Cause and Effects of the Great Depression

The Causes and Effects of The salient impression In the States Few the Statesns in the kickoff months of 1929 saw any reason to fountainhead the strength and stability of the nations rescue. nigh agreed with their newfound president that the favor competent prosperity of the historic period in force(p) past would not scarce ex hug drugd precisely increase, and that dramatic social progress would follow in its wake. We in America to mean solar daytime, Herbert Hoover had proclaimed in August 1928, ar warm to the final triumph over poverty than ever before in the history of any land. The poorhouse is vanishing from among us. 1In mid-October, 1929, the reasonable bourgeoisie American saw ahead of him an illimitable vista of prosperity. The newly inaugurated president, Herbert Hoover, had announced seriously in the previous year that the conquest of poverty was no longish a mirage We stick out not deliver the goodsd reached our goal, still given a chance to go for ward with the policies of the last eight years, and we sh solely soon with the helper of God be within sight of the day when poverty forget be banished from the nation. This was the economical promise interwoven with what a popular historian would call the American Dream. much(prenominal) than complacently, Irving Fisher and other economists in the say-so of Wall route assured the citizen that he was dwelling upon a permanently high musical scaleau of prosperity. 2 Only fifteen months new-mader, those haggling would emergence to haunt him, as the nation plunged into the seve lie in and virtually prolonged economic slack in its history. It began with a stock commercialize crash in October 1929 it slow but steady deepened over the next three years until the nations parsimoniousness (and, many believed, its social and political systems) approached a total collapse.It continued in angiotensin-converting enzyme form or other for a full decade, not only in the get tog ether States but through come out much of the rest of the world, until war finally restored American prosperity. 3 In the autumn of 1929, the grocery store began to fall apart. On October 21, stock de edgeines dipped sharply, alarming those who had become habitual to an uninterrupted upward progression. Two days later, after a truncated bumpy, an even more alarming decline began. J. P. Morgan and Company and other loose deponeers managed to stave off disaster for a while by prominently acquire up stocks to restore public confidence. tho on October 29, all the efforts to save the market failed. Black Tuesday, as it became known, saw a withering panic. Sixteen jillion shares of stock were traded the industrial index dropped 43 points stocks in many companies became virtually worthless. In the weeks that followed, the market continued to decline, with handoutes in October totaling $16 billion. Despite occasional hopeful signs of a turnaround, the market remained deeply depr essed for more than four years and did not fully recover for more than a decade. 4The sudden financial collapse in 1929 came as an especially grim shock because it followed so closely a period in which the bare-assed Era seemed to be performing another series of economic miracles. In particular, the nation was experiencing in 1929 a outstanding boom out in the stock market. 5 In February 1928, stock prices began a steady ascent that continued, with only a few temporary lapses, for a year and a half. By the autumn of that year, the market had become a national obsession, attracting the attention not only of the wealthy, but of millions of spate of dainty-scale means.Many brokerage firms gave added encouragement to the speculative mania by pass absurdly easy credit to purchasers of stocks. It was not hard to understand wherefore so many Americans flocked to invest in the market. Stocks seemed to provide a trus dickensrthy avenue to quick and easy wealth. Between May 1928 and kinfolk 1929, the average price of stocks rose more than 40 pct. The stocks of the major industrials, the stocks that are utilise to determine the Dow Jones industrial Average, doubled in value in that akin period.Trading mushroomed from two or three million shares a day to more than five million, and at times to as many as ten or twelve million. There was, in short, a remote-flung speculative fever that grew steadily more intense. A few economists warned that the boom could not continue, that the prices of stocks had ceased to bear any relation to the earning power of the corporations that were issuing them. But most Americans refused to listen. 