The Great Depression

Chapter 25

I. The Coming of the Great Depression

The Great Crash Between May 1928 and September

of 1929 the average price of stocks increased over 40 percent

trading grew from 2 or 3 million shares a day to 5 million… as high as 10 or 12 million

brokerage firms encourage stock mania by offering easy credit to those buying stocks

October 21 and October 23 alarming declines in stock prices

both had recoveries J.P. Morgan and other big bankers

bought up a great deal of stock to restore public confidence

The Great Crash Continued

October 29, 1929: “Black Tuesday” all efforts to save the market fail sixteen million shares of stock traded (sold) industrial index dropped 43 points stocks in many companies became worthless

In the months that followed, the market would continue to decline

Market would be depressed for the next four years and would not fully recover for over a decade

Not the only cause of the Great Depression

Causes of the Depression

Most historically attributes of the Great Depression is that it was so severe and lasted so long… question then remains, why was it such a bad one? Lack of diversification in the American economy

prosperity had depended on only a few basic industries, most significantly the construction of automobiles

when these industries began to decline, newer industries (like plastics, chemicals, petroleum) had not developed enough strength to compensate for bigger industries’ decline

Causes of the Depression Continued

Maldistribution of purchasing power and the weakness in consumer demand…

as industrial and agricultural production increased, the proportion of profits going to farmers, workers and other potential consumers was too small to create and adequate market for the goods the economy was producing this lead to demand not being able to keep up with supply aka a surplus!

in 1929, after almost a full era of economic growth… more than half the families in America still lived on the edge of or below the minimum subsistence level… too poor to buy the goods the economy was producing

During the 1920s, as long as corporations had continued to expand their capital facilities, the economy had flourished… by 1929 capital investment had created more plant space than could profitably be used, plants producing more goods than consumers could purchase… this lead to mass layoffs depleting mass purchasing power further

once fired, people have trouble finding employment elsewhere because other companies experiencing the same trend

Causes of the Depression Continued

Poor Credit Structure of the Economy farmers deeply in debt

land mortgaged (tenancy) crop prices low

small banks in trouble (especially ones tied to agriculture) , consumers defaulting on loans, many failed

big banks in trouble, too reckless investing

Causes of the Depression Continued

Decrease in International Trade European demand for goods began to decline European economy being destabilized by international

debt structure that emerged in the aftermath of World War I

International debt structure Germany and Austria Hungary as incapable of paying

off reparations as Allies were able to pay off debts American gov’t refused to forgive or reduce the

debts… instead they offer loans (like a credit card) Reparations being paid only by piling up new and

greater debts High tariff rates make it near impossible for European

countries to sell their goods in American Markets

Thus “Black Tuesday” was not the cause of the Great Depression, but rather a trigger or spark in a chain of events that exposed longstanding weaknesses in the American economy

The Progress of the Great Depression

Crisis would steadily worsen over the next three years Collapse of much of banking system would follow the stock

market crash over 9,000 American banks either went bankrupt or closed their

doors between 1930 –1933 people depositing money lost over $2.5 billion 1/3 decrease in money supply / currency

Role of the Federal Reserve: if they acted more responsibly, a severe depression might have been avoided

GNP plummets from $104 billion in 1929 to $76.4 billion in 1932 (25% decline in three years)

Gross farm income dropped from $12 billion to $5 billion in four years (60% decline)

1932 25% of the workforce unemployed, another third of the workforce experienced cuts in wages or hours or both

II. The American People in Hard Times

Unemployment and Relief Midwest and Northeast rocked with

unemployment 1932 Cleveland, Ohio: 50% 1932 Akron, Ohio: 60% 1932 Toledo, Ohio: 80%

Most Americans had been trained to believe that every individual was responsible for his or her own fate

many males took their poverty and joblessness as signs of personal failure

men wandered the streets, day after day, looking for jobs that did not exist

Unemployment and Relief Continued

Limited gov’t and private assistance… most gov’t officials felt that any welfare system would undermine the moral fiber of the country

Strange city scenery people waiting in long lines at the

Salvation Army for food hand outs men sifting through garbage cans looking

for food young men becoming nomads,

wandering the countryside on freight trains (HoBo’s = (Ho)meless and jo(B)less

Farm income down 60% between 1929 –1932

1/3 of all farmers lost their lands one of the worst droughts in history “Dust Bowl” stretching from Texas to the

