Wen and I are fortunate to have great friends. A few of them (randomly) ended up giving us gift certificates to Gramercy Tavern when we got married and we finally made it the other night. As we were basking in the glow of a ridiculously good meal, Wendy mentioned “how did we get here?” I couldn’t help but think of how, at least for me, a couple of decisions that – at the time – seemed irrelevant have massively shaped who I am today. (Note that this is not an original notion; complexity scientists call it path dependence). Here are a couple of those events:
When I was in high school, you applied for three different university programs in descending preference. I didn’t get into my first pick – computer engineering at the University of Waterloo. Instead, I did engineering at Queen’s. If I’d gone to Waterloo I likely wouldn’t know my current set of friends and almost certainly be married to Wen. In fact, I’d argue that not getting into Waterloo is the best thing that ever happened to me (and that’s no knock to Waterloo as a school).
When I was at Queen’s every engineer did a common first year and then had to pick a discipline to specialize in over the next three years. I had no idea what I wanted to do, but knew that I liked computers and math and physics. Each discipline made a presentation and the Engineering Physics department invited a grad named Kamal Hassan to present. He talked about how he had studied Eng Phys and learned lots of interesting math/physics/engineering but didn’t want to be an engineer and therefore became a management consultant. I had no idea what a ‘management consultant’ was, but the program sounded like something interesting so I decided to do Eng Phys. The training I received there continues to help me on a daily basis. (And, in a weird twist of fate, I ended up becoming a consultant like Kamal and, freakishly, ended up at the same business school he went to)
After my 2nd year of school, I went overseas to London on a work exchange program. There was a central organization that helped you find a job. A list of positions were posted; you applied; and if you were to be interviewed, a notice was placed for you in a book (this was pre-cellphones). This book had a very odd structure. There were tabbed pages (by students’ last names), but the tabs weren’t rigid and you could open the book but it would be collapsing under its own weight if your last name started with a “w”.
One morning I went to check if I had any interviews and I had one-for a 150 quid/week job at Merrill Lynch. However, due to the collapsing book, I missed one for a 250/week at some publishing company. When I found out I missed out on a job that paid 66% more I was crushed (and I spent the summer living in pernury) – but years later I was in a job interview and saw “Merrill Lynch” circled on my CV and knew that it had been worth it (if you ever meet me, ask me about that job at Merrill).
Finally, I didn’t get into any of the American grad schools I applied to. Instead, I ended up at INSEAD. Again, I met some truly unique people who I otherwise would not know. More importantly, I got a special chance to work with a serial investor and startup in Silicon Valley. This gave me the confidence to strike out on my own after school, and while that business wasn’t a success, it directly led to me getting my current job.
All of which led to us having dinner at Gramercy Tavern. I don’t pretent that the only reason I was able to have dinner there was because of the decisions made above (after all, there are an infinite number of paths that could have led to me eating there), but at least I know which points in my life have made the biggest impact.
And as for the meal. It was delicious. The appetizer was a lamb papardelle with olives, lemon confit and swiss chard.
This was followed by venison loin and sausage in a Bourbon sauce and with a potato pancake:
We quaffed it down with probably the best bottle of wine I’ve ever have – a 2001 bottle of Oddero Barolo:
Finally, they gave us a little amuse bouche for the next morning – a piece of cocount cake with pear inside:
Today I went to an exhibition at the Met called Art of the Samurai: Japanese Arms and Armor, 1156-1868. It has given me a new appreciation for how absolutely insane Japanese culture is. First, let’s take a look at some of the different helmets that Samurai might wear into battle:
If you were to ask “Lindsay, isn’t one of those helmets done up to look like a swallow’s tail? And is the other one a set of crabs claws?” you’d be absolutely correct. Apparently the Samurai helmet was the early equivalent of taking your shoe off and banging it on your desk at the UN – an attempt to intimidate your enemy by convincing them that you were crazier than they were.
Their armor certainly suggests that. Granted, to a jaded 21st century dweller, it looks like the sort of costume a psychopathic midget who worships the Village People might wear (the armor dates back to the Middle Ages and the Japanese were quite short back then), but I can only imagine how exceptionally nutty it would look when combined with a very sharp sword.
If you look closely at the images below you’ll notice a few things. First, everyone’s wearing a mask to look a little crazier – although the mustaches undermine it. Second, the guy with brown hair actually does have hair coming out of his helmet-there’s some sort of animal pelt there; a different set of armor (not shown) actually had long, flow, dyed red hair attached to it. Finally, the red outfit suggests where Darth Vader comes from.
I recently finished reading Bill Bishop’s The Big Sort. It’s a “big ideas” book and something of a road map to help you understand why the world (or at least America) is what it is today. The book begins with an insight: the 1976 Presidential election was highly competitive and only 26.8% of Americans lived in a ‘landslide county’ – where the margin of victory was at least 20%. However, in 2004, that number had reached 48.3% (and steadily increased each election from ‘92-’04, despite all of them being competitive).
