The Great Depression
The Great Depression
Roaring 20s
The 1920s in America were a time of intense prosperity and a reimagining of ideals, morality and philosophies. The technological advancements of the era gave the people of that time a new freedom; cars, moving pictures, telephone and radio charged the air with modernity and traditions were being shunned. Post World War I, the world needed a breath and the glittering extravagance of the 20s provided a release like never before. Womanhood was being redefined, art was appreciated in a new way – literature boomed, painting took on a new aesthetic and the invention of Jazz changed the way people dressed, danced and socialized. Industrialization skyrocketed. The mass production of cars and the erection of major cities with skyscrapers meant that the rubber, steel and glass industries were pushing themselves to their prosperous limits. There was a mass exodus from the rural regions of the United States as the lure of the city, its prosperity and promise of the shining American Dream caused men and women to abandon their farms in search of a new, urban Utopia. This wealth spread throughout the country and unemployment rates plummeted.
This prosperity and widespread wealth prompted a sense of optimism and hope in the American people. William E. Leunchtenburg wrote, “The prosperity of the 1920s produced the contagious feeling that everyone was meant to get rich…the conviction that, especially in the economic world, anything was possible.” This prompted people to try their hands at the stock markets. Investing in the growing industries became sport to the American people, a socialization tool even. They borrowed money from the bursting banks to invest and by 1928 the stock market was carrying the entire economy.
Black Tuesday
On 24 October 1929, 12.9 million shares were traded; the bubble of prosperity had burst. The following Tuesday, a day now known as Black Tuesday, panic hit Wall Street and 16 million shares were traded, millions of others were rendered worthless and all of those investments made on borrowed money left their owners with nothing.
Spending all but halted, causing those booming industries to slow. Factories closed. Other businesses went under. Construction workers were fired. Wages across the board fell and the buying power of the dollar weakened and the gold standard spread the economic downturn happening in the United States across the oceans to Europe and other parts of the world.
Stock Market Crash on Black Tuesday
All of the gains of the Golden Twenties were wiped out in just a few months and the economic downturn only seemed to be deepening. The panic caused by Black Tuesday caused people to drain all their money from the banks, forcing the banking industry to bankrupt. The Hoover administration offered bank bailouts, hoping that it would resuscitate to failing industries and encourage job growth, but this was to no avail. Unemployment reached 25% . By 1932, a million people were unemployed in New York City alone. In the rural areas of America, farmers unable to afford to harvest their crops left miles and miles of rotting food in the fields.
Breadlines and soup kitchens became a cultural norm as food scarcity grew. Hoovervilles and shantytowns were erected across the country as the homeless population burgeoned.
Hooverville on the Seattle waterfront
Breadlines
A New Deal
“Throughout the nation, men and women, forgotten in the
political philosophy of the Government, look to us here for guidance
and for more equitable opportunity to share in the distribution of
national wealth…I pledge myself to a new deal for the American
people. This is more than a political campaign. It is a call to arms.” –FDR
Herbert Hoover was succeeded in the presidency in 1932 by a man whose economic ideals were opposite his. Where Hoover saw it was not the role of the government to interfere in the economy, Franklin Delano Roosevelt felt it was his duty to aid in the recovery of The Great Depression. His policies, called The New Deal, created government agencies whose purposes were to stimulate the economy. An “alphabet soup” of agencies, including the National Recovery Administration (NRA), The Agricultural Adjustment Act (AAA), The Federal Deposit Insurance Corporation (FDIC), the Federal Crop Insurance Corporation (FCIC), the Federal Housing Administration (FHA), the Tennessee Valley Authority (TVA), Social Security System and the Securities and Exchange Commission (SEC) all provided opportunities and protections for workers, farmers and industries. With this deal also came the 40 hour work week, restrictions on child labor, unemployment compensation, minimum wage and public employment services and the suspension of the Gold Standard. 8.5 million workers were employed as a direct result of the New Deal.
The New Deal, implemented over FDRs four terms as president, helped to greatly change the tide in American and global economies and by 1938 there was a large economic upswing. Ultimately, what ended the Great Depression was the declaration of war after the December 1941 Pearl Harbor attack. War industries boosted the growing economy and a new era of prosperity was on the horizons.
Online Resources
History Channel Videos on The Great Depression
History Channel Audio Speeches from The Great Depression