Dakotas locusts “black blizzards”

*Fake Smile**Fake Smile*

African Americans and the Depression

1930 Atlanta Black Shirts organization adopts the slogan “No Jobs for Niggers Until Every White Man Has a Job!”

as bad as whites had it, blacks had it worse whites began to take jobs previously held by blacks: janitors,

street cleaners, domestic servants during the 1930s 400,000 blacks would leave the South and

journey to cities in the North Traditional patters of Segregation and disfranchisement

survived the Depression largely unchallenged NAACP began to work diligently to win a position for blacks

within the emerging labor movement Walter White encourages blacks not to work as strikebreakers Due to such efforts, over a half a million blacks would be able to

join the labor movement 20% of the membership in the Steelworkers Union

Scottsboro Boys

No crime in American history-- let alone a crime that never occurred-- produced as many trials, convictions, reversals, and retrials as did an alleged gang rape of two white girls by nine black teenagers on a Southern Railroad freight run on March 25, 1931.  Over the course of the two decades that followed, the struggle for justice of the "Scottsboro Boys," as the black teens were called, made celebrities out of anonymities, launched and ended careers, wasted lives, produced heroes, opened southern juries to blacks, exacerbated sectional strife, and divided America's political left.

By Douglas O. Linder (1999)

Mexican Americans in Depression America

1930s there were approximately 2 million Latinos in the United States (US Population in 1920 = 105 million, 1930 = 123 million, 1940 = 132 million)

Some wandered as agricultural migrants, most lived in urban areas

similar to blacks in that whites soon demanded menial jobs previously held by Latinos… unemployment quickly rose to levels higher than whites

round ups and transports across the border ½ million Mexicans left the United States for Mexico

in the first years of the Depression Limited access to hospitals, education, relief

programs

Asian Americans in Hard Times

even in California, where the largest Japanese / Chinese American populations resided… even well educated Asians had trouble moving into mainstream professions

20% of all Nisei in LA worked at fruit stands like Blacks and Hispanics… often forced out of jobs to

accommodate whites Influx of whites from the Great Plains meant general

bad news for all minorities in California Younger Japanese try to organize: Japanese American

Democratic Clubs Japanese encourages assimilation more so than other

minorities: Japanese American Citizens League Chinese who left the Chinese community rarely found

jobs above the entry level

Women and the Workplace in the Great Depression

Depression served to strengthen the widespread belief that a woman’s place was in the home: with the little work there was, both women and men believed it should go to men

From 1932 to 1937 it was illegal for more than one member of a family to hold a federal civil service job

many married women found work simply because their family needed them to

by the end of the Depression 20% more women were working than had been doing so at the beginning

Women and the Workplace in the Great Depression Cont

½ of all black working women lost their jobs in the 1930s

But, at the end of the 1930s 38% of all black women were employed compared with 24% of all white women… this is because of black women, both married and unmarried had always been more likely to work than a white women

For feminists, Depression years were a time of frustration… end of National Woman’s Party

Depression Families

middle class families accustomed to steady growth during the 1920s saw that replaced with unemployment and uncertainty

consumer patterns developed during the 1920s retreated women often returned to sewing clothes for their families preserving food engaged in home business

Average household population grows: parents living with kids, grandparents with grandkids

although divorce rate decreased (because of cost) the break up of families increased

unemployed men escaping humiliation of being unable to earn a living

marriage and birth rates declined for the first time since the early 19th century

III. The Depression and American Culture

Depression Values American social values seemed to change relatively little in

response to the Depression People remained committed to the traditional American emphasis

on the individual The economic crisis did work to undermine the traditional

“success ethic” in America many people began to look to the gov’t for assistance many blamed corporate monguls

BUT in the end, the Depression did very little to erode the success ethic

Nothing surprised foreign observers of America in the 1930s as the apparent passivity of the unemployed… many unemployed were too ashamed to show themselves in public

Dale Carnegie’s self help book How to Win Friends and Influence People was one of the best selling books of the decade.

