The Great Depression (1929-39) was the deepest and longest-lasting economic downturn in the history of the Western industrialized world. In the United States, it began soon after the stock market crash of October 1929, which sent Wall Street into a panic and wiped out millions of investors. The Great Depression was an economic slump in North America, Europe, and other industrialized areas of the world that began in 1929 and lasted until about 1939. It was the longest and most severe depression ever experienced by the industrialized Western world.
Causes of the Great Depression
The Great Depression remains the most important economic event in American History. It caused enormous hardship for tens of millions of people and the failure of nation's banks, businesses, and farms. The stock market crash in 1929 is believed to be the cause of the Great depression, but there are many other factors and long-term causes that developed in the years prior to the depression. Buying on credit was huge problem in the 1920’s. Since the 20’s was a period of great economic boom, not many people took the future into consideration. Many people bought expensive luxury items using money they did not have. Installment buying allowed people to make a monthly, weekly, or yearly payment on an item that they wanted or needed. Buying on credit and installment buying left millions of people in debt. Installment buying allowed lenders to repossess an item if the borrower missed just one payment. People may have stopped making new purchases to reduce the risk of losing things they already had bought on credit. There was a big drop in consumer spending, which lowered prices, which meant that farmers, businesses, and nations could not repay their debts. 'During the 1920s, the rich got richer, and the poor got poorer. Between 1920 and 1929, the income of the wealthiest 1 percent of the population rose by 75%, compared with a 9% increase for the rest of Americans as a whole. More than 70 percent of the nation's families earned less than $2500 per year, then considered the minimum amount needed for a decent standard of living. Even families earning twice that could not afford many of the household products that manufacturers produced. Economists estimate that the average man or woman bought a new outfit of clothes only once a year. Scarcely half the homes in many cities had electrical lights or a furnace for heat. Only one city home in ten had an electric refrigerator. This unequal distribution of income meant that most Americans could not participate fully in the economic advances of the 1920s. Many people did not have the money to purchase the flood of goods that factories produced. The prosperity of the era rested on a fragile foundation.' (http://us-history-the-great-depression.wikispaces.com/Unequal+Distribution+of+Income).
One of the several problems of the Great Depression was overproduction. American businesses were producing far more than could be consumed. The result was lost profits and eventually debts. After a while many companies went out of business. The market began an unprecedented rise in 1928. By September 3rd 1929 the market reached a record high of 381. Then the decline began. Many didn't think it would last but on October 24th panic selling began as 12.8 million shares changed hands. Then came Black Tuesday, October 29th 1929. The market plummeted. By July the Dow reached a low of 41.22. Millions upon millions of dollars had been lost. Many who had bought on margin (credit) had to pay back debts with money they didn't have. Some opened up the windows and jumped to their deaths. The depression had arrived. Black Tuesday refers to October 29, 1929, when panicked sellers traded nearly 16 million shares on the New York Stock Exchange. It was often cited as the beginning of the Great Depression. During the 1920s, the U.S. stock market underwent rapid expansion, reaching its peak in August 1929, a period of wild speculation. By then, production had already declined and unemployment had risen, leaving stocks in great excess of their real value.
One of the several problems of the Great Depression was overproduction. American businesses were producing far more than could be consumed. The result was lost profits and eventually debts. After a while many companies went out of business. The market began an unprecedented rise in 1928. By September 3rd 1929 the market reached a record high of 381. Then the decline began. Many didn't think it would last but on October 24th panic selling began as 12.8 million shares changed hands. Then came Black Tuesday, October 29th 1929. The market plummeted. By July the Dow reached a low of 41.22. Millions upon millions of dollars had been lost. Many who had bought on margin (credit) had to pay back debts with money they didn't have. Some opened up the windows and jumped to their deaths. The depression had arrived. Black Tuesday refers to October 29, 1929, when panicked sellers traded nearly 16 million shares on the New York Stock Exchange. It was often cited as the beginning of the Great Depression. During the 1920s, the U.S. stock market underwent rapid expansion, reaching its peak in August 1929, a period of wild speculation. By then, production had already declined and unemployment had risen, leaving stocks in great excess of their real value.
