Understanding the Causes and Impact of the Great Depression

All right, everyone, so this is Alan Brinkley, The Unfinished Nation. We'll be looking at Chapter 23. Chapter 23 is called The Great Depression, and The Great Depression is considered in American history, if not in... world history to be the worst economic downturn in the history of the United States. And the Depression itself roughly stretches from, we'll say, 1929 to make things a little bit easier all the way until 1941, which is American entry into World War II. So for about 10 years, or broadly speaking, we could say the 1930s, the United States experienced a significant decline in its economic standard. To put it in context, let us just go ahead and recall that the time period before is sometimes referred to as the booming 1920s, from the ending of World War I up until 1929. So The United States really kind of goes from a booming decade to bust, and that is kind of what brackets it. Again, 1941 being World War II, which is what eventually gets the United States out of the Great Depression. So let's unpack a little bit about how exactly this happened. Typically, we think of the beginning of the Great Depression as occurring on Black Friday. Tuesday, which was October 1929. And this was a day where the stock market crashed. It's estimated that, as you can see kind of from the graph here on Black Tuesday, this is your stock market. It had been going up and up and up during the 1920s. And then on one single day in 1929, the stock market plunge rather significantly, had a brief recovery, but then for the next, really, four years or so, it would continue to decline. So Black Tuesday is, we'll say, the crashing of the U.S. stock market. And if you're not familiar with the stock market or what it does, essentially, you can think of the stock market as an evaluation of all the businesses that are listed on it. So if we're talking about the American stock market, we're mostly referring to American companies. If you were to, you know, if you were to sort of value all American businesses, add them all together and put that in one place, that's essentially what the stock market is. So you During the 1920s, the value of all American businesses were going up and up and up and up. And then suddenly that value crashed. A lot of that is because most of the value in the stock market is based off of speculation. That wasn't the only thing going on in the 1920s. There was outright, you know, outright dishonesty and outright. kind of illegal activity taking place. But we don't truly know what the value of a business is. It's more or less the price that people are willing to pay for it. And, you know, if people speculate that companies are going to grow significantly in the next five years, then they're going to be willing to pay a much higher price for it. So businesses went from being worth a lot to... being worth nothing. And we might ask ourselves, why is that a problem or why is that significant? In 1929, when the stock market crashed, most Americans were unaffected, unless you were a stockbroker or something along those lines. It had very little effect on you. But it does affect the business. So for example, if a business loses, 25% of its evaluation. In fact, after Black Tuesday, businesses would lose approximately 50% of their overall value. If a business loses a lot of its value, then that might lead the business to downsize. And that's when businesses start to lay off workers. They start to close factories. And this is when it actually starts to get felt by the American public. So, for example, you know, the stock market crashes in 1929, but most Americans don't start feeling the depression until 1931, 1932, 1933. after they've been laid off from their job, after businesses have to close down, you know, 25% of their production facilities. Now, what was the cause of the Great Depression? Well, there are a lot of historians and economists who argue about this, so you're not going to get really consensus. But we can point to kind of, you know, a couple of different factors. First and foremost, we can identify the problems within the United States economy, but then also the problems on the global scale. So there's kind of two factors at work here. Very important to note that Black Tuesday, this was not the cause of the Great Depression, but certainly kind of a signal that something was wrong. You know, if you think about it like having a cold, you know, you might sneeze because you have a cold, but the sneeze is not actually causing you to get sick. The stock market crash was kind of like the symptom. The stock market crash was kind of like the sneeze. It was a sign or a signal that something was very, very wrong with the U.S. economy. So let's just kind of outline a couple of contributing factors. I think we actually have six different contributing factors to what caused the Great Depression. First and foremost, domestic production. Now, interestingly enough, when it came to domestic production. It wasn't producing not enough, it was actually producing too much. Much of the 1920s economy was, or the growth in the 1920s economy, was based off of these sort of single purchase large items. So think about things like, you know, a radio or a car or some sort of kitchen appliance, right? You know, some of these were kind of newer technologies, technologies or at least affordable for the very first time. But the reality is, is that once a family owns one radio, one car and let's say, you know, one sort of kitchen appliance, they're not going to go out to buy another one. Right. You know, you don't need five radios or you don't need five cars. So producers were anticipating that people would continue to buy. at the rate that they had been buying in the 1920s, and were adjusting their production as such. And it turned out that once people purchased one of each, then they didn't really need to buy any more. So we might call this, to use maybe like an economic term, oversupply for businesses. At the same time, consumer demand was declining. And not just because of the reasons we outlined earlier, but one other thing we need to take into consideration is that while the 1920s were a time period of economic growth, there was a significant wealth disparity that was growing. And this is, you know, to say kind of in another sort of way is to say that. The middle class was not growing along with the economy. Maybe saying that there was no middle class might be putting it too strongly, but certainly there was a weak middle class. There were a lot of people who had wealth at the very top, a lot of people at the bottom, and not really a lot in the middle. And the reason why middle class is important is that this is your consumer class. So these are the people that purchase things. Most people with excess money, a great example is this. If you just run this experiment. You know, let's say that you can either give, you know, just to make things simple, you know, you could either give $10,000 to one person or you could give $10,000 to 10 families. In the situation where you give $10,000 to 10 different families, they are ultimately going to purchase 10 radios, 10 cars, and 10 appliances. Whereas if you take, you know, $10,000. or whatever 10 times $10,000 is, if you give just $100,000 to one single person, well, maybe they'll buy two radios, two cars, and two appliances just to be fancy. But in other words, if the wealth is concentrated all into too few hands, they're not going to kind of evenly purchase consumer goods the way in which middle class families would. So this was also a reason why consumer demand was declining. So on the one hand, oversupply of goods, but declining demand. Another issue domestically in the United States economy was the system of credit and debt that had built up during the 1920s. A lot of people and businesses and farmers had taken out loans, owed money to the banks. A lot of people purchase kind of all these consumer goods using credit, buy now and pay later. And when people and businesses couldn't pay back their loans, right, so you have unpaid loans, you know, that would affect the small banks that... had lent out those loans. It turns out small banks buy from bigger banks, and it sort of created a chain reaction in the economy, whereas too much debt and too many loans were being paid, people couldn't pay them back, small banks closed, because small banks closed, big banks closed, and in fact, you had a lot of situations in which banks just simply failed. You know, there was this term that they used at the time to describe kind of the way in which people would descend upon the banks that were failing to try to get their deposits back. And they called those the run on the banks. And you can see a couple of images here. If you were someone who had deposited money in the bank and you had heard that your bank was failing, you would try to run out to the bank as quickly as you can to try to get your money out of the bank. Because if that bank failed, then you weren't going to get your money back. And there were lots of people who lost their entire life savings when banks crashed, you know, across, you know, across the economy. So the failure of banking is not just due to, you know, sort of the unpaid loans, but certainly had, you know, a factor or certainly was a factor in that weak banking system, kind of risky loans, risky credit, etc, etc. So those are kind of three things we could point to going on in the domestic front. In terms of global factors that also contributed to the Great Depression, wartime demand was declining. A lot of, we might say, the U.S. economy boomed because of World War I. World War I was a war in which devastated Europe. And in fact, the United States really benefited from the war in a lot of ways, economically anyways. And so, you know, once the war concluded and Europe started to rebuild, they didn't need U.S. products anymore. Europeans could produce their own products. And so, again, we have another problem of declining demand, but this time declining demand overseas. So declining demand at home. declining