ADVANCED PLACEMENT
UNITED STATES HISTORY
The Great Depression
*The 1920s were a period of prosperity for America.
Americans bought goods on the instalment plan and speculated in
stocks bought on margin, expecting to pay off their debts as
stocks rose in value. America’s factories turned out goods
at a rate previously unimagined and paid wages more than double
those known in the past.
*In 1928, Herbert Hoover ran for president with a promise of 'a
chicken in every pot and a car in every garage.' His
opponent was the Democrat Al Smith of New York, known as the Happy
Warrior. Smith had problems, however. He was a
Catholic, which made many Americans, particularly Southern
Baptists and German-American Lutherans, distrusted him: once
elected, after all, he might take orders directly from the
Pope. He was also against prohibition (making him unpopular
with many fundamentalists) and against lynching (making him
unpopular with many Southern Democrats). Hoover defeated him
in a landslide, and Americans expected the prosperity of the Jazz
Age to continue unabated.
*There were already problems, though. Farmers were poor due
to falling food prices, people had bought as much as even
instalment plans would let them do: 60 per cent of
cars and 80 per cent of radios had been bought on the
instalment plan. Factories had to cut production or build up
huge surpluses, partly because high tariffs made it hard to sell
American products overseas.
*As factories could no longer sell goods, the value of their
stocks fell. People began trying to sell their stocks before
they lost too much value, but with many sellers and few buyers,
stock prices fell to almost half their peak value for good
companies and to almost nothing for weaker ones. This began
on 23 October, 1929, and despite efforts by some large investors
(like J.P. Morgan & Company) to stop it, on Black Tuesday, 29
October, 1929, the stock market crashed completely, wiping out
fortunes and leaving many speculators with huge debts to pay off
and no way to do so. This was the beginning of the Great
Depression.
-Crash Course video: https://www.youtube.com/watch?v=GCQfMWAikyU
*Initially the Crash only hurt people who invested in the stock
market. Unfortunately, many banks had invested, and all were
tied into the nationwide financial system. Loans banks had
made to stock speculators could not be paid back, investments
banks had made in stocks were often worthless, people worried
about the crash withdrew all their money (more than banks had on
hand), and many banks collapsed, taking with them the life savings
of many Americans. The Federal Reserve System might have
lent some of these banks money to keep them afloat or might have
printed more money to put into circulation, but was unwilling to
do so. Within two years, over 4,000 banks had failed.
*Businesses began to close and unemployment shot up--the Ford
Motor Company alone laid off 75,000 workers. In 1933,
unemployment reached 25%, and many of those who were employed were
underemployed, not making as much money as they really
wanted.
*Americans had to cut back: milk was replaced by water and
meat completely vanished from most meals. So many people
made clothes, especially dresses, out of flour sacks that
companies began selling flour in sacks printed with patterns as
one way to help, and appeal to, their customers.
*Even people who had money learnt to save it carefully, because
they might lose their jobs at any moment, and many of those who
had jobs were working fewer hours for lower wages, bringing home
pay checks that might have been reduced by a third or more.
It seemed that the American Dream was over.
*Many people had their homes foreclosed upon or could not pay
their rent, and ended up homeless, sometimes living in cardboard
or plywood shacks grouped together in shanty-towns called
Hoovervilles. Others took to the rails and became hoboes,
only stopping occasionally in ‘hobo jungles.’ People who
could, stood in bread lines or went to soup kitchens where food
was given away free by charities.
*In the South, as crop prices fell further and further, farmers
lost their farms to bank foreclosures and became tenant farmers or
sharecroppers. Others moved west looking for work, but even
Western farmers were in trouble, as a long drought had dried up
the soil on many Western farms. Eventually dams were built
out west that created reservoirs to make droughts less
destructive, but in the 1920s and early 1930s, there was no such
help.
*In the 1930s (mostly between 1930-1936), the dry, barren soil was
blown away in windstorms, destroying the land. Some soil was
blown from the Dakotas to points as far east as New England, where
it stained the snow red. The part of the country stripped of
its topsoil and impoverished was called the Dust Bowl.
*In combination with low crop prices, these terrible conditions
caused about 60% of families in the area to lose their
farms. These farmers moved west, too, looking for work
picking oranges or doing other work in California. Although
they went there from all parts of the country, so many came from
Oklahoma that farmers who went west looking for work were called
Okies.
*Their story was told most famously by John Steinbeck in his
novels The Grapes of Wrath and Of Mice and Men.
*Indeed, as food crop prices had been falling ever since the end
of the Great War, some farmers did not even notice when the
Depression began in the rest of the country; others felt
fortunate, because at least they could grow their own food at a
time when people in the cities were starving.
