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Q: Successful companies and industries during the Great Depression ( Answered 4 out of 5 stars,   1 Comment )
Subject: Successful companies and industries during the Great Depression
Category: Business and Money
Asked by: duckfarm-ga
List Price: $100.00
Posted: 19 Mar 2003 12:54 PST
Expires: 18 Apr 2003 13:54 PDT
Question ID: 178334
What industries fared relatively better and worse in terms of pricing
and demand during the Great Depression of 1929?  Do the industries
reflect a hierarchy of demand from essential consumables to deferrable
purchases to capital goods?  What specific companies did well in any
industry and what distinguishes those companies.
Subject: Re: Successful companies and industries during the Great Depression
Answered By: digsalot-ga on 19 Mar 2003 16:54 PST
Rated:4 out of 5 stars

To begin, not all was gloom and doom during the Great Depression.  It
was a time when those who knew what they were doing made great
economic strides and the very nature of the depression itself was an
economic boon for them.  It was a time when several companies
benefited from aggressive marketing while their rivals cut back.  A
good example of that would be Kellogg besting C.W. Post during that
time.  Consumers didn't totally stop spending during the depression,
most just looked for better deals and the companies providing those
better deals came out stronger after the depression ended.  When
spending picked up, consumer loyalty to those companies remained.

To state a generality, those companies who not only survived but did
well and grew during the Great Depression are those who continued to
act as though there were nothing wrong and that the public had money
to spend.  In other words, they advertised.  These are industries who
didn't wait for public demand for their products to rise, they created
that demand even during the most difficult of times.  Because so many
companies cut spending during that era, advertising budgets were
largely eliminated in many industries.  Not only did spending decline,
these companies actually dropped out of public sight because of short
sighted decisions made about spending money to keep a high profile. 
These advertising cutbacks caused many customers to feel abandoned and
associated the effected brands with a lack of staying power.  This not
only drove customers to more aggressive competitors but caused a
certain amoung of financial mistrust when it came to making additional
investments in the no longer visable companies.

Both anecdotal and emperical evidence support the case that
advertising was the main factor in the growth or downfall of companies
during those years.  To put it bluntly, the companies which
demonstrated the most growth and which rang up the most sales were
those which advertised heavily.  The Great Depression offers classic
examples of the power of brand advertising even during times of
economic crisis.

Proctor and Gamble - This is a company which has a philosophy of not
reducing advertising budgets during times of recession and they
certainly did not make any such reduction during the Depression.  P&G
has made progress in every one of the major recessions and that is no
accident.  When their competitors were swinging the budget axe, P&G
actually increased their spending.  While the Depression caused
problems for many, P&G came out of it unscathed.  Radio took P&G's
message into more homes than ever.

Chevrolet - During the 1920s, Fords were outselling Chevrolets by 10
to 1.  In spite of the Depression, Chevrolet continued to expand its
advertising budget and by 1931, the "Chevy 6" took the lead in its
field and remained there for the next five years.

Camel Cigarettes - in 1920 Camel was the top selling tobacco product. 
American Tobacco Company then struck back with the Lucky Strike brand
and by 1929 Lucky had overtaken Camel as the number one brand.  Two
years later in the heart of the Depression, Chesterfield also overtook
Camel.  Camel countered with a massive increase in advertising
spending and by doing so demonstrated the power of advertising during
depressed times.  By 1935, it was back on top.

Now, these examples count as anecdotal.  But in addition to these
examples, studies have demonstrated that during times of recession,
companies that maintain advertising during these periods experience
higher sales and profits during the downturns and afterward than
companies who cut their advertising budgets.

It was also the very nature of this advertising that spurred the
growth of two other industries during the Depression.  The first of
which was radio broadcasting.

Let's return to Proctor and Gamble for a while.  P&G first turned to
radio in 1923 advertising Crisco on a New York station.  Other
products such as Ivory and Lava soap were advertised on 'product
oriented' shows which were similar to todays infomercials.  But in the
heart of the depression P&G took a step which changed not only that
company but the broadcast medium forever while creating great demand
for its products.  The president of P&G at the time was Richard
Deupree.  In spite of the fact that shareholders were demanding that
he cut back on advertising, he knew that people were still buying
essential household products.  So he created radio programming that
did not focus on a product.  Because of that, we now have a cultural
attribute known as the "soap opera."

In 1933, P&G went on the air with its first "soap" - "Ma Perkins,"
sponsored by Oxydol.  P&G was so satisfied with the increase of sales,
they went on to introduce "Vic and Sadie" for Crisco, "O,Niells" for
Ivory Soap and "Forever Young" for Camay.  By the time 1939 rolled
around, P&G was sponsoring 21 radio programs and they doubled their
radio advertising budget every two years during the Depression.