So why did this happen? Well, a big part is geography. Economic specialization has led geographic segregation. This should scare you as there is substantial evidence that people who are in groups will polarize (see Stanley Schacter, Muzafer Sherif, James Stoner, etc.). There are two reasons why this happens: first, when people spend all their time with a group, they only hear the same ideas and it becomes self-reinforcing. The other is that when you’re in a group, adopting a position a little to the extreme of the group can be a way to ingratiate yourself. A similar slippery slope; this is okay for your Little League, but it’s the stuff wars are fought over when it’s politicians doing so.
In politics, this lack of dialogue is reinforced by how politicians live in Washington. In 1990, Rick Santorum made an issue of the incumbent Congressman’s house – he’d bought a house in DC to keep his family together – and promised that, if elected, he would spend less time in Washington. Now Senators and Congressmen frequently live with other party members and spend so little time in Washington that they don’t socialize (and thereby talk) with their peers in opposite parties.
However, it’s not as simple as that. As the same time as this economic specialization has occurred, there has been a corresponding decrease in the role of traditional American institutions: Elks, marriage, the Presbyterian Church, the daily newspaper, arguably the federal government and the Democratic party (think the New Deal).
In fact, 1965 turns out to be the Annus Horribilus for trust in America. The year started with the creation of Medicare and Medicaid plus many of Johnson’s Great Society programs (the War on Poverty) and the Justice Department ordering desegregation. It saw Bloody Sunday in Selma. The year ended with the escalation of the Vietnam War, the first stirrings of anti-war protests and then the Watts riots. One hell of a year and a massive shock to the system resulting in a massive drop in people’s faith in old institutions.
This shock in 1965 is partially explained by Inglehart’s theory of social change. In the early 1970’s, he proposed that when people grow up in abundance, their social values changed. The 1950’s and ’60’s represented the first time that the mass of Americans grew up middle class-and it had a profound effect on their values. Inglehart predicted that society would transition from being “elite-directed” to being “elite-challenging” and that we would live in a “post-materialist” society where people would lose interesting in traditional religion, become more interested in personal spirituality and people would be more interested in personal freedom, abortion rights, gay right and the environment. He also predicted that folks would vote less but sign more petitions. It’s largely played out that way.
And this is where my beef with The Big Sort begins. After this aggressive hypothesis, the rest of the book falls into a set of stylized facts explaining how we got to today and how it’s represented in society, rather than a discussion of how to live in today’s reality. We learn that geography, more than class or gender, is a better indicator of how you will vote. Labour leaders were pro-Iraq was in Republican counties but against it in Democratic counties. Same for women. We hear that in 2004, 73% of Americans lived in counties where the same political party had been elected since 1992 (not much dialogue there). And there’s a long description of the rise of the Evangelical Right (the origin of Public vs. Private Protestantism, the preacher McGavan [Bridges of God] recognizing that Christianity spreads as a mass movement and this leads to the Saddleback Churches of the world) plus a quaint description of how Applebee’s uses community to fill tables (each Applebee’s has a ‘community wall’ celebrating the history and people of the area; they then eat in groups).
There’s a lot of commentary on how dangerous a situation this is and a thorough description of how it’s emerged, but there’s no guide to the future. There’s not even a whiff of how we might manage our way out of this. A great book, but I’m hoping there’ll be a sequel about what we might do next.
And now for some interesting factoids:
Democrats may be a little more flexible than Republicans. Between 1995 and 2000, 79% of people who left Republican counties moved to counties that would vote Republican in 2004. However, people who left Democratic counties moved to both Republican and Democratic-voting counties (but not to Republican landslide counties).
In Ohio in the 1960’s, Michigan’s working class voted solidly Democrat. However, in Ohio they voted Republican (which was arguably against their interests). The explanation is that in Michigan all the workers lived near one another and acted as a block whereas in Ohio they were interspersed with the middle class, who frequently voted Republican. There was no cohesive Ohio working class and no cohesive Democrat machine to get out the vote. This is a prelude to today, where Bishop would argue that economic specialization has led to geographic segregation, which is reflected by more similar people living together (hence the landslide votes).
The Founding Fathers envisioned the House and Senate as a place for a constant clashing of opinions. In the early years of the Republic, there was talk about whether legislators should be “instructed” by their constituents or if they should represent the local opinions of their constituency but be focused more on what was best for the nation. The national perspective was the winner, but Bishop would argue that the “instructors” are taking back the legislative branch.
Contact hypothesis: when groups have contact with others, they can learn how to integrate and find middle ground. However, in order to work, the groups must see themselves as equals, the meetings must take place as a pursuit of a shared goal and the meetings must not be artificial.
People always visit New York and ask me what they should see. I can usually come up with some ideas for everyone, but I’m not really able to provide a comprehensive set of suggestions. However, this weekend at Brooklyn Flea I bought a tour pamphlet, so now people can refer to this blog post.
