The Great Depression
CORE TOPICS
Causes of the Great Depression
No single cause — it was a confluence of structural weaknesses already present during the 1920s "boom."
Stock Market Crash (Oct. 1929): Black Tuesday (Oct. 29) — stock values collapsed. U.S. Steel dropped from $262 to $22; GM from $73 to $8. But only 2.5% of Americans owned stock; deeper causes explain the Depression.
Inequality: Per capita income rose 10% for all Americans in the 1920s, but 75% for the wealthiest. Purchasing power of workers was chronically weak.
Market saturation: By late 1920s consumer goods had saturated the market. Manufacturers cut production and fired workers.
Agricultural crisis: Farm prices had already collapsed after WWI. Rural areas were in depression before 1929.
Smoot-Hawley Tariff (1930): Highest tariff in U.S. history. Other nations retaliated; global trade collapsed from $36B to $12B. U.S. exports fell 78%.
Bank failures: 1,352 banks failed in 1930; nearly 2,300 in 1932. Federal Reserve raised interest rates — worsened crisis.
Hoover's Response (and Failure)
Hoover believed in associationalism — voluntary cooperation between businesses and charities, not direct government intervention.
POUR (President's Organization for Unemployment Relief): Relied on private charities, which were quickly overwhelmed.
Opposed direct federal aid on ideological grounds: feared it would undermine self-reliance and work ethic.
RFC (Reconstruction Finance Corporation, 1932): Government loans to banks and corporations — called a "millionaire's dole" by critics for bypassing ordinary Americans.
By 1932, unemployment reached ~25%. "Hoovervilles" — shantytowns — appeared across American cities.
Bonus Army (1932): WWI veterans marched to Washington demanding early payment of war bonuses. Hoover ordered MacArthur to disperse them by force — a political disaster.
The Lived Experience of the Depression
Families used up savings, borrowed from relatives, relied on charity — all of which eventually ran dry.
Unemployment hit ~25% nationally; Black unemployment reached as high as 50%.
Women were often the "first orphan in the storm" — employers favored male breadwinners; married women were systematically fired.
Dust Bowl: Severe droughts on the Great Plains (1932–1936) + agricultural mismanagement created massive dust storms. Oklahoma lost 440,000 people to outmigration. Dorothea Lange's Migrant Mother became the iconic image.
FDR and the New Deal
FDR won the 1932 election in a landslide, promising a "New Deal." He fundamentally transformed the federal government's role in American life.
First New Deal (1933–1934) — Relief & Recovery:
FDIC — insured bank deposits
CCC (Civilian Conservation Corps) — employed young men in conservation projects
PWA (Public Works Administration) — funded large construction projects
AAA (Agricultural Adjustment Act) — paid farmers to reduce production and raise prices
NRA (National Recovery Administration) — set wages and prices for industries
Second New Deal (1935–1936) — Long-term Reform:
Social Security Act (1935) — retirement pensions, unemployment insurance
Wagner Act (1935) — guaranteed workers' right to unionize
WPA (Works Progress Administration) — massive jobs program including arts, writing, theater
Limits of the New Deal
New Deal programs often excluded or discriminated against African Americans — AAA benefited white landowners; relief programs were administered locally with racial bias.
Court-packing crisis (1937): FDR tried to add justices to a hostile Supreme Court; Congress blocked him; marked the end of major New Deal legislation.
The Depression only truly ended with wartime industrial mobilization of WWII.
Voices of Protest: Huey Long ("Share Our Wealth"), Father Coughlin (radio demagogue), Francis Townsend (old-age pension plan) — all challenged FDR from left and right.
KEY TERMS — CHAPTER 23
PEOPLE TO KNOW — CHAPTER 23