*Throughout America, the Depression did not just affect people’s
incomes, it affected how they felt about themselves and their
place in society. Men who had once been their families’
breadwinners felt worthless. Women sometimes became
breadwinners, going to work at odd jobs, often doing sewing
work. Children could tell their parents were depressed, even
if they often did not understand why. While these shared
hardships brought some families closer together, some families
broke up under the stress.
*Things were particularly hard for minorities, particularly the
African-Americans who had moved north in the Great
Migration. Due to prejudice, they were often the last men
hired and the first ones fired. In 1932, the black
unemployment rate was about 50%
*Mexican-Americans faced discrimination in the Southwest, where
many Anglo-Americans demanded their repatriation: return to
Mexico (by force, if necessary), and hundreds of thousands did
voluntarily return to Mexico. Nonetheless, many more
remained in the Southwest.
*In desperation, some people turned to crime, including one of the
most infamous crimes of the Twentieth Century. In 1932, the
son of the most famous man in America was kidnapped and held for
ransom, and the search for the Lindbergh Baby, and the Trial of
the Century for the man accused of kidnapping and murdering him,
gripped Americans for years (until the Most Hated Man in the
World, the German immigrant Bruno Hauptmann, was finally
electrocuted in 1936). Afterwards, kidnapping across state
lines was declared a Federal crime.
*Herbert Hoover insisted that prosperity was just around the
corner, and he tried to bring America out of the Great Depression
(he first used the term depression, thinking it sounded better
than the 19th century terms ‘crash’ and ‘panic’).
*To try to prop up the value of American goods, Congress passed
the Hawley-Smoot Tariff in 1930, the highest tariff in American
history. It made foreign goods completely unable to compete
in American markets, but foreign countries then raised their
tariffs even higher in response, reducing American exports
further.
*As American businesses failed and the Hawley-Smoot Tariff and
other countries’ responding tariffs destroyed international trade,
depressions began in many European countries, and as America could
no longer lend money to Germany under the Dawes Plan and the Young
Plan, Germany could no longer pay reparations and support its
people, leading to a complete collapse of the already weak German
economy into a depression far worse than America’s.
*Hoover tried to keep the government from giving direct aid,
feeling that was not the Federal Government’s role. He
tried, instead, to encourage volunteerism, asking businesses to
keep employing the same people at the same wages and asking
workers not to demand more. He asked the rich to give more
to charity. Volunteerism had worked during and
after World War I, but it was not enough to correct the Great
Depression (even though many more people did give to charity and
volunteer in soup kitchens and other charities).
*Hoover did want the government to cut taxes, lower interest
rates, create public works programmes, and even eventually began
to lend money to large corporations through the Reconstruction
Finance Corporation, hoping this would allow them to keep their
workers employed, but for the most part it did not. One of
the few successes was the construction of Boulder Dam, later
renamed Hoover Dam.
*Although Hoover's attempts to bring America out of the Depression
were radical for their time--lending $2 billion dollars to
industry through the Reconstruction Finance Corporation would have
shocked any earlier presidents--it was not enough to address a
worldwide depression on this scale.
*For one thing, Hoover had faith in localism, and expected local
governments to solve local problems, knowing that if enough local
governments could solve their problems, eventually all the
country’s problems could be solved. However, the country was
now so interconnected by roads, railroads, and communication that
each area’s problems affected many others, and local governments
were not up to the task. For another thing, Hoover did not
understand the public mood, and, despite being a very
compassionate man, he came off as being cold and uncaring, and
perhaps even unaware of the nation's problems.
*Some people wanted radical solutions. Some communists
wanted a socialist revolution that would make the government take
care of the people. Some fascists wanted a strong national
government that would force people to work together. Most
Americans, though, still had faith in progress and democracy—the
American Dream.
*The most radical movement during the Depression was the creation
of the Bonus Army. In 1924, Congress had promised to pay all
World War I veterans a lump sum pension in 1945. However, as
the Depression got worse, 20,000 unemployed veterans marched on
Washington in 1932, demanding early payment of those
pensions. When they reached Washington, they set up camp
outside town, and rioted when the police tried to force them to
leave.
*Hoover sympathised with the Bonus Army, but he did not want them
threatening the government, so he sent Douglas MacArthur to run
them off. He used excessive force, though, with the cavalry
pulling their sabres, tear gas being fired into the camp, and US
soldiers marching against ragged veterans with bayonets. As
Americans saw pictures of this and heard reports of hundreds of
veterans being wounded or killed, Hoover’s popularity, already
low, fell further, and, although he ran for re-election in 1932,
had no real chance of winning.
This page last updated 16 December, 2020.