You can take the “uptown residential tour” which will take you to Grant’s Tomb where you can see “the New George Washington Bridge, with its longest span in the world.” For those keeping track, the bridge hasn’t been “new” since it was dedicated in 1931 and Grant’s Tomb (shown below) is surrounded by a canopy of fully grown trees:
But perhaps you want something a little more prurient. Why not take the De Luxe After Dark Tour? You’ll go to Chinatown, Greenwich Village, the Bower and the Lower East Side. The Bowery “is a characteristic and historic spot with its endless procession of human wrecks of all ages and from all walks of life.” “The Ghetto” a.k.a. the Lower East Side is “the melting pot where foreigners from all over the world first come into touch with American life.”
If you’re really crazy, you could take the De Luxe Combination Tour: it throws in Harlem. You’ll visit its “conglomeration of night clubs, cabarets, spiritual meetings, jazz and superstition.” Bonus points: on the way back, you’ll “return through the Upper East Side German and Bavarian sections, with its sidewalk cafes, beer gardens and waiters in native Bavarian costumes.”
I went to the Conflux Festival on Saturday morning and attended a talk by Matt Knutzen entitled Rebuilding the Historical City. Matt’s a cartographer working at the NYPL and he was explaining a new tool they’ve built – and the Very Big Idea behind the tool.
The NYPL has over 60,000 maps of NYC in their Digital Gallery, but they’re simply digitized images. They lack any actual mapping points: latlongs, etc. that can actually be use to project the map onto other maps. As a result, they’ve decided to build a tool – the Map Rectifier – that allows anyone to convert an image of a historical map into an actual working map and share the results with the world.
The process is simple: you find an old map you want to convert into a working map. You put it side by side with an OpenStreetMap map of New York. You then click on a point in the old map and click on a corresponding point in OpenStreetMap. Once you’ve done at least four points, you click “rectify” and the system warps the image of the old map to fit it onto the real map. At this point, the old map is converted into a set of latitude and longitudes and can be used elsewhere (the system is also smart enough to tell you if you did a bad job). I’d show you screen shots, but I can’t get a login to the system; it’s still in invite only mode
There’s some other cool functionality in the tool: it’s got the ability to crop maps (so you can skip parts of the map) and you can also trace out buildings and add data about them (e.g., it’s a public house, etc.).
This gets better and better because once you’ve converted the map into a set of KML coordinates and you can view it in Google Earth. For example, here’s a projection of a 1924 aerial set of photos vs. what’s there today (a lot more farmland back then):
Here’s another example, from the 20th Ward’s fire insurance map. You can see what Madison Square looked like before the Garden and the Farley post office were built:
This technology is impressive as you can start to tell and visualize the history of the city. Moreover, once the system launches, it’s going to be open to the public and anyone can rectify a map (that’s a sea change in how libraries work). Also, kudos to the NYPL for making the entire system open source: you’ll be able to install the software on your own server and start rectifying your own maps.
I was walking around the neighbourhood the other day when a historic plaque caught my eye:
…the workingmen’s cottages on Warren Place were among the first planned low-income housing in the nation when they were built in the late 1870’s. At that time, rent for a four-room apartment was $1.93 per week.
Wow! $1.93 a week rent sounds great. But what is that after inflation? According to the inflation calculator, that’s about $37.41 in 2008 (assuming 1875 as a base year). Given that a 1Br goes for about $500 a week around here (and has roughly 4 rooms), if you were a very old person with rent control, you’d be laughing.
Also, if you were a landlord, the difference between $500 and $37 ain’t much of a return. That’s a compound return of only 1.90% over the 130-odd years, meaning you’re doing much better than inflation, but not a whole heckuva lot. You still would have done better in the stock market.
If you know me, you might know that I spent my last year of college in Germany. I’ve always had a curious fascination with the place: it’s a nation that didn’t exist until the late 19th century and then spent the first half of the 20th century trying to take over the world-and committing moral suicide along the way. It was then torn in two and rebounded to become (at least the Western part) one of the most successful countries in the world.
I’ve always wondered how the nation spun into the moral decay that led to World War II and the Holocaust. The world was in a bad time in the 1930s (sound familiar?) but the Germans responded in their own uniquely offensive (both militarily and morally) way. Recently I’ve been reading Christopher Isherwood’s The Berlin Stories, which gives a sense of what the atmosphere was like in the early 1930s before the Nazis came to power. He chronicles the time and it offers a bit of insight into what life was like in a nation humbled and bankrupted by the Versailles Treaty, wracked by hyperinflation and desperately searching for strong leadership – be it from the Right or the Left.
