The Roaring 20s and Causes of the Great Depression Economy, Politics, and Society, 1920s-1930s Economy in the 1920s Growth (“Roaring 20s”), but with Major Systemic Problems 1920s, a decade of economic growth – GNP increased 40% Post-WWI recession, but Fed. Reserve cut interest rates, ended recession, showed Fed. power Pent up consumer demand after war Mass consumption: durable goods (appliances, autos, home goods) New technologies Buying on credit, opened up consumption to more people New Technologies and Forms of Consumption Auto Age: From 1.3 million in 1923 to 4 mill. in 1929; economic linkages (effects) forwards and backwards Electrification: first businesses and amusements, then 1/3 to 2/3 of homes Consumer credit: from 2.6 to 7.1 billion during 1920s Advertising: associate product with way of life, sex, use of psychology In 1920s, business held in high-esteem, Bruce Barton’s 1925 book, The Man Nobody Knows: Jesus was greatest salesman in history Calvin Coolidge: “the business of America is business”; factory is a temple, workers worship there Welfare Capitalism 1920s capitalist model of dealing with Labor Question: Capitalists provide amenities - cleaner, safer workplaces, breakrooms, bathrooms, medical care, Ford’s Sociological Department – check to make sure that workers and families are living up to certain standards Provide for workers’ leisure – amusement parks, picnics, better wages so they can enjoy time off Provide some benefits to make workers happier, less prone to labor unrest and unions Company unions instead of labor movement: answer to call for economic democracy – give workers sense of power in workplace Idea that employers have power to make best decisions for workers’ happiness – reward workers so they are happier or can buy more products Fordism: lower cost of consumer goods = workers could purchase the products they produced Ford’s $5 day Radicals and socialists unsure about impact – seemed good to many Problems with Welfare Capitalism Question: Could workers put their welfare in employers’ hands? Did employers have workers’ interests at heart? What happens when hard times hit? Ford examples: Cut workforce, wages when hard times hit Used Sociological Dept. to monitor/control workers outside of workplace Was more interested in selling cars, making profit, than problems of his workers Used violence and intimidation against workers who wanted to unionize Causes of Great Depression/ Weaknesses of 1920s Economy Overarching problem: overproduction and underconsumption Weak sectors of economy: farming = overexpansion, falling prices, debt, impacted wider economy Other sick sectors: rail, coal, textiles, ships, lumber Buying on credit Stock market speculation euphoria/mania (buying shares on margin; paper economy, not real) Causes of Great Depression/ Weaknesses of 1920s U.S. Economy (cont.) Industrialization tied up lots of capital, fixed costs – U.S. and Germany hit hardest b/c most industrial Wide disparity of wealth: 0.5% owned 1/3 of wealth Wealthy invested in industry (machines), increased productivity = overproduction Overproduction when poor couldn’t buy goods Bad monetary policy Bank failures – not only bad banks failed – over 9,000 between 1930 and 1933 Causes of Great Depression/ Weaknesses of 1920s U.S. Economy (cont.) Smoot-Hawley tariff (tax) on imports, created trade war with foreign countries Cutbacks in lending to foreign countries Hoover made France and G.B. pay back loans from WWI Harsh reparations against Germany for WWI All resulted in loss of export market just when domestic consumption also dropped Poor economic knowledge Hoover’s inaction and bad actions Responses to Great Depression? Alternatives? Charles Sheeler vs. The Grapes of Wrath Compare the imagery, messages, and historical meaning of Charles Sheeler’s work and the film The Grapes of Wrath. How are they different? What kind of shifts in political, social, and economic ideas do they represent?