Radio was one of the fastest growth industries of the depression.  P&G
virtually built daytime radio with its advertising budgets and
programming.  Two industries were thriving from the advertising budget
of one.

The print media was also a growth industry during the Depression.  To
give some reason for this, we now return to Chevrolet.  the first ads
for Chevrolet appeared in print in 1914.  In 1927, they began to
increase their print advertising budget.  As the country moved into
the Depression a couple of years later, Chevy did not let its
commitment to print advertising falter and its car ads not only kept
some publications afloat, it helped many to grow.  In as much as the
term "print media" covers many outlets, they pioneered the outdoor
advertising medium, billboards.  Chevrolet also went into radio and
sponsored such Depression Era classics as Fred Allen and Jack Benny. 
Chevy's print ads appealed to the "emotional" side of a buying
decision which was a great move in light of the economic uncertainty
of the time.

So once again, those companies which took advantage of the Depression
and came through in good form were those who kept their name in front
of the public in spite of a lack of purchasing power.

Your question asks about a hierarchy of demand from essential
consumables to deferrable purchases to capital goods.  In reality
there was no such hierarchy.  I have tried to balance the examples
given to show some spectrum across the board.  Proctor and Gamble
represents essential consumables, Chevrolet represents deferrable
purchases and Camel represents non-essential products.  So as you can
see, the so called hierarchy of necessity and want was sidestepped by
those who had the marketing gumption to ignore such distinctions.

However, capital goods information needs to reflect the entire
economic structure of the Depression and not just those companies
which were successful.  Overall, new production of capital goods less
capital goods consumed during the years 1929 - 1939 was near zero. 
The increase in the money supply during the 1920s also increased the
prices of capital goods relative to the prices of consumer goods. This
disparity set in motion a boom in real estate and stock market prices
and interest rates were driven down by the "increase in Fed money.

It must also be noted that the preceeding statement on capital goods
is only one of many competing economic theories about the Depression. 
There are some who say this compounding of assertions is wrong from
beginning to end.  But in composing an answer such as this, there
needs to be one which best meets the nature of the question and in
conjunction with the material about public visability covered above,
this is the one your researcher ties into the equation.
When money has entered the economy from whatever sources during
business fluctuations in the past, has there been a disparity between
the increases in prices of capital and consumer goods?  That alone is
a subject which would take volumes to answer.  In fact, it would take
volumes just to cover the debate without any resolution coming about.

As far as the end of your question as to what distinguished the
companies that did well during the Depression?  They were the
companies that kept their name in front of the public and created
brand name recognition even during the worst of times.
Search - Google
Terms - great depression, company growth great depression, great
depression success stories, brand name awareness great depression,
advertising history, new industry great depression, benefits of

Websites used to compose the above:

"America's Great Depression - Causes and Cures" -

"H102 Lecture 19: The Great Depression and the New Deal" - -
University of Wisconsin, Stanley K. Schultz, Professor of History

"Sliding into the Great Depression" - - University of
California at Berkeley

"Great Myths of the Great Depression" - - Universidad Autónoma de
Centro América

"Economic Surpluses" -
- San Jose State University

"Accounting for the Great Depression" -
http:/ - a PDF file,
Acrobat Reader needed.

"Four Myths About America's Great Depression" -
- From Liberty Haven

"EAP Vocabulary - Exercise" - - some interesting
information about capital goods and business cycles here but mostly in
a modified glossary format

"Creating Mass Culture" - -
University of Virginia

"The Visitor in Your Living Room: Radio Advertising in the 1930s" - -
University of Virginia

If I may clarify anything before you rate the answer, please don't
hesitate to ask.  I'm sure this is a subject where some clarification
will be necessary.



Request for Answer Clarification by duckfarm-ga on 20 Mar 2003 05:57 PST
today we have extensive data on household spending, and can track
spending by various demographic groups over time through that data.  A
review of that data shows that those with incomes well above
subsistence continue to spend as they have, those at the bottom don't
change much, just decline on the margin, and those in the middle tend
to defer.  Is there a study or similar data on actual consumer

Your capital spending comments are very helpful. 

On the auto example, of course, at that time, autos were a high growth
industry with continued penetration driving demand.  Likewise various
electric appliances, etc... for the GE's and Westinghouses of the
world.  Are there deferrables that were well established that provide
data where there is no underlying demand?

