THE GREAT DEPRESSION

Economy 1919-1920

• BRIEF economic recession– Reduced demand after war– Soldiers return & want jobs

• Resulting labor unhappiness– 4,000 strikes in 1919– Almost 4,000,000 go on strike

• Good times Return by 1921

The Republican 1920’s

Warren G. Harding Calvin Coolidge Herbert Hoover 1921-1923 1923-1929 1929-1933

Politics in the 1920’s• Dominated by Republicans• Progressivism Dies

– Too much change in previous decades?

• A return to “Laissez-faire”– Government plays minor role– Big business is allowed to run free

• Harding’s “Ohio Gang” including Albert Fall, Sec. of Interior, & the Teapot Dome Scandal

– Record profits• But growing poverty

• A sort of “2nd Gilded Age”?

Politics in the 1920’s

The 1920’s Economy• Output rises by 60%

• Per capita (per person) income rises by 1/3

• Unemployment is fairly low– Always less than 5%

• Inflation (prices) is minimal

• Stock value increases 4x, 1921-1927

• Auto production triples; construction, too

• Overall, wealthiest society in history!

Weaknesses in 1920’s Economy

• Mining Industry– Coal expanded in previous 2 decades– Oil industry skyrockets– UMWU membership drops from 500K to 75K

over decade.

• West Virginia Mine Wars 1921-24– “Red Necks”, 5000 strong, march to battle only

to be defeated– Harding sends in federal troops

Weaknesses in 1920’s Economy

• Farm Crisis– Prices decline by 2/3 & profits

– Farmers earn 25% of average– 500,000 farms go bankrupt– Leads to bank failures?

• McNary-Haugen Bill– Would have used government subsidies to

guarantee a minimum price for crops– Vetoed by President Coolidge

Labor Unions in 1920’s

• Significant decline in numbers & power

• 5 million members in 1920; 3 million in 1929– Strongly anti-union Republicans in power

• Strike breaking & anti-union laws

– Reaction to the Red Scare– Businesses busted unions

• The “American Plan”

Weaknesses in 1920’s Economy• Mining Industry• Farm Crisis• Decline in union membership• Growing rich/poor income gap

– 2/3 of population at “minimum comfort level”• ½ at “subsistence or poverty level”

– Average income 80% of “minimally decent standard of living”

– Purchasing power declines by 1927

Weaknesses in 1920’s Economy• Mining Industry• Farm Crisis• Decline in union membership• Growing rich/poor income gap• Unpaid war debt

– Versailles set reparations payment at 269 billion gold marks.

– Allies couldn’t repay US w/o reparations– US floats $ to Ger. to repay Allies – Payments lowered by Dawes ‘24 & Young ‘29

Herbert Hoover, 1929-1933

"We in America today are nearer to the final triumph over poverty than ever before in the history of any land."

--August, 1929

Stock Market

“Black Monday?”

• Oct 29, 1929

• Stock Market drops 40%

• Eventually loses 90% of value

• Led to bank & business failures

• Beginning of the Depression

Bank Closings & Depression• People put $ in banks• Banks invest in stocks

and loans to others• Stocks fall• Banks call in loans• Businesses close• People laid off

– No purchasing

• Banks fail• DEPRESSION

Causes of the Great Depression• Stock Market Crash

– Mostly a symptom; but also a cause

• Underlying weaknesses in economy– Farms; income gap, etc.

• Poor Purchasing power– Common person no longer with money to buy

• “All eggs in one basket”– Much of economic growth in autos & construction

• Over reliance on credit & “watered stock”• International economic problems • Bad Timing

The Great Depression

• Depressions are not unusual– Boom & bust capitalist economy

• 1819, 1837, 1857, 1873, 1893, (1907), etc.

• What is unusual:– Duration

• Lasts 1929-1940– Major recession in 1937-1938!

– Depth…..

Great Depression Statistics by 1933• Banks

– 9,000 fail– Loss of $2.5 billion in savings

• 25 % drop in Gross National Product (GNP)• Stock investment down 97%• 25 % unemployment

– 50 %-80% in some cities– Even more “underemployment”

• Farm income drops by 2/3 more– Millions forced off land

Help?

