The Great Depression 5 The Great Depression was the worst economic downturn ever in U. S. History, and one which extended to practically the entire industrialized world. The Depression began late in 1929 and lasted for about ten years. Many economists have their theories as to what brought all of this about. It is generally accepted that the main cause for the Great Depression was the combination of the greatly unequal distribution of wealth throughout the 1920's, and the extensive stock market speculation that took place during the latter part that same decade.
The disparity in the distribution of wealth in the 1920's existed on many levels. Money was distributed unequally between the rich and the middle-class, between industry and agriculture within the United States, and between the U. S. and Europe.
This imbalance of wealth created an unstable economy. The excessive speculation in the late 1920's kept the stock market artificially high, and eventually lead to huge market crashes. These market crashes, combined with the mal distribution of wealth, caused the American economy to capsize. Lives and livelihoods of the lower economic groups were devastated.
Politicians were no longer admired and the strain between the races was high. Through it all, however, the people were able to find moments of relief in entertainment of many kinds. They all pulled together to stretch what little they had and found strength in themselves that they never realized was there. The 'roaring twenties' was an era when our country prospered tremendously. Thenation's total income rose from $74. 3 billion in 1923 to $89 billion in 1929.
The rewards of the 'Coolidge Prosperity' of the 1920's were not shared evenly among all Americans, however. The top 0. 1% of Americans had a combined income equal to the bottom 42%! The same top 0. 1% of Americans in 1929 controlled 34% of all savings, while 80% of Americans had no savings at all. The disparity of income between the rich and the middle class grew throughout the 1920's. A major reason for this large and growing gap between the rich and the working-class people was the increased manufacturing output throughout this period.
The large and growing dissimilarity of wealth between the well-to-do and the middle-income citizens made the U. S. economy unstable. For an economy to function properly, total demand must equal total supply. In an economy with such disparate distribution of income, it is not granted that demand will always equal supply.
In just three years a whole decade of economic growth was wiped out. The first three waves of bank failures began in the fall of 1930. While bank failures were common in the 1920 s, many more banks failed in the 1930 s, and, unlike in the 1920 s, there was a large decline in the money supply. Made fearful by the huge number of banks that failed, surviving banks cut back on their lending, and the public reduced their bank balances. Between 1929 and 1933, the nation's money supply declined by over 25 percent. The federal government also contributed to the gap between the rich and middle-class.
The Roaring Twenties was an era dominated by Republican presidents: Warren Harding (1920-1923), Calvin Coolidge (1923-1929) and Herbert Hoover (1929-1933). Under their conservative economic philosophy of laissez-faire ('leave it alone'), markets were allowed to operate without government interference. Taxes and regulation were slashed dramatically, monopolies were allowed to form and inequality of wealth and income reached record levels. The country was on the conservative's preferred gold standard, and the Federal Reserve was not allowed to change the money supply. The fact that the Great Depression began in 1929 on the Republicans' watch was and still is a great embarrassment to conservative economists. Many try to lay the blame of the worsening of the Depression on Hoover, for supposedly betraying the laissez-faire philosophy.
In his defense, however, almost all of Hoover's government action occurred long after the worst of the Depression had hit. In fact, he was voted out of office for doing 'too little too late.' That set the stage for the election of Franklin D. Roosevelt who defeated Hoover. FDR promised the nation a 'New Deal' and instituted many programs known as the alphabet soup programs designed to strengthen the economy and raise the spirits of the country. The Depression was hard on most Americans, but especially on the Blacks.
They were the primary victims of job discrimination. Their slogan was, 'Last hired, first fired.' In the North, blacks worked in factories and at menial jobs that helped them get by. They organized cooperative groups and helped out black merchants and shopped at places that hired black workers. The Southern blacks were not as fortunate. Many African-Americans worked as migrant farm workers and never knew from one day to the next if or when they could feed their families. Mrs.
Roosevelt traveled all around the country and witnessed this systematic discrimination first hand. She influenced her husband to expand the African Americans's hare in the New Deal work projects. They were instrumental in FDR's winning his reelection. Times were so terrible that people needed to escape from their cares for a few hours.
They wanted to lose themselves in romantic stories, laugh at popular comedians and see a part of the world they could never visit in real life. Movies provided just the release that the downtrodden Americans were looking for. They could watch Ginger Rogers and Fred Astaire dancing in elegant movie musicals and catch up on the Depression happenings through the Newsreels. Radio's Golden Age of Broadcasting began in the mid- twenties and provided the major source of family entertainment.
Families throughout the country would gather nightly to listen to comedies like Amos and Andy, adventure dramas such as The Shadow and music. Children would race home from school to listen to radio adventure shows produced just for them. Some radio programs were so popular that during their broadcast, movie theaters would stop the films and turnon their radios so that their customers would not miss the programs. Families turned to the simpler joys of life and made an evening walk the highlight of their day. Many had gardens and took great pleasure growing their own food from seed. The Great Depression was probably the most traumatic event in American History since the Civil War.
Like the Civil War, it drastically changed the country. It changed they way Americans looked at their government and what they expected from it. It also changed the way people looked at themselves. I have learned that The Great Depression tested the fabric of American life as it had been seldom tested before or has since.
It caused Americans to doubt their abilities and their values. It caused them to despair. But they weathered the test, and as a Nation, emerged stronger than ever, and were all better today for their strength and their courage.