Artists and Intellectuals in the Great Depression

focus of a collective social response to social circumstances

Photographers hired by Federal Farm Security Administration to take documentary photos

captured harsh conditions of farm families revealed savage impact of hostile environment

Writers and playwrights attempted to capture social injustice taking place

Erskine Caldwewll Tobacco Road, later became a long running Broadway play

Richard Wright, African-American novelist captured plight of urban ghetto Native Son

John Dos Passos’s U.S.A. opening attacked modern capitalism

John Steinbeck = The Grapes of Wrath, Of Mice and Men, Cannery Row, East of Eden

John Stienbeck

Radio Most popular forms of mass entertainment

were those that served as a distraction to the harsh reality taking place

Radios now a part of most homes, rural and urban

Major social event Adventure stories: Superman, Dick Tracy

and The Lone Ranger Amos ‘n Andy: demeaning picture of urban

blacks New type of comedy: elaborately timed

jokes (George Burns, Jack Benny and Gracie Allen)

Soap Operas (sponsored by soap) complicated stories about romance, intrigue and betrayal, usually without overt social or political messages

Radio Continued

Radio programs broadcast live: before audiences in theatres and studios

Band concerts broadcast from dance halls, helped jazz and swing bands achieve popularity

Some of the most dramatic moments of the 1930s were a result of radio coverage of celebrated events

the World Series major college football games the Academy Awards political conventions Hindenburg Orson Welles “The War of the Worlds”

Encouraged families and individuals to center their lives around the more around the home than they had in the past

The Movies

one would think individuals would forgo spending money on movie tickets in the middle of a Depression, but by the mid 1930s Americans were still watching movies in large numbers

Movies getting better: sound and color Will Hays continued to ensure that

movies carried no sensational or controversial images

Louis B. Mayer (MGM) vs. Jack Warner (Warner Brothers): escapist vs. reality

Director Frank Capra created “feel good” movies with “muted” political and social messages

The advent of Walt Disney Women and minorities portrayed in

stereotypical roles

The Popular Front and Left

Popular Front: coalition of “antifascist groups” the most important of which was The American Communist Party

claimed that the government was controlled by business interests Soviet Union instructs the ACP to soften up it’s criticisms of US

government (preparing for potential war with Germany) “Communism is twentieth-century Americanism” helped mobilize writers, artists and intellectuals behind a pattern of

social criticism (great majority of writers had no connection to Communist party)

The Lincoln Brigade, consisting of 3,000 volunteer soldiers goes to Spain to fight against Franco (Ernest Hemmingway, For Whom the Bell Tolls)

Social Issues successful in organizing the unemployed alone among political organizations in taking a firm stance on racial

justice helped organize black sharecroppers in the South

The Popular Front and Left

ACP was not the open, patriotic organization it tried to appear as… took it’s orders from Comintern in Russia

Socialist Party of America cited the economic crisis as a failure of capitalism… but by 1936 membership had fallen below 20,000

Antiradicalism still a powerful force: Congressional committees headed by Hamilton Fish and Martin Dies imprisoned communist organizers

BUT never in history did being part of the left seem so respectable and even conventional among workers, intellectuals and others

New Deal would embrace policies that would challenge capitalist norms

Works Projects Administration Pare Lorentz and film documentaries that celebrated New Deal

programs and offered a harsh critique of capitalist exploitation

IV. The Ordeal of Herbert Hoover The Hoover Program

When crisis first hit, Hoover’s response was to attempt to restore confidence in the economy

summoned leaders of business, labor and agriculture to the White House and urged upon them a program of voluntary cooperation for recovery

But mid 1931 economic conditions had deteriorated so much that the structure of voluntary cooperation had collapsed… and Hoover could not stop them

industrialists began cutting production

laying off workers slashing wages

Hoovervilles

The Hoover Program Continued Hoover made weak attempts to use government spending as a tool for

fighting the Depression proposed to Congress an increase in $423 million in federal works programs (then

a large sum of money) but not willing to spend enough over a long enough period of time to do any good not willing to tolerate deficits in the budget In 1932 – at the depth of the Depression – he proposed a tax increase to help the

government avoid a deficit (!) Before the crash, Hoover had begun to construct a program to assist the

troubled agricultural economy. 1929 Agricultural Marketing Act: first time a gov’t bureaucracy would be

established to help farmers maintain prices Hawley-Smoot Tariff of 1930 contained protective increases on 75 farm products

and raised tariff rates to the highest point in American history (1,000 members of the American Economics Association warn Hoover this is a bad idea… but he signs it anyway)

Neither helped farmers sufficiently Marketing Act relied on voluntary co-operation and did nothing to limit production Hawley-Smoot Tariff provoked foreign governments to enact trade restrictions of their

own in reprisal which further diminished the market for American agricultural goods (Retaliatory tariffs)

