The Great Depression
By Alexus Croom
Causes and Effects of the Depression, 1929-1933
During the wall street crash the ever rising stock prices became a symbol and a center of wealth during the prosperous 1920s. "Boom" was in full throttle in the United States and the world economy during the late 1920s. Stock prices continued to go up for a total of 18 months from March of 1928 to September 1929. September 3rd the Jones Industry finally reached a high of 381. Millions invested in the "boom" of 1928 and millions also lost their money when the "boom" collapsed in October 1929. Even though the stock prices collapsed tremendously due to the crash the actual panic didn't start until a Thursday towards the end of October. During this Black Thursday October 24, 1929 there was an unusual amount of selling on Wall Street, and the stock prices rose. On Black Tuesday, October 29, the bottom fell out, as millions ordered their brokers to sell, when there were no buyers to be found. From October 24, 1929 prices on wall street continued to go down. Wages went up only a little bit compared to the big increases in productivity and the corporate profits. The economy's success wasn't shared by all. Many people in all of the economic classes thought that they could get rich by "playing the market" . People stopped investing their money to share within the profits of a company. When people bought on margin they were allowed to borrow most of the cost of the stock, making down payments as low as 10 percent. Once stock prices dropped, the stock market collapsed and several people lost everything they borrowed and invested. The excessive use of credit overproduction of consumer goods, weak farm economy, government policies, and global economic problems also played major roles in the wall street crash. Values of goods and services made by the nation in one year went from $104 billion to $56 billion within four years when the nation's income declined over 50 percent. A good 20 percent of all of the banks shutdown, cleaning out 10 million savings accounts . By the year of 1933, the count of people that were not working went up to 13 million people, 25 percent of the workforce, farmers weren't included. The republican domination came to an end. Federal government power would increase tremendously, while the people accepted the fact of changes in the policies. Affects of the depression were felt by each social class. African Americans and farmers had the most difficulties. The numbers of poverty and homelessness increased. Mortgage foreclosures and evictions became common.
The Crash of 1929
In June of 1930, the president signed in on a law schedule with tariff rates that were the highest in history. The Hawley Smoot tariff which was passed by the Republican congress helped set tax increases which ranged between 31 to 49 percent on foreign imports. European countries had higher tariff rates of their own against the United States' goods. This effect was only to decrease trade for every nation, both the national economy and the international economy went deeper into depression. By the year of 1931, conditions got even worse in Europe and the United States that the Dawes plan was discontinued. Hoover proposed a suspension on international debt payments. Britain and Germany accepted the suspension, France didn't. President Hoover felt that government action was well needed to help pull the United States out of their doldrums. He even supported law programs that gave assistance to farmers and struggling businesses that were in debt. The farm board was made in 1929 right before the stock market crash, but its power wasn't enlarged until later to meet the economic crisis. The board helped farmers stabilize prices by holding grain and cotton in storage, but the program was too modest to handle the overproduction of farm goods. The (RFC) was made in 1932 by congress for propping up false railroads, banks, life insurance companies, and other financial institutions. Emergency loans from the (RFC) helped stabilize key businesses. Democrats felt like this plan would only help the rich. In 1932 unemployed workers and impoverished farmers were in a state of desperation. Some went ahead and took direct action to fight the forces that were crushing them. In some communities, farmers came together to keep banks from foreclosing their farms and putting them out of their homes. In the summer of 1932 1000 unemployed world war I veterans marched over to Washington D.C. Demanding immediate payment of the bonuses they were promised at a later date (1945). Congress failed trying to pass the bill they sought. The army's chief of staff, used their tanks and tear gas to make the veterans leave from Washington. Many people began to look at president Hoover as a heartless and uncaring person. 1932 was the depression's worst year, 1932 was a presidential election year. The republicans renominated Hoover who gave caution about the democrats victory, he said their victory would only have an outcome of worse economic problems. At the democrats convention the democrats nominated the governor of New York, Franklin D. Roosevelt for president, and John Nance Garner for vice president. In the voters' minds, the actual issue was the depression. 60 percent of the people felt that there was time for a change. Hoover remained president.
Franklin D. Roosevelt's New Deal
Roosevelt was the only child of his rich New York family. Roosevelt admired his cousin Theodore and followed in his footsteps, becoming a New York legislator and later a U.S. assistant secretary of the navy. Franklin was a Democrat. By 1920 he was a Democratic nominee for vice president. Both Franklin and James Cox lost the election. In the middle of Franklin's promising career he became paralyzed by Polio in 1921. Franklin had more than enough money to retire, instead he labored to continue his career in politics and soon got the full power of his upper body back. Even though Franklin would never walk again, his greatest strengths were his welcoming personality, his talent as a speaker, and the ability to work with other people, and inspire people. Roosevelt's campaign in 1932, he offered indistinct promises but no real programs. He didn't have a comprehensive plan for stopping the depression, but he was committed to steps and eager to experiment with political solutions to the problems the economy faced. In Roosevelt's acceptance speech he delivered during the democratic convention, Roosevelt promised to help the "forgotten man at the bottom of the economic pyramid". With giving shape to Roosevelt's new deal, Roosevelt relied on the group of advisers that helped him when he was governer of New York. Louis Howe was supposed to be his chief political adviser when Roosevelt needed advice, he turned to a group of university professors, also known as the brain trust, which included Rexford Tugwell, Raymond Moley, and Adolph A. Berie Jr. With the nation being desperate and close to panic, democrats congress looked at the new president for leadership, which Roosevelt didn't mind providing. Soon after being put into office on March 4, 1933, Roosevelt put congress into a hundred-day-long special session. During this short period, congress passed every request they got from President Roosevelt. The new laws and agencies were so numerous they were mainly referred to by their initials: WPA, AAA, CCC, NRA. Early 1933, banks were failing, while depositors flocked to withdraw funds. Over 5,000 banks failed in 1933. In order to restore confidence in these banks, the president ordered for the banks to be closed giving the bank a holiday on March 6, 1933. Roosevelt. Went on the radio March 12, 1933, to present the first fireside chat to the people of America. The president made sure that the banks that reopened after the bank holiday were officially safe. There were other programs of the first new deal, the Civil Works Administration (CWA)- this agency hired workers for construction projects supported by the federal government., the Securities and Exchange Commission (SEC)- was made to get the stock market together and put strict limits on things that led to the wall street crash in 1929, the Federal Housing Administration (FHA)- gave construction and homeowners a push insuring bank loans for making new houses.
The Second New Deal
Harry Hopkins became important with Roosevelt's administration with the newest creation in the year of 1935, which Hopkins was head of. The WPA spent billions of dollars between the years 1935-1940 to get people jobs. After the first year of operation with Hopkins, 3.4 million men were employed . They were paid double the relief rate but less than the wage. Most workers were put to work making new bridges, roads, airports, and public buildings. The (NYA) gave part time jobs to help the young people stay in high school and college until they could get a job. The reform of the second new deal reviewed Roosevelt's belief about the industrial workers and farmers. The major labor law of 1935 replaced labor provisions of the National Industrial Recovery Act. The new agency gave loans for electrical cooperatives. And a revenue act of 1935 increased the income taxes of the wealthy. The Social security act made a federal insurance program based on the automatic collection of taxes from employees and employers through their careers. The social security trust fund would be used to help make monthly payments to people over 65 that retired. The economy improved but it was still weak and unstable until the year of 1936 when Roosevelt was nominated again by the Democrats for second term. Alfred Landon was challenging Roosevelt. Landon criticized the democrats because they spent too much money. Roosevelt won every state except Maine.