The Coming of the Great Depression

• In February 1928, stock prices began a steady rise that continued, with only a few temporary lapses, for a year and a half.

• Between May 1928 and September 1929, the average price of stocks increased over 40 percent.

• The stocks of the major industrials—the stocks that are used to determine the Dow Jones Industrial Average—doubled in value in that same period

• Many people believed that the stock market crash was the beginning, and even the cause, of the Great Depression.

• But although October 1929 might have been the first visible sign of the crisis, the Depression had earlier beginnings and more important causes.

Causes of the Depression

• Economists, historians, and others have argued for decades about the causes of the Great Depression without reaching any consensus.

• What is remarkable is that it was so severe and that it lasted so long.

• The important question, therefore, is not so much why there was a depression, but why it was such a bad one.

• Most observers agree, too, that a number of different factors account for the severity of the crisis, even if there is considerable disagreement about which was the most important.

• One of those factors was a lack of diversification in the American economy in the 1920s.

• Prosperity had depended excessively on a few basic industries, notably construction and automobiles.

• In the late 1920s, those industries began to decline

• A second factor was the maldistribution of purchasing power and, as a result, a weakness in consumer demand, which was too small to create an adequate market for the goods the economy was producing.

• Even in 1929, after nearly a decade of economic growth, more than half the families in America lived on the edge of or below the minimum subsistence level—too poor to buy the goods the industrial economy was producing

• Another major problem was the credit structure of the economy.

• Farmers were deeply in debt—their land mortgaged, crop prices too low to allow them to pay off what they owed.

• Small banks, especially those tied to the agricultural economy, were in constant trouble in the 1920s as their customers defaulted on loans; many of these small banks failed.

• Large banks were in trouble, too.

• Although most American bankers were very conservative, some of the nation’s biggest banks were investing recklessly in the stock market or making unwise loans.

• When the stock market crashed, many of these banks suffered losses greater than they could absorb.

• A fourth factor contributing to the coming of the Depression was America’s position in international trade.

• Late in the 1920s, European demand for American goods began to decline.

• That was partly because of high American tariffs, partly because European industry and agriculture were becoming more productive, and partly because some European nations (most notably Germany, under the Weimar Republic) were having financial difficulties and could not afford to buy goods from overseas.

• The U.S. government refused to forgive or reduce the debts. Instead, American banks began making large loans to European governments, with which they paid off their earlier loans.

• Thus debts (and reparations) were being paid only by piling up new and greater debts.

• In the late 1920s, particularly after the American economy began to weaken in 1929, the European nations found it much more difficult to borrow money from the United States.

• At the same time, high American protective tariffs were making it difficult for them to sell their goods in American markets.

• Without any source of foreign exchange with which to repay their loans, they began to default.

Progress of the Depression

• The stock market crash of 1929 did not so much cause the Depression, then, as help trigger a chain of events that exposed long-standing weaknesses in the American economy.

• During the next three years, the crisis steadily worsened.

• A collapse of much of the banking system followed the stock market crash.

• More than 9,000 American banks either went bankrupt or closed their doors to avoid bankruptcy between 1930 and 1933.

• Depositors lost over $2.5 billion in deposits

• The American gross national product plummeted from more than $104 billion in 1929 to $76.4 billion in 1932—a 25 percent decline in three years.

23.1: The American People in Hard Times

Unemployment and Relief

• In the industrial Northeast and Midwest, cities were becoming paralyzed by unemployment.

• Cleveland, Ohio, in 1932 had an unemployment rate of roughly 50 percent; Akron, 60 percent; Toledo, 80 percent.

• Many industrial workers were accustomed to periods of unemployment, but no one was prepared for the scale and duration of the joblessness of the 1930s.

• Most Americans had been taught to believe that every individual was responsible for his or her own fate, that unemployment and poverty were signs of personal failure.

• Many adult men, in particular, felt deeply ashamed of their joblessness

• An increasing number of families were turning to state and local public relief systems, just to be able to eat.

• But those systems, which in the 1920s had served only a small number of indigent persons, were unequipped to handle the new demands.

• In many places, relief simply collapsed.

• Private charities attempted to supplement the public relief efforts, but the problem was far beyond their capabilities as well.

• State governments felt pressure to expand their own assistance to the unemployed; but tax revenues were declining along with everything else, and state leaders balked at placing additional strains on already tight budgets.

• Breadlines stretched for blocks outside Red Cross and Salvation Army kitchens.

• Thousands of people sifted through garbage cans

• Swarms of grasshoppers were moving from region to region, devouring what meager crops farmers were able to raise, often even devouring fence posts or clothes hanging out to dry.

• Great dust storms—called “black blizzards”—swept across the plains, blotting out the sun and suffocating livestock as well as people unfortunate or foolish enough to stay outside.

• Even with these disastrous conditions, the farm economy continued through the 1930s to produce far more food than American consumers could afford to buy.

• Farm prices fell so low that few growers made any profit on their crops.

• As a result, many farmers, like many urban unemployed, left their homes in search of work

• Throughout the nation, problems resulting from malnutrition and homelessness grew at an alarming rate.