Here’s a striking passage:
Berlin was in a state of civil war [Isherwood is returning to it in late 1932]. Hate exploded suddenly, without warning, out of nowhere; at street corners, in restaurants, cinemas, dance halls, swimming-baths; at midnight, after breakfast, in the middle of the afternoon. Knives were whipped out, blows were dealt with spiked rings, beer-mugs, chair-legs or leaded clubs; bullets slashed the advertisements on the poster-columns, rebounded from the iron roofs of latrines. In the middle of a crowded street a young man would be attacked, stripped, thrashed and left bleeding on the pavement; in fifteen seconds it was all over and the assilants had disappeared. Otto got a gash over the eye with a razor in a battle on a fair-ground near the Copernickerstrasse. The doctor put in three stitches and he was in hospital for a week. The newspapers were full of death-bed photographs of rival martyrs, Nazi, Reichsbanner and Communist. My pupils [he was a teacher] looked at them and shook their heads, apologizing for the state of Germany. “Dear, dear!” they said, “it’s terrible. It can’t go on.”
The murder reporters and the jazz-writers had inflated the German language beyond recall. The vocabulary of newspaper invective (traitor, Versailles-lackey, murder-swine, Marx-crook, Hitler-swamp, Red-pest) had come to resemble, through excessive use, the formal phraseology of politeness employed by the Chinese. The word Liebe, soaring from the Goethe standard, was no longer worth a whore’s kiss. Spring, moonlight, youth, rose, girl, darling, heart, May: such was the miserably devaluated currency dealt in by authors of all those tangoes, waltzes and fox-trots which advocated the private escape. Find a dear little sweetheart, they advised, and forget the slump, ignore the unemployed. Fly, they urged us, to Hawaii, to Naples, to the Never-Never-Vienna. Hugenberg, behind the Ufa [a film production company], was serving up nationalism to suit all tastes. He produced battlefield epics, farces of barrack-room life, operattas in whch the jinks of a pre-war military aristocracy were reclothed in the fashions of 1932. his brilliant directors and camera-men had to concentrate their talents on cyncially beautiful shots of the bubbles in champagne and the sheen of lamplight on silk.
And morning after morning, all over the immense, damp, dreary town and the packing-case colonies of huts in the suburb allotments, young men were waking up to another workless empty day to be spent as they could best contrive; selling bootlaces, begging, playing draughts in the hall of the Labour Exchange, hanging about urinals, opening the doors of cars, helping with crates in the marekts, gossiping, lounging, stealing, overhearing racing tips, sharing stumps of cigarette-ends picked up in the gutter, singing folk-songs for groschen in courtyards and between stations in the carriages of the Undergorund Railway. After the New Year, the snow fell, but did not lie; there was no money to be earned by sweeping it away. The shopkeepers rang all coins on the counter for fear of the counterfeiters. Frl. Schroeder’s astrologer foretold the end of the world. “Listen,” said Fritz Wendel, between sips of a cocktail in the bar of the Eden Hotel, “I give a damn if this country goes communist. What I mean, we’d have to alter our ideas a bit. Hell, who cares?”
As an aside, this is almost certainly what life was like in Sarajevo in 1992. When I was in Germany I knew a girl who had been to Croatia for a holiday in 1990. She remembered that every night there were fistfights between men in the street; the next year, the war began.
It was a similar situation in Rwanda in the years leading up to the genocide in 1994. The UN was reporting that there was violence in the streets attributable to many parties – the military, politicized youth mobs and various ethnic groups.
Someone is going to write a fascinating paper one day talking about how nations respond to crises: the U.S. in the 1930’s peacefully overcame the displacement brought on by economic disaster and became strong; the Germans projected their issues outward onto the rest of the world whereas Yugoslavia/Rwanda collapsed into horrific civil wars. I’d love to know why each responded in its own way.
I’ve always had a perverse interest in how humans simply abandon things. We’re definitely the only species that covet objects and then abandon them as soon as our internal calculus judges them to be no longer valuable. I’m not talking about no longer wanting your old plates or bicycle, rather the fact that we construct massive edifices and then leave them to rust.
A few years ago this was hammered home to me on a trip to the Yukon. Here’s an old mine near Whitehorse:
Later we were hiking the Chilkoot Trail and when we hit Canyon City we found the detritus of a civilization that lasted at most two years:
As we continued on to Dawson, we came across a set of dredges that are now landlocked. They were built on-site in a pond and literally moved a creek with them as they crunched through the mud looking for gold. The creek is long gone and the dredges (there are two) sit as a testament to, amongst other things, what humans will do for a dollar:
To me, the Yukon was the most personal and poignant example of both how relentless and feckless humans can be.
That is until tonight, when I heard of Hashima Island, off the coast of Japan.
This place almost defies description. Starting in 1890, a small island was built up to contain exactly two things: a coal mine and a city that existed solely to serve it. By the 1950’s, it was the most densely populated place on earth (over 10x as dense as Tokyo). And then in 1973, the coal ran out and it was abandoned in weeks. It’s still there, rusting away and waiting to fall into the sea:
It sounds-and looks-unbelievable but it really exists. For more, check out this and this. Also, watch this video:
I just finished reading John McPhee’s Oranges. It’s a fascinating book (and an easy read at 149 pages). One of the interesting passages concerns Indian River, Florida.
