“Black Tuesday”: On Thursday, Oct. 24, 1929, brokers panicked and starting selling off their stocks. The market briefly rallied, but then bottomed out on “Black Tuesday,” Oct. 29, when 16 million shares were sold off and the industrial index lost 43 points (10 percent of its value). Within a month, stocks had lost half of the September value. . The Great Depression • The Coming of the Great Depression • Soaring Stock Market: Starting in February 1928, the stock market began a rapid ascent that lasted until Sept. 1929, during which the value of the average stock rose 40 percent. Brokerage firms encouraged this frenzy by extending easy credit to even small investors. • The Great Crash • “Black Tuesday”: On Thursday, Oct. 24, 1929, brokers panicked and starting selling off their stocks. The market briefly rallied, but then bottomed out on “Black Tuesday,” Oct. 29, when 16 million shares were sold off and the industrial index lost 43 points (10 percent of its value), wiping out the previous year’s gains. Within a month, stocks had lost half of their September value. Stocks in many companies became virtually worthless.
. The Great Depression • The Coming of the Great Depression • Crash as Symptom: The crash cannot was not the root cause of the Great Depression, but a symptom of underlying economic weaknesses. • Causes of the Depression • Shifting Economy: The U.S. economy was in a period of transition in the 1920s; it had been reliant on heavy industries like steel, textiles, and railroads, but was switching more toward complex consumer goods like automobiles, ready-to-wear clothing, processed foods, etc. The crash happened before the shift was complete. • Poor Economic Diversification: Most of the new 1920s prosperity derived from a few industries, such as automobiles and construction. Both of these began to slow down in 1929; newer industries like chemicals, electronics, plastics, and petroleum had not become strong enough to compensate for these weaknesses.
. The Great Depression • The Coming of the Great Depression • Causes of the Depression • Uneven Distribution of Wealth: As production in industrial and agricultural sectors increased, not enough of the profits were going to potential consumers; the economy was producing more goods than its consumers could buy. In 1928, the top 10 percent made 49.29 percent of the income. More than half of American families lived at our below subsistence level. • Fragile Credit Structure: Even in good times in the 1920s, banks failed frequently as they were largely unregulated and had no minimums on capitalization. Small, rural banks failed a lot because indebted farmers often defaulted on their loans. Some large banks recklessly invested in the stock market and failed with the crash.
. The Great Depression • The Coming of the Great Depression • Causes of the Depression • International Debt Structure: The debt structure that emerged from the Treaty of Versailles, with its heavy reparations, also caused vulnerabilities. The U.S.’s allies owed U.S. banks huge amounts of debt, which their damaged economies could not repay. The U.K. and France had demanded big reparations from Germany and Austria to service these debts. But these countries were barely able to pay the reparations; U.S. banks would not forgive the debt, but offer new and bigger loans. This lead to a collapse of the international credit system by 1931.
. The Great Depression • The Coming of the Great Depression • Progress of the Depression • Banking Crisis: The crash triggered a collapse of the banking system: over 9,000 U.S. banks either went bankrupt or closed between 1930 and 1933, leading the nation’s money supply to contract by a third. • Federal Reserve: Trying to strengthen the U.S. dollar internationally, the Fed raised interest rates, contracting the money supply further. • Plunging GNP and Economic Disaster: The American gross national product dropped from $104 billion in 1929 to $76.4 billion in 1932, a 25 percent decrease. Manufacturers slowed production, lowered prices, and laid off workers. • Unemployment: By 1932, at 25 percent of the workforce was unemployed, maybe even more. Many were “underemployed,” too.
. The Great Depression A “run” on the American Union Bank in New York City; probably in 1931, the year it failed. Depositors rushed to get their money back before the bank failed since their deposits were not insured.
. The Great Depression • The American People in Hard Times • Unemployment and Relief • Industrial Cities Paralyzed: Unemployment crippled industrial cities in the Northeast and Midwest. In Ohio in 1932, these cities had the following unemployment rates: • Cleveland: 50 percent • Akron: 60 percent • Toledo: 80 percent • Construction and Heavy Industries: Construction was perhaps hit hardest with the loss of two million well-paying jobs, followed by heavy industries like steel, automobiles, railroads, and coal mining. • Relief Agencies and Private Charities Overwhelmed: These organizations were used to dealing with a small amount of people in the 1920s, and quickly became flooded. • Malnutrition: Hospitals came to see many cases of malnutrition and even starvation.