demand overseas. Both of these things end up being a major problem for American businesses. At the same time, another global factor was the economic system created after the war. Let us recall that the United States had made a lot of loans to nations during World War I, loans that couldn't be paid back. It's also true that countries like Germany and Austria were forced to pay. reparations after the war was over. And so U.S. banks really were not, we might say, getting their money from, we'll just say overseas, right? Whether that's the inability for countries like Britain and France to pay back their loans. or the inability for countries like Germany and Austria, you know, who were forced to pay, countries like the United States and Britain and France. In fact, there was a somewhat complicated system of kind of borrowing and loaning and paying back that developed after the war years. So, you know, let's just imagine this for a moment. So, you know, during the war, countries like Britain And France, oops, write that again, countries like Britain and France. They borrowed money from the United States. The U.S. stayed out of the war for quite some time, and so they loaned the British and the French money. The idea was that the British and French would eventually pay that money back, which is true. Where would the British and French get that money from? Well, they would get it from Germany, who was forced to pay reparations after the war. So the idea was that Germany was forced to pay. reparations to Britain and France. Britain and France would pay money back to the United States. In the 1920s, the German economy actually crashed, experienced hyperinflation, and Germany was unable to pay back its loans or its reparations. As a result of that, the United States decided that it would be in its best interest to let Germany borrow money. So you have this very kind of... global cycle of debt going on. And as soon as other countries begin not being able to pay it back, it creates all sorts of problems. It's also the reason why, for example, that when the American economy goes down, then that affects Germany's ability to pay back Britain and France, and that affects Britain and France's economy as well. So it kind of brings the whole world with it. So there were other global factors that were also contributing to this decline. And the last thing that we'll point out is tariffs. Recall that tariffs are a tax on imports. Again, the U.S. used tariffs, and so did other nations. The other nations used tariffs. That is to say, if the United States decided to tax another country to import into the U.S., other nations did that as well. The 1930s were driven by kind of a version of like national economics, right? A lot of countries were kind of turning inwards when it came to the economy. And this is a problem again, because it doesn't allow for the Americans to solve this problem of oversupply that we talked about earlier. So the idea is that if you tax another country, that country is going to tax you. And so the inability for American businesses to sell at home, but also to sell overseas because the tariffs were so high, it made their products so expensive. It only makes the problem of oversupply worse. So once again, you know, the Great Depression, the causes of it, it's a very complicated kind of issue. It's not something that there's a consensus about among historians and economists. But at the very least, there are some fundamental factors that everyone kind of agrees upon. You know, the idea of oversupplying, declining demand, the problem of credit and debt. The global factors, right? Wartime loans and reparations, the tariff wars. All of these things together led to, again, the worst economic period in U.S. history, maybe even world history. This graph here is also pretty illustrative in terms of just how the Great Depression progressed. What you're looking at here is a graph of U.S. exports and each kind of… outside circle or outside line represents the year. So in the first year, 1929, the United States was exporting approximately, I think this would be like $3 billion or $2,000 million, whatever that is. The next year, one year later, the United States was exporting $2.7 billion. The next year, $1.8 billion, $1.2 billion. And then finally, when you get to 1933, the United States is only exporting less than $1 billion. So you go from $3 billion to $1 billion. And it just shows you the way in which, you know, American companies are really sort of struggling. So on the one hand, you know, we can think of the depression in terms of, you know, or some of the reasons as to how we can gauge this as being one of the worst economic time periods is by, you know, kind of looking at the statistics of the depression. And there are a couple that we can sort of point to to indicate. Um, you know, just how bad of an economic downturn this actually was. So between the years, we'll say roughly between the years 1930 and 1933, again, just to throw some statistics at you, 9,000 banks failed. Again, if you were unlucky enough to have deposited any money in those banks, you had lost your savings. In terms of the money supply, so the money available in circulation, it shrank by one third. So one third of the money supply was no longer available. And a fancy economic term, GNP, gross national product, everything that is produced inside of a specific country, that decreased by 25%. Probably the most cited, though, number in terms of measuring the Great Depression is the unemployment number. Now, of course, this varied depending on location and demographic. So, for example, unemployment would be much higher for women than it would be for men. It would be much higher for ethnic and racial minorities, African-Americans, Hispanics, Asian-Americans, than it would be for white Americans. And it depended on geographic location. You know, some. Cities that were hit especially hard by the Depression could have unemployment up to 60% or 80% in some case. But typically, the overall average number that we usually cite for the Great Depression is 25%. That is to say that of all the people who are actually looking for work, 25% of people, or one out of four, can't find a job. Unemployment is kind of a tricky statistic. It doesn't actually mean people who... don't have jobs. Unemployment means people who are looking for a job. They want a job. They're actively out there trying to find one, and they still can't. So 25% in terms of unemployment. So that's kind of one way of measuring the depression, just kind of purely statistical. You know, we can look at all these kind of numbers and sort of gauge the depression in that way. But we can also... kind of measure it in terms of the way that American people experienced it. You know, the stories of how people living in the 1930s, excuse me, of how people living in the 1930s, you know, experienced all these kind of statistical markers. At the same time, as the American economy was crumbling, and really the world economy was crumbling, um, You also had somewhat of a disastrous effect coming from Mother Nature, and that was in the 1930s, early 1930s, you had a dry spell hit the kind of the Midwest or the Great Plains region of the United States. This period of drought is sometimes referred to as the Dust Bowl. So we might say the Dust Bowl is in the early... 1930s, we'll say a dry spell. In the early 1930s, a dry spell, we might say, made it impossible for farmers. in the Midwest slash Great Plains. So again, kind of like a coincidence in some sorts or irony or whatever the term you want to use that, you know, while everything in terms of the economy is breaking down in the rest of the country. It just also happens to be a year in which Mother Nature kind of rears its ugly head. And you can see from this image here that this severe drought led to topsoil that was more or less dust combined with very strong winds. There were giant dust storms that, you know, just kind of went over the entire country there. And so this was crushing for a lot of farmers. A lot of farmers were put out of business because of the Dust Bowl. Many ended up moving to California, in which they were referred to as Okies. So Okies were people who moved. to California because of the Dust Bowl. And that's to say that the Great Depression had an effect on workers in the cities, in the factories, just as much as it did on farmers. You know, farmers certainly felt the depression as well. For other demographic groups in the United States, the Great Depression is one of those things that is felt by everyone. Nobody can really escape the depression, but it does affect certain demographic groups more so than others. Like many families during the Depression era, a lot of people went in search of new jobs and new opportunities. So, for example, African-Americans, most of whom lived in the South during the Depression era, many moved to the North for more economic opportunity. This is part of a larger kind of trend in. world history that we refer to as the Great Migration. We covered that in an earlier chapter. The Great Migration is the movement from African Americans in the South into the North. And, you know, we can kind of point to several things. The jobs made available in World War I brought people to the North. The economic troubles of the Depression sent people searching for work, and the jobs available in World War II The Great Migration, you know, we might say 1910 to 1950. So again, sort of a steady influx of African-American migrants from the South into the North continues during the Great Depression. The Great Depression was still an era in which a lot of the kind of systematic discrimination that African-Americans faced in the South was more or less ignored by the federal government. However, there were one particular instance we'll look at here where we're starting to see a little bit more federal intervention. Of course, for a lot of civil rights advocates at the time, a lot of the issues that African Americans are facing in the South are going more or less ignored by the federal government and state and local