Indian River is where the best oranges in Florida come from (they commanded a $1/box premium in the Northeast – and that was in the 1960s). It’s also quite resilient to freezing as it is on a tidal bay. What’s interesting about the area is how it has changed over time. Here’s how McPhee describes the life of the original post-Civil War orange farmers:
The plantation society of the St. Johns was fairly metropolitan in contrast to life on the Indian River. Families had settled all along the Indian River, but even twenty years after the Civil War they were few enough so that when they saw a sail miles away they could usually tell by the cut of it who was approaching. At night, a family would go out in a small boat, light a lantern, talk, drift, and in thirty minutes catch enough fish to feed them for a week. On trips for supplies in sailboats, they would sometimes see ahead of them a darkness formed on the water’s surface by five hundred acres of ducks. As a boat approached, the ducks would rise with a sound of rolling thunder, leaving on the water five hundred acres of down. Everyone slept on down pillows and down mattresses. The river was full of oysters. The shores were full of cabbage palms, whose hears, boiled, were delicious. Currency was almost unknown. The nearest bank was in Jacksonville. When families put up Northerners who came for part of the winter, payment was often made by check at the end of a visit. For months, these checks would go up and down the Indian River as currency, until they had so many endorsements on them that they looked like petitions. In Titusville, near Merritt Island at the north end of the river, there wa a group called The Sons of Rest. Any member who was seen with perspiration on his face was fined twenty-five cents. At the end of each month, the money was used to buy a pair of overalls for the member who had worked the least. A man named Cuddybuck won four pairs of overalls in a row and the organization disbanded. there was one lawyer on the river. He raised oranges because the practice was so small.
However, the good times didn’t last as first the railroad came and then land promotion led to speculation. By the time McPhee was visiting in the early 1960’s, things had changed substantially:
…Aerospace [NASA - it's right near Cape Canaveral] industries, residential housing, and places like Ramon’s [a bar] are taking over so rapidly that in a few years there will be no citrus trees on the island, with the exception of those owned by the National Aeronautics and Space Administration. Hill’s son has built a new house next to his father’s, and he will probably stay there even if the family grove is cut down. He works for R.C.A. No space-age Chekov is going to write a play called The Orange Grove about the Hill family of Merritt Island.
McPhee was largely prescient. Take a look at what the place looks like today:
The orange grows have been plowed under and replaced with communities engineered so that everyone gets a space on the sea:
There’s a concept in both the social and hard sciences called path dependence. To oversimplify, it basically says that everything that happens influences everything that subsequently happens – and provides positive feedback to what you are going to do. It always has an influence, even if only infinitely small.
It was with this in mind that I recently read Caroline Bird’s The Invisible Scar. It’s the history of the impact of the Depression on America – and it was written in 1966, so it’s an interesting read now (although a bit hard to find – it’s out of print).
The book is absolutely fascinating as you realize the profound effects that the Depression had on America and how they continue to resonate today. Hence the path dependence! What follows is a summary of what I found really interesting.
First, the stage needs to be set. America was a much poorer place and had a much more uneven distribution of wealth. The poor were very poor and the rich were very rich. To put it in perspective:
In 1929 the rich did not have to work for a living. Interest rates were high and income taxes negligible. A nest egg of a little more than $115,000 could assure you of a safe, coupon-clipping (and tax-free) income of $5,000 a year, the target of aspiring young men.
In 1929 more of the rich were very, very rich. A record of 513 individuals admitted to an income of a million dollars or over, a larger number than in the 1960s, where there were more than have as many people in the country.
To put that into perspective, according to this inflation calculator, $5,000 a year in 1929 was only $60,000 in 2007. That’s not going to be anything of distinction – in fact, according to the U.S. Census Bureau via Wikipedia, 36.75% of American households had an average annual income of $60,000 or more in 2005.
The poor were also grindingly poor. Consider the following:
In 1933, nine out of ten farmers had no electricity. Power companies maintained that they did not need it or could not afford it. They could not see that extending electricity to outlying farms might raise their productivity to the point where the owners could become paying customers, and when they could see it they regarded such an investment as too long-term and too low in return to be attractive to private enterprise.
More dramatic are the following:
In 1936, when poet Jim Agee explored the Tennessee mountains, he found whole families who talked Elizabethan English and who lived and died ten miles from town without ever having been there. Some had never seen an electric light, a water pipe, or a doctor. No tenant house had paint or more than a single layer of knotholed lumber against the winter weather. None had screens against the fever mosquitoes. Sharecroppers working cotton patches had to get through the winter on advances of as little as $10 a month for families of six or eight. Many were blotched and stupid with pellagra because of limited food. Most tenant families lacked not only privies but even newspaper for toilet paper; mountain people retired to bushes and cleaned themselves with twigs and leaves. Many could not read or write. The Tennessee Valley had more than its share of the millions Roosevelt saw “whose daily lives continue under conditions labeled indecent by a so-called polite society half a century ago.”
