On October 24, 1929, my father was 14 years old. He lived with his father, the manager of a large dental laboratory, and his mother, a housewife, in a comfortable house in Chicago. His uncle, the creative director of an advertising agency in New York, had pledged to pay my father’s way through Harvard.
Four years later, as President Roosevelt was calling the bank holiday, my grandfather was dead — the family always attributed it to the Depression; the house was gone and its furnishings, briefly warehoused, were taken to pay for storage costs. My father and grandmother had embarked on a years-long peregrination between relatives’ spare rooms and boardinghouses. My great uncle was still working, but with his stock portfolio wiped out, he was no longer able to do much for his dead brother’s wife and son.
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Lines outside banks were a common sight in the 1930s. (National Archive)
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These experiences marked my father. He was frugal to the point of cheapness. He never took risks, staying in his job at Montgomery Ward from 1940 until his retirement in 1977. Except to buy a house, whose 30-year mortgage he and my mother prepaid 10 years early at considerable sacrifice, he never went into debt. He paid cash for the used cars he bought infrequently. When credit cards began to proliferate, he got two, a Visa and a MasterCard, and never carried a balance; later, he pounced on Dean Witter’s Discover card because of the cash-back component. To the end of his life, he preferred restaurants that offered "value," i.e., those that served big portions.
It is the fashion now to say that the October market crash did not cause the Depression; that it was Smoot-Hawley, or irresponsible little banks, or the withdrawal of European money. But my father, and millions like him, knew that October 1929 was the end of the good times.
My father’s experience was no worse, and considerably better, than that of millions of other people. It was an experience that, with WWII, left a scar on the national psyche that is only now beginning to fade, as the youngest people who can actively recall those days reach their 70s. Three full generations of Americans were marked by the Depression. The generation of Franklin Roosevelt saw its world crumble. My father’s generation (he was a contemporary of Nixon and Kennedy) saw its future radically altered from what they had expected. The Clinton generation of baby boomers have lived much of their lives in reaction to their parents’ lives.
The Depression/WWII generation is being rehabilitated now. Tom Brokaw calls it the greatest generation, Steven Spielberg and Tom Hanks have created a mini-industry commemorating its wartime heroics, and there are plans for a WWII memorial. But 30 years ago, the boomer generation was calling its Depression-ravaged and war-torn parents materialist warmongers, responsible for the imminent destruction of the planet.
Materialist? Maybe, but in a careful, frugal sort of way. After nearly 20 years of deprivation they bought the new necessities: houses in the suburbs, furniture and appliances to fill them, toys for their large broods of children, cars, television sets, and stereos. But they saved their money, too, and they watched their debt because they remembered the day the mortgage on the house was foreclosed. Their purchases paid for an unprecedented postwar prosperity that allowed blue-collar workers to provide their families with comfortable lives and decent educations. In short, it was for the security their children needed to bite the hands that fed them.
Then, in the 1970s, as retirement loomed for my father’s generation, the good times again slipped from their grasp. Inflation and industrial decline wrought havoc with the steel and auto industries, where high-paying blue-collar work was concentrated. US Steel (USX), International Harvester (now Navistar), and the automakers (Ford, GM, Chrysler – now DaimlerChrysler) were devastated by falling demand for their products.
Into this job market – the worst since the Depression – poured the sneeringly non-materialist boomers when they got out of college. Coming of age during the era of high inflation marked the boomers. They are job-hoppers, because they saw companies that did not reciprocate their parents’ loyalty. Depression-era deflation taught my father that a dollar saved today was two dollars to spend tomorrow; inflation taught boomers that a dollar saved today would buy 80 cents-worth tomorrow. Stable interest rates made my father’s house a home. Inflation made my house an investment. The 1970s represented an interregnum between the old order of industrial might and the new order of "think" jobs created by and for boomers in the 1980s.
Bill Gates, baby boomer, founded Microsoft in 1975; Steve Jobs founded Apple in 1976. Consulting firms like McKinsey and the consulting arms of the big accounting firms (including Andersen Worldwide, Ernst & Young, and PricewaterhouseCoopers) flourished during the 1980s, as did financial manipulators like Salomon Brothers (now Salomon Smith Barney), Kohlberg Kravis Roberts, and The Trump Organization.
In the 1980s, the boomer generation split between those positioned to take advantage of the new order and those stuck in the diminished industrial and lower-level service sectors. By the late 1990s, that split was even more evident in the proliferation of dot-com fortunes created by the younger boomers, their post-boomer siblings, and their baby-bust offspring. The fin de siecle blossoming of "unearned" wealth from companies like Amazon.com, Yahoo!, and Netscape, has fueled a culture of envy. Across the boomers’ economic spectrum, a lifetime freedom from real privation, a lingering expectation of an ever-rising standard of living, and the feeling that everyone else was doing better have combined to produce one of the lowest historical rates of savings and perhaps the highest-ever rates of indebtedness and personal bankruptcy.
Is that my father’s coffin I hear making that whirring sound?
Barbara Spain is an editor for Hoover's Finance and Healthcare team.
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