America had gone through
hard times before: a bank panic and depression in the early 1820s, other
economic hard times in the late 1830s, the mid-1870s, and the early and
mid-1890s. But never did it suffer an economic illness so deep and so long
as the Great Depression of the 1930s.
Counting the causes
Economists have argued
ever since as to just what caused it. But it's safe to say there were a
bunch of intertwined things that contributed. Among them:
|The stock market crash.
The stock market soared throughout most of the 1920s, and the more it
grew, the more people were eager to pour money into it. Many people bought
"on margin," which meant they paid only part of a stock's worth when they
bought it, and the rest when they sold it. That worked fine as long as
stock prices kept going up. But when the market crashed in late October
1929, they were forced to pay up on stocks that were no longer worth
anything. Many more had borrowed money from banks to buy stock, and when
the stock market went belly-up, they couldn't repay their loans and the
banks were left holding the empty bag.|
Many small banks, particularly in rural areas, had overextended credit to
farmers who, for the most part, had not shared in the prosperity of the
1920s and often could not repay the loans. Big banks, meanwhile, had
foolishly made huge loans to foreign countries. Why? So the foreign
countries could repay their earlier debts from World War I. When times got
tough and the U.S. banks stopped lending, European nations simply
defaulted on their outstanding loans. The result of all this was that many
banks went bankrupt. Others were forced out of business when depositors
panicked and withdrew their money. The closings and panics almost
completely shut down the country's banking system.|
|Too many poor people.
That may sound goofy, but it's a real reason. While the overall economy
had soared in the 1920s, most of the wealth was enjoyed by relatively few
Americans. In 1929, half of the families in the country were still living
at or below the poverty level. That made them too poor to buy goods and
services and too poor to pay their debts. With no markets for their goods,
manufacturers had to lay off tens of thousands of workers, which of course
just created more poor people.|
Many American farmers were already having a hard time before the
Depression, mostly because they were producing too much and farm product
prices were too low. Things were so bad in some areas that farmers burned
corn for fuel rather than sell it. Then one of the worst droughts in
recorded history hit the Great Plains. The Midwest became known as the
"Dust Bowl." Dry winds picked up tons of topsoil and blew it across the
prairies, creating huge, suffocating clouds of dirt that buried towns and
turned farms into abandoned deserts.|
Living with the consequences
||Whatever the causes, the
consequences of the Great Depression were staggering. In the cities,
thousands of jobless men roamed the streets, looking for work. It wasn't
unusual for 2,000 or 3,000 applicants to show up for one or two job
openings. If they weren't looking for work, they were looking for food.
Bread lines were established to stop people from starving. And more than
a million families lost their houses and took up residence in
shantytowns made up of tents, packing crates, and the hulks of old cars.
They were called "Hoovervilles," a mocking reference to President
Hoover, whom many blamed (somewhat unfairly) for the mess the country
Thousands of farmers
left their homes in states like Oklahoma and Arkansas and headed for the
promise of better days in the West, especially California. What they found
there, however, was most often a backbreaking existence as migrant laborers,
living in squalid camps, and picking fruit for starvation wages.
||Americans weren't sure what
to do. In the summer of 1932, about 20,000 desperate World War I
veterans marched on Washington D.C. to claim $1,000 bonuses they had
been promised they would get, starting in 1946. When Congress refused to
move up the payment schedules, several thousand built a camp of tents
and shacks on the banks of the Potomac River and refused to leave. Under
orders of President Hoover, federal troops commanded by General Douglas
MacArthur used bayonets and gas bombs to rout the squatters. The camp
was burned. No one was killed, but the episode left a bad taste in the
mouths of many Americans.
Shoving aside African Americans,
Mexicans, and Native American Indians
||More than half of African
Americans still lived in the South, most as tenant farmers or
"sharecroppers," meaning they farmed someone else's land. Almost all of
those who worked and weren't farmers held menial jobs that whites hadn't
wanted — until the Depression came along. When it did, the African
Americans were shoved out of their jobs. As many as 400,000 left the
South for cities in the North, which didn't help much. By 1932, it's
estimated half of the black U.S. population was on some form of relief.
||Other minority groups
suffered similarly. Mexico had been exempted from the immigration
restrictions of the 1920s, and as a result, hundreds of thousands of
Mexicans came to the United States, mostly to the Southwest. Prior to
the Depression, they were at least tolerated as a ready source of cheap
labor. In the 1930s, however, they were pushed out of jobs by desperate
whites. Many thousands were deported, even some who were legal U.S.
citizens, and as many as 500,000 returned to Mexico. Those of Asian
descent, mostly on the West Coast, were likewise pushed out of jobs or
relegated to jobs only within their own communities.
American Indians had
been largely forgotten by the U.S. government since the 1880s, which was not
a good thing. The general idea had been to gradually have Indians disappear
into the American mainstream. In 1924, Congress made U.S. citizens of all
Indians who weren't already citizens, whether they wanted to be or not.
But preliminary studies
done in the 1920s found that "assimilation" had failed. In 1934, Congress
changed direction and passed laws that allowed Indians to retain their
cultural identity. Although well meaning, it did little for their economic
well-being, and they remained the worst-off of America's minority groups.
Keeping women at home — or work
With jobs scarce, a
strong feeling prevailed that women should stay home and let men have the
jobs. There was even a federal rule that two people in the same family could
not both be on the government payroll. But two things occurred that actually
increased the number of women in the workforce during the decade. The first
was that many families simply could not survive without an extra income. The
second was that many men abandoned their families to look for work or
because they were ashamed they could not find work. Marriage rates dropped
for the first time since the early 1800s.
Developing organized labor
If the sun peeked
through the Depression's clouds on anyone, it might have been organized
labor. The captains of industry and business lost much of their political
clout during the 1930s, and new laws made organizing easier.
All told there were more
than 4,500 strikes in 1937, and labor won more than three-fourths of them.
By 1940, more than eight million Americans were members of organized labor.