Boom and Bust

Unit 6
Roaring 20s and the Great
Depression
 Growing Economy
• The automobile! In 1925, more people had
cars than running water...
– Mobility and transportation was a priority
• Beginning of mass production:
– Large-scale manufacturing
done with machines
– Increased supply without
increasing cost
– Wages increased, work
hours decreased and some
even had a 2 week paid
vacation!
 The Assembly Line
• Divides operations into a series of simple tasks
• Henry Ford is the first to adopt this method in his
business
– Workers were able to built a whole car every 93 minutes
instead of 12 hours
– Eventually able to have a car roll out off the line every 10
seconds
– The first car built this was
called the Model T (Tin Lizzie)
• The philosophy then becomes
“the cheaper the car = the
more I can sell = the more
profit I make
 The Car
• 15% of the nation’s steel was consumed by
the auto industry
• The rise in popularity of cars also lead to a
rise in other industries:
– Petroleum, Rubber, Glass etc.
– Also a rise in
habitation of the
suburbs
• Public transportation
became less
successful
 “Consumer Goods”
• Disposable income leads to
common people being able to
buy more “frivolous”
purchases to make their lives
more comfortable...
– Frozen foods (refrigerator),
electric razors, hair dye etc.
• The most popular items were
concerning cleanliness,
“labour-savers” and fashion
 The Airline Industry
• After the Wright brothers invented the plane (1903), the
industry took off in both a commercial and military sense
– Way better and cheaper than Langley’s attempt...
• American-made planes were particularly in demand during
WWI...
• After planes for war, came planes for mail 1926 Congress
passed the Air
Commerce Act
– Federal
subsidies for
building airports
– By 1928, there
were 48 airlines
serving 355 cities!
 The Radio Industry
• Edwin Armstrong invented the special
electrical circuit that allows for sound to be
transmitted over long-range
• First public broadcast in history: the landslide
victory of President Harding
• First company (in 1926) = National Broadcasting
Company (NBC)
• 1928: CBS organises
a coast-to-coast
network!
• How are radio stations
profitable?
 Consumerism
• The rise of Credit!
– Debt all of a sudden becomes
acceptable if you believe in
your ability to pay it off...
– “pay in easy instalments”
– Danger of Credit?
• 75% of radios and 60% of
cars were bought on credit
 Mass Advertising
• Many inventors faced the
problem of convincing
the people their products
were needed*
– Leads to advertising
• How does
advertising work?
– They link a product
with qualities
associated with the
era
– Links to desires or
fears
 Home Work
• Find a MODERN advertising and explain
what this ad says about our modern
values and concerns
• Find an ad from the 20s and compare the
2 – how much have our values or ideas of
beauty changed?
 Managerial Revolution
• Rise of the Manager!
• Companies are so big now that they need to
be split into divisions (accounting,
marketing, human resources etc.)
• The rise of professional managers leads
to an increase in size of the
Middle class
• More machines leads to a
need in engineers – they
too join the rank of the
Middle class
 Welfare Capitalism
• This was a movement by the business
owners allowing workers to buy stocks in
the company, receive pensions and
even receive medical care!
– Make money, but also give back
to the workers
• This lead to the “Open Shop” idea
– Employees not required to join unions
– Workers were being taken care of,
without having to pay Union fees
 Outcasts of the Roaring 20s
• Not everyone is making loads of money...
– African American and women: both lost their
jobs when the war ended
– Native Americans: finally granted citizenship in
1924, but still isolated and
jobless
– Immigrants: mostly
unskilled labourers that
were paid less than citizens
– Deep Southerners: farmers
did not benefit from this
economic boom
 Farm Crisis
• Farmers were earning on average 1/3rd of a factory
worker’s income
• Machines help produce more here too, but demand
does NOT increase = low prices
• During the war, farmers were pushed to produce
more – many
borrowed money
to buy new land and
machines
• After the war, European
farms started producing
again – less demand for
American products
 Harlem Renaissance
• A time of African American “cultural revolution”
– African American writers, singers, musicians, actors
an politicians all encourage racial pride and
progressivism
– Starts and is most felt in
Harlem, NYC
• Birth of jazz: a mix of blues
and ragtime
– Many artists of the time got
their big break at the
Cotton Club – music by
African Americans, but
audience only white...
