Federal Reserve system, resulting from a fully developing capitalism, was established in 1913. Salvador Allende, a man we remember as someone of our times, was already 15 years old.
The First World War broke out in
1914, when the prince heir to the Austrian-Hungarian Empire in the very heart
of the center and south of Europe was murdered in
The bloody wars against the Muslims
At the end of the First World War,
the United States joined the war, that is, in 1917, two years after the sinking
of the Lusitania, a ship carrying
American passengers that had left from New York. It had been sunk by torpedoes
shot from a German submarine following the absurd instructions of attacking a
vessel carrying the flag of a distant, rich and potentially powerful country
whose government, from supposedly neutral positions, was looking for a pretext
to join the United Kingdom, France and other allies in the war. The attack took
place on May 7, 1915, as the vessel was crossing the Strait between
Then, on October 24, 1929, a date
that would go down in the history of the
“The American Bank was closed on December 11, 1930. This was the critical date. It was until then the most important commercial bank in the American history that had collapsed.”
Just in the month of December 1930, 352 banks were closed. “The FED could have tried a better solution buying on a large scale public debt bonds in the open market.”
“On September 1931, when the
“After two years of strong repression the system reacted by raising the interest rates at a level never known before in its history.”
Be mindful that Friedman is exposing
a view that is still prevalent in the
“In 1932, under Congress pressure, the FED concluded its sessions and immediately cancelled its buying program.”
“The final episode was the banking panic of 1933.”
“The fear was intensified during the
interregnum between Herbert Hoover and Franklin D.Roosevelt, who was elected on
November 8, 1932 but was only inaugurated on March 4, 1933. The former did not
wish to take drastic measures without the cooperation of the new president,
The episode is a reminder of what is happening today with the president elected on November 4, less than a month ago, Barack Obama, who will be inaugurated on January 20, 2009. Only the interregnum has changed; in the 1930s it was of no more than 117 days and at present it is of no more than 77.
As Friedman indicates, at the moment
of the greatest economic boom there were up to 25 thousand banks in the
“When President Roosevelt decided to put an end to the closing of banks, 10 days after it had started,” said Friedman, “a few banks short of 12 thousand were allowed to open the doors, followed later by only 3 thousand others. Therefore, all together, some 10 thousand of the 25 thousand banks in 1929 disappeared during those four years, due to bankruptcy, merging or liquidation.”
“The closing of businesses, production cut down and growing unemployment all fed the agitation and fear.”
“Once the depression had started, it expanded to other countries and then, of course, there was this reflected influence: another example of the always present feedback in a complex economy,” Friedman concludes.
The world of 1933 described in his book is quite different from todays. This is an absolutely global world made up by more than 190 nations represented at the United Nations. Its population is threatened by risks that scientists, even the most optimistic, cannot ignore and that a growing number of people know and share, even prominent American politicians.
The echo of the impact of the current crisis can be felt in the desperate efforts of important world leaders.
Xinhua press agency has reported that Hu Jintao, President of the People’s
These words from the leader of the most extensively populated country on Earth make it unnecessary to add any more arguments on the depth of the present crisis.
Fidel Castro Ruz
November 30, 2008