Ch. 25- The Great Depression

“Black Tuesday”
-Initially, stock market boom; autumn of 1929, began to fall apart
-On Oct. 29 (Black Tuesday): Stock Market Crash
-16 million shares of stock were traded, industrial index dropped 43 pts, stocks in many companies became virtually worthless
-Market continued to decline

Causes of the Depression
1. Lack of Diversification
2. Maldistribution of Wealth
3. Credit Structure of the Economy
4. Declining Exports
5. Unstable Internat’l Debt Structure

Lack of Diversification
-Prosperity depended a lot of a few basic industries (construction & automobiles)
-In the late 1920s, those industries began to decline
-Newer industries were emerging (petroleum, chemicals, plastics, etc.) but were not developed enough to compensate for the decline in other sectors

Maldistribution of Wealth
-Maldistribution of purchasing power & weakness in consumer demand
-Industrial/agricultural production increased, proportion of profits going to farmers/workers was too small
-Demand was not keeping up w/ the supply
-Many families were too poor to buy the goods the industrial economy was producing
-Industries experiencing declining demand began laying off workers, depleting mass purchasing power further

Credit Structure of the Economy
-Farmers were deeply in debt (land mortgages, crop prices too low to allow them to pay off debts)
-Small banks were in constant trouble as their customers failed to pay back loans
-Some of the nation’s biggest banks were investing recklessly in the stock market/making unwise loans

Declining Exports
-Late 1920s, European demand for American goods began to decline
-Euro. industry & agriculture were becoming more productive
-Some Euro. nations (Ger. under Weimar Republic) were having financial difficulties
-Euro. economy was being destabilized by the internat’l debt that had emerged in the aftermath of WWI

Unstable Internat’l Debt Structure
-Allied nations owed large sums of money to American banks & were unable to pay them off
-US gov. refused to forgive/refuse the debts; US banks made large loans to Euro. govs., w/ which they paid off their earlier loans
-High American protective tariffs were making it difficult for foreign nations to sell goods in American markets

Banking Collapse
-Over 9000 banks either went bankrupt or shut down to avoid bankruptcy
-As a result, nation’s money supply greatly decreased
-Decline in purchasing power, thus deflation
-Reduced prices, production cut backs, lay offs

Belief in Personal Responsibility
-Most Americans believed that every individual was responsible for his/her own fate
-Unemployment & poverty were signs of personal failure
-Many adult men felt ashamed of their joblessness

Extensive Poverty
-Families were turning to state/local public relief systems
-Private charities attempted to supplement the public relief efforts, but the problem was beyond their capabilities
-State govs. felt pressure to expand their own assistance to unemployed; budgets were too tight
-Breadlines outside of Red Cross/Salvation Army
-Some people became Nomads

Dust Bowl
-Horrible droughts in great plains (South/West)
-Decline in rainfall/increase in heat
-Turned fertile farm regions into virtual deserts
-Swarms of grasshoppers devoured crops
-Great dust storms blotted out sun & suffocated livestock

-Farm prices fell too low to make any profit
-Many farmers left their homes & wandered from town to town
-Families from the Dust Bowl (aka “Okies”) traveled to Cali & other states were they found horrible conditions
-Problems of malnutrition/homelessness

African-American Suffering
-Experiences ore unemployment, homelessness, malnutrition, & disease than before/the whites
-Collapse of prices for cotton/staple crops
-Blacks were displaced from jobs (janitors, street cleaners) by whites
-Whites used intimidation/violence to drive blacks from jobs
-Many blacks left the South & went to the north (less discrimination, same conditions)

Scottsboro Case
-March 1931, 9 black teenagers were taken off a freight train in Alabama & arrested for vagrancy/disorder
-2 white women who were on the train accused them of rape
-Overwhelming evidence that the women were not raped
-Made accusations out of fear of being arrested themselves
-All-white jury in AL convicted them & sent 8 to death
-Supreme Court overturned convictions; new set of trials; Internat’l Labor Defense & NAACP provided assistance
-All eventually gained their freedom
-Result: blacks in jury, adequate legal representation

NAACP’s Changing Role
-NAACP began to work to win a position for blacks within the labor movement & helping to break down racial barriers within labor unions
-Walter White (secretary) made a personal appearance at an auto plant to implore blacks not to work as strike-breakers; blacks were able to join the labor movement

Mexican Americans: Depression/Discrimination
-Chicanos worked menial jobs in the West & were unskilled workers in urban areas
-When Depression hit many whites forced them from their jobs
-Relief to Mexicans was severely limited
-Many were rounded up to be sent back to Mexico
-Discrimination: no access to American schools, hospitals refused them admission
-Many migrated to cities such as LA

Asian Americans: Depression/Discrimination
-Japanese/Chinese Americans faced discrimination in the west, especially in Cali
-Often lost jobs to white Americans
-Some Japanese sought to form clubs to advance political agendas: Japanese American Democratic Club worked for laws against discrimination
-Japanese American Citizens League sought to make immigrants more assimilated

Women & the Workplace
-Widespread belief that a woman’s place was at home; no woman w/ a husband should accept a job; jobs go to men
-Single/married women worked in the 1930s
-Nonprofesh. jobs for women (salesclerks/stenographers) were less likely to disappear; men weren’t willing to ask for them
-Black women; unemployment; reduced domestic service jobs

