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Grade Level:       Type of Work           Subject/Topic is on:
 [ ]6-8                 [ ]Class Notes    [Essay on the Depression ]
 [x]9-10                [ ]Cliff Notes    [of the 1930's and how   ]
 [ ]11-12               [x]Essay/Report   [it was unique.          ]
 [ ]College             [ ]Misc           [                        ]

 Dizzed: 09/94  # of Words:1311  School: ?              State: ?
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Depression of the 1930s
 
The economic depression that beset the United States and other
countries in the 1930s was unique in its magnitude and its
consequences. At the depth of the depression, in 1933, one
American worker in every four was out of a job. In other
countries unemployment ranged between 15 percent and 25 percent
of the labor force. The great industrial slump continued
throughout the 1930s, shaking the foundations of Western
capitalism and the society based upon it.
 
 
Economic Aspects                                                       
 
 President Calvin COOLIDGE had said during the long prosperity
of the 1920s that "The business of America is business."
Despite the seeming business prosperity of the 1920s, however,
there were serious economic weak spots, a chief one being a
depression in the agricultural sector. also depressed were such
industries as coal mining, railroads, and textiles. Throughout
the 1920s, U. S. banks had failed--an average of 600 per
year--as had thousands of other business firms. By 1928 the
construction boom was over. The spectacular rise in prices on
the STOCK MARKET from 1924 to 1929 bore little relation to
actual economic conditions. In fact, the boom in the stock
market and in real estate, along with the expansion in credit
(created, in part, by low-paid workers buying on credit) and
high profits for a few industries, concealed basic problems.
Thus the U. S. stock market crash that occurred in October
1929, with huge losses, was not the fundamental cause of the
Great Depression, although the crash sparked, and certainly
marked the beginning of, the most traumatic economic period of
modern times.
 
 By 1930, the slump was apparent, but few people expected it to
continue; previous financial PANICS and depressions had
reversed in a year or two. The usual forces of economic
expansion had vanished, however. Technology had eliminated more
industrial jobs than it had created; the supply of goods
continued to exceed demand; the world market system was
basically unsound. The high tariffs of the Smoot-Hawley Act
(1930) exacerbated the downturn. As business failures increased
and unemployment soared--and as people with dwindling incomes
nonetheless had to pay their creditors--it was apparent that
the United States was in the grip of economic breakdown. Most
European countries were hit even harder, because they had not
yet fully recovered from the ravages of World War I.)
 
 The deepening depression essentially coincided with the term
in office (1929-33) of President Herbert HOOVER. The stark
statistics scarcely convey the distress of the millions of
people who lost jobs, savings, and homes. From 1930 to 1933
industrial stocks lost 80% of their value. In the four years
from 1929 to 1932 approximately 11,000 U. S. banks failed (44%
of the 1929 total), and about $2 billion in deposits
evaporated. The gross national product (GNP), which for years
had grown at an average annual rate of 3.5%, declined at a rate
of over 10% annually, on average, from 1929 to 1932.
Agricultural distress was intense: farm prices fell by 53% from
1929 to 1932.
 
 President Hoover opposed government intervention to ease the
mounting economic distress. His one major action, creation
(1932) of the Reconstruction Finance Corporation to lend money
to ailing corporations, was seen as inadequate. Hoover lost the
1932 election to Franklin D. ROOSEVELT.
 
 
The New Deal
 
The depression brought a deflation not only of incomes but of
hope. In his first inaugural address (March 1933), President
Franklin D. ROOSEVELT declared that "the only thing we have to
fear is fear itself." But though his NEW DEAL grappled with
economic problems throughout his first two terms, it had no
consistent policy.
 
 At first Roosevelt tried to stimulate the economy through the
NATIONAL RECOVERY ADMINISTRATION, charged with establishing
minimum wages and codes of fair competition in every industry.
It was based on the idea of spreading work and reducing unfair
competitive practices by means of cooperation in industry, so
as to stabilize production and prevent the price slashing that
had begun after 1929. This approach was abandoned after the
Supreme Court declared the NRA unconstitutional in SCHECTER
POULTRY CORPORATION V. UNITED STATES (1935).
 
