US-A+Chapter+24

The stock market crash of 1929 was caused by several factors like the government's encouragement of purchases on stocks and the bull market. Assured by their faith in the nation's economic prosperity, many Americans purchased new consumer products on credit. The federal government encouraged this borrowing by keeping interest rates low during the 1920s. The Republican administrations of the time reasoned that an easy-credit policy would promote business. Easy access to credit enabled consumers to buy goods when they did not actually have the money to pay for them. Moreover, investors poured millions of dollars into the stock market. As demand for stocks rose, so did stock prices. Many economists saw no end to the bull market and stock speculation ( "playing" the market by buying and selling to make a quick profit) became popular. This situation caused margin buying ( the practice of purchasing stocks with borrowed money.) Many people ignored the economists' gloomy voices and kept investing on the stock market.
 * 1. Analyze the causes and consequences of the stock market crash of 1929.**

However, shrewd investors began to sell their stocks. The bubble burst on Black Thursday October 24, 1929. A large number of investors, made nervous by factors such as rising interest rates, suddenly began to sell their shares. The dumping of so much stock on the market jolted investor confidence and caused prices to plunge. Yet, Black Thursday was just the beginning. On Black Tuesday October 29, prices sank to a shocking new low when panicked investors dumped more than 16 million shares of stock on the market. As prices fell, brokers contacted customers who owed them money for stocks purchased on margin. The brokers demanded cash to cover their loans but many customers were unable to raise the funds and so, they had to sell their stocks at huge losses.

Regarding the causes of the Great Depression like the massive war debt built up by European countries and US policies upon the worldwide economic downturn, the economic crisis was unavoidable. With the end of WW1, many European countries were in debts. They were not able to pay back the loans from the United States. Moreover, European countries were not able to stimulate their economy because there was no source of money to do so. In addition, the United States, which gained enormous profits from WW1, isolated themselves to protect their economy. This prevented active international trade and made hard for European countries to recover their economies.
 * 2. Evaluate the causes of the Great Depression.**

The global context of the depression indicates the effect of the depression on many countries worldwide during early 20th century. For example, regardless of the Global Depression, unemployment remained low in France because foreign workers were sent home and many factory workers returned to family farms. In USSR, the Communists organized agriculture and built up heavy industry in order to become economically self-sufficient. Moreover, in Germany and Italy, government economic policies and centralized control helped to bring theses countries out of the depression.
 * 3. Explain the global context of the depression and the reasons for the worldwide economic collapse.**

Global Depression was caused by massive war debt built up by European countries and US policies upon the worldwide economic downturn. After WW1, many European countries were in debts because they spent so much money on the war that there was no finance left to cycle the businesses again. World trade rapidly declined during the late 1920s and early 1930s and worsened the economic crisis. Foreign consumers were unable to purchase goods. Industries, which relied on sales to international and domestic consumers, were struck with large surpluses. U.S. policies could have eased the global depression. Instead, the United States contributed to the worldwide economic downturn by playing high tariffs on imported goods. Even after the crash, Congress continued to pass high tariffs such as the Smoot-Hawley Tariff of 1930. The act protected American industries from inexpensive imports. However, it accelerated the global depression by eliminating the American market for foreign manufacturers and industries.

As the U.S. economy failed, many Americans looked to President Hoover for leadership. Despite the nation's problems, Hoover remained optimistic and this deepened crisis of the Great Depression. As the depression wore on and the crisis worsened, many Americans began to demand that the federal government provide direct relief to the needy. However, Hoover rejected the idea of direct government aid. Hoover argued that direct federal relief would create a large bureaucracy. He feared that it would inflate the federal budget and reduce the self-respect of people receiving the aid ( rugged individualism). Instead, Hoover urged Americans to lift themselves up through hard work and strength of character. Hoover's firm belief in individualism and the value of charter-building experiences kept him from establishing a federal system that would directly aid Americans in need.
 * 4. Explore the reasons for the deepening crisis of the Great Depression and evaluate the Hoover administration's responses.**

The Hoover administration's responses to the Great Depression was unrealistic and impractical. Although he created numerous organizations and passed Acts to improve the economy, virtually none of them had a significant impact on the recovery of the economic crisis. For example, to encourage voluntarism, Hoover created the President's Committee for Unemployment Relief (PCUR) in 1930. It was designed to assist state and local relief efforts. He appointed experienced philanthropists and businesspersons to encourage donations to private relief organizations. However, the committee did little beyond urging Americans to contribute more to charity.