• Hospitals pointed to a striking increase in deaths from starvation.

• On the outskirts of cities, families lived in makeshift shacks constructed of flattened tin cans, scraps of wood, abandoned crates, and other debris.

• Many homeless Americans simply kept moving—sleeping in freight cars, city parks, subways, or unused sewer ducts.

African Americans and the Depression

• As the Depression began, over half of all black Americans still lived in the South.

• Most were farmers.

• The collapse of prices for cotton and other staple crops left some with no income.

• Many left the land altogether—either by choice or forced by landlords who no longer found the sharecropping system profi table

• As the Depression deepened, whites in many southern cities began to demand that all blacks be dismissed from their jobs.

• In Atlanta in 1930, an organization calling itself the Black Shirts organized a campaign with the slogan “No Jobs for Niggers Until Every White Man Has a Job!”

• Two million African Americans were on some form of relief by 1932.

• Mexican americans is depression america

• Mexican Americans filled many of the same menial jobs in the West and elsewhere that African Americans filled in other regions.

• Some farmed small, marginal tracts.

• Some became agricultural migrants, traveling from region to region harvesting fruit, lettuce, and other crops.

• As in the South, unemployed white Anglos in the Southwest demanded jobs held by Hispanics.

• Thus Mexican unemployment rose quickly to levels far higher than those for Anglos.

• Some Mexicans were, in effect, forced to leave the country by officials who arbitrarily removed them from relief rolls or simply rounded them up and transported them across the border.

• Perhaps half a million Chicanos left the United States for Mexico in the first years of the Depression.

• Occasionally, there were signs of organized resistance by Mexican Americans themselves, most notably in California, where some formed a union of migrant farmworkers.

• But harsh repression by local growers and the public authorities allied with them prevented such organizations from having much impact.

• Like African American farmworkers, many Mexicans began as a result to migrate to cities such as Los Angeles, where they lived in a poverty comparable to that of urban blacks in the South and Northeast.

Asian Americans in Hard Times

• For Asian Americans, too, the Depression reinforced long-standing patterns of discrimination and economic marginalization.

• In California, where the largest Japanese American and Chinese American populations resided, even educated Asians had always found it difficult, if not impossible, to move into mainstream professions.

• Japanese American college graduates often found themselves working at family fruit stands

• In California, younger men and women organized Japanese American Democratic Clubs in several cities, which worked for, among other things, laws protecting racial and ethnic minorities from discrimination

• Chinese Americans fared no better.

• The overwhelming majority continued to work in Chinese-owned laundries and restaurants.

• Those who moved outside the Asian community could rarely find jobs above the entry level.

Women and the Workplace in the Great Depression

• The economic crisis served in many ways to strengthen the widespread belief that a woman’s proper place was in the home.

• Most men and many women believed that what work there was should go to men.

• Many people believed that no woman whose husband was employed should accept a job.

• But the widespread assumption that married women, at least, should not work outside the home did not stop them from doing so.

• Both single and married women worked in the 1930s, despite public condemnation of the practice, because they or their families needed the money.

• In fact, the largest new group of female workers consisted of wives and mothers.

• By the end of the Depression, 20 percent more women were working than had been doing so at the beginning.

• Black women suffered massive unemployment because of a great reduction of domestic service jobs.

• As many as half of all black working women lost their jobs in the 1930

Depression Families

• The economic hardships of the Depression years placed great strains on American families, many of whom had become accustomed in the 1920s to a steadily rising standard of living but now found themselves plunged suddenly into uncertainty.

• Women often returned to sewing clothes for themselves and their families and to preserving their own food rather than buying such products in stores.

• Others engaged in home businesses— taking in laundry, selling baked goods, accepting boarders.

• Many households expanded to include distant relatives.

• Parents often moved in with their children and grandparents with their grandchildren, or vice versa.

• But the Depression also eroded the strength of many family units.

• There was a decline in the divorce rate, but largely because divorce was now too expensive for some

23.2: The Depression and American Culture

Depression Values

• American social values seemed to change relatively little in response to the Depression.

• Instead, many people responded to hard times by redoubling their commitment to familiar ideas and goals

• In some respects, the economic crisis worked to undermine the traditional “success ethic” in America.

• Many people began to look to government for assistance; many blamed corporate moguls, international bankers, “economic royalists,” and others for their distress.

• Yet the Depression did not, in the end, seriously erode the success ethic.

• Some victims of the Depression expressed anger and struck out at the economic system

• Artist and intellectuals in the great depression

• Just as many progressives had become alarmed when, early in the twentieth century, they “discovered” the existence of widespread poverty in the cities, so many Americans were shocked during the 1930s at their discovery of debilitating rural poverty

Radio

• Almost every American family had a radio in the 1930s.

• In cities and towns, radio consoles were now as familiar a part of the furnishing of parlors and kitchens as tables and chairs.

• Even in remote rural areas without access to electricity, many families purchased radios and hooked them up to car batteries when they wished to listen.

• Unlike in later times, radio in the 1930s was often a community experience.

• Young people would place radios on their front porches and invite friends over to sit, talk, or dance.

