A chilling excerpt from The Great Depression: A Diary.

80 years ago this week, the United States experienced the worst meltdown of the stock market in the nation's history. As the effects of the crash rippled through the broader economy, banks began shutting their doors in record numbers.

Benjamin Roth, a lawyer in Youngstown, Ohio, recorded the effects as the banks closed in his town. His diary, previously excerpted on The Big Money, is now available as a book—The Great Depression: A Diary.

October 8, 1931. Everybody is excited about Pres. Hoover’s plan to end the depression, and stocks go up as high as 10 and 15 points. Under this plan, a huge national banking corporation is to be formed backed by government money, which will discount frozen mortgages and other illiquid assets of the banks in order to give them cash to pay depositors. It will be something like the Federal Reserve Bank, except that it can discount mortgages and other paper not now eligible. The plan also contemplates making the Federal Reserve more flexible so that in time of depression it can widen its discount basis.

October 10, 1931. When I visited my safety box in the vault of the Dollar Bank today, Mr. Owen told me that “in the last two days—since President Hoover announced his plan to help the banks—has been the quietest we have had for several months. Before that we had a number of new applicants for safety boxes every day but since then we have had none.” He felt that Hoover’s announced [sic] had strengthened faith in the banks and had put a stop to hoarding.

Again and again I am forced to the conclusion that in prosperous times a man must be cautious and preserve his capital and be careful not to over-expand his business or to go to [sic] deeply in debt relying on a continuation of good business to pay the debt. In time of depression, a man can be brave and if the depression is nearing an end he can invest his money or expand his business or open a new business with confidence that he is facing 5 or 10 years of prosperity. He can feel sure that the road ahead will be up—not down. Many great prosperous businesses were founded on the ruins of depression. This may be why so many Federal St. merchants are now beginning to put in a new store front, etc.

A great many losses and failures in business and in investment is [sic] due to the reversal of this policy. At the height of prosperity, they rush in to buy stocks or real estate or businesses at boom prices and assume enormous indebtedness which can be liquidated only if the boom spiral mounts higher and higher. Then comes an abrupt end to prosperity—a crash—and down go these businesses and investments purchased at top prices. If the purchase was made mostly with borrowed capital as so often happens—then you can write finis to the chapter.

October 12, 1931. Bank failures continue in spite of President Hoover’s plan. Yesterday saw the closing of the National Bank of Uniontown—one of the largest in western Pennsylvania.

The Strouss-Hirshberg Company employees some time ago received a 25 percent cut in wages. Yesterday, the employees on the second floor were informed they could work only on alternate days. At the Truscon Steel employees also received a 25 percent cut some time ago and now they can work only five days a week. The stock market has been going up for several days now since the Hoover announcement.

October 13, 1931. The good effect of President Hoover’s plan is wearing off rapidly. Last night’s paper publishes the quarterly reports of the local banks. All were in pretty frozen shape (about 20 percent liquid) except the Commercial Bank which is about 65 percent liquid. Long lines of people can be seen this morning quietly withdrawing deposits and bank officials seem more worried than ever. More people renting safety deposit boxes or taking their money to the post office to open a U.S. Postal savings account. 

October 14, 1931. Last night’s paper reports the closing of eight banks in West Virginia and Philadelphia. Also that the 14 banks in Atlantic City have been combined into four banks. Also that the government bank aid plan is not going so good because the stronger banks do not want to guarantee the weaker. The proposed capital has been cut from $500 million to $100 million.

Stocks are on the way down again.

October 15, 1931. Great excitement in Youngstown. It finally happened here. The Dollar Savings & Trust Co, The City Trust, and the 1^st National Banks all fail to open for business this morning. This leaves only the Mahoning Bank and The Commercial open for business. Both of them are besieged by depositors seeking to withdraw their deposits. I do not see how it can last. The town is panic-stricken and the streets are crowded with people excitedly discussing the situation. I was aroused this morning at 4 a.m. by newsboys shouting Xtras. It still seems like a bad dream.

October 15, 1931 2 p.m. Banks in the small towns around Youngstown are either closing their doors or refusing to permit withdrawals except for emergency use.

Several of the wealthiest families in Youngstown had all their funds invested in local bank stocks or in the local steel mills. With these investments almost worthless and with double liability attached to the bank stocks they are wiped out. This seems to show the wisdom of a partial investment in sound bonds or government securities.

Announcement is made that the proposed Bethlehem-Sheet & Tube merger has been called off.

October 15, 1931 3 p.m. The run continues on the Mahoning and Commercial banks. Both banks are still open but trying to talk depositors out of making withdrawals or giving them part of their money. A large street car bus filled with armed guards just unloaded money for the Mahoning Bank brought from the Federal Reserve Bank at Cleveland.

I have some money and checks to deposit but do not know where to go to open a checking account. I was a depositor at the Dollar Bank, which is now closed.

October 16, 1931. The Commercial and Mahoning Banks are still open and jammed with depositors but only partial withdrawals are being permitted.

Business is being operated this morning in crazy-quilt fashion. No one will accept checks—and nobody has cash. The wholesalers, most of whom have their offices in other cities, refuse to deliver merchandise to the stores except C.O.D cash. A good many professional men are also likely broke and admit it without hesitation. When I came downtown yesterday morning, my total assets consisted of a $15 check on a Hubbard Bank and $6 in cash. I rushed to Hubbard—was the first one to enter the bank at 9 a.m. and succeeded in getting the check cashed. So far, so good—but what of tomorrow!