The Great Depression
1920s were a period of prosperity for
*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
*There were already problems, though. Farmers were poor due to falling food prices, people had bought as much as even installment plans would let them do: 60 per cent of cars and 80 per cent of radios had been bought on the installment 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
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. Even those 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.
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
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
combination with low crop prices, these
terrible conditions caused about 60% of families in the
area to lose their
farmers moved west, too,
looking for work picking oranges or doing other work in
*Their story was told most famously by John Steinbeck in his novel The Grapes of Wrath.
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
*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
desperation, some people turned to crime,
including one of the most infamous crimes of the Twentieth
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
murdering him, gripped Americans for years (until the Most
Hated Man in the
World, the German immigrant Bruno Hauptmann, was finally
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’).
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 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
*For one thing,
*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