Retreat from Consumerism
-Women returned to sewing clothes/preserving food
-Home business: taking in laundry, selling baked goods, etc.
-Households expanded to include more distant relatives
-Decline in marriage/divorce rates; too expensive

“Success Ethic” & Self-Blame
-Belief that individual controlled own fate and success through hard work (“success ethic”) largely survived Depression
-Many unemployed blamed themselves & remained passive b/c felt ashamed of their joblessness
-Masses responded to messages that they themselves could restore own wealth & success—best-selling How to Win Friends and Influence People by Dale Carnegie
-Message: personal initiative was the route to success; best way for people to get ahead was to fit in & make other people feel important

Art & Literature during the Depression
-During 1930s many shocked at “discovery” of rural poverty
-photography of Farm Security Administration photographers highlighted impact of hostile env’t on ppl
-Many writers highlighted social injustices (ex. John Steinbeck’s novels of Migrant workers; John Dos Passo’s USA trilogy attacked capitalism/materialism)

-Radio & movies were popular distractions that people looked towards to divert attention away from the Depression
-Almost every family had radio in the 1930s; communal activity
-Entertaining and escapist in nature (comedies/adventures, soap operas)
-Allowed access to major public events in news, sports, politics (Ex. World Series, Academy Awards, presidential inaugurations)
-“War of the Worlds” created panic among millions
-Drew nation together by creating the possibility of shared experiences & common access to culture/info, gathered family together in the home

-Most movies were censored heavily & studio system kept projects largely uncontroversial
-Some films explored social and political questions (ex. The Grapes of Wrath movie, Our Daily Bread)
-Frank Capra: comedies like Mr. Smith Goes to Washington; virtues of the common people in contrast to the selfish/corrupt values of the urban rich
-Gangster movies: dark, violent world; desperate stories related to those who were struggling
-Most remained escapist in order to keep attention of audience away from troubles.
-Walt Disney movies emerged during 1930s; animation & children’s entertainment (Snow White, Wizard of Oz & Gone With the Wind; Emergence of Mickey Mouse)

Popular Literature & Journalism
-Much lit/journ. dealt w/ the disillusionment & increasing radicalism of the time
-Escapist/romantic works still widely pop (Gone w/ the Wind)
-New popular photographic journal “Life” was known for stunning photographs of sporting/theater events, natural landscapes, etc
-Portraits of the harshness/emptiness of American life (ex. John Dos Passos’ USA trilogy attacked American materialism)

Hoover’s response to Depression
-Tried to restore public confidence in the economy
-Gathered leaders of business, labor, & agriculture to the White House & urged them to adopt a program of voluntary cooperation for recovery
-Voluntarism collapsed b/c of worsening economy
-Tried using gov spending to boost economy; increase $ in fed. pub. works programs
-Spending wasn’t enough in face of huge economic problems
-proposed a tax increase to help balance the budget

Agricultural Marketing Act
-Program to help the agricultural economy
-Established the first major gov. program to help farmers maintain prices
-Fed. sponsored Farm Board would make loans to nat’l marketing cooperatives/establish corporations to buy surpluses & raise prices
-Tried to protect farmers from internat’l competition by raising agricultural tariffs
-Didn’t help farmers significantly

Hoover’s Declining Popularity
-Hoover’s political position deteriorated considerably
-1930 congressional elections, Democrats won control of the house
-Many Americans blamed Hoover for the crisis; called the shantytowns “Hoovervilles”
-Democrats urged Hoover to support more vigorous programs of relief & public spending
-Instead, Hoover seized on a slight improvement in economic conditions early in 1931 as proof his policies were working
-Internat’l financial panic of 1931: largest bank in Austria collapses

Reconstruction Finance Corporation (RFC)
-Government agency whose purpose was to provide fed. loans to troubled banks, railroads, & other businesses
-Made funds available to local govs. to supportpublic works projects & assist relief efforts
-Operated on a large scale
-Lent funds only to financial institutions w/ sufficient collateral; much $ went to large banks & corporations
-Didn’t have enough money to make any real impact

Farmers’ Holiday Association
-In summer of 1932, group of unhappy farm owners gathered in Iowa to establish FHA
-Endorsed the withholding of farm products from the market (farmer’s strike)
-Succeeded in blockading many markets; but failed in the end

Veteran’s Bonus March
-Veterans Bonus Bill during WWI
-By 1932, veterans wanted bonus to be paid immediately; Hoover rejected their appeal, more concerned about balancing budget
-In June, Bonus Army marched into Washington & promised to stay until Congress approved legislation to pay bonus
-Congress vetoed proposal; Hoover ordered police to clear out the marchers; violence; eventually brought in army
-Final blow to Hoover’s popularity

Election of 1932
-Repubs re-nominated Hover as candidate; Democrats nominated NY Governor Franklin Delano Roosevelt
-Roosevelt avoided religion and prohibition, focused on economic grievances of nation
-Roosevelt won large majority of popular vote and even more overwhelmingly in electoral college; Dems majorities elected to House and Senate- signified mandate for change

The “Interregnum” & Banking Crisis
-Month before inauguration; collapse of the American banking system suddenly & rapidly accelerated
-Confidence in banks decreased, depositors withdrawing money, more bankrupt banks

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