Great Depression and World War II Study Notes

Overview of the Great Depression and World War II

Introduction

  • Transition from the Roaring Twenties and the Harlem Renaissance to the Great Depression and World War II.

  • Official end date for the Roaring Twenties: October 29, 1929 (Black Tuesday).

The Great Depression

Causes

  • The Stock Market Crash: Not the sole cause but a significant trigger for the Great Depression.

    • Occurred on October 29, 1929 (Black Tuesday).

    • Steady market decline preceded the crash.

  • Wrongful Credit Practices:

    • Increased American debt as citizens purchased stocks on credit, leading to unsustainable practices.

    • Brokers demanding repayment led to mass sell-offs of stocks.

  • Market Statistics:

    • 16,000,000 shares sold on Black Tuesday.

    • Stockholders lost $30,000,000,000 by November 13, 1929; $40,000,000,000 by end of 1929; and $75,000,000,000 by mid-1932.

Definition of a Depression

  • A depression consists of both economic issues and psychological impacts (mood).

  • Most Americans were not directly affected financially by the stock market crash; wealthier individuals suffered the most.

Economic Impact

  • Key consequences of the Great Depression:

    • Decline in consumer confidence and spending.

    • Massive layoffs due to decreased production.

    • Agricultural prices declined by 86%.

    • Unemployment rates soared:

    • Over 25% of labor force unemployed (12,600,000 workers) by 1933.

    • Certain cities (e.g., Toledo) experiencing as high as 60% unemployment.

  • Bank Failures:

    • Frequent crashes led to economic devastation and loss of deposits due to lack of bank insurance (FDIC not established until later).

The Cycle of Economic Decline

  • A self-perpetuating cycle where loss in consumer confidence leads to reduced spending, causing further economic decline.

    • Firms laid off workers due to lack of demand, leading to lower spending power of the workforce.

  • Initial government inaction under President Hoover:

    • Hoover stated that it was up to individuals to support themselves and the government.

    • By 1931, mass evictions occurred, leading to the creation of Hoovervilles (shantytowns named derisively after Hoover).

Franklin D. Roosevelt and the New Deal

  • Election of FDR in 1932:

    • Promise for a "New Deal" aimed at relief for the needy, economic recovery, and financial reform.

  • Major Legislative Actions in the First 100 Days:

    • Enactment of 15 major bills establishing New Deal agencies and programs.

    • Introduction of the Federal Deposit Insurance Corporation (FDIC) to protect depositors.

    • Creation of various agencies known as