To stimulate the economy, Hoover urged cabinet leaders to voluntarily maintain pre-depression levels of production, employment, and wages. Hoover saw this as the first step toward reviving business activity and promoting recovery.In addition, at Hoover's request, Congress and state governments funded several public-works programs. By providing contracts for construction and materials, Hoover hoped that these projects would stimulate business and reduce unemployment. One of the largest public-works programs was the construction of Hoover Dam. However, these policies that were created to stimulate the economy had little impact on the depression.

Hoover sought to ease the plight of farmers by passing the Agricultural Marketing Act through Congress in 1929. This Act established the Federal Farm Board (FFB) and granted budget of $500 million to support the farmers. In lines with Hoover's notion of rugged individualism, the Federal Farm Board was instructed to find ways to help farmers help themselves. They offered loans and also financed the creation of farmers' cooperatives. These organizations reduced farmers' expenses by allowing them to purchase necessary materials - such as equipment, fertilizer, and pesticides. Hoover also recommended the passage of the Home Loan Bank Act in 1932. The act established the Home Loan Bank Board and provided money to savings banks, building and loan associations, and insurance companies for low-interest mortgages. Regardless of his new policies, crop prices continued to fall.

Hoover tried to stimulate the economy with the Reconstruction Finance Corporation (RFC). RFC was authorized to lend money to stabilize troubled banks, insurance companies, railroad companies, and other institutions. By strengthening key businesses, Hoover hoped to reduce business failures and create more jobs. By the end of Hoover's term, RFC loans had helped many large corporations avoid collapse. However, the economy continued to decline, in part because the RFC was not created until the depression was already in full swing. The RFC also provided no direct aid to industries or to small businesses, which continued to fail at an alarming rate.

Hoover and Roosevelt had very different ideas on how the Depression should be handled. This was almost entirely a result of two integral differences in their schemas; Hoover was a Republican, and had basically worked his way through life, while Roosevelt was not only a Democrat, he had basically been born with the proverbial silver spoon in his mouth. As one can easily see, in many ways these two are complete opposites.
 * 5. Contrast the background and leadership abilities of Franklin D. Roosevelt with those of Herbert Hoover.**

Hoover was very poor as a child. This effect on his schema would be rather interesting, as it seems that he should have had a better understanding of how to handle problems with the poor than Roosevelt. As Hoover was born poor, one would think that he would know how to run the country like a business, so that it would stay afloat; however, when confronted with the Depression, he repeatedly cut taxes. Hoover was basically a hard working Republican, the typical self made man.

Roosevelt, on the other hand, had been born into a very rich family and had everything basically taken care of for him in his childhood by his mother. This gave him a sense of security, of being able to do anything he wanted, most simply because he didn't fail early on. He had never lived through what the American public was going through, so his view of the world, his schema, did not necessarily include what it was like to live in poverty. He believed that the Depression could be solved merely by putting as many people to work for the government as possible. This could relate to how, growing up, he himself did not have to work in any way, shape, or form.

Political affiliation is also one of the most necessary differences to realize in contrasting Hoover and Roosevelt. Hoover's policies, when viewed form the modern perspective, seem rather strange. One of his major efforts appears to have been lowering taxes; he basically expressed faith in the existent American system. He basically refused to give out any national welfare, believing that it demeaned proud Americans. While he attempted much to help businesses, it was clear by 1932 that his policies were a complete failure. Even when the Democrats had control of the congress after 1930, he still stubbornly refused to take stronger action. Throughout this time, the bank failures had been steadily going up. His lowest point in popularity was when a group of veterans camped in D.C. demanding a bonus that they were due. Hoover ordered them removed. Yet even through all of this, he still insisted that the American public did not honestly want national relief. Basically, Roosevelt could have no better campaign than Hoover's presidency.

