QUICK NOTES

I am again a bit pushed for time and as a result will need to continue the discussion about the American auto industry and the Great Depression either this evening or in the morning. One of the most interesting books yet read on the subject of the banking crisis during the 1930s and the rise of the New Deal is this one.

The price is a bit spendy for a paper back but this well researched work rates at the top of my list for books written about the cause and effects of the Great Depression.

Last evening we attended an introductory meeting on the proposed solar powered electrical plant hosted by the Route 66 Association of Kingman. My initial impression is favorable. Details will be posted soon.

I am quite glad Jim Conkle has resurrected the Route 66 Pulse, a much needed clearing house for information along historic Route 66. In the upcoming issue there will be extensive information about the Kingman area and its colorful history.

After a shaky start it looks as though the Will Rogers Awards and Route 66 Days in Flagstaff, Arizona is coming together in a big. If your a fan of the old double six I highly recommend this event.

I should note that I will be signing books at the Barnes & Noble that weekend, Saturday the 12Th of September, from 1:00 to 3:00. So if you happen to be in Flagstaff for the event or just passing through I hope you will stop by and introduce yourself.

In recent posts I noted my struggle to find a silver lining in the "Cash for Clunker" program. The deeper I dig into this the more angry and disgusted I become. This cost analysis study adds to both feelings immensely. http://www.theamericanconsumer.org/2009/06/30/cash-for-clunkers-may-not-benefit-consumers-or-the-environment/

I have another update on the steam powered Packard. I received a pretty reliable lead about the cars current location. Once this is verified information pertaining to the cars history and current condition will be posted.

A wide array of plans for some exciting projects are currently under way. Our prints are now being sold at the Lile Gallery in Amarillo (contact information is in the upper left column) and we are in the preliminary stages of planning an early fall Route 66 cruise that will be a combination vacation/book signing/research trip for Ghost Towns of Route 66.

Then there is the Adventure Expo in Chicago next January. This is still up in the air but it looks as though we will be dusting off the long johns for at least one weekend next winter.

Work on Ghost Towns of the Southwest is pretty much finished and Ghost Towns of Route 66 is underway. In addition I have three more in the hopper - a book on an Alaskan adventure, another on ghost towns of the Sauk Trail, and another on vintage cars along Route 66.

If your travels include passing through Kingman in the next couple of months you might plan to be here on the evening of August 15TH, the date for the next Chillin' on Beale Street. In September there is the street drags and block party and there may soon be a Harley Davidson themed ghost town cruise and a "T" party, as in Model T Ford. I will keep you posted.

Stay tuned for updates and the next installment in the auto industry and Great Depression story.

1931 - THE BEGINNING OF THE END

Few aspects of American society reflect the cataclysm of the depression better than the automobile industry during this period. In 1941, Alfred P. Sloan Jr. of General Motors noted, "Between 1929 and 1932 car and truck production in the United States and Canada fell 75%, from 5.6 million units to 1.4 million." He also noted that during this period, "...in dollar sales the decline was even more precipitous - from 5.1 billion at retail to $1.1 billion, or 78%."
A graph of automobile production during the period from January of 1929 to the end of December, 1932, is almost a vertical line. Hudson produced just over 300,000 units in 1929. Never again would the company reach these numbers. For 1932 total production was a mere 57,550 units.
At Ford the situation was equally dire. Including Lincoln, sales plummeted 80% between 1929 and 1932 to 290,683 units.
Chrysler was the new kid on the block having organized in late 1924. Still, the company had shown steady growth through the production of quality and technologically advanced vehicles through 1930. In 1932, sales of all Chrysler vehicles, including De Soto, Plymouth, and Dodge, dropped to 215,056 vehicles.
Even the giant General Motors combine experienced a massive decline in sales, from 1,353,000 units to 432,830. This in turn led to a massive hemorrhaging of red ink.
These were the fortunate companies. Durant and Jordan, Peerless and dozens of smaller manufacturers closed their doors. Studebaker, recently merged with Pierce-Arrow entered into receivership.
Investors were not spared from the bloodbath. During the same period stock in General Motors dropped from 72 3/4 to 36, and in Hudson Motor Company from 93 1/2 to 2 7/8.
With the collapse of the auto industry the city of Detroit and surrounding communities plunged headlong toward financial ruin. In an eerily similar scenario as unemployment increased foreclosures mounted and owners abandoned properties. As property values decreased in a dramatic fashion banks found themselves holding mortgages worth a fraction of the financed amount. The loss of tax revenues brought municipalities to their news.
In the waning days of the Hoover administration, under mounting political pressure and the rising fear of societal unrest, President Hoover signed Reconstruction Finance Corporation Act, the depression version of the bail out in the second depression.
To be continued -

GREAT DEPRESSION PART ONE

This 1920s Hudson, photo courtesy of the Hudson Essex Terraplane Club, represents the high water mark for the legendary white triangle, at least in terms of production numbers. With the luxury of hindsight and from the perspective of what seems to be the early stages of the Great Depression part two, it also represents the beginning of the end for the American automobile industry.

The seeds for the economic maelstrom that was the Great Depression were planted in the rise of the Federal Reserve and in the draconian policies instituted by the Wilson administration during World War I. They were watered with capitalism awash in cash derived from loose fiscal and credit policies that allowed the consumer to live beyond their means and the industrialist to expand beyond the previous constraints of profit margins.

In addition there was an increasing abandonment of the concept that with great wealth and power there came great responsibility. By 1931, there was also an increasing reliance on governmental assistance to keep poorly managed companies afloat in an effort to avoid financial collapse.

