How Does Current Crisis Compare to Great Depression?

With all the coverage of the current economic crisis that's now worldwide, there have been a lot of comparisons made to the Great Depression that lasted through the 1930s. Leading up to the stock market crash in October 1929, the United States was in an era of economic growth. Easy credit allowed people to speculate in the stock market, borrowing money to invest thinking the growth of their stocks would pay them back. That's very much like the growth in the housing market before the recent crash, with people using easy credit to buy more house than they could afford, thinking the homes' rising value would keep them afloat.

But for all the comparisons, there's nothing like living through both times to give you perspective. Cornelia Freeman is 96 years old and lives in a retirement community in West Columbia. She was 17 when the stock market crashed and remembers well living through the Great Depression.

"Oh, I remember one horrible day. My father, we lived in the country on a farm and we had plenty, you know, lot of food. But he was a director in the bank in Orangeburg and he was called to come. And the citizens had started a run on the bank," she explains. He left early in the morning and got home very late, "really looking despondent", she says. The bank had run out of money and became one of more than 9,000 that failed nationwide during the Depression.

But the actual day-to-day life during the time wasn't as bad for her family as it was for many others, since her family had the farm and they raised all their own food. "We accepted the fact that we weren't going to live quite like we had," she says.

USC economist Dr. Bill Hauk says of the comparison between now and then, “There are enough similarities to say there’s definitely something wrong here. We definitely do need to be concerned. I think the comparisons to the Great Depression are certainly premature and hopefully unneeded."

He thinks the government learned a lot of lessons from the Great Depression and has policy tools now it didn't have back then to keep the economic problems from getting as bad.

"We’re certainly looking at a recession. I don’t think anybody would say there’s no cause for worry. But are we going to be seeing bread lines on the streets and things of this nature, 25 percent unemployment? No, I don’t think so,” he says.

The Great Depression did make Mrs. Freeman a lot more frugal. "Until this day, I can't throw away anything," she says. "You'll be surprised, my little box of Christmas ribbons that came off of packages."

Other than that, though, she doesn't think it had a lasting effect on her. She does have advice, though, for all of us going through the current uncertainty. "Accept doing without and you can cope, you can cope with what you have."