A Deepening Crisis

1930: Democrats win control of the House Many Americans feel the President is personally responsible for

crisis Shantytowns = “Hoovervilles” (mocking president, Hoover blankets,

Hoover Flags, Hoover Hotels, etc.) Progressive reformers urged Hoover to pass more policies

dedicated to social reform, but instead he used economic statistics that showed a slight gain in 1931 as evidence that his policies were working…

May 1931 largest bank in Austria collapses and panic spreads throughout Europe and into the US when

European countries pull out their gold reserves from US banks European investors pull their US investments in the market to pay off

their loans US economy reaches new lows

Hoover comes up with a sound proposal to allow countries having to pay reparations one year moratorium on payments… French and England grudgingly agreed to accept it… but it came too late

A Deepening Crisis Continued

January 1932: Reconstruction Finance Corporation (RFC)

government agency whose purpose was to provide federal loans to troubled banks, railroads, and other businesses

made funds available to local governments to support public works projects and assist in relief efforts

RFC was only permitted to lend funds to financial institutions with sufficient collateral: much of it’s money went corporations or large banks

critics called it a “breadline for big business” RFC remained healthy by refusing to make loans to the

institutions that most desperately needed them of the $300 million available to support local relief efforts, the

RFC lent out only $30 million in 1932 of the $1.5 billion public works budget, it released only 20%

Popular Protest

During the early years of the Depression, most Americans were too stunned or too confused to raise many effective protests… but by mid 1932, radical and dissident voices were becoming loud and pervasive

Farmers unrest call for a plan to help guarntee a

return on crops (similar to McNary-Haugen Bill)

Farmer’s Holiday Association: call for a general strike by farmers

ended in failure caused ripple effect all the way to

Washington: election year

Popular Protest Continued

Most celebrated protest came from American Veterans 1924 Congress had approved the payment of $1,000 bonus to all those who had served in

World War I and that the money would be distributed by 1945 by 1932 vets were demanding that the money be paid immediately Hoover refused to comply In June 2,000 vets formed the “Bonus Expeditionary Force” marched to Washington, built

crude camps around the city and promised to stay until Congress approved legislation to pay the bonus

In July Hoover ordered police to clear the marchers out of the abandoned buildings in which they had been staying

Clearing the Bonus Marchers few marchers throw rocks a police, someone opened fire, two veterans fell dead Hoover considered the incident evidence of radicalism and ordered the U.S. Army to assist

the police in clearing out the buildings General Douglas MacArthur, George Patton and Dwight D. Eisenhower use tear gas and

bayonets to clear out protesters Chase them to their tent village and burned the village down More than 100 marchers were injured and a baby died

Hoover now confirmed as aloof and out of touch with American public… great engineer who was the symbol of success in the 1920s came to represent the failure of the national govt’s ability to deal effectively with its startling reversal of fortune.

The Election of 1932

Republicans dutifully re-nominate Hoover to head of Republican Party Democrats nominate the governor of New York, Franklin Delano Roosevelt

on Democrat ticket as VP in 1920 (lost) stricken with polio less than a year after… would never walk again without the use of

crutches returned to politics, became governor of New York

Winning the election Roosevelt was able to avoid issues that had divided Democrats in years past: prohibition,

race, religion Emphasized economic grievances that most Democrats shared In a dramatic break from tradition he flew to Chicago to accept his party’s nomination “I pledge you, I pledge myself, to a new deal for the American people”

Differences in candidates Hoover stoic / Roosevelt flashy: cigarette holder, hat, smile, excellent speaking skills Depression: Hoover blamed it on Europe / Roosevelt called it a domestic problem blamed it

on Republicans Roosevelt wins in a Landslide: receives 57% of the popular vote and won every

state but five (in the electoral college FDR = 472, Hoover = 59) Democrats also take control of both houses of Congress

The Interregnum In February, just a month before the

inauguration… a new crisis developed when the American banking system began to collapse

depositors were withdrawing money one bank after another was closing it’s

doors Harding continued to try to extract a

promise from Hoover to maintain current budget system… Roosevelt continually refused (this was prior to the Twentieth Amendment)

March 4, 1993: the Day Roosevelt took office… Hoover was convinced the country was heading to ruin, Roosevelt was beaming and buoyantRoosevelt