As we examined in Module 15, during the 1920s, American production soared. As a result of scientific management techniques, fewer workers were able to produce more. The economy was based more and more on consumer goods, including automobiles, appliances, and leisure activities.
More and more Americans participated in the consumer economy, but they did so with the use of credit. Although productivity rose, wages did not. In Module 16, we'll examine the economic crisis at the end of the 1920s.
Three questions will guide this module blog post:
How did the Great Depression change the way Americans viewed the role of the state?
How did the Great Depression impact gender and family relationships?
How did the Great Depression exacerbate existing tensions within American society?
Before we get started, a poll:
Poll #1:
In your opinion, which global event had the greatest impact on American society in the early twentieth century? World War I? or the Great Depression?
Answer the poll below, or access it here.
Now, let's get started!
Part I: Crisis of Capitalism
Through the 1920s, the gap between the rich and poor continued to grow. The richest one-fifth of families received nearly 50% of all personal income, while the remaining four-fifths of families divided the rest. The richest 10th got richer over the decade, while the poorest tenth got poorer, and the middle held their ground.
Herbert Hoover was elected to the presidency in 1928. He claimed that, “We in America today are nearer to the final triumph over poverty than ever before in the history of any land. The poorhouse is vanishing from among us.”
The US had become the world’s creditor after World War I. It dominated the world economy the way Great Britain had before the war.
During the 1920s, the US exported more and more goods around the world. However, due to high tariffs, other countries weren’t able to import their goods back into the US and weren’t able to earn dollars of their own. They borrowed to keep their economies going.
By 1929, more people were investing in the stock market. They were buying stocks by putting a small amount of money down, but borrowing the remainder at high interest rates. Banks were loaning billions of dollars into the market to support buying stocks on credit.
Everything hinged on this system where the banks loaned out money. If something disrupted the system, it could crash and bring down both the American and European economies.
Stock Market Crash
The stock market crashed on “Black Tuesday,” October 24, 1929. The market had stalled, and banks began demanding repayments of their loans. Borrowers were forced to declare bankruptcy which led to chaos.
In 1930, 800 banks closed and the government did little to save the banking system. Unemployment, which was at 1.5 million in 1929, shot up to 4.2 million in 1930. Without dollars and American markets, the world economy began to do very poorly. Foreign countries could neither buy American goods or repay earlier loans. They too sought protection behind tariffs, keeping out American goods, which then worsened conditions in the United States.
However, Herbert Hoover announced that the economy was sound. Although Hoover had entered the White House with 58.2% of the popular vote, he left it utterly discredited, as Americans largely blamed him for the economy’s decline. People used his name as a synonym for hard times and suffering.
People who spent the night on park benches covered by newspapers said they were sleeping on “Hoover blankets.” People hitched broken-down cars to horses said they rode in “Hoover wagons.”
Hoover tried to fix the economy by implementing key policies: He tried to persuade business and labor leaders to maintain wages and keep up production; he stepped up federal expenditures for the construction of roads, bridges, and public buildings; he raised tariff rates to protect American manufacturing and farming; and declared a moratorium on war debts, encouraging England and France to suspend payments in order to restore fiscal sanity to the world economic system. He also implemented the Reconstruction Finance Corporation, which made direct loans to big capitalist institutions in danger of bankruptcy and further unemployment.
However, none of these policies reversed the economic downturn. The US’ gross national product declined, national income fell from $88 billion to $40 billion, more and more banks failed, and farmers’ income plummeted by 61%. In 1930, at least 13 million workers (25% of the total) were unemployed. An average of 75,000 workers lost their jobs every week for three years.
The Great Depression transformed American life. Hundreds of thousands of people took to the road looking for work. Thousands of families were evicted from their homes and moved into shantytowns, which they dubbed “Hoovervilles.” The Depression also reversed the movement of the population from the farms to the cities, as many families left cities in order to try to grow food for their families. The future was extremely uncertain, and it affected the American population psychologically as well as financially. The suicide level rose to its highest level in history, and the birthrate fell to its lowest rate.