governments aren't really willing to act on them. A great example is the example of lynchings. Lynchings were public executions, typically of young black men, and the people who were killed in public, there was never any justice that was really brought for them, that those cases went uninvestigated and nobody would be held accountable for it. And so for a very long time, civil rights advocates would attempt to try and get the federal government to... to intervene on their behalf. So you start to see a little bit of a changing when it comes to that. And we find it in the Scottsboro case, which took place in the 1930s. The Scottsboro case was a case in which nine African-American teenagers were accused of raping two white women, and eight of them were sentenced to death for it. So very much in line with a lot of the kind of other common lynchings that would occur. Typically, young black men in the South would be accused of some sort of sexual crime against a white woman. And in this case, the local jury there in the South determined that not only were the nine teenagers guilty, but that their punishment should be the death penalty. In 1932... the U.S. Supreme Court overturned it or overturned their sentences. Many would continue to stay in prison, but none of them would be executed. And instead, new trials would be held in the foreseeable future. So certainly still a long ways away from the types of federal interventions that were characteristic. during the civil rights movement of the 1950s and 1960s, but you can start to see some tension between federal and state, in this case, like judicial systems. over issues related to race already emerging in the 1930s. For others during the Great Depression, you know, Hispanics and Asians, for example, again, they face the same types of difficulties that other ethnic and racial minorities face, that is typically discrimination in the workplace, a higher chance of being laid off as compared to, let's say, their white counterparts, but also in the same way, searching for new economic opportunities. So for example, some Hispanics who had came to the United States during the booming 1920s actually left or migrated outwards. It's estimated that perhaps 500,000 left the United States. And for women and families in the Great Depression, the Great Depression put a lot of strain, not just on people in general, but specifically kind of family units. For women, especially married women, were among some of the first to be fired. And, you know, this was very much in line with the types of stereotypes. You know, the idea is that the husband ought to be the male breadwinner of the family and that, you know, especially if a woman is married, then she should not take up a job that would otherwise go to a man. So oftentimes married women in particular were the first ones to be fired. The Great Depression in general sort of strengthened the notion, we'll say, of separate spears, a separate... which I believe is a term we used earlier. The idea of separate spheres is that the proper place for a man in society is in the public arena. The proper place for a woman in society is in the domestic or the private sphere. And so the Depression only strengthened that division within Depression-era America. As far as families go, marriage rates declined. People were much less likely to get married. Birth rates also declined. People were much less likely to start families. You know, things like divorce, abandonment, runaway children, all of these things increased. Right. So traditionally, the kind of nuclear family unit. all of those things were fundamentally challenged by it. People put off marriage, people put off having families, more divorces happened, families abandoned themselves. All of these things were very stressful for the family unit. So that's another way of looking at the depression. The depression is the story of statistics and numbers and unemployment rates and stock markets, but it's also the story of what individual people face. It's the story of searching for economic opportunity. It's the story of people putting off families, not because they have no reliable way of, of, you know, raising children. It's the story of abandonment. It's the story of divorce. It's the story of suicide, which increased during the depression. You know, kind of all those things. So we can look at the depression kind of in two ways, kind of the personal you know, account of it, but also the statistical or numerical account of it. In terms of culture, though, you know, the Great Depression did have, you know, did have an impact on American culture. Generally speaking, or broadly speaking, depression values continue to stress kind of this notion of, you know, hard work, independence, that those things ought to be pursued. The Depression did not kind of get rid of that sort of what we might call kind of work ethic sort of attitude. So we might just say about Depression values is that Americans continued to believe in what we might say like individual. I don't know, we'll say work ethic, something along those lines. A great example is, what's his name? I forget exactly the guy's name. I want to say, yeah, I'm not even going to try and guess what the author is. But one of the more famous books of the time, and it continues to be very famous today in the United States and even around the world, was How to Win Friends and Influence People. And again, this is kind of a category of maybe like self-help. So, you know, yeah, there certainly was some despair that occurred during the Depression era. But Americans still had a pretty strong kind of attitude towards being able to kind of lift themselves up. How to Win Friends and Influence People still even today remains somewhat of a popular kind of popular book. And again, the idea is that it's going to kind of. help you in your personal and professional life. You know, modes of cultural output like the radio and the movies, both of these things continue to, you know, be very popular. You know, the film industry did end up taking kind of a brief decline at the beginning of the Great Depression, but it actually grew during the Depression era. Movies were one of the few industries to actually grow and a lot of it is attributable to the type of media or the type of entertainment that was being propagated by both radio and movies and that is escapism and escapism we might say is like popular culture uh to escape kind of the the realities of life, that actually when things get tougher, people are more likely to gravitate towards sort of escapism. So The Wizard of Oz, for example, very, very popular movie, comic books like Superman became popular in the 1930s. So, you know, these things still remain somewhat strong, you know, during the Depression era, people trying to escape from what the real world was providing. In other ways, Americans were becoming maybe more so involved in kind of the global reactions to the Great Depression. In terms of what was going on overseas, first of all, in the next chapter, we'll talk a little bit more about how Americans responded to the Great Depression. But in large part, the economies of Europe looked at kind of the current system, which was a system that was politically based off of democracy and an economic system based off of capitalism, a lot of Europeans, or maybe not a lot, but there were certainly countries and leaders in Europe that said, because of the Great Depression, democracy and capitalism have failed and that it's now time to try something else. Whereas in the United States, you'll certainly get some changes to the democratic and capitalist system, but there's not going to be any sort of fundamental overthrowing of capitalism in the US like there will be in other European countries. So other European countries thought the Great Depression would be so bad and so terrible that we need to tear up the existing political system and establish new systems. And one of these new systems, for example, would be communism. which had taken root in the Soviet Union following or in Russia following World War I. And when the Western capitalist economies failed during the Great Depression, the Soviet Union was actually doing quite well. And so there was a lot of people at the time, if you're just standing there in 1930, that would say, you know, capitalism is the past, communism is the future. One such group was called the Popular Front. This was a communist organization. in the U.S. And because of the Great Depression, it gained popularity, right? People in the United States were saying, because of the Great Depression, yes, I agree, capitalism has failed. Let's do what the Soviets are doing and let's try communism. Well, there are also other countries in Europe, namely Italy, that said, well, communism is one sort of alternative. But we could also try something else. And they experimented in fascism, which was an undemocratic kind of corporate capitalist type of system. But it certainly wasn't communism and it wasn't democracy and it wasn't capitalism. And so sometimes these are referred to as like the three ways, right? The first way is democracy and capitalism. The second way is communism. The third way is fascism. And you can think of these as kind of competing ideologies under which we. ought to base society off of. And so these ideologies did battle in Europe during the Spanish Civil War, I think 1935 to something like 1937, fascists and communists went to war in Spain. Some Americans formed the Lincoln Brigade. This was 3,000 Americans went to Spain to fight against the fascists, right? So these were people who were kind of more, you know, members of the popular front, were more supportive of the communism ideology. And, you know, in the Spanish Civil War, there were nations that supported both sides. So, for example, countries like Italy and Germany came to the side of the fascists in Spain. And the Soviet Union and the Lincoln Brigade came to the side and fought for the side of the communists. Whereas most of the capitalist democracies. like the United States, like Britain, like France, they were more or less