The Great Depression (Chapter 23: The Unfinished Nation by Alan Brinkley)

Overview

• The Great Depression: Worst economic downturn in U.S. history, from 1929 to 1941.
• Transition from the "booming 1920s" to economic bust.
• The U.S. entered World War II in 1941, which helped end the Depression.

Stock Market Crash

• Black Tuesday (October 1929): Major stock market crash; not the sole cause but a signal of economic problems.
• Stock market reflects the valuation of businesses; speculation inflated values.
• Initial crash didn't affect most Americans directly but led to business downsizing and layoffs.

Causes of the Great Depression

Domestic Factors

• Overproduction: Excessive production of durable goods led to oversupply.
• Weak Consumer Demand: Driven by wealth disparity; underdeveloped middle class impacted purchasing.
• Credit and Debt Issues: Overreliance on credit led to unpaid loans and bank failures.
  • Run on the Banks: People rushed to withdraw savings from failing banks, leading to loss of life savings.

Global Factors

• Declining Wartime Demand: Post-WWI Europe reduced demand for U.S. products.
• Complex Debt System: Global loans and reparations led to economic instability.
  • U.S. loans to Europe, Germany’s reparations, and debt cycle problems.
• Tariff Wars: High tariffs hindered international trade and worsened oversupply.

Impact of the Great Depression

Economic Indicators

• 9,000 bank failures, shrinking money supply, and a 25% decrease in GNP.
• Unemployment peaked at 25%, with significant variation by demographic and region.

Social and Cultural Impact

• Dust Bowl: Severe drought in the Midwest exacerbated farmers’ struggles.
• Great Migration: Continued movement of African-Americans from South to North seeking opportunities.
• Demographic Challenges: Higher unemployment for women, minorities; strain on family structures.
• Cultural Values: Persistence of individual work ethic; escapism in movies and media remained popular.

Political and Social Reactions

• Herbert Hoover's Presidency: Initial optimism; ineffective response to economic crisis.
  • Misguided policies: Volunteerism, high tariffs (Holly Smoot Act), and Reconstruction Finance Corporation.
  • RFC provided financial aid to businesses, but not individuals.
  • Bonus Army: Veterans demanding early bonus payments met with military force.
• Franklin D. Roosevelt's Election (1932): Promised a New Deal to address the Depression.
• Global Reactions: Rise of alternative political ideologies (communism, fascism) as responses to economic failure.

Conclusion

• The Great Depression was defined by complex causes, significant economic and social impacts, and reshaped cultural and political landscapes.
• It prompted new policies under FDR's New Deal aimed at economic recovery.