How did people cope? In hard economic times, when breadwinners lost their jobs, wives, siblings, and children went looking for work in order to aid the family. Neighbors and other close associates in tight-knit ethnic communities lent a hand until families got back on their feet.
However, during the Depression, everyone was pushed to their limits. When a breadwinner lost a job, it was not as likely that someone else could pick up the slack. They looked to welfare agencies within their own communities, such as benevolent societies for specific ethnic groups and church charities. These charities and institutions were often unable to keep up with the growing need for assistance.
Despite the vast employment issues, Hoover was opposed to offering federal relief for the unemployed. He believed it would increase taxes and discourage private investment, leading to an unbalanced budget. Most of all, he believed that relief would undermine the “moral character” of the recipients, their “self-reliance,” “sturdiness,” and “independence.” In 1931, Hoover quoted former president Grover Cleveland, “The Government should not support the people…Federal aid…weakens the sturdiness of our national character.”
In the Memory Palace episode assigned for this module, you’ll be able to hear more about his ideology. He was very proud of being a “self-made man” and believed firmly in the idea of American grit and independence.
Bonus Army
Hoover’s response to the Bonus Army represents the disconnect between his ideologies and the demands of the American people. In 1924, Congress had promised payments, known as "bonuses," to veterans of WWI, to be paid out in 1945. In 1932, many veterans were unemployed and wanted to be paid immediately. They felt they deserved the money and were in desperate need. Veterans came to DC to lobby for the passage of a bill that would pay out the money to them immediately.
Although they did arouse sympathy, Hoover was reluctant to give into the demands of the Bonus Army. He believed that paying the bonuses would damage the balanced budget and give preferential treatment to veterans over other needy citizens. In response, 22,000 veterans set up camp in Washington, DC. They built shanties furnished from garbage dumps. When Congress failed to pass the bill for their immediate payment, it allocated money to pay for their transportation home. However, many remained in DC, presumably because they had no homes or jobs to return to.
Hoover refused to meet with representatives for the veterans, assuming that an interview would only dignify their case and raise false hopes, and bring even more demonstrators to Washington.
He also came to accept the view that communist agitators infiltrated the Bonus Army, and demanded that they evacuate. Cavalry and infantry troops were dispatched to move the Bonus Army out, which escalated into a full conflict where soldiers, armed with bayonets and tear gas, drove the veterans back to their camp, and set fire to their shantytown.
In the eyes of many Americans, Hoover’s response to the Depression seemed inadequate and uncaring. Many of the president’s advisers told Hoover that economic downturns were a natural part of capitalism, as they weeded out unproductive firms and encouraged moral virtue among the less fortunate.
Few political leaders understood the extent to which consumer spending had become integral to the American economy. The federal government had never faced a crisis of this magnitude. Hoover’s faith in businesses to voluntarily maintain investment and employment, and charities to assist the people was not realistic in this economic climate.
Poll #2:
What do you think? In your opinion, did Hoover deserve the American peoples' harsh critiques of his presidency? Answer the poll below, or access it here.
The Dust Bowl
During the 1930s, in addition to extreme economic downturn and widespread unemployment, the US was also faced with an environmental crisis. According to historian Donald Worster, the capitalist ethos imparted several key ecological values that led to the Dust Bowl:
"Americans saw nature as capital. They believed that man had a right—even an obligation—to use that capital for self-advancement. And, they believed that the social order should permit and encourage this continual increase of personal wealth. Farming and ranching were increasingly seen as businesses. The object of the land was not to make a living, but to make money." [1]
As a result, commercial farming took risks with the land in order to make a profit, and there was no real structure in place to stop them. It was considered normal in the American capitalist line of thought. Commercial farming relied on the overproduction of singular cash crops (namely wheat on the Southern Plains). This resulted in the domination and exploitation of the land—for example, by pulverizing the topsoil and killing native grasses which prevented erosion—which, when coupled with drought, resulted in the Dust Bowl. Massive dust storms engulfed towns, causing farmers to be displaced and to move west looking for work.
This particularly affected the people working on large commercial farms and sharecroppers who did not own their own land.