6 The first gear of the stock market impressed the world-wide public with the idea that it would depress general line of business. Because of a psychological consequence, it did, but it should not have.There are 120,000,000 persons in the accountry and at the maximum not more than 10,000,000 were involved in stock market transacti ons. The be 110,000,000 persons suffered no loss. The bulk of the population may not have suffered the loss of stock investments, but there were plenty of other ways to answer for loss, and by the end of 1929, with unemployment rising, with shops and factories ornamented by closed or out of business signs, and, perhaps most terrifying of all, the closing of the nations banks, taking with them millions of dollars in deposits. More than 9,000 American banks either went bankrupt or closed their doors to subdue failure between 1930 and 1933. Depositors lost more than $2. 5 billion in deposits. 8 Two-hundred and fifty six banks failed in the single month of November 1930, and further yet on December 11, when the United States Bank, with deposits of more than $200 million, went under. It was the largest single bank failure in America history up to that time, and contributed no bitty portion to an economic hangover in which, in the words of banker J. M.Barker, avarice turned into unre asoning, emotional, universal fear. 9 The misery of the groovy feeling was, then, without precedent in the nations history. 10 The most searing legacy of the depression was unemployment, which attach steadily from the relatively low levels experienced between 1922 and 1929. The percentage of the civil comprehend force without work rose from 3. 2 in 1929 to 8. 7 in 1930, and reached a peak of 24. 9 in 1933. The estimates of unemployment amongst non-farm employees, which include the freelance(a) and unpaid family workers are even higher.These are horrifying figures millions of American families were left without a prick-winner and lookingd the very real possibility of destitution. 11 inwardly a few months after the stock market collapse of October 1929, unemployment had catapulted from its office of a vague worry into the position of one of the countrys foremost preoccupations. Unemployment change magnitude steadily, with only a few temporary particularizebacks, from the fall of 1929 to the spring of 1933. all the same a cursory reference to the several existing estimates of unemployment will extravagantly show the rapidity with which unemployment established itself as an economic factor of the first order of importance. 12 By 1932, a quarter of the civilian labor force was unemployed and the amount was still rising. State and local temperance agencies lacked sufficient funds to meet the demands of families for bare sustenance. Discouraged by revenant turn-downs, the unemployed had stopped looking for jobs.On good days in the great cities the jobless sat on park benches reading cast out newspapers, and many who had lost their homes slept in the parks. While some families managed to stay in their homes and apartments, even though they failed to pay the rent or mortgage interest, others were evicted. To find some semblance of a home, families built protections from discarded crates and boxes on trifling land or in the larger parks. Municipal a uthorities, uneffective to provide adequate help, were forced to adopt a tolerant attitude against these squatters.As time passed the structures became more elaborate and habitable, but older children were inclined to pad away and look for opportunities elsewhere. 13 Fifty years after his presidential term and twenty after his death, Herbert Clark Hoover remains the person most Americans held responsible for the economic calamity that struck after 1929. Few of our political leading have been more ridiculed and vilified during their tenure in office. By 1931, new words and usage based on his name had entered the countrys cultural vocabulary Hooverville a temporary bivouac of homeless, unemployed citizens. Hoover blankets the newspapers used by people to keep warm at night while sleeping in parks and doorways. Hoover Flags empty pants pockets, turned inside out as a sign of poverty. Hoover wagons any motor vehicle being pulled by a horse or mule In the heat of the 1932 election, hitchhikers displayed signs reading If you dont give me a ride, Ill vote for Hoover. 14 From the New York Times, October 22, 1932Fifty-four men were arrested yesterday morning for sleeping or tick over in the arcade connecting with the subway 45 West Forty-second Street, but most of them considered their unexpected meeting with a raiding party of ten policemen as a stroke of luck because it brought them free meals yesterday and shelter last night from the sudden change in the weather. From the New York Times, September 20, 1931 Several hundred homeless unemployed women sleep nightly in Chicagos parks, Mrs. Elizabeth A. Conkey, Commissioner of Public Welfare, reported today.She learned of the situation, she said, when women of good character appealed for shelter and protection, having nowhere to sleep but in the parks, where they feared they would be molested. We are informed that no fewer than 200 women are sleeping in Grant and capital of Nebraska Parks, on the lake front, to say nothing of those in the other parks, said Mrs. Conkey. I made a personal investigation, driving park to park, at night, and affirm the reports. The commission said the approach of winter made the problem more serious, with only one free womans lodging house existing, accommodating 100.These are just two of the many stories that came of the poverty of the depression. 