The Great Depression

1
The Great Depression

• Chapter 25

2
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

3
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

4
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

5
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

6
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

7
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 govt 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

8
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
9
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

10
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

11
Unemployment and Relief Continued
Fake Smile

• Limited govt and private assistance most govt
  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 (HoBos
  (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

12
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

13
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)

14
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

15
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

16
Women and the Workplace in the Great Depression

• Depression served to strengthen the widespread
  belief that a womans 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

17
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 Womans Party

18
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

19
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 govt 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 Carnegies self help book How to Win Friends
  and Influence People was one of the best selling
  books of the decade.

20
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 Passoss U.S.A. opening attacked modern
  capitalism
• John Steinbeck The Grapes of Wrath, Of Mice and
  Men, Cannery Row, East of Eden

John Stienbeck
21
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

22
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

23
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

24
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 its
  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

25
The Popular Front and Left

• ACP was not the open, patriotic organization it
  tried to appear as took its 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

26
IV. The Ordeal of Herbert Hoover

• The Hoover Program
• When crisis first hit, Hoovers 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
27
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
  govt 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)

28
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

29
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
  its 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

30
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)
• Farmers Holiday Association call for a general
  strike by farmers
• ended in failure
• caused ripple effect all the way to Washington
  election year

31
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 govts ability to
  deal effectively with its startling reversal of
  fortune.

32
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 partys 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

33
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 its 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

Roosevelt