Gender, Family, and the Great Depression
Unemployment and poverty wreaked havoc on the supposedly “normal” American family system—the nuclear family encouraged by Progressive maternalist reformers, with one male breadwinner who was able to support his wife and children. Of course, this family system was not the norm for many families who depended on more than one wage-earner. However, the idea of the male breadwinner was integral to the psychological and economic balance of the family. When men could no longer carry their weight, wives and children became the sole support of their families.
Women found it easier at times to get jobs. Women’s labor was cheaper than men’s, and they worked mainly in service industries (as waitresses, maids, and clerks) which survived the hard economic times better than manufacturing jobs dominated by men. Children also found they had an easier time getting jobs than their unemployed fathers. Children were expected to turn over their entire paycheck to the family, rather than reserving a portion for leisure or clothing, which sparked conflict within households.
The male breadwinner lost some of his authority and feared that he would lose respect from his wife and children. Some men grew resentful over their loss of status. In 1934, a social worker in Chicago wrote, “Family relations are becoming strained; fathers feel they have lost their prestige in the home; there is much nagging, mothers nag at the fathers, parents nag at the children. Children of working age who earn meager salaries find it hard to turn over all their earnings and deny themselves even the greatest necessities and as a result leave home.” [2]
Poll #3:
In your opinion, which aspect of the Great Depression posed the biggest threat to stability and order in the US? The economic downturn? Or internal psychological difficulties and family strife? Answer in the poll below, or access it here.
In 1932, the Democratic candidate, Franklin Delano Roosevelt (FDR), won a resounding victory for the presidency, receiving 57% of the popular vote. Americans were ready for a complete change, after battling the economic crisis, which they associated with Herbert Hoover.
Below, you’ll find election maps from 1928 and 1932 which demonstrate the drastic change to the political map.
FDR promised the American people a “new deal.” He spoke to what he saw as the “spiritual values” of the American people—work and security. In his 1932 speech accepting the Democratic nomination, he said, “What do the people of America want more than anything else? To my mind, they want two things: work, with all the moral and spiritual values that go with it; and with work, a reasonable measure of security—security for themselves and their wives and children. Work and security—these are more than words. They are more than facts. They are the spiritual values, the true goal toward which our efforts of reconstruction should lead.”
Part II: Introducing the New Deal
In the second part of this module, we’ll examine some of the early programs of FDR’s New Deal.
One of the first reforms FDR implemented was a remedy for the failing banks. Roosevelt declared a “bank holiday,” temporarily halting all bank operations, while Congress met in a special session. In March 1933, it passed the Emergency Banking Act, which provided funds to shore up threatened institutions. He also passed the Glass-Steagall Act, which barred commercial banks from becoming involved in the buying and selling of stocks (preventing the practices that had contributed to the stock market crash).
The law also established the Federal Deposit Insurance Corporation (FDIC), which insured checking and savings accounts of individual depositors. Together, these measures rescued the financial system and increased the government’s power over it. These measures brought back a new sense of confidence for people to put their money back in commercial banks, and provided a government cushion for the commercial banking industry. In addition, the Securities and Exchange Commission (SEC) required any corporation trying to sell stocks and bonds to file a disclosure statement, making all aspects a matter of public record. This served to limit the power of inside traders, cleaned up the stock exchange, and gave more power to outside brokerage companies who dealt directly with their customers.
National Recovery Administration
One of the initial agencies FDR implemented to combat the Depression was the National Recovery Administration (NRA). The goal for the administration was for the government to work with groups of business leaders to establish industry codes that set standards for output, prices, and working conditions. This rejected the idea of market competition.
The NRA also guaranteed labor the right to organize, and inaugurated a public works program to pump money into the economy.
By the fall of 1933, every major industry had pledged to cooperate, but the NRA failed to work as Roosevelt had envisioned. Many corporate leaders saw no problem fixing prices, so long as they were the ones doing the fixing. Big business played the dominant role in drawing up the industry codes. As a result, the NRA kept production down and prices up. The codes restricted output by limiting factory hours, banned new plant construction, set minimum prices, prohibited sales below cost, and restricted other competitive practices. These policies caused a lot of controversy. Consumers resented the arrangement because prices remained high. Small businesses believed that the codes discriminated in favor of bigger businesses. Workers were allowed to unionize, but there was a lack of enforcement and oversight that forced employers to bargain in good faith. In 1935, the Supreme Court found the NRA unconstitutional.
