The Effects Of The Great Depression Essay, Research Paper

The Twenties have often been known as one of the most prosperous decades in our history. It was the decade of high times following the Great War’s additions to our economy. But it was these additions that eventually led to the largest stock market crash in America. Millions were affected by the resulting depression, which eventually became so massive that the leaders of the time started referring to it as the Great Depression. The summation of these effects is a job best left to historians, but a quick overview of some of them is more easily obtained.

Before going into the effects of an event, it is best to see some of the causes of the said event. Few expected the Twenties to end with any sort of economic crisis, let alone the largest in American history. Herbert Hoover, speaking at the Republican National Convention in 1928, stated that:

One of the oldest and perhaps the noblest of human aspirations has been abolition of

poverty. By poverty I mean the grinding by undernourishment, cold and ignorance, and fear of old age of those who have the will to work. 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. We have not yet reached the goal, but, given a chance to go forward with the policies of the last eight years, we shall soon with the help of God be in sight of the day when poverty will be banished from this nation (qtd. in Wilbur 2).

And, during the first months of the Hoover administration, it looked as if this goal was near-by. The popular heroes of the day were business leaders, as opposed to sports stars or actors. Time’s Man of the Year in 1929 was William P. Chrysler, one of the leading automobile manufacturers (Boardman 4).

On the low end of the social spectrum were the masses of proletarians. The estimate of how many were unemployed in 1929 ranges from four million to 5.8 million (Meltzer 13). During the entire decade, something to the order of 8.2% of the population earned $5,000 or more during the span of a year. The majority of the populace, 59.5%, had an income of less than $2,000 a year (Boardman 7) and nearly six million families earned less than $1,000 in a year (Meltzer 10).

Beyond a doubt, those who were most affected by the Great Depression were those who had the least. “You fellows, better organized, got yours,” Alexander Logge said in 1930, “while the farmer, unorganized, failed to get anything” (qtd. in Romasco 97). Among the industries worst hit by the Crash in 1929 was the automotive industry. A Willys plant in Toledo had started the year with 28,000 employees. By the end, only 4,000 were still working. Ford’s plant in Detroit lost a similar amount of workers, starting the year with 128,000 and ending it with 100,000 (Meltzer 24).

Despite this, many thought that thedepression was just like any other fluctuation in the market, and that the economy would eventually curve upwards. Fault was placed on the jobless by the wealthy, such as John Edgarton, President of the National Association of Manufacturing. In his mind, “if they gamble away their savings on the stock market or elsewhere, is our economic system, or government, or industry to blame?” (qtd. in Meltzer 160)

Besides finding fault, optimism was also in the air. Charles M. Schwab, a leading steel manufacturer, said in 1930 that “all present indications are that 1930, in broad prospective, will prove to be a year of normal business progress” (qtd. in Boardman 25).

Following such shallow judgements, coupled with inactivity, was a deepening of the Depression. As George Soule said in 1931, “The main trouble is not that business is in the saddle; the trouble is that nobody is in the saddle” (qtd. in Romasco 202). General Motors, which before the Depression employed 260,000, had downsized almost 100,000 of them by October of 1931. Baltimore & Ohio Railroad’s earnings were down 33% from 1929, and 20,000 workers had been laid off (Romasco 139). Those employed in cities did no better. 18% of Cincinatti, and 26% of Buffalo, was unemployed, alongside a million people in New York City (Meltzer 29). In Chicago, two out of every five people, a full 624,000 people, had no job (Romasco 155).

One of the first things to be lost in poverty is the luxury of eating well, or at all. As an Illinois commoner wrote to Hoover, “The emty stomack does not recogniz no laws” (qtd. in McElvaine 81). “There is not,” Edmund Wilson reported, “a garbage dump in Chicago which isn’t diligently hunted by the hungry.” Thomas Wolfe, one of the social voices of the Depression, seemed to die a little each time he saw such sights. As he wrote, “…the unending repercussions of these scenes of suffering, violence, oppression, hunger, cold, and the filth and poverty going on unherded in a world in which the rich were still rotten with their wealth, left a scar upon my life” (qtd. in Boardman 32). The point that Hoover did little to relieve such problems was seized upon by progressives in the Republican party, and almost led to the formation of a third party. Henrik Shipstead, a congressman in the early 30s, commented that “Before the Roman revolution, when the people became discontented and hungry, they were given a loaf of bread and a circus. Now we can only give them a circus” (qtd. in Feinman 19).