Your point on advertising rings true, of course, to advertise, one had
to have liquidity and a strong balance sheet going into the
depression.  So taking the offensive (be it brands or more mundane
commodities) makes a lot of sense, but was liquidity a key issue.  My
recollection (I grew up in Detroit) about Ford was that they were not
well managed from a liquidity standpoint, and even if they wanted to
attack better managed GM/Chevrolet, did they have the dry powder. 
Anyway, my hypothesis would be that companies that were liquid
supplying essential or growth goods did fine, those less liquid or
supplying capital goods or deferrables less so.  with Smoot Hawley,
one would also think those not dependent on imports or exports also
did better.

Last point of clarification, local, state and federal government
increased its share of GDP materially during the Great Depression, did
companies supplying this demand also prosper?

Clarification of Answer by digsalot-ga on 20 Mar 2003 11:30 PST
Thank you for giving me some additional pointers as to where you want
to go with this.  I shall address those and post them tonight.  I'm
giving you this short response now so that it removes the request for
clarification "flag" from the computer.

Back soon

Clarification of Answer by digsalot-ga on 21 Mar 2003 07:08 PST
Hello again

It might be best to start this section with some information about the
demographics of the US population in the 1930s and see if we can
narrow things from there.

While the Depression led to hard times for many, high unemployment was
only one symptom.  There was also a set of "invisible scars" which
were fear and shame.  The fear was financial and the shame was caused
by the perceived fall in status, not only within American society but
globally as well.  While we are all familiar with photos of soup
kitchens and apple sellers on the street corners, the "fears" were
much more wide spread than actual deprivation.  However, those who
experienced the deprivations are not likely to look at it in that way.

Of course the Depression did effect American demographics in major
ways.  Whether these effects were driven by the inability to make
purchases or the perception of future ability to obtain economic
stability is unclear except on a case by case basis.  There was a drop
in both the marriage and birth rates and of course a corresponding
drop in income for the industries which catered to those events.  The
Depression also delayed the career starts of millions of young people.

For those in society which were already at the bottom of the economic
ladder, the Depression meant even worse times.  But of course not all
of those worse times were Depression related.  Farmers on the Great
Plains were driven off the land by a combination of factors not the
least of which was a drought which led to an indebtedness not directly
related to the Stock Market crash.  The drought was also aided by
farming practices which did little to preserve topsoils and prevent
erosion.  The "Dust Bowl" was as much man made as weather related.  We
have a situation of 'factor' layering on 'factor' when dealing with
this time in American history.  This is a situation where an industry,
agriculture, came out of the Depression stronger than before it
started.  It was also a situation where the survival and success of
that industry was caused not so much by what was done to overcome an
economic loss but by a forced change in practice, technique and a jump
start during the New Deal and later World War II.

Mexican-Americans in California and the Southwest fled or were
deported due to growing discrimination.  For American Blacks, the
Depression "was for the white folks" because the economic plight of
Black America did not significantly change.

In combination with the demographics of population we need to combine
the demographics of money which will lead in to some of the answers
you are looking for regarding industrial liquidity and whether or not
it was a key issue.

The Depression was also a time of deflation.  During the course of the
Depression years we need to consider price decline.  The average rate
of price decline between 1929 and 1933 was 6.4%.  Suppose the interest
rate before the advent of deflation was 3%.  If prices fell 6.4% per
year and if the decline had been expected, then the average real
interest between 1929 and 1933 must have risen to at least 6.4%.  This
is the annual real return on currency between 1929 and 1933.  One
dollar in 1933 purchased 23.5% more goods (or 6.4% more a year) than
it did in 1929.  The advertising campaigns mentioned above began not
right at the time of the crash in '29 but a couple or three years
later.  Companies with even marginal liquidity at the beginning of the
depression, if they survived the initial shock, had a purchasing power
between 20 and 25% greater just a few years later even if actual
liquid reserves grew not at all.  For these companies, it would be a
philosophical decision, as much as an economic one, to invest this
increased spending power in maintaining a high public profile.  Now it
is understood that many did not make it through the initial shock but
they are not even considered here.  This question, after all, deals
with those who were successful, not the failures.  Among this latter
classification are some who entered the Depression with a healthy
balance sheet but either out of fear or pressure from stock holders
still cut their advertising budgets and slid out of public sight.

Now I will tie this with consumer expenditures and I think you will
find that after reading those figures that the importance of
maintaining a high profile during downturns is doubly important
especially when you see the downturn in durable and semi-durable
goods.  The data on consumer spending from the Depression is based not
so much on population demographics as would become common later on,
but is an across the board analysis based on total population figures.