And:
Kentucky coal miners suffered perhaps the most. In Harlan County there were whole towns whose people had not a cent of income. They lived on dandelions and blackberries. The women washed clothes in soapweed suds. Dysentry bloated the stomachs of starving babies. Children were reported so famished that they were chewing their own hands. Miners tried to plant vegetables, but they were often so hungry that they ate them before they were ripe. On her first trip to the mountains, Eleanor Roosevelt saw a little boy trying to hide his pet rabbit. ”He thinks we are not going to eat it,” his sister told her, “but we are.”
And:
A year after his defeat by Roosevelt, Hoover – who had repeated so many times that no one was starving – went on a fishing trip with cartoonist “Ding” Darling in the Rocky Mountains. One morning a local man came into their camp, found Hoover awake, and led him to a shack where one child lay dead and seven others were in the last stages of starvation. Hoover took the children to a hospital, made a few phone calls, and raised a fund of $3,030 for them.
It’s literally impossible to imagine this happening in America today. Part of this is due to all the institutions that were created (quite controversially) during the Depression. Among the standouts are Social Security:
Conservatives were outraged (at Social Security). Insurance companies and savings banks claimed the Government was “competing” with them. Security would take all the “romance out of life.” Children would no longer support their parents. Americans would be as demoralized as workers in Germany, where children brought up on to social insurance chanted, “One, two, three, four. Only fools work any more.” The “payroll tax” would discourage employment.
Blue Cross/Blue Shield health insurance:
Depression hastened the spread of plans for the pooling the risk of hospital bills. In 1929, Dr. Justin Ford Kimball, of Baylor University, organized the firs Blue Cross plan to help Dallas schoolteachers and newspapermen to save up together for hospital care. Each member paid $0.50 into a common “prepayment fund” on which subscribing hospitals drew to compensate them for an agreed number of days of care.
And food stamps/school lunch programs:
In 1938, when farm surpluses threatened again, Agriculture’s Surplus Marketing Administration began giving surplus foods to school lunches and, through stamps redeemable at grocery stores, to families on relief. The Federal school Lunch program has been growing ever since and the food stamp plan was revived in 1964, but both are sharply focused on welfare targets.
One of the reasons why the government was able to push such then-radical ideas was that the economic slowdown was unprecedented. A couple of anecdotes show just how colossal and unimaginable the scale of the economic impacts were:
In the 1920s, American railroads had bought an average of 1,300 locomotives a year. In 1932, no American railroad ordered a single one.
And:
At home, whole towns were left without enough cash to make change in the stores. Where banks could not supply cash, employers paid off in IOUs of small denominations, which were good at least in local stores. Newspapers and cities sometimes had to issue scrip. When Toledo bootleggers agreed to accept it, the papers carried the story as an important news item. In part, at least, to put a humourous face on the nuisance, Baline, Washington, issued wooden nickels. Tenino, Washington, went Blaine one better by eventually selling enough of its wooden coins as souvenirs to buy the building of a bank that had failed. Just before Roosevelt was inaugurated, a million Americans in 300 small communities were getting along on some locally improvised substitute for cash money. The scarcity of change helped to make “Brother, Can You Spare a Dime” one of the most popular songs of the year.
If you had a job, you certainly weren’t going to leave it:
The quit rate is a measure of what people will endure to hold a job. In prosperous 1929, more than three workers out of every 100 gave up their jobs each month. In 1945, when women were leaving jobs to rejoin returning servicemen, the quit rate was more than 5 per 100. In February 1933, it dropped to one out of every 200, just about the minimum to allow for people who faint on the job. Among those who didn’t quit were mill girls in New England working for $4 and $5 a week, store clerks in Chicago working for a nickel an hour, and men earning $0.10 an hour at Briggs Manufacturing in Detroit.
However, it was not all doom and gloom. The Depression led businesses to focus on consumers and there were many success stories:
The consumer was the key to success in the Depression. The big change the Depression made in business was to reward products, firms and industries that gave consumers what they wanted. This seems platitudinous in retrospect, but it was not so clear at the time. Money had been made first by investing in railroads, steel mills, construction, mining, and factories. In the boom years, money had been made in financing production and selling stock. The Depression hit theses “capitalistic” enterprises much harder than “consumeristic” goods and services people needed in daily living that could often be realized with little investment. Real income per capita – spendable money a family had to lay out – did not grow during the Depression decade, but it did continue to be as high as it had been in the boom. Demand for shoes, drugs, foods, soap, cigarettes, clothes, and gas for the old jalopy grew directly with the population. Buses, trucks, gas, electricity, stores, laundries, beauty parlours, stayed in business.