Agricultural Adjustment Administration
The Agricultural Adjustment Administration (AAA) was an agricultural counterpart to the NRA. It also involved a planned limitation of production under government oversight. Under the AAA’s plan, farmers signed acreage-reduction contracts, and in return for reducing output, they received government subsidies. This program affected wheat, cotton, hog, tobacco, corn, rice, and milk farmers.
In the beginning, the government had to convince farmers to destroy part of their existing crops. The AAA paid farmers to destroy 1/4 of their cotton, and to slaughter 6 million pigs and 200,000 sows. Critics opposed this at a time of widespread hunger—although pork was distributed to relief agencies to give to needy families.
By limiting production, the AAA succeeded in raising farm prices and incomes, but only for the farmers who owned their own land. For those who worked as tenant farmers and sharecroppers, the policy of reducing farm acreage lead to evictions and unemployment. In addition, they received little of the government funds, since payments were only made to landowners.
Landowners were supposed to distribute the money equally to their tenants, but few actually did so. Essentially, the AAA froze the economic status quo. Large-scale operators got large-scale benefits, but small-scale farmers got very little.
Poll #4:
In your opinion, what was the most essential aspect of the American economy which needed to be fixed after the Great Depression? Agriculture? Manufacturing and industrial jobs? Banks? or something else? Answer in the poll below, or access it here. (If you chose "something else," let us know why in the annotations/comments!)
Government Jobs and Public Works
To conclude the module, we’ll examine two more programs that were established in the early stages of the New Deal. The first was the Civilian Conservation Corps (CCC). This program had unemployed young men work on projects like forest preservation, flood control, improvements of national parks, and wildlife preserves. By the time the program ended in 1942, 3 million people had passed through CCC camps, where they received wages of $30 per month. The program was so popular, that Congress considered making it a permanent agency.
The CCC was a quasi-military organization, creating the impression that enrollees were “soldiers in training” rather than men receiving government relief. Members were required to allot most of their monthly income to a “dependent.” However, those who enrolled in the CCC program were required to be unmarried. Therefore, as historian Margot Canaday writes, the CCC was a program for “breadwinners-in-training.” Because enrollees were required to allot most of their wages to a family member (since they were unmarried, the “dependent” they would send money to was vaguely defined), this program served to shore up the understanding of the male wage-earner as a provider for the family, even in times of economic hardship. [3]
Word Cloud #1:
Why do you think CCC enrollees were required to be unmarried? Enter a response below, or access the word cloud here.
Tennessee Valley Authority
The second program was the Tennessee Valley Authority (TVA). The TVA built a series of damns to prevent floods and deforestation around the Tennessee River and to provide cheap electric power for homes and factories in a seven-state region, where most people still lived in isolated cabins. Consumption of electricity in the region more than doubled.
For the first time, the government was in competition with private companies selling electricity. Private companies were opposed to the program, arguing that their rates would be measured against the federal government’s. They engaged in legal battles against the TVA, which the TVA won.
In these initial New Deal programs, we can see the development of a new kind of American state—an expanding government role in the everyday lives of American citizens. We’ll assess the conflicts and controversies which arose over that expansion in the next module.
Repatriation
Lastly, how did the Great Depression affect immigration? The racial animosity that had developed over the competition for jobs intensified in many areas throughout the US during the Great Depression. One key phenomenon that exemplified this conflict were the repatriation campaigns of the early 1930s.
Repatriation campaigns were designed to encourage Mexicans living in the US to leave permanently for Mexico. Started by Los Angeles county relief agencies, local authorities throughout the Southwest and Midwest repatriated over 400,000 Mexicans during the early 1930s. Authorities claimed that it was cheaper to transport Mexicans to the border than to keep them on relief. An estimated 60 percent were children or American citizens by birth, the vast majority spoke English and many had been in the US for at least ten years.
