The Great Depression

The Causes, the Living Conditions, and the Resolution.

The Causes of the Great Depression

The Crash of 1929

    Before the Great Depression, the economy was soaring. Investors and stockbrokers figured that it would rise that way forever. There was a successful bull market, or when stock's prices increased. Many people invested in the stock market during this time and they could even buy stocks on margin and only pay for part of it as a down payment and the rest would come from a stockbroker who would charge interest and the stock would be collateral.

    Sadly the bull market was short lived. Investors stopped investing. Overproduction contributed greatly to the Great Depression. The earlier economic boom allowed machinery to become more efficient, but now the machines were producing goods at a rate that Americans couldn’t buy them quick enough. the manufacturing output raised a drastic 32 percent whereas the average worker’s wage only rose 8 percent. This raise left working families with very little to no disposable income at all. Also, since people bought big purchases on installment plans, they  had to pay off those debts, that usually stopped people from making new purchases.

    When the bull market was speeding up, American banks made loans to speculators instead of loans to companies abroad. If they would have done this, then many jobs could have been saved. Now many nations didn’t have enough money to buy American crops, or goods. When America raised its tariffs, other countries raised theirs so foreign countries no longer bought American products.

    The Federal Reserve Board did not raise its interest rates to end high speculation. This was one of the major causes of the Depression in two ways. The low rates allowed banks to make risky loans. Second, the low rates let businesses believe that the economy was growing. so the companies borrowed more money to expand production, this led to overproduction. Then the depression hit and companies had to lay off workers so they could lower costs on goods. Then the Federal Reserve raised interest rates, this tightened credit, and ended the economic growth that was established in the 1920s. Then the stock market crashed.

    On Black Thursday, October 24, 1929, stocks plummeted. Investors tried to sell their stocks quickly this caused an even steeper drop in the stock prices. No one saw this drop coming. Many investors had invested their life savings into the stock market, and now were out of money. Banks and other business were not better prepared for a crash either and many failed because of their losses. Businesses such as steel production and auto sales often failed because of price inflation. The upper  class citizens and bankers tried to stop this from happening by buying a bunch of stock, but this did not help  enough. On October 24 the industrial index lost 43 points in only one day. Investors lost over 10 billion dollars in only one day. This amount is the same as 100 billion dollars today. The crash of the stock market led to many Americans losing their jobs.

Life During the Great Depression

The Hardships of the Great Depression

    The Great Depression meant falling stocks and skyrocketing unemployment rates. The amount of Americans unemployed raised to 13 million from 5 million. Desperate factory owners hired children to work for half-wages. Children often dropped out of school to earn money for their families. People who didn’t have jobs were starving. These people would do anything for food: going to a YMCA, soup kitchens, and even waiting in a line city blocks long for some bread. Middle-class families tried to keep their homes by letting in boarders, bartering with the items they already had, and being penny-pinchers.

    Many families could no longer pay for their homes and had to live in shacks along streets. These communities of shacks were called shantytowns. Shantytowns weren’t always dependable places to live though. Police officers often were called in to rip down the shacks and kick out the families. People kept coming back even after their “houses” were torn down.  These shantytown dwellers usually wandered around looking for jobs. These wanderers were called hobos.

   

     As soon as the depression was in full swing, the Dust Bowl started. The Dust Bowl happened when many farmers left their fields uncultivated and a drought took its toll on the Great Plains.  There were no plants to hold down the soil so the wind carried it. The sky was darkened, the leftover crops were covered in dry, dusty dirt. The Dust Bowl was even responsible for suffocating humans and livestock to death. The Dust Bowl put many farmers out of work. If their fields weren’t turning out a profit and were mortgaged, they had to be turned over to the bank. The farmers then had to try to farm in the west. They packed up and headed to California where they lived as homeless families.

     Many Americans plagued by the Great Depression went to enjoy the arts of the era to try to escape their hardships. Radio plays and motion pictures became more popular during this time and so did comic books.

    Motion pictures became very popular. Americans would flood the theaters to see comedies, cartoons, and even serious films during this time. This entertainment boom caused many famous people to be recognized as exceptional actors and actresses.

    With the help of the radio, people didn’t need to leave their houses for entertainment and important news broadcasts. Millions of people had radios in their houses and followed along with the riveting adventures of the Green Hornet and the Lone Ranger. People also listened to comedians such as Jack Benny, George Burns and Gracie Allen. Along with the comedies, the dramas also had a lot of listeners. Soap operas became popular. They were called soap operas because they were often sponsored by laundry soap companies.

    People also started writing and making art about the Great Depression. The artists portrayed shantytowns and the dustbowl. Writers wrote about poverty and starting a new life in California. Photographers also took pictures of the poor side of America and showed life from a hobo’s point of view.