People of the Harlem Renaissance
• Louis Armstrong: King of Jazz*
• “What a Wonderful World” -
https://www.youtube.com/watch?v=A3yCcXgbKrE
• Claude McKay: first important writer of the Harlem
Renaissance – especially poetry
– “If we must die”
• Bessie Smith: Empress of the Blues*
– “Downhearted Blues” -
https://www.youtube.com/watch?v=5TzylwYt-YM
• Paul Robeson: Actor –
“Emperor Jones”
• Josephine Baker:
International dancer and actress
 African American Politics
• After their participation in WWI and the Great
Migration, African Americans were set to re-
enter the political sphere
– Their increased numbers in Northern cities allowed
them to strong voting power – voting blocs
• Voting as a bloc, they were able to elect Oscar
DePriest, first African American in Congress
from the North
– He made lynching a
federal crime and
introduced many
laws opposing racial
discrimination
 African American Politics
• The National Association for the
Advancement of Coloured People
(NAACP) made very persistent efforts to
combat lynching and discrimination
• The NAACP, along with labour unions,
had their greatest success when they
defeated the nomination to the
Supreme Court of Judge John J.
Parker*
 Black Nationalism
• Marcus Garvey: originally from Jamaica, he was an African
American leader that encouraged black pride and
nationalism, especially through education
• “Black nationalism” encouraged the African American to
separate themselves from Whites – they would never find
justice in America, so should go to Africa
• Garvey also called some key figures of the Harlem
Renaissance “weak kneed flatterers of white men”...
• Middle class African Americans did not agree with
Garvey...
• His movement died when he was
eventually deported back to Jamaica,
but the sense of pride and hope remained
 Stock Market Soars
• Bull Market: when the stock market
experiences a long period of rising stock
prices
– 10% of American families owned stock by 1929...
• People begin to buy stock on “margin”
– Stockbroker holds the stock as “collateral”
– If the price of the stock fell, the broker could make a
“margin call”
• Speculation: when people stop taking into
account the real earnings of a company and bet
on it to continue to climb
 Stock Market Crashes
• A Bull Market only lasts so long as investors
keep putting new money into it...
• A slow in new investors lead professional
investors to sell – which lead to “margin”
investors selling to pay their loans
– Prices then fall fast!
• Black Tuesday: October 29th 1929
– Market lost between $10 and $15 billion!
• Stock market crash is NOT the MAIN reason
for the Great Depression – but it certainly did
not help the country’s economic weakness...
 Bank Closures
• Blanks are weakened by the crash in 2 ways:
– Banks had loaned about $6 billion to speculators
– Banks had invested the depositors money
• Consequences of weak or closing banks:
– Banks cut back on giving out loans – businesses as
well as ordinary people suffer*
– Government does NOT ensure bank deposits – lost
savings
– People no longer trust banks,
leading to “Bank Runs”*
• By 1932, 10% of the nation’s
banks closed...
 Causes of the Great Depression
• Uneven Distribution of Income
– Top 5% earned 30%, 2/3rd lived with less
than $2,500 a year – very little disposable
income
• Overproduction/Falling Demand
– Less people able to buy the over-produced
products – manufacturers cut down
production* – lay off employees – people
buy even less - repeat
 Causes of the Great Depression
• High tariffs
– Jobs might have been saved if Americans goods
sold abroad
– Hawley-Smoot Tariff raised tariffs to the highest
point in US Hist.
• Low interests rates by the Federal
Reserve
– Encouraged banks to make risky loans
– Led business leaders to believe the economy
was still expanding – more borrowing in order
to increase production - overproduction
 Life During the Great Depression
• 1/4th of the workforce was unemployed by
1933...
• Hunger: bread lines and soup kitchens (YMCA)
• Homelessness: shantytowns (Hoovervilles) on
public land
• To search for jobs or
better opportunities
people began wandering
– hobos
– “ridding the rails” or
hitchiking
 The Dust Bowl
• Massive drought hits the Great Plains...
– No water or plants to hold down the top soil it all
turns to dust
– The area from Dakota to Texas is the “Dust
Bowl”
• Wind wipes the dust into the air, blocking
out the sun
• Animals and people sometimes died from
suffocation if caught outside during a dust
storm
 Art and Entertainment
• Entertainment became a way to escape their worries
– Comics books: Superman (1938) and Batman (1939)
– Movies: King Kong, Walt
Disney’s Mickey Mouse (1928)
and Snow White (1937)
– Radio comedians, adventure
story tellers (Green Hornet)
and soap operas
– John Steinbeck and The Grapes
of Wrath
– Margaret Bourke-White:
photographer extraordinaire!
 Hoover and the Depression
• President Hoover believed that the
government should not interfere...
– Believed the American system of “rugged
individualism” would see the people through...
• He did eventually organise funding for
“Public Works”
– Government financed building
projects
• Budget deficit versus raising
taxes...
 Relief of Banks and People
• Hoover believed it would be wiser to
help the banks than individuals
– Banks loan to corporations, who hire people
• Congress ended up passing the
Emergency Relief and Construction Act
– Hoover reluctantly signed the bill...