• Almost no government help

• A little private charity

• Most felt it was their own fault– The myth of the “rugged individual”

“Hoovervilles” shacks for homeless people

“Hoover flags” empty pockets turned out

“Hoover blankets” newspapers made into blankets

A Hooverville

How People Coped • 25 % rise in women working

– Despite lack of jobs– Poor & minority women especially

• Made due with old stuff• Ate less• Despondency, alcohol, suicide• Escaping into movies & radio

– The only two industries to grow during Depression

• Very limited charity help– Almost no government help

An Okie Family

Cultural Response to the Depression

Woody Guthrie Huddie “Lead Belly” Ledbetter 1912-1967 1885-1949

“Hobo’s Lullaby” by Woody Guthrie

Go to sleep you weary hobo / Let the towns go drifting by Can't you hear the steel rails hummin’ / That's the hobo's lullaby

Now don't you think about tomorrow / Let tomorrow come and go Tonight you're in a nice warm boxcar / Safe from all that wind and snow

I know the police cause you trouble / They cause trouble everywhere But when you die and go to Heaven / You'll find no policemen there

So go to sleep you weary hobo / Let the towns drift slowly by Can't you hear the steel rails hummin’ / That's a hobo's lullaby

I know your clothes are torn and tattered / And your hair is gettin' gray Lift your head and smile at sorrows / You'll find peace and rest some day

The “Red Decade”• Willingness to look at radical ideas• Communist Party has 100,000 members

– “Communism is 20th Century Americanism”– Forms “popular front” (alliance with New Deal

liberals)– Strong civil rights record

• Socialist Party gets 1,000,000 votes in 1932• Abraham Lincoln Brigade

– 2,800 American volunteers who fought in Spanish Civil War against fascism

Spanish Civil War (1936-1939)

African Americans & the Depression• Started off poorer

– Less educated

– More discrimination

– Poorer health

• Discriminated further– Fired for white workers

– Rise in violence

• Great Migration continues– 400,000 North during

1930’s

The Scottsboro Boys

• 9 young blacks accused of raping two white women on a train in 1931

• Clearly not guilty• Convicted anyhow in

Alabama• All freed up to 20

years later

Mexican Americans & the Depression

• Suffered much of the same discrimination and disadvantages of blacks

• 400,000 deported to Mexico– Including many American citizens

The Dust Bowl

The Dust Bowl

• Massive drought in OK, TX, KS

• At the height of the Depression

• ½ million “Okies” leave their land for Calfornia

Hoover’s Initial Response• Initially cautious

• Believed– It would soon get better on its own– Hand-outs weaken people

• Called for voluntary cooperation as solution– This collapsed quickly

The Bonus Army, 1932

• World War I vets had been promised a pension starting in 1945

• Unemployed vets camped in front of White House demanding the pensions now

• Congress would not agree

• Hoover orders military to remove campers

• Shacks burned, 2 killed

• Hoover now even less popular than before!

• "While the crash only took place six months ago, I am convinced we have now passed through the worst -- and with continued unity of effort we shall rapidly recover. There has been no significant bank or industrial failure. That danger, too, is safely behind us.“– Herbert Hoover (April of 1930)

Stock Market

Hoover’s Eventual Response

• Agricultural Marketing Act (AMA)– $500 million in loans to farmers– Did little; still overproduction & low prices

• Hawley-Smoot Tariff– Put a tariff on agricultural goods– Most economists warned against this

• Hoover felt he had to do something

– Disasterous; Europe responded with own tariffs

Hoover’s Eventual Response

• Reconstruction Finance Corporation– $1.5 billion to firm up banks

• Seen as a hand out to the already hated rich

– A very little bit for suffering individuals• $400 million on public works

• But Hoover would only spend on projects that paid for themselves

• Only 20% of budget ever used

– Too little, too late, & unpopular

Could Hoover Have Done More?• Obviously, his approach failed.• But

– No precedent for big federal spending• Federal budget only 3% of GNP in 1930

– 20% today

– No common understanding that more spending would help, nor what type of spending

– He spent more than anyone before him• A precedent setter?

Election of 1932

• Hoover widely hated

• Democrats run Franklin D. Roosevelt– Charming, funny, upbeat– NOT HOOVER!!!!

• FDR wins in landslide

• Takes office in March of 1933

Election of 1932

Election of 1932

Election of 1932

• Democrats had been minority party since the 1860’s

• Began almost 50 years of Democratic dominance– Ended with the Reagan years of the 1980’s

• New Democratic constituency– Unions, blacks, & old progressives added to the

already existing white southerners