15 Not quite a three and a half years had passed since the stock market crash, had plunged the United States, and most of the world, into the worst economic debacle in Western memory. Industrial output was now less than half the 1929 figure. The number of unemployed, although difficult to count accurately, had mounted to something between 13 and 15 million, or a save high of 25 per cent of the labor force-and the unemployed had 30 million mouths to feed besides their own. Hourly wages had dropped 60 per cent since 1929, white-collar salaries 40 per cent.Farmers were getting less than 50 cents a bushel for wheat. The blunt statistics gave no real picture of the situation-of the pitiful men selling apples on city street corners of the long lines of haggard men and women who waited for dry bread or thin soup, meager sustenance dispensed by insular and municipal charities of the bloated bellies of starving children of distraught farmers blocking the roads to dump milk cans in a desperate effort to drive up the price of milk. They say blockading the highways illegal, said an Iowa farmer. I says, Seems to me there was a tea Party in Boston that was illegal too. 16 The suffering extended into every area of society. In the industrial Northeast and Mid wolfram, cities were becoming virtually paralyzed by unemployment. Cleveland, Ohio, for example, had an unemployment rate of 50 percent in 1932 Akron, 60 percent Toledo, 80 percent. To the men and women suddenly without incomes, the situation was frightening and bewildering. just about had grown up believing that every individual was responsible for his or her own fate, that unemployment and poverty were signs of personal failure and even in the face of national distress, many continued to believe it.Unemployed workers walked through the streets day after day looking for jobs that did not exist. When finally they gave up, they often just sat at home, hiding their shame. 17 An increasing number of families were twist in humiliation to local public moderateness systems, just to be able to eat. But that system, which had in the 1920s served only a small number of indigents, was totally unequipped to handle the new demands being lay on it. In many cities, therefore, relief simply collapsed. New York, which offered among the highest relief benefits in the nation, was able to provide families an average of only $2. 9 per week. offstage charities attempted to supplement the public relief efforts, but the problem was far beyond their capabilities as well. As a result, American cities were experiencing scenes that a few years earli er would have seemed almost inconceivable. Bread lines stretched for blocks outside bolshy Cross and Salvation Army kitchens. 18 Thousands of people sifted through drivel cans for scraps of food or waited outside restaurant kitchens in hopes of receiving plate scrapings. Nearly 2 million young men simply took to the roads, ride freight trains from city to city, living as nomads.The economic hardships of the Depression years placed great unfolds on American families, particularly on the families of middle-class people who had become accustomed in the 1920s to a steadily rising standard of living and now found themselves plunged suddenly into uncertainty. It was not only unemployment that shook the confidence of middle-class families, although that was of course the worst blow. It was in any case the reduction of incomes among those who remained employed. Economic circumstances forced many families, therefore, to retreat from the consumer patterns they had certain in the 1920s.Wo men often returned to sewing clothes for themselves and their families and to preserving their own food, rather than buying such products in stores. Others engaged in home businesses taking in laundry, selling baked goods, accepting boarders. Many households expanded to include more distant relatives. Parents often moved in with their children and grandparents with their grandchildren, or vice versa. 19 The public did not understand the causes or solutions of unemployment, but people could gauge polices by results.They had little tolerance for anyone who said current polices were working when, in fact, more jobs were being lost. One indication of how desperate the situation was came in June when Chicago mayor told one House Committee that it still had a choice it could send relief, or it could send troops. 20 With local efforts chop-chop collapsing, state political sympathiess began to feel new pressures to expand their own assistance to the unemployed. Most resisted the pressure . Tax revenues were declining along with everything else, and state leaders balked at placing additional strains on already tight budgets.Many public figures, moreover, feared that any permanent eudaemonia system would undermine the moral fiber of its clients. 