The first to feel the effects of malnutrition were children. “I said to the teachers last fall,” a

Chicago school principal testified, “‘Whenever you have a discipline case, ask this question first, ‘What has he had for breakfast?”, which usually brings out the fact that he has had nothing at all” (qtd. in Meltzer 93). In New York City, one-fifth of public school students were malnurished (Boardman 64). Besides malnutrition, children also had to deal with the massive school financial problems of the era. In a time when going to school meant the possibility of getting a better job to get more money for the family, more and more were closing. By 1933, some 2,600 schools had closed, disrupting the education of over ten million children (Meltzer 46).

Another one of the effects of the Depression was migration due to the loss of housing. 1931 was the first year in which more people left the United States than entered it (Boardman 30). The next year, over 273,000 families lost their homes through foreclosure. Early in 1933, a thousand houses a day were being taken away by mortgage holders (Meltzer 65). In that same year, an estimated million people spent their lives riding the rails (Boardman 30). Roughly a quarter of these transients were under 21. Many had been to high school, and some had even gone to college (Meltzer 49).

1932, the third full year of the Depression, saw even more hardships for the citizens of the

United States. The number of unemployed strafed the 13 million mark (Boardman 46). Among those with jobs were some very low-paid workers. In Chicago, a department store saleslady would earn between five and 25 cents an hour. Sawmill workers in Pennsylvania earned a nickel an hour, and non-union coal miners were paid $1.50 for a day’s work. Sweatshops in Connecticut paid girls 60 cents to a dollar for a 55-hour week, and farmworkers averaged a wage of a dollar and change for a day of work (Meltzer 108).

Mirroring the descent of the peoples’ wages was the fall in the national economy. The gross national production of the entire country, which in 1929 was $104 billion, was down to $58.5 billion (Boardman 46). Some 4,000 banks failed between the stock market crash and the beginning of 1933 (Boardman 64). In the same time period, consumption expenditures went down 18%, construction decreased by 78%, investments declined by 98%, and the unemployment rate fell from 3.2% to an astonishing 24.9% (McElvaine 75). Before 1933 was out, 85,000 businesses had failed, with losses of $4.5 billion (Meltzer 65). Despite all of this economic chaos, there were so many goods being produced that some of them had to be destroyed, while people in dire need of it froze and starved. To quote John M. Keynes, “In all our thoughts and feelings and projects for the betterment of things, we should have it at the back of our heads that this is not a crisis of poverty, but a crisis of abundance” (qtd. in Romasco 3).

As the Depression deepened in 1932-33, a vocal minority felt that the only solution to the

problems of the time was revolution. A good deal of the members of the Communist and Socialist parties believed that this was the end of the American capitalistic society, but few in the general public shared this belief. The Socialist party, which had captured over a million votes in both the 1912 and 1920 presidential elections, took in less than 900,000 in 1932 with their candidate Norman Thomas. William Z. Foster and the Communists only gained 100,000 votes in the same year, and that was only after intense in-fighting about who would be the candidate (Meltzer 162).

Black Americans faced the double threat of their own economic troubles and the anger of white Americans who had had enough of their own financial problems. Throughout the Depression, black unemployment rates stayed substantially higher than those of whites. In 1930, 1931, and 1932, the black rate of unemployment was, respectively, 15.7%, 35%, and 56% (Meltzer 57). Being the last man hired and the first man fired was almost the preferable lifestyle in the Deep South, where one could kill a black person with little-to-no fear of legal problems. “…Ku Klux practices were being being resumed in the certainty that dead men not only tell no tales but create vacancies,” reported Hilton Butler (qtd. in Meltzer 62). Lynchings in America rose from 8 in 1932 to an average of 20 for 1933, 1934, and 1935. An Atlanta Klan-styled group had a slogan that stated “no jobs for niggers until every white man has a job.” Even individuals that weren’t affiliated with such associations had a racist attitude towards employment. As a Georgia woman wrote the President in 1935, “Negroes being worked everywhere instead of white men it dont look like that is rite” (qtd. in McElvaine 187).