And:
Big business had traditionally disdained inexpensive consumer goods. Before the Crash, power companies had given away electric light bulbs in order to increase the use of current, and Muzak was developed later for the same purpose. Before the Depression, General Electric bothered with small appliances only to increase demand for its generators. Broadcasting was started in order to increase demand for radio sets. During the Depression, however, light bulbs, appliances, and entertainment launched as bait became products worth selling in their own right.
“Consumeristic” companies did better than competitors who were farther away from the retail customer. Both Shell and Gulf lost out to the Standard Oil companies because they were slower to develop gas stations as outlets for their products. Gulf had to build its way back by investing in a national system of leased stations.
Here are different examples of successes. Note the common theme of focusing on consumers’ unmet needs or capitalizing on the build-out of long-term technological trends like the automobile and electrification:
(General Robert Elington) Wood (head of Sears) claimed the formula was simple: “The customer comes first, the employee next, and the stockholder last.” Wood studied the consumer. Instead of trying to make existing products as cheaply as possible, he developed new products that fitted into the changing way of life he saw around him. He developed suppliers who could mass-produce “class” products. Refrigerators sold well even in the depth of the Depression, so Wood brought out a low-cost Sears refrigerator to capture this market. He was one of the first marketing men to see the potentials of the automobile. One of his achievements for Sears was to offer automobile insurance-at low cost, by mail-before the established insurance companies were willing to promote coverage for the new risk. Bust most decisively, he saw that the family car meant trips to the store, so he added retail stores to the mail-order business.
And:
Many enduring little businesses grew up around the automobile, which surprised everyone by becoming a necessity rather than a luxury. House trailers, auto radios, motels, drive-in theaters – all these small services flourished, and none of them developed by people with substantial capital. Established banks did not at first lend customers money to buy cars, and established insurance companies shunned the growing market in automobile liability.
And:
The typical success story of the Depression is a consumer product that did not at the time seem worth the notice of a grown man, peddled by a persistent promoter who was not considered eligible for bank credit and had to scrounge for money to expand. A good example is Lawrence Gelb, a bright N.Y.U. graduate in chemistry, from the Bronx, who started manufacturing Clairol hair colouring during the Depression and peddling it himself. Everything about hair dyeing was questionable. Nice women would not talk about it (one of Gelb’s contributions was to avoid the word “dye” and use “colour” instead). Hairdressers did not know how to apply it, and they feared, with some justification, that their customers might sue them for injurings arising out of accidents in applying the dyes. Banks would have nothing to do with the business.
Gelb was not deterred. For promotions, he wangled a free write-up in The Chicago American, which sold out his supply in that city. He wangled credit from bottle manufacturers and extended credit to jobbers so they could put the product into beauty shops on credit. By 1950, Gelb had persuaded young women to change their hair with their moods. In 1959, he sold Calirol to old-line Bristol-Myers for $22.5 million and become one of its vice presidents with a lordly layout in the head office in Rockefeller Center.
And:
Banks went after the man in the street. Before the Crash, few householders paid their small bills by check. Banks discouraged small deposits by requiring a minimum balance. They wanted only checking accounts big enough so that the use of the money would outweigh the expense of handling the check. In 1934, Alexander Efron started the check-master Plan, under which anyone could draw a check for a nickel against an account that could be opened for as little as a dollar. By 1938, more than 300 banks were attracting people into the bank by offering small checking accounts and other services.
And:
In 1936, Life launched a new style of “photographic journalism.” It was so successful that Look and other competitors soon appeared. ”The March of Time” made the newsreel a major feature instead of a filler. The artistic flowering of photography set ordinary people with the price of a Brownie to snapping the American scene, as well as each other, all over the country. Cameras and film were one of the growth industries of the Depression.
Fortune and Esquire were also both started during the Depression. Also, direct sales became popular:
Companies increased sales at little expense by inducing the unemployed to sell on a commission basis. The harder the times, the better the talent that sales managers were able to enlist. Alfred C. Fuller reports that sales of his Fuller Brush Company “suddenly upended, like a tired freighter, and headed toward the bottom” during the prosperous closing years of the boom, but jumped $15,000 to $50,000 in the doldrum month of August 1932 alone, and grew at the rate of a million dollars a year all through the Depression.
Businesses also became much more professional, as the Robber Barons of the Gilded Age handed their business over to managers, not children:
His (Henry Ford’s) rival, General Motors, was the model and in large part the creator of the rising management system. This system was born not in the automobile business, but in the chemical industry, where technological advance dealt more ruthlessly with enterprise. In the stock-market drop of 1920, the du Ponts used their war profits to buy General Motors at a bargain. They managed it the du Pont way.
Like the Rockefellers, whose oil companies gained on their competitors in the Depression too, the du Ponts did not regard their enterprises as fields for personal expression. Both families disciplined their heirs to administer the business as a trust. du Pont bred sons and acquired sons-in-laws competent enough to run the business. None of the grandsons of John D. Rockefeller went into the oil business. But both families devised ways of separating ownership from control so that members of the family could work in the business, if they chose, without personally exercising the authority of their ownership as distinguished from the moral authority they exerted because they had grown up in the tradition of the business. And in both families, the tradition was to seek out the ablest men, reward them handsomely, and give them authority and status to develop the business as if it were their own.