President Herbert Hoover
Herbert Hoover did believe that the government should act to improve the economy. The old story of his belief in "rugged individualism" has been widely misinterpreted. Hoover was opposed to direct aid from government to individuals, but never took a hands off, laissez faire attitude. Hoover's approach was anything but "hands off." He did believe that the American people needed to show some initiative to end the Depression, and not wait on the government to solve it for them; at the same time, he did not expect the government to sit back and let people solve it for themselves. The only government involvement he opposed was direct Federal government involvement with individuals. Rather he believed the proper way to stimulate the economy was to stimulate business and public works through the states. Hoover thought the stock crash was just part of a recession that would pass; so did many economists and business leaders. Herbert Hoover would spend his entire presidency trying to ward off of what the stock market crash led to: The Great Depression. A global economic slowdown and over-speculation brought the worst financial crisis the U.S. had known before or since. It was first called the boulder dam until a Secretary of the Interior, Ray L. Wilbur, named the dam "Hoover Dam" at the spike driving ceremony. This announcement came as a surprise to reporters. An act passed by the Hoover administration in 1932 that was designed to encourage home ownership by providing a source of low-cost funds for member banks to extend mortgage loans. The Federal Home Loan Bank Act was the first in a series of bills that sought to make home ownership an achievable goal for more Americans. The Reconstruction Finance Corporation was a government corporation in the United States that operated between 1932 and 1957 which provided financial support to state banks, railroads, mortgage associations and other business. Herbert Hoover was the 31st American President who served in office from March 4, 1929 to March 4, 1933. One of the important events during his presidency was the emergence of the Shanty Town during the Great Depression.
Depression in the City
The Shanty Towns, known as Hoovervilles, sprang up across the nation during the Great Depression (1929 - 1941). They were built by unemployed impoverished Americans that had been made homeless and had nowhere else to live. By 1932, between one and two million American people were homeless. The Hoovervilles varied in size from just a few shacks clustered together to communities of over 1000 rickety shacks covering acres of unused or public lands. The makeshift shacks were constructed from unwanted materials and lacked basic amenities such as adequate sanitation and clean drinking water. All the Hoovervilles were 'eradicated' at the end of the Great Depression in 1941. Soup kitchens in America started around 1929 when the effects of a growing depression began to be felt. The need for soup kitchens was felt even more keenly when the tailspin in the economy worsened in 1932, and 12 million Americans — about 25 percent of the normal labor force — were out of work. When soup kitchens first appeared, they were run by churches or private charities. The Capuchin Services Center in southeast Detroit, for example, served 1,500 to 3,000 people a day. That center opened on November 2, 1929. Volunteers of America also was important in setting up soup kitchens all over America. By the mid-1930s, state and federal governments also were operating them.The breadlines during the Great Depression are some of the most symbolic characteristics of the Great Depression. The breadlines were unusually long and crowded, despite of the fact that the agency were providing little bread to each individuals. Although most of people on the breadline were capable laborers, the lack of employment opportunities made them unable to make any production and forced them to wait on a crowded line for most of the day-time. It was quite tragic, since many capable workers were forced to accept the little ration provided by the government. Certain city folks found it unbearable and relocated themselves to rural areas to farm, in hope of using their labor to produce actual food. The breadlines were a group of needy people waiting in line for free food to be distributed by a government agency or charitable organization.
Depression in the Countryside
The Dust Bowl has little rainfall, light soil, and high winds, a potentially destructive combination. When drought struck from 1934 to 1937, the soil lacked the stronger root system of grass as an anchor, so the winds easily picked up the loose topsoil and swirled it into dense dust clouds, called “black blizzards.” Recurrent dust storms wreaked havoc, choking cattle and pasture lands and driving 60 percent of the population from the region. Most of these “exoduses” went to agricultural areas first and then to cities, especially in the Far West. They called her the Migrant mother, her real name was Florence Owens Thompson. Thompson was born Florence Leona Christie, a Cherokee, in a teepee in Indian Territory, Oklahoma, in 1903. She married at 17, then moved to California for farm- and millwork. When she was 28 years old and pregnant with her sixth child, her husband died of tuberculosis. Thereafter Thompson worked odd jobs of all kinds to keep her children fed. For most of the 1930s, she was an itinerant farmhand, picking whatever was in season.