neutral, right? Recall that America's foreign policy after World War I is a policy of isolation, so it's not really their business. The Spanish Civil War will be one of the contributing factors to World War II, which is still a couple years away here. But again, you know, sort of the idea of more radical alternatives to the... The problem of the Great Depression continued to gain popularity in the United States through organizations like the Popular Front. Now, in terms of the politics, the president who is in charge during the Great Depression is Herbert Hoover. And Hoover starts off his presidency rather positively. You know, he was. intelligent, charismatic. He was the last of three Republican kind of laissez-faire, hands-off presidents of the 1920s. However, he will go down in American history as perhaps one of the worst presidents ever, and that's because he's captain of the ship while the United States is headed towards the worst economic period in its history. And it seems that everything he does is... is a mistake. Now, there is a little bit of a misconception about Hoover, and that was he is a do-nothing president. That is, as Americans, we're struggling with homelessness, we're struggling with food and bread lines and unemployment, that Hoover did nothing but just kind of, you know, sit in the White House. That's actually not entirely true. In fact, Hoover did take unprecedented measures to try and intervene in the economy. It's just that one, everything he did was ineffective. So we might say of Hoover, he was ineffective. And number two, comparatively, especially to his successor, Franklin Roosevelt, yeah, it kind of does look like he pretty much did nothing. And compared to... the countries in Europe, for example, it sort of looks that way as well. So when the Great Depression happened, Hoover had sort of a knack for just saying the wrong thing at the wrong time. You know, he remarked that in 1929, he said something like, you know, the worst is behind us and everything is only going to get better. So he, you know, he sort of had that working against him, just not really saying the proper things at the proper time. But his program also was not effective, really, in any ways. Initially, Hoover responded to the Great Depression by encouraging people to volunteer. And while people could certainly volunteer, and the 1930s were some of the most, some of the years in which people volunteered the most, it was just not kind of going to be to the scale required to solve the economic problems. So volunteerism, yes, it increased, but it wasn't the right antidote for the poison that was the American economy. Additionally, not just to pin this on Hoover, but to also pin this on Congress. The Holly Smoot tariff was passed, I want to say, in 1930. This placed, we'll say, new highs for tariff rates. Again, the idea behind tariffs is that you protect American businesses. But again, the problem with American businesses was that they couldn't sell. And if you raise tariffs on foreign countries, they're going to raise tariffs on you. So this only compounded the problem. of high tariffs and how it factored into the economy. And it wasn't very long that Americans began blaming Hoover for the crisis, whether or not or how much Hoover is actually responsible himself. You know, we can debate that. We can argue about that. But it typically is the case that whether it's your fault or not, if you're the president of the country during an economic downturn, you will be blamed for it. And so many of the shantytowns that were built in cities across the country. When people became unemployed, they were kicked out of their homes. And so they just started building their houses out of anything they could find. And all of these sort of shantytown cities began springing up all around the country, and they called them Hoovervilles. So Hoovervilles were the name for the, we'll just say the quote-unquote shantytowns across the country. We can maybe think of this as homelessness. They also called newspapers Hoover blankets. People who couldn't afford a blanket would use newspaper for their blanket. Again, Hoover's blankets. So Hoover did go from this position of volunteerism, very much a pick-yourself-up-by-your-bootstrap sort of mentality, to creating a system that would intervene in the economy in an unproductive way. unprecedented way. And that's the Reconstruction Finance Corporation, otherwise known as the RFC. So the RFC, we might want to call this is Hoover's intervention in the economy. And no president had ever done anything like this before. But again, the problem with the RFC is that one, it's not going to work. And number two, Compared to what the next guy does, it does kind of look like peanuts, right? It doesn't really look like much. But the RFC, fundamentally what it does is that it provides, we'll say, we'll say loans slash money, right? So providing financial resources to business, banks. and in some cases, local governments. So the Reconstruction Finance Corporation provides loans and money to businesses, banks, and local governments. The big kind of thing that is missing from the RFC that not only makes it ineffective, but also makes it something that people criticize Hoover for is that the RFC did not provide anything for individual people. And again, if you just look at it from a purely kind of optical standpoint, here is Hoover giving money to Rockefeller and Carnegie, giving money to J.P. Morgan. And in the eyes of the American public, J.P. Morgan and Rockefeller, they don't need any more money. They're rich enough as it is. Meanwhile, the people who are waiting in bread lines and living in Hoovervilles, they're not getting anything. So. The RFC and Hoover's presidency, to make it short, was nothing but a disaster. To make matters worse, Hoover did not deal with the social upheaval very well. As you might imagine, in an economically desperate time period, people are going to cause some trouble. This is especially true with high levels of unemployment that people will be up to no good. And so, you know, things like crime and theft. and all of those things were generally on the rise. As a result, there were instances of upheaval in cities and places across the country, but perhaps the most famous example of this popular protest was in the form of the Bonus Army. The Bonus Army was a group of World War I veterans who marched and occupied D.C. demanding their bonus payment, right? Demanding their bonus payment. So that's where we get the term bonus army. So they were there to receive their bonus payment and their World War I veterans. So what had happened was that during World War I, Congress had agreed to give World War I veterans bonus money or a bonus payment. But the problem was that payment was not to be paid out until a much, much later date. And so when the Depression settled in, a lot of the veterans said, look, I need this money now. And there was a bill in Congress that would potentially give the veterans their bonus payment early. And so a bunch of World War I veterans then marched to Washington, D.C., saying, pass this bill. We want our money now. And by the time they had got there, they had set up encampments outside of D.C. A lot of other people had joined them that were not. originally part of the bonus army or World War I veterans themselves, but they were just generally those who had been kind of left behind due to the economy. And the result was that one, the Senate or Congress more broadly defeated the bill so the veterans would not get their bonus money. Number two, President Hoover said that he didn't approve of giving the bonus payments now, so that He kind of made enemies by doing that. And then number three is that President Hoover actually called in the army to disperse the marchers. And law enforcement and the military were brought in, including cavalry and machine guns and even tanks, I believe. And those who had set up encampments around D.C. were dispersed. And again, in the eyes of the American public, when you're the president of the United States and you're ordering tanks to go and displace veterans, that's not going to sit well with a large portion of the American public. And so Hoover went from, again, a very promising presidential candidate to being considered amongst not just those at the time, but those ever since. One of the worst presidents we've ever had, not just to be blamed for the Great Depression, but really. blamed for his inability to, you know, to handle it. And so this set up an election in 1932 where, you know, Hoover, who's the incumbent, very, very, very unpopular, is running against a kind of not really a new presidential candidate, but certainly someone who has some new ideas. He's running up against Franklin Delano Roosevelt, otherwise known as FDR. And Franklin Delano Roosevelt up until this point. He comes from kind of the same cloth as your traditional progressive presidents, much like his distant cousin, Teddy Roosevelt, who had been president before, born into affluence, Ivy League educated. But rather than, you know, inherent his family's business, he spends his life dedicated to public service. Roosevelt was assistant secretary to the Navy or of the Navy in World War I. He had... ran for vice president in 1920. In 1921, he was struck by polio and he lost the use of his legs. He became paralyzed from the waist down. And for the next eight years, he would spend more or less the next eight years trying to gain use of his legs back. And it wasn't until 1928 that he was healthy enough. to run for governor of New York, and then in 1932, he runs for president. And he wins the 1932 election rather handily. As you can see from this map, the green is what Roosevelt won. And during the campaign, what he had promised was a new deal for Americans, right? So he promised Americans a new deal. And the new deal in short would be, we'll say FDR's plan. Oops. about FDR's plan to solve the Depression. So kind of very famously, when Roosevelt is inaugurated, he says to the American people, you know, don't be scared. There's nothing to fear but fear itself.