The Resolution

Fixing America

      Hoover tried to calm the American public by promising that the the unemployment drop would ease up in the next sixty days. Sadly his speech was not true and his encouraging words were said in hopes of business leaders and bankers making sound decisions. Hoover did not want to resort to socialism for he believe that it lead to a slow economic recovery.
      Industry promised to keep factories open and and to not cut wages but they did break those promises. Starting public works projects was the next idea that the government had.Public works projects, or government financed building projects, created some jobs but not enough for the 13 million who were unemployed. The only way a gross amount of jobs could be available would be if there would be an increase in government spending. Sadly, Hoover refused to do so.
     In order to pay for public works projects, the government could not raise taxes, that’d mean less money for the American people, so the government ran a budget deficit instead which means that the government kept taxes low and spent more than it collected in taxes. The government then borrowed the extra money.

      In order to save the banks, Hoover wanted to put more currency into circulation. His idea was refused so he created the National Credit Corporation (NCC) to create a pool of money that allowed banks to keep lending. the program did not meet the high needs of the nation.
     Hoover then set up the Reconstruction Finance Corporation (RFC). The RFC loaned money to businesses. the RFC did help some businesses, but not enough to save the failed economy.
       Hoover was not in favor of relief, or money given to families in need. he thought that only government should get the help. and other needs should be taken care of by charity and not the federal government.
       Hoover did however sign the Emergency Relief and Construction Act. The act issued $1.5 billion for public works projects and $300 million in emergency loans for direct relief. this was the first time that the United States federal government provided direct relief funds.

      The public was no longer suffering in silence. People began raiding grocery stores and demanded food. These rallies were called “hunger marches”. Farmers were also beginning to be angered. there were almost one million farms foreclosed by creditors between 1930 and 1934. The creditors took ownership of the land and kicked out the families living off of it.

      At the end of World War I, Congress promised veterans a $1,000 bonus for each veteran. The veterans would receive their bonuses in 1945. But a Texas congressman passed a bill that would allow people to receive their bonuses early. In 1932 many people marched to Washington to receive their bonuses early. as these Oregon veterans marched eastward, other veterans joined them. The marchers were called the “Bonus Army.”
       When they marchers arrived in Washington they stayed in the shantytowns and the Bonus Army grew to 15,000. Hoover refused to meet with the veterans. Congress did not pass the pill so the veterans could not receive their bonuses before 1945. Many of the veterans headed home, whereas some stayed in buildings in Washington.
Hoover then ordered the the buildings to be evacuated. the police put in an effort, but the army took over. General Douglas MacArthur sent in cavalry, infantry, and tanks to wipe out the shantytowns.
    

  Hoover didn’t do too much to revive the economy. But his biggest accomplishment was the Reconstruction Finance Corporation. it was the created to stimulate the economy during times when the United States were not at war.
       The Great Depression taught many lessons to the American people. It taught them that credit is not something you should go overboard on, that you don’t have to pay someone else to do something that you can do for yourself, to not buy things that they do not need, don’t buy something unless you have more than enough money, and to not gamble with the stock market.

Works Cited

  • Images:
  • bing.com/images
  • google.com/images
  • Section One:
  • Appleby, Joyce Oldham., Alan Brinkley, Albert S. Broussard, James M.           McPherson, and Donald A. Ritchie. The American Vision: Modern times. New    York, NY: Glencoe/McGraw-Hill, 2006. Print.
  • "Stock Market Crash (Overview)." American History. ABC-CLIO, 2013. Web. 25 Feb. 2013. ABC CLIO
  • "stock market crash of 1929." American History. ABC-CLIO, 2013. Web. 25 Feb. 2013.
  • Section Two:
  • Appleby, Joyce Oldham., Alan Brinkley, Albert S. Broussard, James M.           McPherson, and Donald A. Ritchie. The American Vision: Modern times. New    York, NY: Glencoe/McGraw-Hill, 2006. Print.
  • "Suffering America, 1929-1939 (Overview)." American History. ABC-CLIO, 2013. Web. 3 Mar. 2013.
  • "Life During the Great Depression." AllAboutHistory.org. N.p., n.d. Web. 02 Mar. 2013.
  • Section Three:
  • Appleby, Joyce Oldham., Alan Brinkley, Albert S. Broussard, James M.           McPherson, and Donald A. Ritchie. The American Vision: Modern times. New    York, NY: Glencoe/McGraw-Hill, 2006. Print.
  • "Life During the Great Depression." AllAboutHistory.org. N.p., n.d. Web. 02 Mar. 2013.
  • "Suffering America, 1929-1939 (Overview)." American History. ABC-CLIO, 2013. Web. 3 Mar. 2013.

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