The Great Depression
Chapter 25
I. The Coming of the Great Depression
The Great Crash
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Between May 1928 and September
of 1929 the average price of stocks
increased over 40 percent
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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
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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
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October 29, 1929: “Black Tuesday”
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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
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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?
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Lack of diversification in the American economy
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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…
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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
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once fired, people have trouble finding employment elsewhere because
other companies experiencing the same trend
Causes of the Depression Continued
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Poor Credit Structure of the Economy
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farmers deeply in debt
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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
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reckless investing
Causes of the Depression Continued
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Decrease in International Trade
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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
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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
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Crisis would steadily worsen over the next three years
Collapse of much of banking system would follow the stock
market crash
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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
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Unemployment and Relief
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Midwest and Northeast rocked with
unemployment
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Most Americans had been trained
to believe that every individual was
responsible for his or her own fate
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1932 Cleveland, Ohio: 50%
1932 Akron, Ohio: 60%
1932 Toledo, Ohio: 80%
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
*Fake Smile*
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
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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
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1/3 of all farmers lost their lands
one of the worst droughts in history
“Dust Bowl” stretching from Texas to the
Dakotas
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locusts
“black blizzards”
African Americans and the
Depression
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1930 Atlanta Black Shirts organization adopts the slogan “No
Jobs for Niggers Until Every White Man Has a Job!”
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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
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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
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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
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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
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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
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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
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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
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middle class families accustomed to steady growth
during the 1920s saw that replaced with unemployment
and uncertainty
consumer patterns developed during the 1920s retreated
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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
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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
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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
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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
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focus of a collective social response to social
circumstances
Photographers hired by Federal Farm Security
Administration to take documentary photos
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Writers and playwrights attempted to capture
social injustice taking place
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John Stienbeck
captured harsh conditions of farm families
revealed savage impact of hostile environment
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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
Radio
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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
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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
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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
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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
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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
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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
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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
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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
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Hoovervilles
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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
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industrialists began cutting
production
laying off workers
slashing wages
The Hoover Program Continued
Hoover made weak attempts to use government spending as a tool for
fighting the Depression
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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.
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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
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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
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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
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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)
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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
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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
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call for a plan to help guarntee a
return on crops (similar to McNaryHaugen Bill)
Farmer’s Holiday Association: call
for a general strike by farmers
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ended in failure
caused ripple effect all the way to
Washington: election year
Popular Protest Continued
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Most celebrated protest came from American Veterans
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Clearing the Bonus Marchers
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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
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
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Republicans dutifully re-nominate Hoover to head of Republican Party
Democrats nominate the governor of New York, Franklin Delano Roosevelt
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Winning the election
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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
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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
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
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In February, just a month before the
inauguration… a new crisis developed
when the American banking system
began to collapse
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Roosevelt
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 buoyant