So for about 10 years, or broadly speaking, we could say the 1930s, the United States experienced a significant decline in its economic standard. To put it in context, let us just go ahead and recall that the time period before is sometimes referred to as the booming 1920s, from the ending of World War I up until 1929. So The United States really kind of goes from a booming decade to bust, and that is kind of what brackets it. Again, 1941 being World War II, which is what eventually gets the United States out of the Great Depression. So let's unpack a little bit about how exactly this happened. Typically, we think of the beginning of the Great Depression as occurring on Black Friday.

Tuesday, which was October 1929. And this was a day where the stock market crashed. It's estimated that, as you can see kind of from the graph here on Black Tuesday, this is your stock market. It had been going up and up and up during the 1920s.

And then on one single day in 1929, the stock market plunge rather significantly, had a brief recovery, but then for the next, really, four years or so, it would continue to decline. So Black Tuesday is, we'll say, the crashing of the U.S. stock market. And if you're not familiar with the stock market or what it does, essentially, you can think of the stock market as an evaluation of all the businesses that are listed on it. So if we're talking about the American stock market, we're mostly referring to American companies.

If you were to, you know, if you were to sort of value all American businesses, add them all together and put that in one place, that's essentially what the stock market is. So you During the 1920s, the value of all American businesses were going up and up and up and up. And then suddenly that value crashed.

A lot of that is because most of the value in the stock market is based off of speculation. That wasn't the only thing going on in the 1920s. There was outright, you know, outright dishonesty and outright.

kind of illegal activity taking place. But we don't truly know what the value of a business is. It's more or less the price that people are willing to pay for it. And, you know, if people speculate that companies are going to grow significantly in the next five years, then they're going to be willing to pay a much higher price for it.

So businesses went from being worth a lot to... being worth nothing. And we might ask ourselves, why is that a problem or why is that significant? In 1929, when the stock market crashed, most Americans were unaffected, unless you were a stockbroker or something along those lines. It had very little effect on you.

But it does affect the business. So for example, if a business loses, 25% of its evaluation. In fact, after Black Tuesday, businesses would lose approximately 50% of their overall value. If a business loses a lot of its value, then that might lead the business to downsize.

And that's when businesses start to lay off workers. They start to close factories. And this is when it actually starts to get felt by the American public. So, for example, you know, the stock market crashes in 1929, but most Americans don't start feeling the depression until 1931, 1932, 1933. after they've been laid off from their job, after businesses have to close down, you know, 25% of their production facilities. Now, what was the cause of the Great Depression?

Well, there are a lot of historians and economists who argue about this, so you're not going to get really consensus. But we can point to kind of, you know, a couple of different factors. First and foremost, we can identify the problems within the United States economy, but then also the problems on the global scale.

So there's kind of two factors at work here. Very important to note that Black Tuesday, this was not the cause of the Great Depression, but certainly kind of a signal that something was wrong. You know, if you think about it like having a cold, you know, you might sneeze because you have a cold, but the sneeze is not actually causing you to get sick. The stock market crash was kind of like the symptom.

The stock market crash was kind of like the sneeze. It was a sign or a signal that something was very, very wrong with the U.S. economy. So let's just kind of outline a couple of contributing factors.

I think we actually have six different contributing factors to what caused the Great Depression. First and foremost, domestic production. Now, interestingly enough, when it came to domestic production.

It wasn't producing not enough, it was actually producing too much. Much of the 1920s economy was, or the growth in the 1920s economy, was based off of these sort of single purchase large items. So think about things like, you know, a radio or a car or some sort of kitchen appliance, right? You know, some of these were kind of newer technologies, technologies or at least affordable for the very first time. But the reality is, is that once a family owns one radio, one car and let's say, you know, one sort of kitchen appliance, they're not going to go out to buy another one.

Right. You know, you don't need five radios or you don't need five cars. So producers were anticipating that people would continue to buy.

at the rate that they had been buying in the 1920s, and were adjusting their production as such. And it turned out that once people purchased one of each, then they didn't really need to buy any more. So we might call this, to use maybe like an economic term, oversupply for businesses. At the same time, consumer demand was declining.

And not just because of the reasons we outlined earlier, but one other thing we need to take into consideration is that while the 1920s were a time period of economic growth, there was a significant wealth disparity that was growing. And this is, you know, to say kind of in another sort of way is to say that. The middle class was not growing along with the economy.

Maybe saying that there was no middle class might be putting it too strongly, but certainly there was a weak middle class. There were a lot of people who had wealth at the very top, a lot of people at the bottom, and not really a lot in the middle. And the reason why middle class is important is that this is your consumer class.

So these are the people that purchase things. Most people with excess money, a great example is this. If you just run this experiment. You know, let's say that you can either give, you know, just to make things simple, you know, you could either give $10,000 to one person or you could give $10,000 to 10 families.

In the situation where you give $10,000 to 10 different families, they are ultimately going to purchase 10 radios, 10 cars, and 10 appliances. Whereas if you take, you know, $10,000. or whatever 10 times $10,000 is, if you give just $100,000 to one single person, well, maybe they'll buy two radios, two cars, and two appliances just to be fancy.

But in other words, if the wealth is concentrated all into too few hands, they're not going to kind of evenly purchase consumer goods the way in which middle class families would. So this was also a reason why consumer demand was declining. So on the one hand, oversupply of goods, but declining demand. Another issue domestically in the United States economy was the system of credit and debt that had built up during the 1920s.

A lot of people and businesses and farmers had taken out loans, owed money to the banks. A lot of people purchase kind of all these consumer goods using credit, buy now and pay later. And when people and businesses couldn't pay back their loans, right, so you have unpaid loans, you know, that would affect the small banks that... had lent out those loans.

It turns out small banks buy from bigger banks, and it sort of created a chain reaction in the economy, whereas too much debt and too many loans were being paid, people couldn't pay them back, small banks closed, because small banks closed, big banks closed, and in fact, you had a lot of situations in which banks just simply failed. You know, there was this term that they used at the time to describe kind of the way in which people would descend upon the banks that were failing to try to get their deposits back. And they called those the run on the banks.

And you can see a couple of images here. If you were someone who had deposited money in the bank and you had heard that your bank was failing, you would try to run out to the bank as quickly as you can to try to get your money out of the bank. Because if that bank failed, then you weren't going to get your money back.

And there were lots of people who lost their entire life savings when banks crashed, you know, across, you know, across the economy. So the failure of banking is not just due to, you know, sort of the unpaid loans, but certainly had, you know, a factor or certainly was a factor in that weak banking system, kind of risky loans, risky credit, etc, etc. So those are kind of three things we could point to going on in the domestic front.

In terms of global factors that also contributed to the Great Depression, wartime demand was declining. A lot of, we might say, the U.S. economy boomed because of World War I. World War I was a war in which devastated Europe. And in fact, the United States really benefited from the war in a lot of ways, economically anyways. And so, you know, once the war concluded and Europe started to rebuild, they didn't need U.S. products anymore. Europeans could produce their own products.

And so, again, we have another problem of declining demand, but this time declining demand overseas. So declining demand at home. declining demand overseas. Both of these things end up being a major problem for American businesses.

At the same time, another global factor was the economic system created after the war. Let us recall that the United States had made a lot of loans to nations during World War I, loans that couldn't be paid back. It's also true that countries like Germany and Austria were forced to pay.

reparations after the war was over. And so U.S. banks really were not, we might say, getting their money from, we'll just say overseas, right? Whether that's the inability for countries like Britain and France to pay back their loans. or the inability for countries like Germany and Austria, you know, who were forced to pay, countries like the United States and Britain and France.

