Great Depression in the United States

The Event Large-scale economic downturn

Dates 1929-1941

The Great Depression in the United States has been regarded as the worst national crisis in American history since the American Civil War. The Depression, which was worldwide, had profound economic, political, and social effects on the United States during the 1930’s. It was the longest and most significant economic downturn in U.S. history, and the government efforts to address it shaped American society.

The Great Depression of the 1930’s was the result of several causes. Although economic mini-depressions, or “panics,” had been part of the American economic cycle for at least a century, this depression was deeper and lasted longer than any previous economic downturn. The Depression followed the unprecedented economic prosperity of the 1920’s.

The event that symbolized the beginning of the Great Depression was the stock market crash of October, 1929, which ended an unprecedented rise in the stock markets that included a doubling of the Dow Jones Industrial Average between 1928 and 1929. Because most of the growth was fueled by purchases made on margin, however, the growth was unsustainable. Trouble was exacerbated by the response of the Federal Reserve, which raised credit rates and tightened the money supply, at a time when lowering interest rates and easing credit would have helped borrowers to pay back lenders. These factors led to a downward spiral of bank and business failures. The nation’s economy continued downward between 1929 and 1932, and the expected sources of relief—families, private organizations, and the state—proved inadequate.

Beyond the cost to American business and the financial infrastructure was the human cost. People lost not only jobs but also homes and savings; even previously middle-class people were reduced to scavenging for food and coal. Many, forced out of their homes, constructed campsites of shoddily built shanties in public places that quickly earned the nickname “Hoovervilles.” In the early Depression era, most Americans, shell-shocked but believing firmly in self-reliance, were initially fairly passive and focused on surviving. Not until later, as economic conditions improved marginally and the people’s hopes were raised, did active political restiveness emerge.

The Hoover Administration and the Great Depression, 1929-1933

The president at the time of the onset of the Depression, Herbert Hoover, quickly proved unequal to the task of addressing the severe economic downturn. A genuinely compassionate man whose long career had included heading the Food Administration in World War I, Hoover nonetheless believed firmly that the federal government should not take a leading role in administering aid, fearing that it would undermine human initiative and self-reliance. Hoover had no such qualms about aiding businesses, believing that supporting business would help stimulate the economy. For that reason, in 1932, Hoover authorized the first governmental body specifically designed to address the economic conditions, the Reconstruction Finance Corporation (RFC), which made $2 billion available as loans to banks and corporations that were willing to build low-cost public housing and public works, displaying Hoover’s emphasis on public-private partnerships. The Hoover administration also created the Home Loan Bank Board to support mortgage companies and savings and loans corporations.

Hoover’s political undoing was his treatment of the Bonus Army marchers, who were veterans of the World War I American Expeditionary Force. Feeling the economic effects of the Depression, they gathered throughout the country and rode boxcars to Washington, D.C., to demand early payment of service bonuses that were not due until 1945; they set up camp at the Anacostia Flats, near Capitol Hill. Fearing what might happen if he gave in to the demands, Hoover refused to meet with the marchers, so they camped outside the White House. Hoover then sent troops, led by Army Chief of Staff Douglas MacArthur and General George Patton, to drive them out. The troops set fire to shacks and tents, and in the melee, one hundred veterans were wounded and one infant was killed. The sight of veterans driven out by the Army did not look good, and it played a significant role in Hoover’s defeat in the 1932 election.

Roosevelt Administration and the Great Depression, 1933-1941

The American people found a savior of sorts in Franklin D. Roosevelt, the aristocratic New York governor and the fifth cousin of President Theodore Roosevelt. As New York governor, Roosevelt had created successful statewide relief programs that he adapted for the nation as president. As a candidate for president, he promised “a new deal for the American people,” and this message resonated with the voting public. Between the election and Roosevelt’s inauguration on March 4, 1933, the economy continued to worsen; even the banks that had been saved by the RFC were closing.

Roosevelt and his administration spent their first one hundred days attempting to restore American confidence by taking emergency measures against total economic collapse. During this time, Roosevelt set a record for political activity, taking actions that ranged from partially repealing Prohibition to declaring a bank holiday that closed the nation’s banks long enough for the government to determine which ones were worth saving. Roosevelt also authorized the establishment of the Federal Emergency Relief Administration, which administered $500 million in direct relief, and the Home Owners’ Loan Corporation to prevent widespread mortgage foreclosures. In an effort to boost the nation’s morale, Roosevelt also began a series of radio addresses that became known as the “fireside chats,” which were effective for their relative infrequency (four times per year) and their direct address to the people through their home radios, a practice that gave Americans the sense that their president cared about their problems. In return, the sheer volume of letters written to the president and First Lady Eleanor Roosevelt displayed the immediate success of Roosevelt’s efforts to reach out to the American people.