One unforeseen offspring of professionalized management and a focus on consumers was the birth of advertising, consumer research and PR:
Theodore Vail, the manager who created the Bell System, taught telephone operators to cultivate “the voice with the smile” to avoid attacks that could have led to “postalization” or Government operation of the phone service like the mails.
And:
Businessmen hastened to adopt the tactics these leaders (Rockefeller et al.) had developed. U.S. Steel, Bethlehem Steel, General Motors, International Harvester, Pittsburgh Plate Glass, and the New York Central Railroad set up public-relations departments during the 1930s.
And:
Young & Rubicam retained opinion pollster George Gallup to study consumer attitudes. In 1933, A.C. Nielsen, back from Bermuda with a few dollars and a bright idea, launched a service that measured the movement of branded merchandise off store shelves.
Some of the lasting results of the Depression are a little less significant. Take, for instance, how we tend to drink orange juice at breakfast:
Consider, for instance, what the Depression did to the orange. Traditionally, it was a luxury for the toe of a Christmas stocking. During the Thirties, dietitians popularized the daily need for Vitamin C to prevent scurvy and deficiency disease. Orange juice for breakfast, orange juice for baby’s first non-milk food, became dietary duties, the new standard of adequate nutrition.
Or the word “boondoggle”:
Within two months (of its 1933 founding), the CWA (Civilian Works Administration) was paying four million men. They could be seen almost everywhere, standing around outdoor doing as little as possible and often in a deliberately inefficient way. Rather than spend money on wheelbarrows, for instance, one project had men carrying dirt 50 feet by the shovelful. Hastily improvised projects intended to be temporary were often just silly. A FERA (Federal Emergency Relief Administration) director in New York City told a reporter he was teaching men to make “boondoggles” – linoleum-block prints, leather belts and such. The word was needed for the new phenomenon of made work, and it stuck.
The book is fascinating and worth a read as it shows you just how influential this brief period continues to be in defining the America we live in. I highly recommend reading it.
PS For your reading pleasure, here are a couple of random items from the book that I thought worth sharing, but didn’t really fit with the above.
First, a few Soviet engineers almost ended up being on the wrong side of a Communist rebellion within America:
On March 7, 1932, seventy Soviet engineers watched 3,000 unemployed attack the Ford plant in Dearborn in the nearest thing to revolution ever abetted by the Communist Party, U.S.A. They were inside the plant, invited there from Russia by Henry Ford to learn mass-production methods.
While consumer goods manufacturers did well, nobody ever did as well as financiers (although during the Depression it was commercial finance, not Wall Street):
During the boom, manufacturers never made as high a profit as the Wall Street speculators who financed the production of the goods they made. During the Depression, manufacturers never made as high a profit as the personal credit companies that financed the consumption of the goods they made. C.I.T. and Commercial Credit, were on the short line of companies that made money in 1932. The installment credit companies had prudently cut their loans to 60 percent of 1929, but they collected all but one percent of the money they lent between 1929 and 1932.
Early Americans must have been ruthless in saving their money. I remember my grandparents (who weren’t American but grew up during the Depression) as saving money fastidiously. However, note what people were saying about the younger version of my grandparents:
But if the escapees from poverty did not tell their children about it, they did accumulate things with a ferocity that looked pathological. The children of Depression seemed to be acting out the resolve of a girl who wrote the New York Times the day of the Bank Holiday that she intended to spend every cent she would ever lay her hands on and enjoy it, rather than “wait for it to be swallowed up by others in some mysterious fashion.” Margaret Mead’s service with the rationing authorities during the war convinced her that the Depression made people teach their children to grad instead of to plan.
If people coming out of the Depression accumulated with “ferocity”, I shudder to think what judgments would be made of us today.
Finally, I love this anecdote as it shows just how much America changed in the 40 years between 1905 and the end of World War II. It definitely grew from teenager to experienced adult at a rate no nation has since matched (although who knows if China or India will):
Whenever my father went to Washington during the New Deal days, he was reminded fondly of the time he dropped in on the Secretary of State in 1905 with nothing much more on his mind he would have had dropping in at his hometown country courthouse. In those days, he recalled, the Secretary of State did not have pressing business every day, either. Father just walked through the door in the Old State Building which said “Secretary of State” and introduced himself to the man at the desk. It was the Secretary himself. ”My name is John Hay”, he said. ”What can I do for you?” Hay was Lincoln’s old private secretary, but the easygoing Government manner in which he was brought up lingered as an ideal almost until World War II.
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We quaffed it down with probably the best bottle of wine I’ve ever have – a 2001 bottle of Oddero Barolo:
Finally, they gave us a little amuse bouche for the next morning – a piece of cocount cake with pear inside:
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