The Great Depressionsgachung.weebly.com/.../76_the_great_depression.pdf · Causes of the Great...

The Great Depression

• Pro_22:7 The rich ruleth over

the poor, and the borrower is

servant to the lender.

OBJECTIVES:

o We will examine the factors that

led to the Great Depression.

o We will examine the impact the

Great Depression on society,

minorities, and women.

THE COMING GREAT DEPRESSION:

o In February 1928, stock prices

began a steady rise, this continued,

with only a few temporary lapses,

for a year and a half.

o Between May 1928 and September

1929 the average price of stocks

increased over 40 percent.


o The stocks of major industries that are used to determine the Dow Jones Industrial Average, doubled in value in that same period.

o Trading mushroomed from 2 or 3 million shares a day to over 5 million and, at times, to as many as 10 or 12 million.


o There was, in short, a widespread speculative fever that grew steadily more intense, particularly once brokerage firms encouraging the mania by recklessly offering easy credit.

o But on October 29 “Black Tuesday” was when the market crashed.

o Sixteen million shares of stock were traded; the industrial index dropped 43 points, stocks in many companies became worthless.

Causes of the Great Depression

o What stood out about the Great Depression what it was so severe and it lasted so long.

o Factors include:

o The lack of diversification in the American economy in the 1920s.

o Prosperity had depended excessively on a few basic industries, notably construction and automobiles.

o In the 1920s those industries began to decline.


o The second factor was the mal-

distribution of purchasing power and, as

a result, a weakness in consumer

demand, which was too small to create

an adequate market for goods the

economy was producing.

o In other words, there were more goods

flooding the market and not enough

people that were able to buy them.


o Even in 1929, after nearly a decade

of economic growth more than half

the families in America were on the

edge of or below the minimum

subsidence level, too poor to buy the

goods the industrial economy was

producing.


o Another major problem was the credit structure of the economy.

o Farmers were deeply in debt-their land mortgaged, crop prices too low to allow them to pay off what they owed.

o Small banks especially those tied to the agricultural economy, were in constant trouble in the 1920s as their customers defaulted on loans; many of these small banks failed.


o Large banks were in trouble too.

o Although most American bankers

were very conservative, some of the

nation’s biggest banks were investing

recklessly in the stock market or

making unwise loans.

o When the stock market crashed,

many of these banks suffered losses

greater than they could absorb.


o A fourth factor contributing to the

coming of the Depression was

America’s position in international

trade.

o Late in the 1920s European

demand for American goods began

to decline.


o This was partly because of high American tariffs, partly because European industry and agriculture were becoming more productive.

o And partly because some European nations (most notably Germany, under the Weimar Republic) were having financial difficulties and could not afford to buy goods from overseas.

o Thus European demand for American agriculture was declining.


o But it was also because the European economy was being destabilized by a fifth factor contributing to the Depression, the international debt structure.

o This debt structure had emerged in the aftermath of World War I.

o When the war came to an end in 1918, all the European nations that had been allied with the United States owed large sums, much too large to be repaid out of their shattered economies.


o American government refused to forgive or reduce the debts.

o Instead, American banks began making large loans to European governments, with which they paid off their earlier loans.

o Thus, debts and reparations were being paid only by piling up new and greater debts.


o That was one of the reasons why the

allies insisted on reparation

payments from Germany and Austria.

o Germany and Austria were

themselves in economic trouble after

the war; they were no more able to

pay the reparations than the allies

were able to pay their debts.


o In the late 1920s, the American

economy began to weaken in 1929,

o The European nations found it much

more difficult to borrow money from

the United States.

o And the United States refused to alter

payment schedule of debts owed by

nations to America.


o At the same time, high American

protective tariffs were making it

difficult for them to sell their goods in

American markets.

o Without any source of foreign

exchange with which to repay their

loans, they began to default.


o Collapse of the international credit

structure was one of the reasons the

depression spread to Europe and

grew more worse in America.

Progress of the Depression:

o The stock market crash of 1929 did

not so much cause the Depression,

then as help trigger chain of events

that exposed long standing

weaknesses in the American

economy.


o A collapse of the banking system

followed the stock market crash.

o More than 9,000 American banks

either went bankrupt or closed their

doors to avoid bankruptcy.


o Depositors lost over $2.5 billion in deposits.

o Partly as the result of these banking closures, the total money supply of the nation fell by more than a third.

o The Federal Reserve Board, concerned about protecting its own solvency in a dangerous economic environment, raised interest rates in 1931, which contracted the money supply even further.