Once the immediate crisis was under control, Roosevelt took more definitive regulatory action through a series of programs and agencies that became known as “The New Deal.” Technically speaking, however, there were two New Deals. The first, enacted between 1933 and 1935, focused primarily on shoring up and regulating American business and restricting output to address overproduction. A key piece of legislation was the National Industrial Recovery Act (NIRA), which created the National Recovery Administration. The NIRA, a voluntary program, encouraged industries to get together to agree on fair codes of competition. The NIRA also included unprecedented prolabor provisions that recognized the right of workers to organize and the responsibility of employers to bargain in good faith. More controversial programs of the first New Deal included the Agricultural Adjustment Act, which paid farmers to not only reduce production but also destroy existing produce and livestock in order to bring prices back up, and the Tennessee Valley Authority, a government program that provided flood control and cheap hydroelectric power for the multistate Tennessee River Valley. The latter initiative was popular with the public because it brought unprecedented improvements for the people of the region. The first New Deal also included early, and controversial, work relief programs, such as the Civil Works Administration (CWA), the Public Works Administration (PWA), and the Civilian Conservation Corps (CCC).

By contrast to the first New Deal, the second New Deal, enacted between 1935 and 1937, shifted the focus from addressing overproduction to addressing underconsumption. The purpose of the second New Deal’s was to enable Americans to earn and consume again, through methods ranging from social welfare to employment at public works to collective bargaining rights for workers. The task of employing many of the unemployed was accomplished through an expanded public works program, the Works Progress Administration, that built on the efforts of the CWA and PWA and expanded them to include the employment of artists to paint public murals, writers to produce travel guides, and actors and other theater professionals to produce low-cost theatrical performances for the public. Paying for all of this involved deficit spending and a break from balanced budgets in order to “prime the pump,” following the theories of British economistJohn Maynard Keynes, which rejected the classical idea that the free market should be left alone to function without governmental assistance or interference.

Politics and Society in the Great Depression

Both New Deals were shaped by the politics of the time, which were, in turn, greatly affected by the economic conditions. Desperate times brought out political extremes from both the left and the right. On the left, the decade represented a resurgence of influence, including electoral, from radical third parties, both socialist and communist. Labor parties were popular among the working poor, as was the Communist Party USA, which by this time had shifted from preaching world revolution to emphasizing a “Popular Front” strategy of making alliances with labor and political organizations, ostensibly against fascism. In California, Upton Sinclair, the author of The Jungle (1906), the early twentieth century exposé of the meatpacking industry, ran for governor of California as part of his End Poverty in California program. He did not win, but he came close. The most significant left-leaning political challenge to Roosevelt came from the eccentric, populist Louisiana senator Huey Long, who preached nothing less than a complete redistribution of U.S. wealth and won enough support to be considered a serious challenger for the presidency before he was assassinated in 1936.

Political challenges to Roosevelt and the New Deal did not come solely from the left. The other major figure to challenge Roosevelt publicly was Father Charles E. Coughlin, a Catholic priest from Michigan who earned the nickname “the Radio Priest” for his regular addresses and sermons on the radio. Coughlin began as a supporter of Roosevelt and the New Deal until he realized that Roosevelt was not listening to his advice, at which point he became a virulent critic of what he labeled “the Jew Deal.” He founded the National Union of Social Justice, a proto-political party that increasingly leaned toward fascism. Also, like the industrialist Henry Ford, Coughlin became increasingly anti-Semitic and obsessed with Jewish conspiracies. By 1939, many radio stations refused to air his programs. In the middle of these extremes, Francis E. Townsend also achieved public prominence through his promotion of an old-age pension plan that was economically and politically unfeasible, but one that Roosevelt later co-opted to create the Social Security system.

As a net result of this labor and political unrest, Roosevelt took a rhetorical left turn, as he publicly attacked the “economic royalists” in the 1936 election, in which he was reelected by a landslide. Substantively, however, Roosevelt’s politics remained relatively unchanged, and while the programs of the two New Deals created significant economic and social reforms, few did anything to seriously redistribute wealth in the United States or otherwise attack economic inequality. By 1937, when the economy appeared to be picking up, Roosevelt began cutting back on some New Deal programs, which led to another economic downturn. “The Roosevelt Recession,” as it was labeled, contributed to a decline in Roosevelt’s popularity, as did his attempt to “pack” the Supreme Court by a failed effort to introduce legislation to expand the number of justices on the Court.

Social and Cultural Aspects of the Great Depression

Beyond politics, the Great Depression left other lasting effects on American society. Economically, it undermined the traditional American business culture severely. Conversely, for a time, the Depression promoted a uniquely prolabor environment in which even popular culture was sympathetic to the goals and aspirations of workers’ movements and the common man was a subject of celebration and sympathy.