The Crash of 29 did cause a collapse in durable goods spending in 1930
and income uncertainty also caused a decline in non-durable goods
spending.  Income uncertainty didn't peak till the following year
after the gold standard crisis of Sept, 1931 which caused even more
decline in spending for durable and non-durable goods alike.  Here is
a general information demonstrating the change in consumer
expenditures from 1928 to through 1933.  This information is based on
1987 dollars but still gives an excellent idea of the change.

In billions - 1987 prices

- - - - - - - Perishables - - - - - - - - - Semi-durables - - - - - -
- - - Durables - - - - - - - - Services
1928              164.3                               59.9            
                         38.4                           269.6 - - - -
532.3 total
1929              168.3                               61.7            
                         40.3                           284.4 - - - -
554.8 total
1930              164.8                               56.1            
                         30.9                           269.0 - - - -
520.8 total
1931              164.4                               53.6            
                         26.4                           257.6 - - - -
501.9 total
1932              154.1                               46.9            
                         20.0                           236.0 - - - -
456.9 total
1933              151.1                               42.7            
                         20.2                           233.5 - - - -
447.6 total
The criteria used for the above figures included the following:
Perishables - Total food, alcohol and tobacco, wood, gas and coal
Semi-durables - Clothing, semi-durable house furnishings, cleaning
supplies, stationary, tires and accessories
Durables - Furniture and mattresses, kitchen appliances, china, other
durable furniture, motor vehicles and wagons
Services - Personal care, housing, domestic service, other household
operation, medical care, personal business, auto repair, gas and oil
for motor vehicles, auto installation and tolls, recreation,
education, electricity, gas, water, telephone and telex, religion and
welfare, traveling by US residents, local transport and intercity

Now I have no idea why the "market basket" used here was selected but
this information comes from a multi-page PDF format paper called
"Income Uncertainty and Consumer Spending During the Great
Depression."  It also includes the usual challenges between economics
'experts' and why or why not the figures presented may or may not be
accurate and even why certain figures should or should have not been
used.  Nothing like certainty, is there? (that was a weak attempt at
humor) - - If you want to wade through the thing
- Acrobat Reader is needed.
From University of Edinburgh, University of Western Australia and
University of Waikato

Much of the information about capital goods or deferrables you are
wanting is found there.  However, if I were to try and digest it and
paraphrase it, you would find I had used so many quotes and
paraphrased explanatory texts, that you would wind up reading the
whole thing anyway. So the best thing I can do is point you to the

As for Smoot-Hawley, this tariff act of June, 1930 raised US tariffs
to historically high levels.  The original intention behind the Act
was to provide protection to US farmers against foreign agricultural
imports.  However, it didn't stop there.  Even though the original
intent was to protect farmers, soon calls for increased protection
flooded in from the industrial sector and other special interest
groups and the Smoot-Hawley Act became the means to raise tariffs on
all sectors of the economy.  When the air cleared, Congress had agreed
to tariff rates even higher than those of the Fordney-McCumber Act of
1922.  US imports from Europe declined from the 1929 high of $1,1334
million to just $390 million in 1932.  In addition, world trade
declined 66% between 1929 and 1934.  With imports forming only 6
percent of the GNP, the 40 percent tariffs worked out to an effective
tax of only 2.4 percent per citizen. Even this is compensated for by
the fact that American businesses no longer invested in Europe, but
instead kept their money in the US.  The consensus of modern
economists (yes, believe it or not, I finally found a consensus among
them) is that the tariff made only a minor contribution to the Great
Depression in the US but a major one in Europe.  However, your
assessment that businesses which were not dependent on imports and
exports did fare better than those who did not.  Even within that
group there was a difference between the importers and exporters. 
Some importers were able to find a replacement for imported goods
within the US, however, those who had a large percentage of income
from the export market took a beating.

With the Great Depression, the movement of the federal government into
infrastructure spending in a big way took place for the first time. 
As many as one out of four Americans could not find jobs, the federal
government stepped in to become the employer of last resort. The Works
Progress Administration (WPA), an ambitious New Deal program, put
8,500,000 jobless to work, mostly on projects that required manual
labor. With Uncle Sam meeting the payroll, countless bridges,
highways, dams and parks were constructed or repaired.
The government's involvement in the GNP did contribute to the survival
of a number of industries, mostly steel and those devoted to various
construction materials, earth moving equipment and land reclamation.