. The Great Depression • The American People in Hard Times • Unemployment and Relief • Farmers Devastated: The depression was even worse in rural areas, where farm income declined by 60 percent between 1929 and 1932, and a third of all farmers lost their land. • “Dust Bowl”: A drought began in 1930 struck the region stretching from Texas north through the Dakotas that lasted a decade, creating a region that was little more than a desert. Many rural migrants fled to California or other states, where they were known as “Okies” since many came from Oklahoma. Many became migrant agricultural workers, picking fruit for starvation wages. • http://www.youtube.com/watch?v=AvKJ9fK99YU&playnext=1&list=PLOUQW9DHQAAPEUFF7JZK8OH1GWK4TVAEH
. The Great Depression Dust Storm Approaching Stratford, Texas, April 18, 1935, U.S. Dept. of Commerce 1937 photo of Okie migrants in California by Dorothea Lange (1895-1965) Dorothea Lange, Migrant Mother, Nipomo, California, 1936; gelatin silver print; Library of Congress
. The Great Depression • The American People in Hard Times • African Americans and the Depression • Soaring Black Unemployment: When the Depression began, over half of all African Americans lived in the South. When prices for cotton and other staple crops collapsed, many had to leave rural areas for Southern cities, either by their own choice or through eviction. There, they found that jobs previously occupied by blacks—janitors, domestic servants, street cleaners—had been taken by whites. By 1932, over half of black Southerners were unemployed. • Northern Migration: About 400,000 Southern blacks left for Northern cities, where they encountered similar conditions. Black unemployment in New York City was over 50 percent, with it being higher in other cities. By 1932, two million—roughly half of all African Americans—were on some kind of relief.
. The Great Depression • The American People in Hard Times • African Americans and the Depression • “Scottsboro Boys”: Discrimination was particularly harsh against migrant blacks. In March 1931, nine African American teenagers were taken off a freight car and arrested for vagrancy in Scottsboro, Alabama. Later, two white women who had been riding on the same train accused them of rape. Overwhelming evidence indicated that the women had not been raped. Nonetheless, all nine were convicted and eight were sentenced to death by an all-white Alabama jury. The Supreme Court threw out the case in 1932, partly through the aid of International Labor Defense, an organization related to the Communist Party Yet none of the nine were acquitted. They all gained their freedom eventually, but the last did not do so until 1950.
. The Great Depression The Scottsboro Boys with their attorney, Samuel Leibowitz, in 1932, under guard by the state militia Accusers Ruby Bates and Victoria Price in 1931
. The Great Depression • The American People in Hard Times • Hispanics and Asians in Depression America • Mexican/Mexican Americans: Since the turn of the century, Mexicans had been arriving in California and the Southwest, often occupying positions filled by African Americans in other parts of the country. Some farmed small tracts or worked as migrant farm workers. White previously thought these jobs beneath them, but wanted them when the Depression struck. Roughly 500,000 Chicanos left the U.S. in the first years of the Depression. • Hispanic Resistance: Especially in California, migrant Hispanic workers began to organize unions, but these were harshly repressed by growers. Mexicans and Mexican Americans increasingly moved into barrios in cities like Los Angeles. living in similar conditions to blacks in other cities.
. The Great Depression • The American People in Hard Times • Hispanics and Asians in Depression America • Asians Marginalized: On the West Coast, college-educated Asian-Americans often found themselves working in their parents’ fruit stand, laundry, or restaurant. Few were able to find professional work outside of ethnic enclaves, like Chinatowns for Chinese Americans. A Japanese or Chinese American woman might find work as a stock person, but never as a sales girl. Many increasingly were pushed out of work by new white migrants coming from the Midwest. • Filipino Immigration Cut Off: In 1934, Congress passed an act that gave the Philippines a constitutional government but also reclassified Filipinos as aliens for the purpose of immigration, implementing a harsh quota of 50 immigrants per year. (Previously they had been considered American nationals.)
. The Great Depression • The American People in Hard Times • Women and Families in the Great Depression • Growing Female Employment: A widespread cultural assumption was that women belonged in the home, and that all available jobs should go to men in hard times. Yet during the 1930s, both single and married women worked outside the home because they needed the money. By 1940, 25 percent more women were in the workplace than in 1930. But female nonprofessional jobs—salesclerks, stenographers, and other service jobs—were less likely to disappear than male-dominated industrial ones. But black women were hit especially hard since so many domestic service jobs were discontinued. • Declining Marriage and Birth Rates: While divorced declined—partly because it was too expensive for many—many families did break up, especially men leaving a family behind, embarrassed they could not provide support. Marriage and birth rates declined for the first time since the early 1800s.
. The Great Depression 1937 Woolworth Workers Strike
. The Great Depression • The Depression and American Culture • Depression Values • Prevailing Values Reinforced: The Depression actually had little affect on American values; if anything it caused people to redouble their commitment to them: the idea that hard work and talent would create success survived, despite the fact that many sought government aid and blamed business tycoons and corporations for the economy.
. The Great Depression Orson Welles around 1937 1930s family gathered around the radio in Montana Groucho Marx Freeman Gosden and Charles Correll, creators of Amos ‘n’ Andy
. The Great Depression “Communism is twentieth-century Americanism” —Earl Browder • The Depression and American Culture • The Popular Front and the Left • The Popular Front: This was a broad coalition that came together after 1935, when Stalin ordered that critiques of the U.S. be lessened in preparation for a war with Hitler. It was a coalition of “anti-fascists” on the left that included American Communists, socialists, and even liberals who supported FDR. It bolstered the reputation of the Communist Party and mobilized writers, artists, and intellectuals to a newly critical but democratic sensibility. • Communist Party Active: It organized a hunger march on D.C. in 1931, played an important role in the defense of the Scottsboro Boys during their trials, and provided a powerful cadre of union organizers.