Roosevelt's philosophy, on the other hand, was entirely different. His most readily apparent ability was his voice; he was able to talk to people in such a way that they almost always went along with him. He was exceptionally confident, and made those around him feel so too. On his inauguration day, he gave his famous speech asserting that the only thing America had to fear was fear itself; not entirely true, because the nation stood on the brink of collapse. Throughout the next few years, Roosevelt's general policy was to make work for anyone and everyone who was idle; it didn't matter if the work was pointless, and didn't really need to be done. Roosevelt simply took the men of the nation and put them to work at whatever he could think of for them to do. The job really didn't matter; the only reason it was there was to keep the public happy.

Hoover and Roosevelt had a variety of differences, both in their background and in their political ideas. Hoover had been born poor, and had worked his way up to a higher station in life (partially with the help of an uncle who came into money). Roosevelt's family, though, possessed basically old wealth. He had whatever he wanted as a child. As far as their political views, Hoover favored a local end to the Depression, basically not believing that the central American government could accomplish what was necessary. Roosevelt, on the other hand, understood that the time for island communities was over, and it was necessary for the central power in the country to lend a hand.

Louise V. Armstrong described the “city at its worst” and described how he saw “a crowd of some fifty men fighting over a barrel of Garbage which had been set outside the back door of a restaurant. American citizens fighting for scraps of food like animals!” The Great Depression affected many American farmers as well. Farmers could not make money from their crops, and for every acre of land that they planted, they lost about $1.50. In the Midwest, as the demand for farm products decreased, the price also decreased. With more goods than they could sell, farmers had crops rotting in their fields. As incomes fell, farmers could not pay their mortgage payments. This led to banks closing the farms and residents grouping together against those foreclosures by bidding ridiculously low prices like 25 cents at the foreclosure auctions of banks. In the Southern part of America, farmers also had a hard time because cotton prices fell from 16 cents per pound to about 6 cents in about four years from 1929 to 1931. Some farmers were also forced off their lands. So when the Midwest had an abundance of food, the Southern farmers had to go through poverty and ‘devastating harvests’. Life on the farm in the Southwest was not as peaceful because the Government wanted to remove Mexican immigrants and ‘illegal aliens’ from the U.S. in order to ease the “strain of depression”. They tried to speed up this process by providing funds so that Mexicans could be transported to Mexico. Migrant farm workers were also forced off the lands. Looking at this, Josefina Fierro de Bright who had gone through hardships, poverty and discrimination decided to take action. With the “El Congreso”, which was made of organized Hispanic migrants to resist oppression from the Government, Josefina Fierro de Bright carried out marches and strikes to go against the discrimination in the Southwest. Many workers became unemployed and many factories closed because of overproduction, and joblessness increased rapidly. For those who had jobs, their incomes fell dramatically. From 1929 to 1933, factory worker’s average annual income fell by almost 1/3. About thirty-four million Americans had no way of earning income in 1933. More than 60 % of the people lived through poverty and starvation. Because so many did not have food to feed themselves, many workers sold apples in the streets for five cents. In 1930, about 6,000 unemployed workers sold apples in New York City. Many lined up in breadlines to get some bread and bowls of soup to not starve. For those who had no shelters, they had to build up “Hoovervilles” which were made of things thrown away such as wood, cardboard, scrap lumber and boxes. These Hoovervilles were also called “Shantytowns”. People wanted to find ways to support each other. Because the Federal Government did little to help the unemployed, city governments, religious groups like the Salvation Army, and charities like the Red-Cross, tried to provide for the poor. There were also Rent Parties, which were large social gatherings that charged small admission fee so that neighbor’s rents could be paid. “Mutualistas” were also a group of Mexican Americans who created a mutual aid society to help each other get through the Great Depression. Not only were workers affected physically, but they were affected mentally and psychologically. In 1932, more than 20,000 Americans committed suicide which was a 28% increase over about four years. Many unemployed men felt guilty that they did not have a job and that they had to make their wives go out and work. Some, who had goals and ambitions, found themselves hopeless and did not know what they would do with their lives. Many felt ashamed and despaired. However, the Great Depression did make people have a stronger desire to have financial stability, because they knew what the consequences were without it. As many male workers lost their jobs due to the Great Depression, and the women in general got hired more because they were cheaper, the family role of men and women switched. Women had to go out to work while men stayed at home doing housework and taking care of their children. Not only men and women, but children starved with no food and no shelters. Many teenagers had become drifters and the number of marriages decreased. Because marriages were not successful, birth rates also decreased, and children had to take greater responsibilities at younger ages. Women had a difficult life making their own soap and baking their own breads. A good quotation that describes the changing roles of women and men is this: “Mrs. Jones… who went daily to her stenographic job, was now the economic mainstay of her family, for Mr. Jones was jobless and was looking after the children.”
 * 6. Analyze the impact of the Great Depression on various groups **
 * F **** arm owners, tenants, and sharecroppers **
 * I **** ndustries and industrial workers **
 * T **** he American family **

