Crisis Causes Creativity: Bartering, an Inventive Solution During the Great Depression

People are often at their most creative when facing urgent problems. The Great Depression was a nationwide financial collapse, and individuals, seeing that government programs were incapable of offering much help, found their own solutions.

If the monetary system was failing, people reasoned, then they would find a way to complete transactions outside of the system. The government, in the form of the federal reserve system, lurked inside any cash transaction. But bartering would sidestep the government entirely, as historian Amity Shlaes writes:

One late summer day in 1931 in Salt Lake City, the money ran out. Not just the money in the banks, and not just the money in the town coffers - the money that citizens had to spend. Locals reached into their pockets and, finding nothing, began to trade work and objects. Barbers traded shaves and haircuts for onions and Idaho potatoes. From there, the trading spread to other products. Life in Utah had always been a desert when it came to water. Now it was a desert when it came to money, as well. People in Utah knew how to survive in a desert. Maybe they could find a way to manage in the money desert as well.

The nation’s economy, under the influence of various programs designed to improve it, would deteriorate further, conditions in 1937 being worse than in 1931. But ordinary citizens invented ways to avoid government influence and maintain some element of productive economic activity.

Government efforts, however well-intentioned, generated the opposite of the desired effects: President Roosevelt’s ‘New Deal’ made the misery of the Great Depression worse.

Bartering, and in some cases even ‘black market’ activity, provided the necessities of life - food, clothing, housing, medical care - despite government strategies.

The Barbary Pirates: The U.S. Navy Matures in the Face of Terrorism in the Mediterranean

The United States became an independent nation in 1776, and the war to defend that independence against British attacks ended the early 1780s. A young nation, the United States had little money and little military power. Whatever money and power it did have, it had spent defending against the British.

Other nations could easily see the American weakness. Weakness is provocative: soon pirates focused their attention on American seagoing vessels. These particular pirates were from a collection of Muslim nations known as the Barbary States. The governments of those nations didn’t do anything to stop piracy, and sometimes even encouraged it.

The pirates wanted money: the would stop an American ship, steal the cargo, and take the sailors as captives. The pirates would sell the cargo and keep the money. They also sold the sailors into slavery. They would also keep the American ship and use it to attack other cargo boats.

Any sailor who resisted would be killed.

England and France had strong navies, and could defend their commercial shipping vessels better. Occasionally, the pirates attacked English and French ships, but rarely. The Americans were a much easier target, because the United States had a new and very small navy.

The Islamic pirates had been attacking unarmed American ships as early as 1784 or 1785, but frequency of the attacks increased after 1793.

The word ‘corsair’ refers to pirates or their ships.

The French and British had been policing the pirates, but when those two nations got into a war with each other, they stopped watching the pirates, who began to attack the Americans even more frequently. As historians Allan Millett and Peter Maslowski write,

The Barbary States - Algiers, Morocco, Tunis, and Tripoli - traditionally engaged in piracy, but the European powers bottled up their activities inside the Mediterranean Sea. After 1793, with the Europeans preoccupied, corsairs from Algiers, the most powerful of the petty North African nations, entered the Atlantic and preyed upon American shipping.

The Islamic nations would sometimes demand tribute. The word ‘tribute’ refers to a payment from a weaker nation to a more powerful nation. The United States gave thousands of dollars to the Barbary States; in return, the Barbary States promised to stop attacking American ships. But the promise was broken immediately.

This cycle of paying tribute to get promises, and then seeing the promises get broken, happened several times. Sometimes the promises made by the Barbary States were documented in treaties which they signed, but they still broke their promises.

U.S. President Thomas Jefferson decided that it would be dangerous if other nations considered the United States to be weak. Congress voted to start building armed ships to strengthen the U.S. Navy. While those ships were being built, the Barbary States increased their aggressiveness, as historian Russell Weigley writes:

The Barbary States of the North African coast increased their piratical attacks upon American commerce and demands for American tribute, because the European wars made the United States the most conspicuous neutral shipping nation.

Meanwhile, the Muslim pirates also began attacking Swedish ships. Sweden and the United States worked together to begin to defend their merchant boats against attacks.

As the U.S. Navy increased the number of ships it had, the Barbary States began to realize that they could not continue attacking American ships, stealing American cargo, and enslaving American sailors. Although the conflict never turned into a full-scale war, there was fighting between the U.S. Navy and the Islamic pirates.

The Battle of Tripoli, in 1804, became famous in a song, and was a major turning point in history.

By 1805, the Barbary States, realized that they had to stop harassing Americans. They signed another treaty. But by 1807, they started again.

By 1815, the Barbary pirates were enslaving as many sailors as ever. The United States, this time teaming up with the British, had by this time an even stronger navy. The Barbary States, including Algeria, finally surrendered permanently, and after 1815 there was little piracy in the Mediterranean.