21 People neer enjoy paying taxes. With the lower incomes of the depression came widespread demand for curtailment and lower local taxes. Indeed, many local citizens and property owners were quite unable to pay their taxes at all. Since a large part of the revenues of local government is spent for public education, it was perhaps inevitable that the tax crisis should produce cutbacks in instructs. Many communities decreased their school spending severely.In effect, they passed the burden on to the teachers, the students, or both. No one will ever be able to calculate the cost to American civilization that resulted from inadequate education of the nations children during the gigantic Depression. The colleges problems were so mewhat different. Although the budgets of almost all colleges, public and private, were not what they should have been, a greater problem was that of students who were destitute. Rare was the college that did not have several cases of severe student poverty. Thousands of students in the 1930s made important sacrifices to stay in college.Because the students of the depression constituted, on the whole, a hungry campus generation they gave college life a new and earnest tone. The goldfish gulpers may have got the big headlines in the late 1930s, but they were not typical depression undergraduates. 22 During the first two years of the depression the schools did business about as usual. By September, 1931, the strain was beginning to tell. Salary cuts were appearing even in large towns, and the number of pupils per teacher had definitely increased. Building programs had been postponed.In a few communities school terms had been considerable shortened, and in others some of the department s and services were being lopped off. But, on the whole, the school world wagged on pretty much as usual. During the 1932-33 term the deflation gathered momentum so rapidly that many communities had to close their schools. By the end of last March nearly a third of a million children were out of school for that reason. But the number of children affected, shocking as it is, does not tell the story so vividly as does the diffusion of the of the schools.Georgia had 1,318 closed schools with an enrollment of 170,790, and in Alabama 81 percent of all the children enrolled in white rural schools were on an enforced vacation. In Arkansas, to site the case of another sorely pressed state, over three hundred schools were open for sixty days or less during the entire year. By the last of February more than 8,000 school children were running loose in a sparsely settled New Mexico. And over a thousand west Virginia schools had quietly given up the struggle. 23 The downswing which began in 19 29 lasted for 43 months.The capital Depression has the dubious distinction of being the second longest economic contraction since the Civil war, second only to that which began in 1873 and continued for 65 months. The length of a depression, however, can only give a extra indication of its impact the amplitude and national ramifications of 1929-33 give those years a special importance. 24 Economists, historians, and others have argued for decades about the causes of the wide Depression. But most agree on several things.They agree, first, that what is remarkable about the crisis is not that it occurred bimonthly recessions are a normal feature of capitalist economies. What is remarkable is that it was so severe and that it lasted so long. The important question, therefore, is not so much why was there a depression, but why was it such a wondering(a) one. 25 America had experienced economic c cabbages before. The Panic of 1893 had ushered in a prolonged era of economic stagnatio n, and there had been more recent recessions, in 1907 and in 1920. The Great Depression of the 1930s, however, affected the nation more profoundly than any economic crisis that ad come before not only because it lasted longer, but because its impact was far more widely felt. The American economy by 1929 had become so interconnected, so dependent on the health of large national corporate institutions, that a collapse in one sector of the economy now reached out to affect virtually everyone. nonetheless in the 1890s, large groups of Americans had lived sufficiently independent of the national economy to avoid the effects of economic crisis. By the 1930s, few such people remained. 26 Some economists argue that a severe depression could have been avoided if the federal Reserve system had acted more responsibly.Instead of moving to increase the funds supply so as to keep things from getting worse in the early 1930s, the Federal Reserve first did nothing and then did the abuse thing Late in 1931, it raised interest rates, which contracted the funds supply even further. 27 At the time, a substantial absolute majority of Americans and nearly all foreigners who expressed opinions on the subject believed that the Wall Street stock market crash of October 1929 had triggered the depression, thereby suggesting that the United States was the birthplace of the disaster.The familiarity seemed too obvious to be a coincidence. Many modern writers have agreed for example, the French historian Jacques Chastenet says in Les Annees dIllsions 1918-1931, After the stock market crash on the other side of the Atlantic came an economic crisis. The crisis caused a chain reaction in the entire world. 