During the 1920s, as in the 1990s, it seemed as if the good times would never end. Speculators and lack of regulation pushed the value of companies built on the shifting sands of low interest loans and that were void of tangible assets free of encumbrances to unsustainable heights.

Companies that specialized in two relatively new industries and supportive technologies dominated the hit parade for speculators - radio and the automobile.

However, for the astute investor it was obvious the veneer of prosperity was very thin indeed. This was especially true in rural areas where the post war collapse of agricultural prices fueled the closure of more than 5,000 banks during the 1920s.

As a city increasingly dependant on one industry Detroit was particularly vulnerable to economic fluctuations. From 1920 to 1930, before the economic implosion of the Great Depression, there were six periods where employment fell to less than fifty percent.

So, by the time of the generally accepted catalyst date for the start of the Great Depression, October of 1929, the city of Detroit was in a precarious financial position. Compounding the cities financial problems were the near complete closure of Ford Motor Company during late 1927 and early 1928 as the company switched from Model T to Model A production, an event that cost Ford employees fifty million dollars in wages.

Compounding the cities problems were the fact that most Ford manufacturing facilities were located in surrounding communities depriving Detroit of the tax revenue. However, the majority of Ford workers resided in Detroit which left the city in a precarious situation to meet the growing needs of unemployed workers.

In Thursday's post I will provide historical perspective to the concept that a bank, or company is to big to fail as well as the consequences of the federal government stepping in to keep failing institutions afloat by examining the rise of the new Deal and collapse of the auto industry during the period 1931 to 1933.

THE GREAT DEPRESSION AND THE AUTO INDUSTRY

I am a bit pressed for time this morning but will provide a more detailed posting this evening. As a teaser I have been working my way through the most fascinating book, Breaking The Banks In Motor City - The Auto Industry, the 1933 Detroit Banking Crisis and The Start Of The New Deal by Darwyn Lumley.

This well researched book has greatly expanded my understanding of the mechanics behind the Great Depression, the demise of the American auto industry during the closing decades of the 20TH century, and changed my perspective about the domestic policies of the FDR administration. It has also added new depth to my understanding of how the interference of the federal government and the federal reserve fueled the economic collapse of the early 1930s.

I will discuss these topics with a detailed post this evening.

CASH FOR CLUNKERS PART TWO

I have not been able to get this image out of my head. To destroy a vehicle like this just seems so very wrong, so immoral.

Then there are the financial implications of this program. Now Edmunds has added credibility to these concerns. http://www.edmunds.com/help/about/press/153566/article.html

I have reservations about speaking against this program. After all it is never a good idea to combine kitchen and bathroom activities in one location and I derive my primary income from auto sales (the parent company for my employer is a Chrysler dealer) and my secondary income from automotive history as an author and free lance journalist.
Still, the historian in me senses this is a pivotal monument in the history of the American auto industry and the nation. Initially it was the impending demise of GM that led to my agreement to provide the Kingman Daily Miner with a monthly series of special features that will chronicle the history of the demise of the American auto industry. Now I have a new chapter to evaluate.

http://kingmandailyminer.com/main.asp?Search=1&ArticleID=32609&SectionID=1&SubSectionID=1&S=1

For those interested in how we arrived at this crossroads I suggest reading my features published in the Miner's on line edition the 15Th of each month. I also suggest an excellent book, Breaking The Banks In The Motor City - the auto industry, the 1933 Detroit banking crisis, and the start of the New Deal, that provides a window into the origins of the auto industries demise.

This book is written by Darwyn Lumley, president of the Society of Automotive Historians. It is available through Amazon.com or the publisher, McFarland Publishing at 800-253-2187 or www.mcfarlandpub.com

ROUTE 66 REMINDERS

The next installment in the Chillin' on Beale Street chronicles takes place on the evening of August 15. Entry of vehicles is free as the goal is to simply bring the community together for an evening of fun, music, games, a farmers market, and cars.

So, bring out your bicycle, Escalade, low rider, classic, Harley Davidson, hot rod, pick up truck or 4x4 and have some fun. If you would like more information contact the Route 66 Association of Kingman - kingmanroute66association@gmail.com

This is also the contact if you have wish to share a photo or a brief note about your Route 66 experience in Kingman. These will be used to round out the forthcoming, interactive association website. Join us as we write a new and exciting chapter in Route 66 history!

Last but not least mark your calendar as the date for the Kingman Street Drags is fast approaching! This year the event has been expanded to include a massive block party under the starry desert sky. http://www.kingmanstreetdrags.com/

CASH FOR CLUNKERS

As my office shares facilities with the local Chrysler dealer I have had a front row seat to watch the "Cash for Clunker" program unfold. In all honesty I am having trouble seeing an up side to this.

These photos are of the most recent vehicles taken in through the "Cash for Clunker" program. When I spoke with the owner on Friday evening they were working on a deal that would add a beautiful 1989 Jeep Cherokee to the collection.

At this juncture I should note that these vehicles seem to run as well as they look. I should also add that most of the trades are free of encumbrances.

So, can someone help me understand this? Am I missing something?

How does the use of tax monies to move people from being debt free to indebtedness benefit the long term economic direction of the nation?

How will removing a large pool of vehicles from the market that could be sold for $3,000 to $4,500 benefit the folks on a tight budget in need of transportation?

Which creates more pollution, driving a well maintained older vehicle or crushing it to build another vehicle?

In the long term, six months or more, how will this benefit the dealerships?

How do we justify the irresponsibility and waste involved with destroying perfectly good engines?
Any thoughts or ideas?