TheThePolitics of Politics of Boom and Bust, Boom and Bust, 1920-19321920-1932

Chapter 35

THE THE GREAT GREAT CRASHCRASH

GUIDING QUESTIONGUIDING QUESTION

What caused the Great Depression?

the federal government during the 1920s?

STOCK MARKET CRASHMay 1928-September 1929, prices doubled in valuebeginning in Sept 1929, gradual slide Black Thursday (Oct. 24)

largest sell-off in NYSE history

Black Tuesday (Oct. 29)$40 billion in stock value lost by Dec.

The Great Depression Response of bankers, Hoover and business leaders

Stock Market Prices, Stock Market Prices, 1921–19321921–1932

Black Tuesday Wall Street, Oct. 29, 1929

UNDERLYING CAUSES OF THE DEPRESSION

Overproduction - Massive business inventories (up 300% from 1928 to 1929)

Lack of diversification in American economy

prosperity of 1920s largely a result of construction & auto industries

Uneven distribution of income and wealth - Poor distribution of purchasing power among consumers

Farm income down 66% in 20s

By 1929 the top 10% of the nation's population received 40% of the nation's disposable income

UNDERLYING CAUSES OF THE DEPRESSION

Weakness of Banking Industry bank failures in late 1920s (farmers) many had small reserveslow margins encouraged speculative investment by banks, corporations, and individual investors

total money supplyclosing of over 9,000 American banks between 1930 and 1933 Federal Reserve system

Consumer Debt – middle class installment loans; buying on margin Overspeculation in Stock Market – by wealthy and upper middle class

Consumer Debt, 1920–1931

UNDERLYING CAUSES OF THE DEPRESSIONDecline in demand for American goods in international trade

European industry and agriculture gradually recovered from World War I Germany so beset by financial crises/ inflation that could not afford to purchase US goods High American protective tariffs

international debt structure

IMPACT IMPACT ON ON SOCIETYSOCIETY

GUIDING QUESTIONGUIDING QUESTION

How did the Great Depression alter the American social fabric in the 1930s?

Effects on Business & Industry

Corporate profits - from $10 billion to $1 billonBusiness failures: 100,000 between 1929 and 1933

GNP – $104 billion in 1929 to $56 billion in 1933Total national income – fell by over 50%

Effects on Business & IndustryBank failures

about 20% all banks (over 6000) between 1929 and 1933)over 9 million savings accounts lost($2.5 billion)

Bank Failures, 1929-1933Bank Failures, 1929-1933

Depositors gathering outside a bank, April 1933

1932

Effects of the CrashGreat Crash Investor

s Businesses and WorkersInvestors

lose millions.

Businesses lose

profits.

Consumer spending drops.

Workers are laid off.

Businesses cut

investment and

production Some fail.

Banks

Businesses and workers

cannot repay bank

loans.

Savings accounts

are wiped out.

Bank runs occur

.

Banks run out of money

and fail.

World Payments

Overall U.S.

production plummets.

U.S. investors

have little or no money

to invest.

U.S. investment

s in Germany decline.

German war payments to Allies fall

off.

Europeans cannot afford

American goods.

Allies cannot pay debts to United States.

Effect on workers and familiesUnemployment ~25% in 1932?

underemploymentpatterns of reemployment and layoffs

hobos“Depression mentality”

Men Lined Up at the New York City Men Lined Up at the New York City Employment Bureau, 1932Employment Bureau, 1932

Effect on workers and familiesMalnutrition

Disease: tuberculosis, typhoid and dysentery.

City & state relief systems in industrial Northeast and Midwest collapse

soup kitchens and bread lines

Soup kitchen, 1931 (Cleveland)

Soup kitchen, Chicago, 1930

Dorothea Lange

“White Angel Breadline“

San Francisco1933

Effect on workers and familiesWomen

Working - 25% moreNew Deal – lower payWomen’s Rights Movement - lowest point in a century

FamiliesHousing Stress - divorceHealth – disease, suicideMigrants - from South and Midwest to West

Women in Workplace 1900-1940Mother and two children living in an abandoned car in Tennessee, 1936

Effects on Farmers“Dust Bowl”

“Okies”

Grapes of Wrath

Resettlement Adminstration

Dust BowlDust Bowl

Dust storm, Springfield, CO, 1935

Dust storm, Elkhart, KS, 1937

The Dust Bowl Aftermath of

dust storms, South Dakota, 1936

Dust Bowl Farm, Texas, 1938Abandoned house, Kansas, April 1941

Migrants

A Destitute Family in the Ozark Mountains. 1935 “Okies” migrate

west in 1939

Dorthea Lange, “Covered Wagon Again” 1935

Migrants Migrants in in

CaliforniaCalifornia

Migrant Auto Camp, California, 1936

"Cheap Auto Camp Housing for Citrus Workers“; Dorothea Lange, Tulare County, California, Feb. 1940

“Migrant Mother”

Dorothea Lange

1936

Effects on African AmericansHigh Unemployment – up to 50%: Last hired, first fired

Competition for jobsExclusion from relief programs

Help from the New Deal?labor unionsScottsboro Case

Evicted Sharecroppers along U.S. 60 in Missouri, 1939

African American family during Great Depression in Scott’s Run, Virginia

Effects on American Culture

Reactions of most Americans Effects on basic values (capitalism, democracy, individualism)

Alternatives: socialism, communism?Whom to blame?

Popular Culture and Escapism Frank Capra Walt Disney Gone With the Wind

HOOVER’SHOOVER’S RESPONSERESPONSE

Federal Response Under HooverHerbert Hoover (1929-1933)

Philosophy: limited government, individualism

Initial response?

public works programs

Hawley-Smoot Tariff (1930)

Debt moratoriumInternational Banking Crisis (1931)- gold standard

Reconstruction Finance Corporation (1932)

"Boulder Dam, 1942“, Ansel Adams

Evaluation of Hoover’s Response

Contemporary popular opinion

“Hoovervilles”

“Hoover's Farm

Relief”

Contemporary Political Cartoon

Response to Hoover’s Response

Farmers“Farmers Holiday Association”

“Bonus Expeditionary Force” Bonus Army camp, 1932

"Bonus Marchers" and police battle in Washington, DC, July 1932

Evaluation of Hoover’s Response

Modern Evaluations:reluctance to spend large amounts of federal funds, expand the role of the federal government.

willing to intervene in the economy to an unprecedented degree.

Bonus Army

Douglas McArthur directing removal of Bonus Army marchers

Bonus Army camp in the Anacostia flats

U.S. Army soldiers guarding Bonus Army camp

1932 1932 ELECTIONELECTION Misery Sweeps Roosevelt into Office

1932 ELECTION1932 ELECTIONFranklin D. Roosevelt

philosophy

“New Deal”

Franklin D. Roosevelt, 1920 Vice Presidential nominee for Democratic Party

Roosevelt Campaigning for Office in Kansas 1932

1932 ELECTION1932 ELECTIONHoover

“The Worst is Past"

"Prosperity is Just Around the Corner"

Results

Electoral Shift, 1928 and 1932

1932 ELECTION1932 ELECTIONLame-Duck Period (Nov. 1932-March 3, 1933)

banking industry collapse.Twentieth Amendment

Bank Failures, 1929-1933

Franklin D. Roosevelt and Herbert Hoover on the way to FDR's inauguration, March 4, 1933(Library of Congress)