What did the Hamilton Watch Company face in 1938? Over-production.
The Company’s catalog showed increases in offerings, many of which never sold. Hamilton didn’t face an economic crisis alone. The US economy suffered from unwarranted optimism. As you scroll down, you’ll see an address by Franklin Roosevelt in April, 1938 that explains the crisis in the US.
Hamilton made the famous “gold watch”, you’ve heard so much about, that companies presented to retiring employees. Hamilton created this model for presentations, but held them back due to the resumption of the depression in 1937 and 1938. (Not many companies gave away gold watches at that time). |
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April 14, 1938
Excerpts from a Radio Address of the President, Broadcast from the White House
Five years ago we faced a very serious problem of economic and social recovery. For four and a half years that recovery proceeded apace. It is only in the past seven months that it has received a visible setback.
And it is only within the past two months, as we have waited patiently to see whether the forces of business itself would counteract it, that it has become apparent that government itself can no longer safely fail to take aggressive government steps to meet it.
This recession has not returned to us (to) the disasters and suffering of the beginning of 1933. Your money in the bank is safe; farmers are no longer in deep distress and have greater purchasing power; dangers of security speculation have been minimized; national income is almost 50% higher than it was in 1932; and government has an established and accepted responsibility for relief.
“…Production in many important lines of goods outran the ability of the public to purchase them, as I have said. For example, through the winter and spring of 1937 cotton factories in hundreds of cases were running on a three-shift basis, piling up cotton goods in the factory, (and) goods in the hands of middle men and retailers. For example, also, automobile manufacturers not only turned out a normal increase of finished cars, but encouraged the normal increase to run into abnormal figures, using every known method to push their sales. This meant, of course, that the steel mills of the Nation ran on a twenty-four hour basis, and the tire companies and cotton factories and glass factories and others speeded up to meet the same type of abnormally stimulated demand. Yes, the buying power of the Nation lagged behind.”
“Thus by the autumn of 1937, last autumn, the Nation again had stocks on hand which the consuming public could not buy because the purchasing power of the consuming public had not kept pace with the production.”
“During the same period … the prices of many vital products had risen faster than was warranted. (….) For example, copper — which undoubtedly can be produced at a profit in this country for from ten to twelve cents a pound — was pushed up and up to seventeen cents a pound. The price of steel products of many kinds was increased far more than was justified by the increased wages of steel workers. In the case of many commodities the price to the consumer was raised well above the inflationary boom prices of 1929. In many lines of goods and materials, prices got so high in the summer of 1937 that buyers and builders ceased to buy or to build.”
“… the economic process of getting out the raw materials, putting them through the manufacturing and finishing processes, selling them to the retailers, selling them to the consumer, and finally using them, got completely out of balance.”
“…The laying off of workers came upon us last autumn and has been continuing at such a pace ever since that all of us, Government and banking and business and workers, and those faced with destitution, recognize the need for action.”
Does that sound familiar? October 31, 2013
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