In fact, there was a somewhat complicated system of kind of borrowing and loaning and paying back that developed after the war years. So, you know, let's just imagine this for a moment. So, you know, during the war, countries like Britain And France, oops, write that again, countries like Britain and France.

They borrowed money from the United States. The U.S. stayed out of the war for quite some time, and so they loaned the British and the French money. The idea was that the British and French would eventually pay that money back, which is true.

Where would the British and French get that money from? Well, they would get it from Germany, who was forced to pay reparations after the war. So the idea was that Germany was forced to pay.

reparations to Britain and France. Britain and France would pay money back to the United States. In the 1920s, the German economy actually crashed, experienced hyperinflation, and Germany was unable to pay back its loans or its reparations. As a result of that, the United States decided that it would be in its best interest to let Germany borrow money. So you have this very kind of...

global cycle of debt going on. And as soon as other countries begin not being able to pay it back, it creates all sorts of problems. It's also the reason why, for example, that when the American economy goes down, then that affects Germany's ability to pay back Britain and France, and that affects Britain and France's economy as well. So it kind of brings the whole world with it.

So there were other global factors that were also contributing to this decline. And the last thing that we'll point out is tariffs. Recall that tariffs are a tax on imports. Again, the U.S. used tariffs, and so did other nations. The other nations used tariffs.

That is to say, if the United States decided to tax another country to import into the U.S., other nations did that as well. The 1930s were driven by kind of a version of like national economics, right? A lot of countries were kind of turning inwards when it came to the economy.

And this is a problem again, because it doesn't allow for the Americans to solve this problem of oversupply that we talked about earlier. So the idea is that if you tax another country, that country is going to tax you. And so the inability for American businesses to sell at home, but also to sell overseas because the tariffs were so high, it made their products so expensive. It only makes the problem of oversupply worse.

So once again, you know, the Great Depression, the causes of it, it's a very complicated kind of issue. It's not something that there's a consensus about among historians and economists. But at the very least, there are some fundamental factors that everyone kind of agrees upon. You know, the idea of oversupplying, declining demand, the problem of credit and debt.

The global factors, right? Wartime loans and reparations, the tariff wars. All of these things together led to, again, the worst economic period in U.S. history, maybe even world history. This graph here is also pretty illustrative in terms of just how the Great Depression progressed. What you're looking at here is a graph of U.S. exports and each kind of… outside circle or outside line represents the year.

So in the first year, 1929, the United States was exporting approximately, I think this would be like $3 billion or $2,000 million, whatever that is. The next year, one year later, the United States was exporting $2.7 billion. The next year, $1.8 billion, $1.2 billion.

And then finally, when you get to 1933, the United States is only exporting less than $1 billion. So you go from $3 billion to $1 billion. And it just shows you the way in which, you know, American companies are really sort of struggling.

So on the one hand, you know, we can think of the depression in terms of, you know, or some of the reasons as to how we can gauge this as being one of the worst economic time periods is by, you know, kind of looking at the statistics of the depression. And there are a couple that we can sort of point to to indicate. Um, you know, just how bad of an economic downturn this actually was. So between the years, we'll say roughly between the years 1930 and 1933, again, just to throw some statistics at you, 9,000 banks failed.

Again, if you were unlucky enough to have deposited any money in those banks, you had lost your savings. In terms of the money supply, so the money available in circulation, it shrank by one third. So one third of the money supply was no longer available. And a fancy economic term, GNP, gross national product, everything that is produced inside of a specific country, that decreased by 25%.

Probably the most cited, though, number in terms of measuring the Great Depression is the unemployment number. Now, of course, this varied depending on location and demographic. So, for example, unemployment would be much higher for women than it would be for men.

It would be much higher for ethnic and racial minorities, African-Americans, Hispanics, Asian-Americans, than it would be for white Americans. And it depended on geographic location. You know, some.

Cities that were hit especially hard by the Depression could have unemployment up to 60% or 80% in some case. But typically, the overall average number that we usually cite for the Great Depression is 25%. That is to say that of all the people who are actually looking for work, 25% of people, or one out of four, can't find a job.

Unemployment is kind of a tricky statistic. It doesn't actually mean people who... don't have jobs.

Unemployment means people who are looking for a job. They want a job. They're actively out there trying to find one, and they still can't. So 25% in terms of unemployment.

So that's kind of one way of measuring the depression, just kind of purely statistical. You know, we can look at all these kind of numbers and sort of gauge the depression in that way. But we can also...

kind of measure it in terms of the way that American people experienced it. You know, the stories of how people living in the 1930s, excuse me, of how people living in the 1930s, you know, experienced all these kind of statistical markers. At the same time, as the American economy was crumbling, and really the world economy was crumbling, um, You also had somewhat of a disastrous effect coming from Mother Nature, and that was in the 1930s, early 1930s, you had a dry spell hit the kind of the Midwest or the Great Plains region of the United States. This period of drought is sometimes referred to as the Dust Bowl.

So we might say the Dust Bowl is in the early... 1930s, we'll say a dry spell. In the early 1930s, a dry spell, we might say, made it impossible for farmers. in the Midwest slash Great Plains. So again, kind of like a coincidence in some sorts or irony or whatever the term you want to use that, you know, while everything in terms of the economy is breaking down in the rest of the country.

It just also happens to be a year in which Mother Nature kind of rears its ugly head. And you can see from this image here that this severe drought led to topsoil that was more or less dust combined with very strong winds. There were giant dust storms that, you know, just kind of went over the entire country there.

And so this was crushing for a lot of farmers. A lot of farmers were put out of business because of the Dust Bowl. Many ended up moving to California, in which they were referred to as Okies. So Okies were people who moved.

to California because of the Dust Bowl. And that's to say that the Great Depression had an effect on workers in the cities, in the factories, just as much as it did on farmers. You know, farmers certainly felt the depression as well.

For other demographic groups in the United States, the Great Depression is one of those things that is felt by everyone. Nobody can really escape the depression, but it does affect certain demographic groups more so than others. Like many families during the Depression era, a lot of people went in search of new jobs and new opportunities.

So, for example, African-Americans, most of whom lived in the South during the Depression era, many moved to the North for more economic opportunity. This is part of a larger kind of trend in. world history that we refer to as the Great Migration.

We covered that in an earlier chapter. The Great Migration is the movement from African Americans in the South into the North. And, you know, we can kind of point to several things.

The jobs made available in World War I brought people to the North. The economic troubles of the Depression sent people searching for work, and the jobs available in World War II The Great Migration, you know, we might say 1910 to 1950. So again, sort of a steady influx of African-American migrants from the South into the North continues during the Great Depression. The Great Depression was still an era in which a lot of the kind of systematic discrimination that African-Americans faced in the South was more or less ignored by the federal government. However, there were one particular instance we'll look at here where we're starting to see a little bit more federal intervention.

Of course, for a lot of civil rights advocates at the time, a lot of the issues that African Americans are facing in the South are going more or less ignored by the federal government and state and local governments aren't really willing to act on them. A great example is the example of lynchings. Lynchings were public executions, typically of young black men, and the people who were killed in public, there was never any justice that was really brought for them, that those cases went uninvestigated and nobody would be held accountable for it.

And so for a very long time, civil rights advocates would attempt to try and get the federal government to... to intervene on their behalf. So you start to see a little bit of a changing when it comes to that. And we find it in the Scottsboro case, which took place in the 1930s.

