With our economy headed deeper into the basement each week, many are beginning to feel that a recovery might be, if not impossible, at least a long way off. The notion that a recovery will be a long time in coming is probably true. Keep in mind, though, that our economy has seen many ups and downs and it has always rebounded from its times of trouble. Following is a brief look at some of the country's most notable financial crises.
The country's first depression in 1837 caused by rampant land speculation and the collapse of the Second Bank (charted as a way to finance the country's debts from the War of 1812), led to seven years of high unemployment and the failure of nearly half of the country's 850 banks. This depression lasted five years.
During Reconstruction, the southern rail system expanded from 11,000 miles in 1870 to 29,000 miles in 1890. Panic I of 1893 caused by this overexpansion of the rail companies caused them to go under. More than 500 banks failed.
The economy finally began to recover in 1896 when an issue of notes was able to sustain gold reserves above $100 million along with new gold production giving confidence to the public and the markets.
In 1907, Panic II crippled the economy when the New York Stock Exchange lost half its value and thousands of businesses fail. J.P. Morgan put up his own money to stop a bank run in New York. President Teddy Roosevelt agreed to give him $25 million to act as a central bank. After a short-lived downturn, the economy recovered in 1908.
The most famous, and by far the worst - so far at least - was the Great Depression, which began on Oct. 29, 1929. The NYSE lost $30 billion in five days, leading to the decade-long Depression that lasted until the beginning of World War II.
Some say that FDR ended the Depression with The New Deal; others say it was the war that brought it to an end. Whoever is right, we all know that the misery and suffering did finally end and the country saw a tremendous boon in the years that followed the end of the war.
Some of today's pundits say that we are on the verge of another Great Depression. Others say that there are safeguards in place to prevent that from happening again. Let's hope the latter is true, although as we all know, the news doesn't seem to get better with time.
Other busts include the 1973-1974 oil crisis; Black Monday when the Dow plummeted 508 points on Oct. 18, 1987, shedding 22 percent of its worth in one day; the 1989 savings-and-loan bubble burst when, by the early 1990s, 747 Savings & Loans failed costing $160 billion.
Another recent failure was the Dotcom Bust from 2000 to mid-2002 when the dotcom bubble burst erasing more than $5 trillion in market value of the technology firms. In December 2001, Enron collapsed wiping out $60 billion in market value and $2 billion in pension funds. We are all too acutely aware of what has happened since then.
I am no economist. I have no answers. I have to live and hope as everyone else does. It doesn't take the education and expertise of an economist PhD, however, to realize that greed in the high offices of our major banking institutions is primarily what got us into this mess. A part of the problem also lies at the feet of our society as a whole. For too many years we have been a society burdened by too much debt, over consumption and under production.
One thing is for certain, though, and that is that our nation and our economy will bounce back. Those rough times mentioned above are but a few of the challenges the country has encountered and "lived to tell the story." This one will be no different. What we must do, though, is give those who are trying to find the fix time to do the job. There are a myriad of problems that have to be solved not only on a national level but also around the globe. This isn't just a problem here in the United States, it is one of global proportions. We didn't get into this mess overnight and we're not going to get out of it overnight.
Another thing that would help is a concerted, bipartisan effort from our representatives in Washington. They would be of incalculable help in restoring faith in our capitalistic system if they would start working together for the common good of our, and their, country.
Optimism is, I'm certain, in short supply with those who have lost their jobs during this economic downturn, and those of us who still have jobs consider ourselves fortunate indeed. If we lose all hope and faith in our system, though, it would only get worse. We can only hope that the efforts being made to remedy our problems will work while we maintain faith in our system.
Most have already seen the following, but there is some information here that I, at least, have not seen in the other announcements. As of Feb. 28, local telephone calls made within West Virginia must include 10 digits (area code plus seven-digit telephone number). This change allows the implementation of the state's new area code (681), which will provide additional telephone numbers that are necessary to support residential growth, additional lines and services in West Virginia. The new 681 area code will be available to serve new telephone customers after the March 28 final implementation date.
Since the beginning of the year, The Inter-Mountain has been including the area code in all events listing telephone numbers to help readers get used to the new dialing procedure. We'll continue to do so as readers will need the area code to reach their intended party.
It is important to remember that a local call will still be a local call regardless of the area code. The procedure for dialing long distance calls will not change. Continue to dial a 1, plus the appropriate area code, then the telephone number. Also, the way you dial special service numbers will not change. You can continue to dial only three digits to call 211, 411, 711, 811 and 911.
Further information may be obtained by calling the Public Service Commission at 1-800-344-5113 or accessing the Web site www.psc.state.wv.us and clicking "10-Digit Dialing."
It may seem a bit early to be talking about the next July 4 weekend auto show, but like all other important dates, it will be here before we know it. Planners of the event are already holding meetings and getting things under way for West Virginia's largest auto show. Volunteers are needed for the event. If you would like to have a fun-filled weekend of hard, yet satisfying work, your help would be deeply appreciated. This is the 25th anniversary of the event and it promises to be the best ever. If you would like to help, call the Elkins-Randolph County Chamber of Commerce at 636-2717 and sign up.
For those who saw the TV commercial of Cash4Gold.com during the Super Bowl and as a sponsor of various other programs asking you to send in your old unwanted gold jewelry in return for the highest prices available, here is a note of caution. According to the Los Angeles Times, what the ad does not mention is that essentially Cash4Gold is a buyer of scrap metal, and scrap metal doesn't fetch much these days.
Frank Poindexter of New York learned the hard way when he sent in what he claimed was $150 to $200 worth of gold. All he got back, he said, was a check for 15 cents. Apparently, he is not alone. The Better Business Bureau has processed 269 complaints about the company in the past three years. Most consumer complaints allege that the company isn't offering fair value for the items they send in. Cash4Gold defends its business practices, noting that it promises to return jewelry to customers who don't like the price they are offered.
As this was written, gold was at $970.70 per ounce.