The Great Depression - own notes

Topic Overview

• Examination of the impact of the Great Depression on capitalism in the USA from 1900 to 1940.

The Great Depression

• Crisis of Capitalism:

  • Major economic decline began with the Wall Street crash in 1929.

  • Millions lost savings, leading to widespread unemployment.

• New Deal Policies:

  • Introduced by President Franklin Roosevelt to aid recovery.

  • A debate on whether capitalism was weakened or strengthened during this period.

• Global Repercussions:

  • Direct control increased in economies like Germany and Japan, spawning totalitarian regimes.

  • Economic stability was restored through militarization, eventually leading to WWII.

• Contrasting Economies:

  • Only Communist Russia maintained stability through government control, leading to a favorable comparison against capitalism.

Timeline of Events

• 1914: First World War begins.

• 1918: First World War ends.

• 1920: Start of economic boom in the USA.

• 1929: Wall Street crash; onset of the Great Depression.

• 1932: Election of Franklin D. Roosevelt.

• 1933: Hitler becomes Chancellor of Germany; First New Deal launched.

• 1935: Second New Deal begins.

• 1939: WWII begins.

Unit 2.1 Capitalism in the 1920s

• Key Terms:

  • Boom: prosperity and growth.

  • Supply and Demand: Principles governing market economy.

  • Free market: Minimal government interference in economic activities.

• Economic Dynamics:

  • Capitalism thrived post-industrialization due to private ownership and capital investment.

  • Economic growth led to wealth concentration and increased job opportunities.

• Critique of Capitalism:

  • Concerns about worker exploitation, inequality, and lack of government regulation emerged.

American Dream

• A belief that the USA was a land of opportunities where anyone could succeed.

• Immigrants fled to America for better chances at prosperity based on hard work and self-reliance.

• Influenced by figures like Herbert Hoover who embodied the ideal of upward mobility.

Structure of the 1920s Economy

• Economic Boom:

  • Driven by resources, skilled workforce, and Republican policies: minimal government intervention, low taxes, protective tariffs, and limited trade union influence.

• Mass Production and Consumerism:

  • Innovations in manufacturing led to increased production of consumer goods, notably in the automobile industry with assembly lines.

• Advertising and Credit Systems:

  • Progressive advertising strategies influenced consumer behavior: "Buy now, pay later" policies proliferated.

Economic Weaknesses Exposed

• Distribution of Wealth: Not everyone could afford the products produced; mass poverty persisted.

• Agricultural Issues: Farmers faced surpluses and plummeting prices post-WWI.

• Unstable Business Practices: Easy credit led to over-leveraging and lack of regulation in the stock market.

The Wall Street Crash (1929)

• A sudden and dramatic drop in stock prices initiated a cascading economic collapse.

• Loss of investor confidence led to halted spending, factory closures, and widespread unemployment.

Social Impact of the Crash

• Unemployment: Massive job loss resulted in long queues for charity aid.

• Homelessness: Evictions led to informal settlements known as "Hoovervilles".

• Decline of Industry and Agriculture: Business closures multiplied, exacerbating the rural crisis with the onset of the Dust Bowl.

Government Response**

• Initial relief measures were insufficient; public discontent grew.

• Strikes and protests, exemplified by WWI veterans demanding bonuses, were met with military force, worsening public trust.

Overall Impact

• The Great Depression significantly altered perceptions of capitalism, exposing vulnerabilities and leading to a reevaluation of government roles in economic stability.