The Great Depression

Overview of the Great Depression (1929-1939)

  • The Great Depression was a stark contrast to the economic prosperity of the 1920s.

    • The 1920s: A period of economic boom, increased credit usage, and a flourishing consumer culture.

  • The Great Depression's significance:

    • Considered a defining moment in the development of the American economy.

    • A worldwide economic downturn that originated in America.

    • Longest and most severe depression in industrialized Western history.

  • Fundamental changes:

    • Economic institutions

    • Economic theory

    • Macroeconomic policies

  • Major topics to explore:

    • Causes of the Great Depression.

    • Demographic impacts and lived experiences.

    • Concepts of Hoovervilles and the Dust Bowl.

    • Hoover's approaches to the crisis.

The Great Crash of 1929

  • Known as the starting point of the Great Depression.

    • The stock market ignores the recent recession.

    • The phenomenon of the bull market: Investors were buying high and hoping to sell higher to maximize profits. → “Buy High, Sell Higher!”

  • Key events:

    • Black Thursday (October 24, 1929):

      • Investors got scared and quickly dumped their stocks

      • Panic selling began, and stock market prices fell drastically on Oct. 24, 1929.

      • J.P Morgan bought stocks in an attempt to stabilize the market

    • Black Tuesday (October 29, 1929):

      • Approximately 16 million shares were dumped, causing the market to crash.

      • Total losses: By the end of October, nearly $15 billion in stock value was wiped out.

Causes of the Great Depression

  • Stock Market Crash of 1929

  • Overproduction:

    • Goods produced exceeded consumer demand.

  • Credit/Debit abuse:

    • The rise of consumer culture led to excessive use of credit; many purchases were made on credit without the ability to pay back.

  • Farming crisis:

    • The Florida land bust:

      • A surge of investment in Florida property led to inflated land prices and a subsequent collapse.

      • Unaffordable housing led to diminished demand and economic blight in local economies.

  • Unemployment and Underemployment:

    • Trying to replace laborers with machines

Unemployment and Underemployment

  • Major economic shifts following World War I resulted in significant workforce reductions.

    • Companies replaced laborers with machines for cost-cutting.

    • Many veterans returned to find jobs filled by women and minorities willing to work for lower wages.

  • By 1932, unemployment peaked, and those employed were earning less, leading to widespread reliance on public assistance and charity.

    • Examples of community reliance on organizations including the YMCA and churches.

Lived Experiences

  • The great depression hit rock bottom by 1932

  • Lots of unemployment

  • Declining wages

  • Minimized expenses

  • Use of pubic assistance and private charities

  • Disappearing credit at local establishments

  • Some profited during the Great Depression

  • Women and children entered the labor force

  • People lived in anything remotely close to a shelter; lots of people were homeless

Hoovervilles and Living Conditions

  • Hoovervilles:

    • Shantytowns: formed by homeless and unemployed Americans, named derisively after President Hoover.

      • Built from scrap materials (cartons, plywood, sheets of metal, cloth, newspapers), creating makeshift shelters in urban areas where land was available.

      • Public land/land not used for agricultural/industrial purposes

  • Living conditions were dire; many were forced into makeshift shelters or squatted in abandoned buildings.

The Dust Bowl

  • An environmental disaster characterized by severe dust storms in the early 1930s.

    • Causes: drought and human actions, such as monoculture farming (heavy reliance on wheat crops).

      • Climatological = drought

      • Human causes = only grew wheat and did not plant trees/grass

    • Effects: destroyed crops, plants, and animal life; exacerbating the economic crisis.

  • Migration patterns shifted as families left the Midwest seeking jobs and stability elsewhere, notably depicted in John Steinbeck's novel "The Grapes of Wrath."

    • "The Grapes of Wrath": Plight of a fictional family from Oklahoma to California.

Racial Impacts

  • African American experiences:

    • “Last Hired, First Fired”

    • Already vulnerable due to lower-paying jobs; faced disproportionate unemployment and layoffs during the Great Depression.

    • Increased racial tension and violence as competition for jobs intensified.

  • Landowners:

    • Attempted to cut labor costs with machinery

    • Kicked sharecroppers and tenant farmers off the land (many of them Black Americans)

  • Latino Workers:

    • Primarily made up of Mexicans and Mexican Americans

    • Low-wage factory jobs and migrant laborers

    • Deemed as an economic threat as jobs shrank

    • Many worked as migrant laborers, constantly relocating to seasonal jobs.

    • Faced discrimination and deportation; fought through labor unions for rights.

President Hoover and Policy Responses

  • Hoover's perspective on the Great Depression was that it was a temporary economic and financial situation.

    • Promoted voluntary action (Associationalism) and limited government interference (laissez-faire).

  • Established:

    • Reconstruction Finance Corporation: Provided emergency loans primarily to banks and industries.

    • President's Organization for Unemployment Relief (POUR): Intended to coordinate private efforts to alleviate unemployment, though largely ineffective.

    • His approach primarily benefited the wealthy and did not trickle down to the average American.

  • Hoover's shift in policy was driven by political pressure as the election approached, highlighting the pressing need for effective intervention to address the ongoing crisis.