The Scottsboro case was a case in which nine African-American teenagers were accused of raping two white women, and eight of them were sentenced to death for it. So very much in line with a lot of the kind of other common lynchings that would occur. Typically, young black men in the South would be accused of some sort of sexual crime against a white woman.

And in this case, the local jury there in the South determined that not only were the nine teenagers guilty, but that their punishment should be the death penalty. In 1932... the U.S.

Supreme Court overturned it or overturned their sentences. Many would continue to stay in prison, but none of them would be executed. And instead, new trials would be held in the foreseeable future.

So certainly still a long ways away from the types of federal interventions that were characteristic. during the civil rights movement of the 1950s and 1960s, but you can start to see some tension between federal and state, in this case, like judicial systems. over issues related to race already emerging in the 1930s. For others during the Great Depression, you know, Hispanics and Asians, for example, again, they face the same types of difficulties that other ethnic and racial minorities face, that is typically discrimination in the workplace, a higher chance of being laid off as compared to, let's say, their white counterparts, but also in the same way, searching for new economic opportunities. So for example, some Hispanics who had came to the United States during the booming 1920s actually left or migrated outwards.

It's estimated that perhaps 500,000 left the United States. And for women and families in the Great Depression, the Great Depression put a lot of strain, not just on people in general, but specifically kind of family units. For women, especially married women, were among some of the first to be fired.

And, you know, this was very much in line with the types of stereotypes. You know, the idea is that the husband ought to be the male breadwinner of the family and that, you know, especially if a woman is married, then she should not take up a job that would otherwise go to a man. So oftentimes married women in particular were the first ones to be fired.

The Great Depression in general sort of strengthened the notion, we'll say, of separate spears, a separate... which I believe is a term we used earlier. The idea of separate spheres is that the proper place for a man in society is in the public arena.

The proper place for a woman in society is in the domestic or the private sphere. And so the Depression only strengthened that division within Depression-era America. As far as families go, marriage rates declined.

People were much less likely to get married. Birth rates also declined. People were much less likely to start families.

You know, things like divorce, abandonment, runaway children, all of these things increased. Right. So traditionally, the kind of nuclear family unit. all of those things were fundamentally challenged by it.

People put off marriage, people put off having families, more divorces happened, families abandoned themselves. All of these things were very stressful for the family unit. So that's another way of looking at the depression. The depression is the story of statistics and numbers and unemployment rates and stock markets, but it's also the story of what individual people face.

It's the story of searching for economic opportunity. It's the story of people putting off families, not because they have no reliable way of, of, you know, raising children. It's the story of abandonment. It's the story of divorce. It's the story of suicide, which increased during the depression.

You know, kind of all those things. So we can look at the depression kind of in two ways, kind of the personal you know, account of it, but also the statistical or numerical account of it. In terms of culture, though, you know, the Great Depression did have, you know, did have an impact on American culture.

Generally speaking, or broadly speaking, depression values continue to stress kind of this notion of, you know, hard work, independence, that those things ought to be pursued. The Depression did not kind of get rid of that sort of what we might call kind of work ethic sort of attitude. So we might just say about Depression values is that Americans continued to believe in what we might say like individual.

I don't know, we'll say work ethic, something along those lines. A great example is, what's his name? I forget exactly the guy's name. I want to say, yeah, I'm not even going to try and guess what the author is. But one of the more famous books of the time, and it continues to be very famous today in the United States and even around the world, was How to Win Friends and Influence People.

And again, this is kind of a category of maybe like self-help. So, you know, yeah, there certainly was some despair that occurred during the Depression era. But Americans still had a pretty strong kind of attitude towards being able to kind of lift themselves up.

How to Win Friends and Influence People still even today remains somewhat of a popular kind of popular book. And again, the idea is that it's going to kind of. help you in your personal and professional life. You know, modes of cultural output like the radio and the movies, both of these things continue to, you know, be very popular. You know, the film industry did end up taking kind of a brief decline at the beginning of the Great Depression, but it actually grew during the Depression era.

Movies were one of the few industries to actually grow and a lot of it is attributable to the type of media or the type of entertainment that was being propagated by both radio and movies and that is escapism and escapism we might say is like popular culture uh to escape kind of the the realities of life, that actually when things get tougher, people are more likely to gravitate towards sort of escapism. So The Wizard of Oz, for example, very, very popular movie, comic books like Superman became popular in the 1930s. So, you know, these things still remain somewhat strong, you know, during the Depression era, people trying to escape from what the real world was providing.

In other ways, Americans were becoming maybe more so involved in kind of the global reactions to the Great Depression. In terms of what was going on overseas, first of all, in the next chapter, we'll talk a little bit more about how Americans responded to the Great Depression. But in large part, the economies of Europe looked at kind of the current system, which was a system that was politically based off of democracy and an economic system based off of capitalism, a lot of Europeans, or maybe not a lot, but there were certainly countries and leaders in Europe that said, because of the Great Depression, democracy and capitalism have failed and that it's now time to try something else. Whereas in the United States, you'll certainly get some changes to the democratic and capitalist system, but there's not going to be any sort of fundamental overthrowing of capitalism in the US like there will be in other European countries. So other European countries thought the Great Depression would be so bad and so terrible that we need to tear up the existing political system and establish new systems.

And one of these new systems, for example, would be communism. which had taken root in the Soviet Union following or in Russia following World War I. And when the Western capitalist economies failed during the Great Depression, the Soviet Union was actually doing quite well. And so there was a lot of people at the time, if you're just standing there in 1930, that would say, you know, capitalism is the past, communism is the future. One such group was called the Popular Front.

This was a communist organization. in the U.S. And because of the Great Depression, it gained popularity, right?

People in the United States were saying, because of the Great Depression, yes, I agree, capitalism has failed. Let's do what the Soviets are doing and let's try communism. Well, there are also other countries in Europe, namely Italy, that said, well, communism is one sort of alternative.

But we could also try something else. And they experimented in fascism, which was an undemocratic kind of corporate capitalist type of system. But it certainly wasn't communism and it wasn't democracy and it wasn't capitalism.

And so sometimes these are referred to as like the three ways, right? The first way is democracy and capitalism. The second way is communism.

The third way is fascism. And you can think of these as kind of competing ideologies under which we. ought to base society off of. And so these ideologies did battle in Europe during the Spanish Civil War, I think 1935 to something like 1937, fascists and communists went to war in Spain.

Some Americans formed the Lincoln Brigade. This was 3,000 Americans went to Spain to fight against the fascists, right? So these were people who were kind of more, you know, members of the popular front, were more supportive of the communism ideology.

And, you know, in the Spanish Civil War, there were nations that supported both sides. So, for example, countries like Italy and Germany came to the side of the fascists in Spain. And the Soviet Union and the Lincoln Brigade came to the side and fought for the side of the communists.

Whereas most of the capitalist democracies. like the United States, like Britain, like France, they were more or less neutral, right? Recall that America's foreign policy after World War I is a policy of isolation, so it's not really their business. The Spanish Civil War will be one of the contributing factors to World War II, which is still a couple years away here. But again, you know, sort of the idea of more radical alternatives to the...

The problem of the Great Depression continued to gain popularity in the United States through organizations like the Popular Front. Now, in terms of the politics, the president who is in charge during the Great Depression is Herbert Hoover. And Hoover starts off his presidency rather positively.