 Roosevelt's second administration gave more emphasis to public
works and other government expenditures as a means of
stimulating the economy, but it did not pursue this approach
vigorously enough to achieve full economic recovery. At the end
of the 1930s, unemployment was estimated at 17.2%.
 
 Other innovations of the Roosevelt administrations had
long-lasting effects, both economically and politically. To aid
people who could find no work, the New Deal extended federal
relief on a vast scale. The CIVILIAN CONSERVATION CORPS took
young men off the streets and sent them out to plant forests
and drain swamps. The government refinanced about one-fifth of
farm mortgages through the FARM CREDIT ADMINISTRATION and about
one-sixth of home mortgages through the Home Owners Loan
Corporation. The WORKS PROGRESS ADMINISTRATION employed an
average of over 2 million people in occupations ranging from
laborers to musicians and writers. The PUBLIC WORKS
ADMINISTRATION spent about $4 billion on the construction of
highways and public buildings in the years 1933-39.
 
 The depression years saw a burst of union organizing, aided by
the NATIONAL LABOR RELATIONS ACT of 1935. New industrial unions
came into existence through the efforts of organizers led by
John L. LEWIS, Walter REUTHER, Philip MURRAY, and others; in
1937 they won contracts in the steel and auto industries. Total
union membership rose from about 3 million in 1932 to over 10
million in 1941.
 
 
Political and Cultural Effects
 
The expanded role of the federal government came to be accepted
by most Americans by the end of the 1930s. Even Republicans who
had bitterly opposed the New Deal shifted their stance. Wendell
WILLKIE, the Republican presidential nominee in 1940, declared
that he could not oppose reforms such as the regulation of the
securities markets and the utility holding companies, the legal
recognition of unions, or Social Security and unemployment
allowances. What bothered him and other opponents of the New
Deal, however, was the extension of the federal bureaucracy.
 
 The depression caused much questioning of inherited economic
and political ideas. Sen. Huey P. Long (see LONG family) of
Louisiana found a national following for his "Share the Wealth"
program. The socialist writer Upton SINCLAIR was nearly elected
governor of California in 1934 with a similar program for
redistributing the state's wealth. Many writers and other
intellectuals swung even further left, concluding that
capitalism was on its way out; they were drawn to the Communist
party by what they supposed to be the accomplishments of the
USSR.
 
 In other countries the depression had even more profound
effects. As world trade fell off, countries turned to
nationalist economic policies that only exacerbated their
difficulties. In politics the depression strengthened the
extremes of right and left, helping Adolf HITLER to power in
Germany and swelling left-wing movements in other European
countries. The depression was thus a time of massive insecurity
among peoples and governments, contributing to the tensions
that produced World War II. Ironically, however, the massive
military expenditures for that war provided the economic
stimulus that finally ended the depression in the United States
and elsewhere. 
 
 
 
Bibliography: Bernstein, Irving, A Caring Society: The New
Deal, the Worker and the Great Depression (1985); Boardman, Fon
W., Jr., The Thirties: America and the Great Depression (1967);
Davis, Joseph S., The World Between the Wars, 1919-39: An
Economist's View (1974); Galbraith, John K., The Great Crash,
3d ed. (1972; repr. 1980); Garraty, John A., The Great
Depression (1986); Kindleberger, Charles P., The World in
Depression, 1929-1939 (1975; repr. 1983); Markowitz, Gerald,
and Rosner, David, eds., Slaves of the Depression (1987);
Mitchell, Broadus, Depression Decade, 1931-1941 (1977);
Rothbard, Murray N., America's Great Depression (1975; repr.
1983); Schlesinger, Arthur M., Jr., The Age of Roosevelt, 2
vols. (1959); Swados, Harvey, ed., The American Writer and the
Great Depression (1966); Wecter, Dixon, Age of the Great
Depression, 1929-1941 (1971).                 