– $1.5 billion in Public Works and $300 million
in emergency loans to the States
 Angry Citizens
• “Hunger marches” start taking place, many
organized by the American Communist Party*
– “feed the hungry, tax the rich”
• Farmers destroy their own crops – trying to raise
prices by reducing the supply
• Bonus Marchers (bonus army): veterans marching to
support a bill that would allow them to have their
bonus checks early
– Starts in Oregon, but on their march to Washington they
were joined by other veterans
– Bill was voted down – General Douglas McArthur sent in
to “clean up”
• *Hangry*
 Homework
• Write a pro and con of providing direct
relief to individuals.
 Roosevelt’s Rise to Power
• Franklin Delano Roosevelt is a distant cousin
of Teddy Roosevelt
– Married Teddy’s niece Eleanor, who was a big part
in keeping his political image positive and
prominent
• Governor of New York during the Wall Street
crash – created the first state relief agency!
• His confidence, energy and break with
traditions, despite his physical trials, lead the
American people to vote for him*
• His policies to end the Great Depression are
collectively called the “New Deal”
 The Hundred Days
• “the brain trust” came into office with many
ideas to end the Depression
– No set political ideology, no agenda – just ideas
– “bold and persistent experimentation…
above all, try something!”
• 5 days after his inauguration – he starts
sending bill after bill to Congress
– 15 major bills are passed in 100 days!
– This is known as the First New Deal
 Banks and Debt Relief
• FDR knew that none of his policies would
work if the banks stayed closed
– His first bill was the Emergency Banking Relief
Act in 1933
– He also announced a “bank holiday”*
• He also started what became known as
“fireside chats”
– He spoke on the radio “directly” to the
American people
– Convinced them to follow his ideas…
 The SEC and the FDIC
• Securities and Exchange Commission
(SEC)
– To regulate the stock market and prevent fraud
– required companies to provide complete and
truthful information to investors
• The Federal Deposit Insurance
Corporation (FDIC)
– Provides government insurance for bank
deposits – up to a certain amount
– Greatly increased confidence in the banking
system
 Mortgage and Debt Relief
• Some of FDRs adviser believed that debt, and
not low prices, was the main obstacle to
recovery*
• Home Owners’ Loan Corporation (HOLC)
– The corporation bought off mortgages of some
people that were behind in their payments
– Gave longer terms of payment
with lower interest rates
– Only loaned to
homeowners that were not
farm owners and were
still employed
– 1 million mortgages (10%)
 Mortgages and Debt Relief
• The Farm Credit Administration (FCA)
– Helped farmers refinance their mortgages, with
lower interest rates
– Helped some less efficient farmers keep their
land…
• The Agricultural Adjustment Act (AAA)
– Prices were low because
farmers were producing
too much…
– Government paid
some farmers NOT to
raise certain livestock or
NOT to plant as many crops
 Relief Programs
• Some believed that a great cause of the
Depression was low consumption
• The Civilian Conservation Corps (CCC)
– Offered unemployed men (18-25) the
opportunity to work under the forestry service
– Planted trees in the dust bowl to prevent
that situation from
happening again
– Veterans and native
Americans were
added to the list of
potential candidates
 Relief Programs
• The Public Works Administration (PWA)
– 1/3rd of the nation’s unemployed workers were from
the construction industry
– Building dams, sewer systems, schools etc.
– Gave money to
construction
companies – not hiring
directly
– Did not do much for
unemployment, but did
break down some racial
barriers in the
construction industry
 Relief Programs
• The Civil Works Administration (CWA)
– Unlike the PWA, the CWA hired workers
directly
– This project spent about $1 billion in only 5
months!
– Shut down the
following spring
– did not want it
to become a
habit...
 Unions
• The Wagner Act
– Guarantees workers the right to unionize!
– This put a stop to some unfair practices such as
spying on workers
– Eventual formation of the Congress of Industrial
Organizations (CIO)
• Sit Down Strikes
– The new method of
striking – prevents
strike-breakers!
– Success in the car
industry (UAW)
 Social Security
• Social Security Act: to provide some
security for older and unemployed
Americans - though payroll taxes
– Monthly retirement benefits
– Unemployment insurance
– “legal, moral and political
right to collect their pensions
and benefits”
• This system left out some of
the neediest: farmers and
domestic workers
FDR versus the Supreme Court
• The Supreme court declared the AAA
unconstitutional, and had their sights on other
New Deal programs...
– “nine old men”
• FDR proposed to increase the number of justices
– If a justice had served 10 years and was 70 y/o, a
new justice could be named*
– This “court-packing” plan was FDR first political
mistake
– This plan would give the President too much
power over the Court...
 The New Deal Ends
• Fair Labour Standards Act is the last act
of the New Deal
– Abolished child labour for good
– Limited the work
week to 44 hours
– First ever minimum
wage to 25 cents/hour
 New Deal Legacy
• New Deal was only slightly successful in
ending the Depression
• It did however give the common American
a greater sense of security and stability
• The government now had much more power
over the economy
• Creation of a “safety net”
• African Americans and women gained more
recognition and opportunities during this
time