In order to save money, many families did not get the medical or dental care that they needed. This led to many deaths from starvation and diseases. Most families also tried to survive by not buying milk or meat, even if the prices of food had decreased. So, milk consumed among families, decreased a million gallons a day in New York City. In 1934, there were 110 deaths caused by hunger in New York City. Also, because there were so many people going through starvation in New York City, $3.77,in relief, was given by the West African nation of Cameroon.

Many African-Americans were discriminated during the Great Depression. Many were forced out of their jobs because employers wanted to provide jobs for the white people. For example, many African-American women, who had taken up most of the domestic jobs at the time, suffered through unemployment more than other women because of their race. Many African-American women stood waiting in the middle of streets to get a job. When Ella Baker and Marvel Cooke saw this, they referred to it as the “Bronx Slave Market”. Although the number of women in general who were being employed did increase, this only increased competition and decreased the number of African-American women hired. According to a study, some white men said that African-Americans “should not be hired as long as there are white men without work.” This just shows how most white people and employers thought that White men should be provided with jobs while the African-Americans were not worthy of being employed.
 * E **** thnic and racial minorities **


 * 7. Explore the reasons for the deepening crisis of the Great Depression and evaluate the Hoover administration's responses.**

President Hoover believed that the Great Depression would only be temporary and that it would actually country better because corrupted business practices would be cleared up. He also believed that the Federal Government should not take action in the economy to help the unemployed or the individuals who were suffering during the Great Depression, because American families would pull themselves up by their 'own bootstraps' by continually working hard.

Because the Federal Government was not helping the economy and the people in the society, city governments, religious groups like the Salvation Army, and charitable groups like Red-Cross, took action to provide for the poor. There were 'mutualistas' which were a group of Mexican-Americans trying to help the neighbors, as well as 'rent parties' to help neighbors pay their rent. However, these actions were not enough. The American people were not able to pull themselves up on their own or with the help of the organizations listed above. Hoover's ideas were not proven because the Great Depression was not temporary, and conditions of the society worsened dramatically.

What Hoover also did not realize was that people were also psychologically affected. Many felt hopeless, and so rather than pulling themselves up on their own, some gave up by committing suicides. Many did not know the path that they should take, and as life got harder, it seemed the Great Depression would last forever. Not only those unemployed, but farmers in the west had over abundance of crops rotting, while the south went through poverty and starvation. The government should have taken immediate action looking at the drastic impacts of the Great Depression. However, Hoover delayed this by encouraging the idea of 'pulling oneself by one's own bootstraps' and stopping the Federal Government from intervening.

**8. How did popular culture offer an escape from the Great Depression?**
In order to get through the psychological pain from the Great Depression, Americans were drawn to activities such as reading, playing games, listening to radios and watching movies. Most famous movies were Gangster movies, showing characters who get through any hardships. Also, Walt Disney who created Mickey Mouse, brightened up the gloomy days of the Great Depression with his lively animation. Radio and the Golden Age arrived and the number of radios increased from 12 million to 28 million. Listening to different music and different radio stations gave the people something else to keep their minds off the Great Depression. Heroes, such as Lone ranger, Little Orphan Annie, the Shadow, helped many to forget the hard times during the Great Depression as well. Lone Ranger, who is portrayed as a heroic figure, inspired many to fight through their stuggles. Because people wanted to get through the Great Depression, literature became a major factor that would console the people, and make them realize that there is hope for the future. A novel called the “Lost Horizon” by James Hilton, was appealing because the main character discovers a perfect world. Other examples such as, “__As I Lay Dying__” by William Faulkner, depicted the lives of people in the Great Depression the way it was in Mississippi. People would be able to sympathize with the characters in the novel and not feel despair. Other inexpensive comic books such as “Flash Gordon” and “Tarzan” took people’s minds off the Great Depression, and be inspired by Heroes who fought through anything.