Hardship for Children
During the Great Depression, children suffered a lot. They no longer had the joys and freedoms of childhood, and often shared their parents' burdens and issues on money. For Christmas and birthdays, very few children were able to have fancy toy. Some families made gifts themselves, but many others could not afford food at all. For most people, the only way to celebrate holidays with gifts, were to window-shop. Since children lacked food, they often suffered from malnutrition. The kids that didn’t like the child labor laws ran away to the railroads and these were called the box car kids. During the Great Depression many schools across the United States closed because of a lack of money. North Carolina did not neglect the education of its children and youth. Not a single public school in the state shut its doors because of the Depression. Children often worked long hours in dangerous factory conditions for very little money. Children were useful as laborers because their size allowed them to move in small spaces in factories or mines where adults couldn’t fit, children were easier to manage and control and perhaps most importantly, children could be paid less than adults. Child laborers often worked to help support their families, but were forced to forgo an education. Nineteenth century reformers and labor organizers sought to restrict child labor and improve working conditions, but it took a market crash to finally sway public opinion. During the Great Depression, Americans wanted all available jobs to go to adults rather than children.
The New Deal
The government instituted a series of experimental projects and programs, known collectively as the New Deal, that aimed to restore some measure of dignity and prosperity to many Americans. More than that, Roosevelt’s New Deal permanently changed the federal government’s relationship to the U.S. populace. The Emergency Banking Act of 1933 was A bill passed during the administration of former U.S. President Franklin D. Roosevelt in reaction to the financially adverse conditions of the Great Depression. The measure, which called for a four-day mandatory shutdown of U.S. banks for inspections before they could be reopened, sought to re-instill investor confidence and stability in the banking system. The Glass Steagall Act was a law passed by the United States Congress on February 27, 1932. This act separated investment and commercial banking activities. At the time, "improper banking activity," or what was considered overzealous commercial bank involvement in stock market investment, was deemed the main culprit of the financial crash. The 1933 Act was the first major federal legislation to regulate the offer and sale of securities. Prior to the Act, regulation of securities was chiefly governed by state laws, commonly referred to as blue sky laws.The National Industrial Recovery Act of 1933 was one of the most important and daring measures of President Franklin D. Roosevelt’s New Deal. It was enacted during the famous First Hundred Days of his first term in office and was the centerpiece of his initial efforts to reverse the economic collapse of the Great Depression. NIRA was signed into law on June 16, 1933, and was to remain in effect for two years. It attempted to make structural changes in the industrial sector of the economy and to alleviate unemployment with a public works program. It succeeded only partially in accomplishing its goals, and on May 27, 1935, less than three weeks before the act would have expired, the U.S. Supreme Court ruled it unconstitutional.
Franklin D. Roosevelt
Franklin D. Roosevelt was the only U.S. president to be elected four times. He led the United States through the Great Depression and World War II. He became the 32nd U.S. president in 1933, and was the only president to be elected four times. Roosevelt led the United States through the Great Depression and World War II, and greatly expanded the powers of the federal government through a series of programs and reforms known as the New Deal. In his first 100 days, President Franklin Roosevelt proposed sweeping economic reform, calling it the "New Deal." He ordered the temporary closure on all banks to halt the run on deposits. He formed a "Brain Trust" of economic advisors who designed the alphabet agencies such as the AAA (Agricultural Adjustment Administration) to support farm prices, the CCC (Civilian Conservation Corps) to employ young men, and the NRA (National Recovery Administration), which regulated wages and prices. Other agencies insured bank deposits, regulated the stock market, subsidized mortgages, and provided relief to the unemployed. Roosevelt died in Georgia in 1945.
Eleanor Roosevelt
The wife of President Franklin D. Roosevelt, Eleanor Roosevelt changed the role of the first lady through her active participation in American politics. After her husband suffered a polio attack in 1921, Eleanor stepped forward to help Franklin with his political career. When her husband became president in 1933, Eleanor dramatically changed the role of the first lady. Not content to stay in the background and handle domestic matters, she showed the world that the first lady was an important part of American politics. She gave press conferences and spoke out for human rights, children's causes and women's issues, working on behalf of the League of Women Voters. She even had her own newspaper column, "My Day." She also focused on helping the country's poor, stood against racial discrimination and, during World War II, traveled abroad to visit U.S. troops.