Sunday, February 22, 2009

USH14: The Not-so-Great Depression

On October 24, 1929, "Black Thursday", prices at the New York Stock Exchange dropped like a stone. Wall Street bankers tried to halt the price slide by buying shares of companies like US Steel at inflated prices but on October 29th, "Black Tuesday" an even larger sell off occurred and panic set in. As Kenneth Davis put it, "Within days, the 'wealth' of a large part of the country, which had been concentrated in vastly inflated stock prices, simply vanished." The prosperity of the Roaring Twenties was over.

A lot of that prosperity was a speculative bubble and it burst. In one year 1,300 different banks went under; in three years, five thousand banks failed. The savings disappeared, businesses and factories closed, unemployment was rampant, and many were homeless. Mini-towns made of cardboard boxes sprung up in cities and were nicknamed 'Hoovervilles'.

In 1932, thousands of unemployed WWI veterans made their way to Washington, DC, where the camped along the streets and rivers, demanding that Congress pay them the bonuses that they were told they'd get in 1945. The members of the 'Bonus Army' couldn't wait that long and got the House to pass a bill to pay them, but it was defeated in the Senate. Hoover ordered the current army out to evict them. The cavalry and the infantry, under Douglas McArthur with assistance from Dwight Eisenhower and George Patton, rode in with tanks and machine guns and tore into the Bonus Army's camps, firing tear gas and burning down the cardboard structures.

By this time, the Republicans were no longer viewed as the party of prosperity. In the 1932 election, Democratic candidate Franklin Delano Roosevelt swept into office, winning in forty-two of the forty-eight states. (Why does this sound familiar? After years of Republican rule the country is in major financial trouble and the voters elect a Democratic to put the country back on track...)

Roosevelt was determined to change things. His inaugural address contained the famous line "...the only thing we have to fear is fear itself..." (a line he may have taken from Thoreau) but he went on to call it "...nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance

When the Bonus Army returned after Roosevelt was elected, FDR sent his wife, Eleanor, out to meet with them. She served them coffee and led them in songs.

FDR promised the country a "New Deal" and called a special session of Congress which passed legislation at a furious pace, creating the Civilian Conservation Corps, the Tennesee Valley Authority, the Federal Deposit Insurance Corporation, the Home Owners Loan Corporation, the Federal Security Act, the Federal Emergency Relief Administration, and the National Industrial Recovery Act. It was a scattershot approach--trying a bit of everything to see what would work. Roosevelt later created the National Recovery Administration, the Securities and Exchange Commission, and the Works Progress Administration, which built roads, hospitals, city halls, schools, and courthouses. But perhaps the most useful thing that Roosevelt did was to institute a series of 'fireside chats' on the radio, where he talked directly with the public and reassured them, speaking in tones of confidence, optimism, and hope. (And, yes, that also sounds familiar--I think Obama has been reading his history.)

Although Roosevelt's talks and reforms had great psychological benefits, and some got people employed, what pulled the US out of the Great Depression was our involvement in World War Two. I'll write about the war soon, but first I want to talk about what was happening with the workers.

Quote of the Day: "Because grief will come in measures, only grief alone will know, And you'll see it on your family, on your own face it will grow, And they'll try to keep you hungry, then they'll tell you to eat snow, You know pride can be a moving thing if we learn the strength of 'NO!'" - Ferron

Kenneth Davis, Don't Know Much About History
Wikipedia, various articles (particularly on the Great Depression in the United States and the Wall Street Crash of 1929)
Howard Zinn, A People's History of the United States

1 comment:

murph said...

Many of the people I have talked to over the years that lived through at least part of the depression like to praise Roosevelt, and claim he got us out of the depression. A very few others claim he kept us in the depression for 14 years. I have read analysis of the period that claimed that the federal government got into a hassle with the bankers (and the government resisted. So they created the depression to force the issue. They accomplished the depression by pulling liquidity out of the economic system. After the industrial revolution had really gotten started we had a new term in the society;'consumerism' and 'conspicuous consumption'. Some analysts claim that the depression originated with consumers stopping consuming, with no explanation of why. Whatever the reason, Roosevelt had a hell of a problem. We know what he did concerning it. Wonder if Obama is going to follow in his footsteps.