You know, he was. intelligent, charismatic. He was the last of three Republican kind of laissez-faire, hands-off presidents of the 1920s.

However, he will go down in American history as perhaps one of the worst presidents ever, and that's because he's captain of the ship while the United States is headed towards the worst economic period in its history. And it seems that everything he does is... is a mistake. Now, there is a little bit of a misconception about Hoover, and that was he is a do-nothing president. That is, as Americans, we're struggling with homelessness, we're struggling with food and bread lines and unemployment, that Hoover did nothing but just kind of, you know, sit in the White House.

That's actually not entirely true. In fact, Hoover did take unprecedented measures to try and intervene in the economy. It's just that one, everything he did was ineffective. So we might say of Hoover, he was ineffective.

And number two, comparatively, especially to his successor, Franklin Roosevelt, yeah, it kind of does look like he pretty much did nothing. And compared to... the countries in Europe, for example, it sort of looks that way as well. So when the Great Depression happened, Hoover had sort of a knack for just saying the wrong thing at the wrong time.

You know, he remarked that in 1929, he said something like, you know, the worst is behind us and everything is only going to get better. So he, you know, he sort of had that working against him, just not really saying the proper things at the proper time. But his program also was not effective, really, in any ways. Initially, Hoover responded to the Great Depression by encouraging people to volunteer.

And while people could certainly volunteer, and the 1930s were some of the most, some of the years in which people volunteered the most, it was just not kind of going to be to the scale required to solve the economic problems. So volunteerism, yes, it increased, but it wasn't the right antidote for the poison that was the American economy. Additionally, not just to pin this on Hoover, but to also pin this on Congress. The Holly Smoot tariff was passed, I want to say, in 1930. This placed, we'll say, new highs for tariff rates.

Again, the idea behind tariffs is that you protect American businesses. But again, the problem with American businesses was that they couldn't sell. And if you raise tariffs on foreign countries, they're going to raise tariffs on you. So this only compounded the problem. of high tariffs and how it factored into the economy.

And it wasn't very long that Americans began blaming Hoover for the crisis, whether or not or how much Hoover is actually responsible himself. You know, we can debate that. We can argue about that.

But it typically is the case that whether it's your fault or not, if you're the president of the country during an economic downturn, you will be blamed for it. And so many of the shantytowns that were built in cities across the country. When people became unemployed, they were kicked out of their homes.

And so they just started building their houses out of anything they could find. And all of these sort of shantytown cities began springing up all around the country, and they called them Hoovervilles. So Hoovervilles were the name for the, we'll just say the quote-unquote shantytowns across the country. We can maybe think of this as homelessness. They also called newspapers Hoover blankets.

People who couldn't afford a blanket would use newspaper for their blanket. Again, Hoover's blankets. So Hoover did go from this position of volunteerism, very much a pick-yourself-up-by-your-bootstrap sort of mentality, to creating a system that would intervene in the economy in an unproductive way. unprecedented way.

And that's the Reconstruction Finance Corporation, otherwise known as the RFC. So the RFC, we might want to call this is Hoover's intervention in the economy. And no president had ever done anything like this before. But again, the problem with the RFC is that one, it's not going to work.

And number two, Compared to what the next guy does, it does kind of look like peanuts, right? It doesn't really look like much. But the RFC, fundamentally what it does is that it provides, we'll say, we'll say loans slash money, right? So providing financial resources to business, banks.

and in some cases, local governments. So the Reconstruction Finance Corporation provides loans and money to businesses, banks, and local governments. The big kind of thing that is missing from the RFC that not only makes it ineffective, but also makes it something that people criticize Hoover for is that the RFC did not provide anything for individual people.

And again, if you just look at it from a purely kind of optical standpoint, here is Hoover giving money to Rockefeller and Carnegie, giving money to J.P. Morgan. And in the eyes of the American public, J.P.

Morgan and Rockefeller, they don't need any more money. They're rich enough as it is. Meanwhile, the people who are waiting in bread lines and living in Hoovervilles, they're not getting anything.

So. The RFC and Hoover's presidency, to make it short, was nothing but a disaster. To make matters worse, Hoover did not deal with the social upheaval very well.

As you might imagine, in an economically desperate time period, people are going to cause some trouble. This is especially true with high levels of unemployment that people will be up to no good. And so, you know, things like crime and theft. and all of those things were generally on the rise.

As a result, there were instances of upheaval in cities and places across the country, but perhaps the most famous example of this popular protest was in the form of the Bonus Army. The Bonus Army was a group of World War I veterans who marched and occupied D.C. demanding their bonus payment, right?

Demanding their bonus payment. So that's where we get the term bonus army. So they were there to receive their bonus payment and their World War I veterans.

So what had happened was that during World War I, Congress had agreed to give World War I veterans bonus money or a bonus payment. But the problem was that payment was not to be paid out until a much, much later date. And so when the Depression settled in, a lot of the veterans said, look, I need this money now.

And there was a bill in Congress that would potentially give the veterans their bonus payment early. And so a bunch of World War I veterans then marched to Washington, D.C., saying, pass this bill. We want our money now.

And by the time they had got there, they had set up encampments outside of D.C. A lot of other people had joined them that were not. originally part of the bonus army or World War I veterans themselves, but they were just generally those who had been kind of left behind due to the economy.

And the result was that one, the Senate or Congress more broadly defeated the bill so the veterans would not get their bonus money. Number two, President Hoover said that he didn't approve of giving the bonus payments now, so that He kind of made enemies by doing that. And then number three is that President Hoover actually called in the army to disperse the marchers.

And law enforcement and the military were brought in, including cavalry and machine guns and even tanks, I believe. And those who had set up encampments around D.C. were dispersed. And again, in the eyes of the American public, when you're the president of the United States and you're ordering tanks to go and displace veterans, that's not going to sit well with a large portion of the American public. And so Hoover went from, again, a very promising presidential candidate to being considered amongst not just those at the time, but those ever since.

One of the worst presidents we've ever had, not just to be blamed for the Great Depression, but really. blamed for his inability to, you know, to handle it. And so this set up an election in 1932 where, you know, Hoover, who's the incumbent, very, very, very unpopular, is running against a kind of not really a new presidential candidate, but certainly someone who has some new ideas. He's running up against Franklin Delano Roosevelt, otherwise known as FDR. And Franklin Delano Roosevelt up until this point.

He comes from kind of the same cloth as your traditional progressive presidents, much like his distant cousin, Teddy Roosevelt, who had been president before, born into affluence, Ivy League educated. But rather than, you know, inherent his family's business, he spends his life dedicated to public service. Roosevelt was assistant secretary to the Navy or of the Navy in World War I. He had... ran for vice president in 1920. In 1921, he was struck by polio and he lost the use of his legs.

He became paralyzed from the waist down. And for the next eight years, he would spend more or less the next eight years trying to gain use of his legs back. And it wasn't until 1928 that he was healthy enough.

to run for governor of New York, and then in 1932, he runs for president. And he wins the 1932 election rather handily. As you can see from this map, the green is what Roosevelt won. And during the campaign, what he had promised was a new deal for Americans, right?

So he promised Americans a new deal. And the new deal in short would be, we'll say FDR's plan. Oops.

about FDR's plan to solve the Depression. So kind of very famously, when Roosevelt is inaugurated, he says to the American people, you know, don't be scared. There's nothing to fear but fear itself.

Transcript for:Understanding the Causes and Impact of the Great Depression

Transcript for:
Understanding the Causes and Impact of the Great Depression