A visit to the events of 1932 wouldn’t be complete without some mentioning of the Bonus

Expeditionary Force. In this strange event, nearly 20,000 veterans came into Washington, D.C. to

receive a payment for the insurance policies they had recieved during World War I. The veterans

planned on staying there until their bonus was paid. The House of Representatives passed a bill for the bonus to be paid, but the Senate rejected it. At this point, many in the BEF left (Boardman 48). A few weeks went by, and the Congressional session ended. More veterans left, but some did not leave quickly enough. A policeman fired at the group, killing one, and soon a riot broke out (McElvaine 93). The city commissioners wrote to Hoover, stating that “A serious riot occurred…. This area contains thousands of brickbats and these were used by the rioters in their attack upon the police…. It will be impossible to maintain law & order except by the free use of firearms which will make the situation a dangerous one. The presence of Federal troops will result in far less violence and bloodshed” (qtd. in “Battle”). Hoover called in troops from local Fort Myer in Virginia, but never ordered them to attack or in anyway remove the Bonus Army from the D.C. area. This idea came from the leader of the troops, one General Douglas MacArthur. The veterans were given one hour to leave, and then the army, with bayonets and tear gas, forced out the rest. Hoover let MacArthur get away with insubordination, and took full public responsibility for the actions taken. “Congress made provision for the return home of the so-called Bonus marchers…. Some 5,000 took advantage of the arrangement….,” he stated after summoning the troops on August 8, “An examination of a large nuber of names discloses the fact that a considerable part of those remaining are not veterans…. Many are Communists and persons with criminal records” (qtd. in “Battle”).

The presidential election of 1932 displaced Hoover, and set up Franklin Delano Roosevelt as the new leader of America. Through his programs, the Depression stopped getting worse, at least for a little while. Banks stopped failing, the unemployment rate went down, and confidence in the stock market was restored. A lot of the hard work acheived through his ideas and programs was lost when a recession hit in August 1937. Two million lost their jobs by the end of the year (Boardman 110). Even in 1940, 7.5 million were still unemployed (Boardman 133).

Ironically, the ending of the Depression is tied into the cause of it. An increase in goods production was necessary during World War I. Once Europe could support itself, the American consumer had to make up for the now lost market of Europe. Supply overwhelmingly dwarfed demand. Ultimately, nothing except a massive change in the country’s industrial output could end the Great Depression, and one of the easiest ways to increase a country’s output is by being in a large war. World War II did not in any way disappoint. As John Kenneth Galbriath wrote in his American Capitalism:

The Great Depression of the thirties never came to an end. It merely disappeared in the great mobilization of the forties. For a whole generation it became the normal aspect of

peacetime life in the United States-the thing to be feared and expected. Measured by its continuing imprint on actions and attitudes, the depression clearly stands with the Civil War as one of the two most important events in American history since the Revolution. For the great majority of Americans World War II, by contrast, was an almost casual and pleasant experience (qtd. in Boardman 132).

Works Cited

“Battle of Washington.” 8 Aug 1932. Time Magazine Multimedia Almanac. CD-ROM. Softkey Multimedia, Inc., 1995

Boardman, Jr., Fon W. The Thirties-America and the Great Depression. New York: Walck, 1967.

Feinman, Ronald L. Twilight of Progressivism. Baltimore: Johns Hopkins UP, 1981.

McElvaine, Robert S. The Great Depression. New York: Times, 1984.

Meltzer, Milton. Brother, Can You Spare a Dime?. Ed. John Anthony Scott. New York: Knopf, 1969.

Romasco, Albert U. The Poverty of Abundance. New York: Cambridge UP, 1965.

Wilbur, Ray Lyman and Arthur Mastick Hyde. The Hoover Policies. New York: Scribner’s Sons, 1937.