The Depression had a profoundly disruptive effect on the American family or, at least, the accepted middle-class ideal of the family. Because most of the job losses were in industries traditionally associated with men, women were more likely to maintain employment and often ended up as the primary breadwinners of their families. These changes in gender roles were not easily accepted, which led to family breakups and desertions for those who could not afford divorce. Marriage rates and birthrates also declined. Because of these consequences, many states and localities fired or refused to hire married women, and subsequent New Deal efforts to help “the forgotten man” forgot or never considered that many women, regardless of marital status, were often the sole supporters of their families. Even some of the early New Deal work-relief programs, such as the CCC, were designated for men only.

Minorities also suffered disproportionately from the effects of the Great Depression. African Americans had enjoyed comparatively little of the prosperity of the 1920’s, and when the Depression hit, they were the most likely to be fired and pushed out of jobs that Caucasians would not have considered in better times. During the New Deal, the obstructionism of southern Democrats prevented Roosevelt from doing more for African Americans; if anything, many of the relief programs reinforced existing patterns of discrimination. The situation for Mexican Americans was in many ways worse than that of African Americans. Many were victimized by repatriation schemes designed to give more jobs to American citizens, and many were caught up in citizenship raids in which even American citizens were deported. State and local governments forced out many more, and by 1935, an additional 500,000 left voluntarily. The New Deal alleviated the worst of this discrimination, but legal harassment and discrimination in the distribution of relief remained, and only Latinos who worked in the construction trades genuinely benefited from the New Deal.

Culturally and psychologically, the national mood became one of darkness and cynicism. Depression was a literal phenomenon for many, with a marked increase in the suicide rate. Reflecting a loss of faith in the norms of polite society, the films and popular culture glorified gangsters and “hard-boiled” heroes who lived by their wits—even outside the law, if need be. Accompanying the darker outlook on life was a yearning for escape, which Hollywood provided through films that presented visions of glamour. The popular culture of the period also reflected a yearning for heroes, which was most visibly expressed by the creation of the character of Superman.

Over time, Americans developed social solidarity, which was expressed in a general willingness to provide food and work for hoboes—jobless men (and occasionally women) who wandered the country both to search for work and to escape the shame of unemployment. Finally, the culture emphasized that those who had once worked and served their country should be treated not as beggars but as upstanding citizens down on their luck. This sentiment was most powerfully expressed in Yip Harburg’s classic song “Brother, Can You Spare a Dime?” and shaped subsequent politics and policy.

Impact

Although the Great Depression ended with the U.S. entry into World War II, effects of the Depression, and the efforts implemented to address it, had a lasting impact on the American government and on American society. Most immediately, there were numerous regulations of business and banking, which kept the American economy essentially sound through the end of the century. Regulations that created minimum standards for labor conditions and a minimum wage came about, though both were only later extended to agricultural and domestic labor. Organized labor was legalized through the Wagner Act, but at the price of compliance with subsequent legal measures that were the product of a less prolabor political climate. Finally, the Social Security system addressed the issue of poverty and the aged, long after industrialized European nations had established old-age pension systems.

Beyond these concrete measures, the Great Depression led to a mostly permanent expansion of the federal government, in terms of both structure and function. For much of subsequent history, it led to a greater understanding of the limits of capitalism and the free market as well as the idea that the government could be the solution to American problems. For that reason, by the end of World War II, most citizens accepted that the government would have an economic regulatory role, albeit one that was mainly indirect and advisory. During the Depression, poverty became a national issue, and old distinctions between the “deserving” and “undeserving” poor were largely, though never entirely, erased. The Americans who lived through the Great Depression, and subsequently World War II, saw many dreams lost or at least deferred, but for the most part, they displayed a resourcefulness and resilience that earned them the nickname the “Greatest Generation.”

Bibliography

Brinkley, Alan. Voices of Protest: Huey Long, Father Coughlin, and the Great Depression. New York: Alfred A. Knopf, 1982. Comparative study of the lives and careers of two of the most prominent critics of the New Deal from the political fringes.

Cochrane, Thomas C. The Great Depression and World War II, 1929-1945. Glenview, Ill.: Scott, Foresman, 1968. Part of a larger series on the history of the United States, providing a general overview of the Great Depression and the New Deal and connecting both with World War II.

Gordon, Colin. New Deals: Business, Labor, and Politics in America, 1920-1935. New York: Cambridge University Press, 1994. This significant reinterpretation of the New Deal emphasizes the role of big business in shaping the direction of governmental economic planning and policy.

Himmelberg, Robert F. The Great Depression and the New Deal. Westport, Conn.: Greenwood Press, 2001. Part of the Greenwood Press Guides to the Historical Events of the Twentieth Century series, this book provides a general overview of the major themes, issues, and political players in the Great Depression and New Deal.

Steindl, Frank G. Understanding Economic Recovery in the 1930s: Endogamous Propagation in the Great Depression. Ann Arbor: University of Michigan Press, 2004. An economic history of the Great Depression that spotlights the understudied significance of economic recoveries during the 1930’s.

Terkel, Studs. Hard Times: An Oral History of the Great Depression. New York: Pantheon Books, 1970. Classic collection of first-person reminiscences of the Great Depression.