28 Many years after it ended, former President Herbert Hoover offered an elaborate explanation of the Great depression, complete with footnote references to the work of many economists and other experts. THE DEPRESSION WAS non STARTED IN THE UNITED STATES, he insisted. The primary c ause was the war of 1914-18. In four-fifths of the economically sensitive nations of the world, including such remote areas as Bolivia, Bulgaria, and Australia, the downturn was perceptible long before the 1929 collapse of American stock prices. 29 undetermined economic and social problems, accumulated over many years, made the Great Depression more of a culture crisis than can be calculated in new laws or economic statistics.Americans had always been confident that the rummy virtues of their society-its stronger economic base, its more alert citizenry, and its higher moral principals-would protect it from the evils and failures of europium and would inevitable lead to new levels of civilization. In spite of the derision of a few artists and intellectuals, this American Dream still persisted in the 1920s. Somewhere in the dark passages of the Great Depression, as the forces of world history weakened doctrine in the uniqueness of the United States as a nation set apart, the drea m faded and became indistinct.While America would recover economically and would rise to new heights of material achievement scarcely thought manageable in the 1929, the myth of a unique destiny would never find its old force and certainty. Henceforth Americans would share some of the realistic disillusion of Europeans, some of the sense that survival alone was an achievement in a world not necessarily designed for the triumph of the human spirit. 30 Endnotes 1. Richard N. online, The Great American chronicle (CD-ROM) The Civil War to WWII, Carlsbad, CA. Comptons New Media McGraw-Hill 1995) p. 1 2.Dixon Wecter, A History Of America The Age Of The Great Depression, (New York, NY. The Macmillan Co. 1948) p. 1 3. Current Opcit. p. 2 4. ibidem p. 8 5. Ibid. p. 6 6. Ibid. p. 7 7. T. H. Watkins, The Great Depression America in The 1930s, (Boston, MA. Little Brown and Co. 1993) p. 54 8. Current Opcit. p. 16 9. Watkins Opcit. p. 55 10. Current Opcit. p. 4 11. Peter Fearon, War Pros perity & Depression The U. S. preservation 1927-45, (Lawrence, KA. University Press 1987) p. 137 12. David A. Shannon, The Great Depression, (Englewood Cliffs, NJ. Prentice anteroom Ins. 1960) p. 13. doubting doubting Thomas C. Cochran, The Great Depression and World War II 1929-1945, Glenview, IL. Scott Foresman and Co. 1968) pp. 29-30 14. Michael E. Parrish, dying(predicate) Decades America in Prosperity and Depression 1920-1941, (New York, NY. W. W. Norton & Co. 1992) p. 240 15. Shannon Opcit. pp. 13-15 16. The Editors of TIME-LIFE BOOKS, This Fabulous nose candy 1930-1940, (New York, NY. Time-Life Books 1985) p. 23 17. Richard N. Current, The Great American History (CD-ROM) The Civil War to WWII, (Carlsbad, CA. Comptons New Media Inc. McGraw-Hill 1995) p. 20 18. Ibid. . 21 19. Ibid. p. 22 20. Robert S. McElvaine, The Great Depression America 1929-1941, (New York, NY. Times Books 1984) p. 122 21. Current Opcit. p. 21 22. David A. Shannon, The Great Depression, Englewoo d Cliffs, NJ. Prentice Hall Inc. 1960) p. 93 23. Ibid. p. 94 24. Peter Fearon, War Prosperity and Depression The U. S. Economy 1917-45, Lawrence, KA. University Press 1987) p. 89 25. Current Opcit. p. 9 26. Ibid. p. 3 27. Ibid. p. 17 28. John A. Garraty, The Great Depression, San Diego, CA. Harcourt Brace Jovanovich 1986) p. 4-5 29. Ibid. p. 4 30. Thomas C.Cochran, The Great Depression and World War II 1929-1945, (Glenview, Il. Scott Foresman and Co. 1968) p. 1 Bibliography Cochran Thomas C. , The Great Depression and World War II 1929-1945, Glenview, Ill. , Scott Foresman and Co. , 1968 Current Richard N. , The Great American History (CD-ROM) The Civil War to WWII, Carlsbad California, Comptons New Media Inc. & McGraw-Hill, 1995 Editors of TIME-LIFE BOOKS, This Fabulous Century 1930-1940, New York, NY. , Time-Life Books, 1985 Fearon Peter, War, Prosperity, and Depression The U. S. Economy 1917-45, Lawrence, KA. , University Press, 1987Garraty John A. , The Great Depression, San Diego, CA. , Harcourt Brace Jovanovich, 1986 McElvaine Robert S. , The Great Depression America 1929-1941, New York, NY. , Times Books, 1984 Parrish Michael E. , Anxious Decades America in Prosperity and Depression 1920-1941, New York, NY. , W. W. Norton & Company, 1992 Shannon David A. , The Great Depression, Englewood Cliffs, NJ. , Prentice Hall, 1960 Watkins T. H. , The Great Depression America in The 1930s, Boston MA. , Little Brown and Co. , 1993 Wector Dixon, A History of America The Great Depression, New York, NY. , The Macmillan Co. , 1948