THE AMERICAN PEOPLE IN HARD TIMES:

o Unemployment and Relief:

o In the industrial Northeast and

Midwest, cities were becoming

paralyzed by unemployment.

o Unemployment rate in Toledo,

Ohio was one of the worst in the

nation at 80 percent.


o Social services were too small to support the growing number of people seeking relief.

o Breadlines stretched for blocks outside Red Cross and Salvation Army Kitchens.

o Farm income declined by 60 percent between 1929 and 1932.

o A third of all American farmers lost their land.


o In addition a large area of agricultural settlement in Great Plains of the South and West was suffering from a catastrophic natural disaster:

o One of the worst droughts in the history of the nation.

o Beginning in 1930s, a large area of the nation, stretching north from Texas into the Dakotas came to be known as the “Dust Bowl.”


o It began to experience a steady

decline in rainfall and an

accompanying increase in heat.

o The drought continued for a decade

turning what had once been fertile

farm regions into deserts.

African Americans and the Depression:

o As the Depression began, over half

of all black Americans still lived in

the South.

o Most were farmers.

o The collapsed prices for cotton and

other staple crops left some with

no income.


o Many left the land altogether either

by choice or forced by landlords who

no longer found the sharecropping

system profitable.

o Some migrated to Southern Cities.

o But unemployed whites in the urban

South believed they had first claim to

all work.


o Many black southerners perhaps

400,000 in all; left the South in the

1930s and journeyed to the cities of

the North.

o There they generally found less

blatant discrimination.

o But conditions were in most respects

little better than in the South.


o In 1931, nine black teenagers were

taken off a freight in train, accused of

rape.

o In fact there was overwhelming

evidence both medical and otherwise

that the women have not been raped.

o But they made the accusation out of

fear of being arrested themselves.


o Nevertheless all-white jury in

Alabama quickly convicted all nine of

the “Scottsboro boys” and sentenced

eight of them to death.

o The Supreme Court overturned the

convictions in 1932 and a series of

new trials began that attracted

increasing national attention.


o Although the White southern juries who sat on the case never acquitted any of the defendants all of them eventually gained their freedom.

o Four because the charges were dropped,

o Four because of early paroles, and one because he escaped.

o But the last of the Scottsboro defendants did not leave prison until 1950.

Mexican Americans in Depression America:

o Mexican Americans filled many of the same menial jobs in the West and elsewhere that African Americans filled in other regions.

o Some farmed small, marginal tracts.

o Some became agricultural migrants traveling from region to region.

o When the depression hit, Mexican American unemployment rose quickly to levels far higher than those for Anglos.

Mexican Americans in Depression America:

o Some Mexicans were in effect forced to leave the country by officials who arbitrarily removed them from relief rolls or simply rounded them up and transported them across the border.

o Perhaps half a million Chicanos left the United States for Mexico in the first years of the Depression.

o Mexicans were shut out of relief programs and also hospitals.

Asian Americans:

o For Asian Americans, too, the Depression reinforced long-standing patterns of discrimination and economic marginalization.

o In California, where the largest Japanese American and Chinese American populations resided, even educated Asians had always found it difficult, if not impossible, to move into mainstream professions.

Asian Americans:

o Japanese Farmworkers like Chicago farmworkers suffered from the increasing competition for even these low-paying jobs from white migrants from the Great Plains.

o In California, younger men and women organized Japanese American Democratic Clubs in several cities, which worked for, among other things, laws protecting racial and ethnic minorities from discrimination.

Asian Americans:

o At the same time, some Japanese

American businessmen and

professionals tried to overcome

obstacles by encouraging other

Japanese to become more

assimilated more “American.”

Asian Americans:

o Chinese Americans fared no better.

o The overwhelming majority continued to work in Chinese-owned laundries and restaurants.

o Those who moved outside the Asian community could rarely find jobs above the entry level.

Women:

o The economic crisis served in many ways to strengthen the widespread belief that a woman’s proper place was in the home.

o Most men and many women believed that what work there, should go to men.

o Many people believed that no woman whose husband was employed should accept a job.

o But both single and married women continued to work in the 1930s.

Women:

o However professional opportunities for women declined because unemployed men began moving into professions such as teaching and social work.

o Female industrial workers were more likely to be laid off or to experience wage reductions than their male counterparts.

Depression Families:

o Economic hardships of the Depression years placed great strains on American families.

o Many of whom had become accustomed in the 1920s to the steadily raising standard of living but now found themselves plunged suddenly into uncertainty.


o Women began to sew their

own clothes for the family and

preserving their own food

rather than buying products in

stores.

o But the depression also

eroded the strength of many

family units.


o There was a decline in the divorce rate, but largely because divorce was now too expensive for some.

o More common was the informal break up of families,

o Particularly the desertion of families by unemployed men bent on escaping humiliation of being unable to earn a living.

o Marriage and birth rates declined simultaneously for the first tie since the early nineteenth century.

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