While some repatriates left voluntarily, induced by the atmosphere of growing racial animus, others were pressured into leaving by relief workers. This applied to even those with American citizenship.
Nearly 20% of the Mexican population in the US returned to Mexico during the early years of the Depression.
In this example we see how race impacted the understanding of who was “deserving” of government relief, even in the case of those who possessed American citizenship rights. The idea that Mexican families were “using up” too much of the relief, or that they should be working in the low-wage and harsh conditions of agricultural labor rather than participating in New Deal jobs, speaks to the underlying legacies surrounding the conflation of “whiteness” with “Americanness” that we talked about in Modules 11 and 12. [4]
In 1935, a formal repatriation program was also enacted for Filipino immigrants living in the US. Filipinos, as US nationals, were allowed to migrate to the United States but unable to obtain full citizenship. Their participation in labor organizing and the fear of interracial relationships between Filipino men and white women was at the root of the racial hostility that Filipinos faced. The Welch bill explicitly provided that Filipinos who chose to repatriate would be unable to reenter the United States. When the program ended in 1941, a total of 2,064 Filipinos chose to return to the Philippines. Many chose to remain in the United States, reflecting resistance against efforts to expel them.
Conclusion:
The widespread unemployment and homelessness during the Great Depression changed the ways Americans viewed relief from the federal government.
The “nuclear” family was strained during the Great Depression, but the idea of the male breadwinner remained entwined in American ideology.
Certain New Deal programs (like the AAA) exacerbated tensions between rich and poor. In some regions, immigrants faced increased hostility due to the impression that they did not deserve relief funds.
Citations:
[1] Donald Worster, Dust Bowl: The Southern Plains in the 1930s (New York; Oxford: Oxford University Press, 1979), 6.
[2] Lizabeth Cohen, Making a New Deal: Industrial Workers in Chicago, 1919-1939, 2nd ed (Cambridge: Cambridge University Press, 2008), 248-249.
[3] Margot Canaday, The Straight State: Sexuality and Citizenship in Twentieth-Century America (Princeton: Princeton University Press, 2009), 122-123.
[4] For more on repatriation, welfare, and race see Cybelle Fox, Three Worlds of Relief: Race, Immigration, and the American Welfare State from the Progressive Era to the New Deal (Princeton: Princeton University Press, 2012).
In your opinion, which global event had the greatest impact on American society in the early twentieth century?
I chose The Great Depression because almost everybody in the US was effected badly. Knowing how people tried to gain money however they can and the labor ordeals, like in "Of Mice And Men", they've been through just seems crazy.
Just a note to bring together all of the themes I saw in these comments--I really like how you all were taking into account the vast (and different) effects of the Depression. This period obviously had dire economic consequences, but also affected peoples' psychological and emotional morale. The conversation about Hoover was especially interesting. The president has this really complicated job--to implement real policy changes to improve peoples' lives and to help in a crisis (which, as most of you argued, he wasn't able to do) and also to provide some sense of comfort and hope (a more nebulous role, but one that is really important). Hoover didn't really do this either--he became a symbol for the opposite! (Hoovervilles, Hooverblankets,…
The world of stock markets and corporate investments influence what Americans invest in. With Manufacturing rapidly declining in job security. Food sources being ruined due to improper agriculture techniques. Losing so much that many would take their own lives, then suffer under the poverty and pressure of it all. An event named the great depression that mentally exhausts and puts stress on the nation as a whole. This would be a period of much thinking and spiritual strife for the working class. The country has failed them and left them to suffer for this time period. Thus leading to the need for serious policies and changes to correct the damage done.
What do you think? In your opinion, did Hoover deserve the American peoples' harsh critiques of his presidency?
Yes, I believe Hoover had too much faith in business to provide a solution on their own. As well as, I think his response to the Great Depression was inadequate due to the pattern of the economic cycle in past history.
In your opinion, which global event had the greatest impact on American society in the early twentieth century? The Great Depression, because it has affected both poor and rich countries in ways of income, profits, jobs, and tax revenue. This event has changed the system and how things work.