• Soap operas, also later to become staples of television programming, were enormously popular on radio in the 1930s, especially with women who were alone in the house during the day

• Radio provided Americans with their first direct access to important public events, and radio news and sports divisions grew rapidly to meet the demand

• Radio was important for the way it drew the nation together by creating the possibility of shared experiences and common access to culture and information.

• It was also significant for the way it helped reshape the social life of the nation, for the way it encouraged many families and individuals to center their lives more around the home than they had in the past.

Movies in the New Era

• Moviegoing would seem particularly vulnerable to hard times.

• Families struggling to pay the rent or buy food could easily decide to forgo an evening at the movies.

• More often, however, the commercial films of the 1930s were deliberately and explicitly escapist

• The 1930s saw the beginning of Walt Disney’s long reign as the champion of animation and children’s entertainment.

• After producing cartoon shorts for theaters in the late 1920s—many of them starring the newly created character of Mickey Mouse

Popular Literature and Journalism

• Much literature and journalism in the 1930s dealt directly or indirectly with the tremendous disillusionment, and the increasing radicalism, of the era.

• The most popular books and magazines of the time were as escapist and romantic as the most popular radio shows and movies.

• Other Depression writing, however, was frankly and openly challenging to the dominant values of American popular culture.

• In the first years of the Depression, some of the most significant literature offered corrosive portraits of the harshness and emptiness of American life

The Popular Front and the Left

• For some intellectuals, the Popular Front offered an escape from the lonely and difficult stance of detachment and alienation they had embraced in the 1920s.

• The Spanish Civil War was important to many American intellectuals, especially those on the left.

• The American Communist Party was not, however, the open, patriotic organization it tried to appear.

• It was always under the close and rigid supervision of the Soviet Union.

• Its leaders took their orders from the Comintern in Moscow.

• The Socialist Party of America, under the leadership of Norman Thomas, also cited the economic crisis as evidence of the failure of capitalism and sought vigorously to win public support for its own political program.

23.3: The Unhappy Presidency of Herbert Hoover

The Hoover Program

• Hoover’s first response to the Depression was to attempt to restore public confidence in the economy

• Hoover also attempted to use government spending as a tool for fighting the Depression

• Even before the stock market crash, Hoover had begun to construct a program to assist the already troubled agricultural economy.

• In April 1929, he proposed the Agricultural Marketing Act, which established the first major government program to help farmers maintain prices.

• A federally sponsored Farm Board would make loans to national marketing cooperatives or establish corporations to buy surpluses and thus raise prices.

• At the same time, Hoover attempted to protect American farmers from international competition by raising agricultural tariffs.

• Many Americans held the president personally to blame for the crisis and began calling the shantytowns that unemployed people established on the outskirts of cities “Hoovervilles.”

• The international financial panic of the spring of 1931 destroyed the illusion that the economic crisis was coming to an end.

• Throughout the 1920s, European nations had depended on loans from American banks to allow them to make payments on their debts.

• After 1929, when they could no longer get such loans, the financial fabric of several European nations began to unravel.

• In May 1931, one of the largest banks in Austria collapsed.

• Over the next several months, panic gripped the financial institutions of neighboring countries.

• The American economy rapidly declined to new lows

• Nevertheless, the new agency failed to deal directly or forcefully enough with the real problems of the economy to produce any significant recovery.

Popular Protest

• For the first several years of the Depression, most Americans were either too stunned or too confused to raise any effective protest.

• By the middle of 1932, however, dissident voices began to be heard.

• In the summer of 1932, a group of unhappy farm owners gathered in Des Moines, Iowa, to establish a new organization: the Farmers’ Holiday Association, which endorsed the withholding of farm products from the market—in effect a farmers’ strike

• A more celebrated protest movement emerged from American veterans.

• Their continued presence in Washington disturbed President Hoover

• The incident served as perhaps the final blow to Hoover’s already-battered political standing.

• Hoover’s own reserved personality reinforced the public image of him as aloof and unsympathetic to distressed people

Election of 1932

• As the 1932 presidential election approached, few people doubted the outcome.

• The Republican Party dutifully renominated Herbert Hoover for a second term of office, but the gloomy atmosphere of the convention made it clear that few delegates believed he could win.

• The Democrats, in the meantime, gathered jubilantly in Chicago to nominate the governor of New York, Franklin Delano Roosevelt.

• Roosevelt had been a well-known figure in the party for many years already.

• A Hudson Valley aristocrat, a distant cousin of Theodore Roosevelt

• Roosevelt worked no miracles in New York, but he did initiate enough positive programs of government assistance to be able to present himself as a more energetic and imaginative leader than Hoover.

• In national politics, he avoided such divisive cultural issues as religion and prohibition and emphasized the economic grievances that most Democrats shared

• In November, to the surprise of no one, Roosevelt won by a landslide.

The Interregnum

• The period between the election and the inauguration (which in the early 1930s lasted more than four months) was a season of growing economic crisis.

• Presidents-elect traditionally do not involve themselves directly in government.

• But in a series of brittle exchanges with Roosevelt in the months following the election, Hoover tried to exact from the president-elect a pledge to maintain policies of economic orthodoxy.