. The Great Depression • The Depression and American Culture • The Popular Front and the Left • More Tolerance of Radicals: Despite the Dies Committee, the 1930s marked a period when it was more accepted to be a radical, and a wider spectrum of ideologies was tolerated in politics and art. • Government Sponsorship of Provocative Art: The Works Progress Administration (WPA) sponsored art that challenged the capitalist norm, and the human cost of poverty and social neglect. For example, the Federal Theatre Project sponsored the 1937 musical, The Cradle Will Rock, which critiqued corporate greed and exploitation of workers in an American steel town and was directed by Orson Welles. • Farm Security Administration Photography: The FSA was created in 1935 to improve the lives of sharecroppers, tenant farmers, an the rural poor. Its famous photography project from 1935 to 1944 employed highly talented photographers like Dorothea Lange, Margaret Bourke-White, Walker Evans, and Ben Shahn.
. The Great Depression 1935 picture of children in Arkansas by FSA photographer and artist, Ben Shahn 1940 picture of migrant workers by FSA photographer Jack Delano
. The Great Depression A family portrait from Let Us Now Praise Famous Men by Walker Evans
. The Great Depression • The Ordeal of Herbert Hoover • The Hoover Program • Restoring Confidence: Hoover’s first response was to try to bolster confidence, saying in 1930 that the “fundamental business” of the country was on a “sound and prosperous basis.” These words would later haunt him; his belief in voluntary cooperation of business leaders to try to solve the crisis made him wary of strong government measures. • Failure of Voluntary Cooperation: Hoover asked business leaders to the White House to ask them to voluntarily agree not to cut production or lay off workers, but by 1931, poor economic conditions made these untenable. • Limited Government Spending: The economy became so bad that, despite his ideological opposition to it, Hoover attempted to revive it through government spending, appropriating $423 million for new federal public works projects, but this was not nearly enough. Hoover soon stepped back from this move and tried to balance the budget.
. The Great Depression • The Ordeal of Herbert Hoover • The Hoover Program • Agricultural Marketing Act and Hawley-Smoot Tariff: Even before the crash, Hoover had been working on this bill to help farmers maintain prices by creating a Farm Board that could extend loans to national cooperatives and establish corporations that would buy surpluses (Hoover refused to have the federal government loan money directly to farmers). He also saw through the passage of the Hawley-Smoot Tarriff, which placed high tariff barriers around seventy-five farm products. Ultimately neither of these measures helped much. • “Hoovervilles”: By the spring of 1931, considerable resentment was focused at the president for not taking more drastic measures. Shantytowns of the homeless and unemployed that sprung up became known as “Hoovervilles.” • Failure of the RFC: In January 1932, Congress created the Reconstruction Finance Corporation (RFC), which had a budget of $1.5 billion—very large for a Hoover initiative—to finance public works projects that would ultimately pay for themselves. Overall, the effect of this act was too small.
. The Great Depression A Hooverville on the outskirts of Seattle in 1933
. The Great Depression • The Ordeal of Herbert Hoover • Popular Protest • Farmers’ Holiday Association: People were initially too stunned to organize popular protest, but this changed by the summer of 1932. Farmers gathered in Des Moines, Iowa, and endorsed withholding farm products from the market, essentially a farmers’ strike, which spread to neighboring areas but ultimately dissolved in failure. • The “Bonus Army”: Congress had passed a law in 1924 giving World War I vets a “bonus” of $1,000 to be collected beginning in 1945. By 1932, vets were demanding payment, although Hoover refused to listen because of his concern of keeping a balanced budget. In June 1932, 20,000 vets marched on Washington, D.C., to demand the bonus. Congress voted down their appeal in early July, but many remained encamped on the outskirts of D.C. until Hoover had them evicted in a bloody clash with the army that killed two vets and injured 100. The incident was a devastating blow to Hoover’s already tarnished reputation.
. The Great Depression "Shacks, put up by the Bonus Army on the Anacostia flats, Washington, D.C., burning after the battle with the military. The Capitol in the background. 1932”; National Archive.
. The Great Depression • The Ordeal of Herbert Hoover • The Election of 1932 • Franklin Delano Roosevelt: This wealthy Hudson Valley aristocrat and distant cousin of Theodore Roosevelt had enjoyed a meteoric rise within the Democratic Party, serving in the New York State legislature, as assistant secretary of the navy during World War I, and as a vice presidential candidate in 1920. Stricken by polio in 1921, he never regained full use of his legs, but managed to be elected as governor of New York in 1928, succeeding Al Smith. As governor, his willingness to try many different types of government assistance while avoiding controversy made him easily electable in 1932. In his unprecedented acceptance speech to the Democratic convention in Chicago, he said that he pledged “a new deal for the American people.” • FDR Elected: Roosevelt won 57.4 percent of the popular vote to Hoover’s 39.7, carrying all but six states in a landslide.
. The Great Depression The Election of 1932
. The Great Depression The Changing of the Guard, New Yorker (FDR Library)