However, that involvement also brought some associated risks when part
of the plan included a redistribution of wealth by means of tax code
revisions.  That risk included an attempt to overthrow the American
government.  Alarmed by Roosevelt's plan to redistribute wealth from
the rich to the poor, a group of millionaire businessmen, led by the
Du Pont and J.P. Morgan empires, planed to overthrow Roosevelt with a
military coup and install a fascist government. The businessmen tried
to recruit General Smedley Butler, promising him an army of 500,000,
unlimited financial backing and generous media spin control.  The plot
was foiled when Butler reported it to Congress.  This really has
nothing to do with your answer about what type of industry was
successful but does provide a little of what the national mood was
like during this time period and some of the problems that had to be
overcome.  It is just another of those 'factors' that are part of the
'layering' process I mentioned earlier.

Once again, however, even these companies dealing with the federal
government had to maintain high profiles.  Not so much in public
advertising but to the government itself.  They had to make their
presence known in order to be included on "bid" lists as well as
having to make investments to broaden their product line and change
marketing strategies to appeal to the federal buyers and contract
There was also a double edge to conducting business with the fed
during this time.  Some companies were prosperous due to the federal
increase in the percentage of the GNP and had changed their focus so
much to do business in that manner that when federal focus changed for
a variety of reasons, these companies simply folded as they had
already lost any exposure to the civilian market and were not able to
adjust to dealing with only the private sector.  Regardless of whether
dealing in the public market place or with the fed, it still leads
back to the same thing.  Money had to be spent to promote awareness of
products and services.  Those who didn't, shriveled on the vine.

Other ways in which the fed was involved in the GNP include the Public
Works Administration (WPA) which was designed to stimulate US
industrial recovery by pumping federal funds into large-scale
construction projects. The head of the PWA exercised extreme caution
in allocating funds, and this did not stimulate the rapid revival of
US industry that New Dealers had hoped for. The PWA spent $6 billion
enabling building contractors to employ approximately 650,000 workers
who might otherwise have been jobless. The PWA built everything from
schools and libraries to roads and highways. The agency also financed
the construction of cruisers, aircraft carriers, and destroyers for
the navy.  So even though the program was not a great success, it did
allow some construction companies, trades and shipbuilders to survive
and prosper along with the segments of the steel industry and building
materials industry catering to these programs.

Now I know this posting will lead to even more questions.  So instead
of ending it with a statement regarding asking for a clarification
request before rating the answer, I am simply going to end it with the
statement that I'm looking forward to your next clarification request.
 It is the kind of subject matter that may very well involve an
ongoing dialogue with each exchange narrowing the focus till we wind
up with exactly what you are looking for or as close as we can
possible get.



Clarification of Answer by digsalot-ga on 21 Mar 2003 07:10 PST
Well, I see the financial table I included broke up when published
here.  I will see if I can redo it in a way that will hold together. 
In the meantime, if you don't want to wait, you will find that table
about 10% of the way down the PDF document I copied it from and the
link to which is included in this text.

Clarification of Answer by digsalot-ga on 21 Mar 2003 07:29 PST
This is an attempt to post that list of figures one more time.  Does
anybody else hate computers as much as I do?

In billions - 1987 prices

- - - - - Perishables - - Semi-durables - - Durables - - Services
1928       164.3                59.9                    38.4          
269.6 - - - - 532.3 total
1929       168.3                61.7                    40.3          
284.4 - - - - 554.8 total
1930       164.8                56.1                    30.9          
269.0 - - - - 520.8 total
1931       164.4                53.6                    26.4          
257.6 - - - - 501.9 total
1932       154.1                46.9                    20.0          
236.0 - - - - 456.9 total
1933       151.1                42.7                    20.2          
233.5 - - - - 447.6 total
The criteria used for the above figures included the following:
Perishables - Total food, alcohol and tobacco, wood, gas and coal
Semi-durables - Clothing, semi-durable house furnishings, cleaning
supplies, stationary, tires and accessories
Durables - Furniture and mattresses, kitchen appliances, china, other
durable furniture, motor vehicles and wagons
Services - Personal care, housing, domestic service, other household
operation, medical care, personal business, auto repair, gas and oil
for motor vehicles, auto installation and tolls, recreation,
education, electricity, gas, water, telephone and telex, religion and
welfare, traveling by US residents, local transport and intercity
duckfarm-ga rated this answer:4 out of 5 stars
took an iteration, but very good answer.  understood a subtle question
and was able to source real data that was very helpful.  I will use
google answer again and would use this researcher again.

Subject: Re: Successful companies and industries during the Great Depression
From: cynthia-ga on 19 Mar 2003 13:49 PST
Just a quick comment to assist the researcher that takes this... Radio
and Printing companies prospered during the depression..


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