Great Depression

The Great Depression is the name given to a worldwide business slump that occurred in the 1930's. The high employment and low business activity of this period of time ranked it as the worst depression in modern times. The Great Depression started on October 29, 1929, when the values of stocks in the United States dropped quickly and thousands of stockholders lost large sums of money. The savings and investments of many stockholders were wiped out completely. Banks, factories, and stores closed their doors and left millions of Americans without jobs or money. Many people had no choice except to rely on the government to provide food for them or to accept charity from other people. President Herbert Hoover was in the White House when the Great Depression started. The voters rejected Hoover in 1932 and elected Franklin D. Roosevelt as President. The reforms of Roosevelt gave more power to the federal government and helped to ease the depression. We now know that those same reforms helped to keep our nation in the depression. Every nation was affected by the Great Depression, which caused a sharp decrease in world trade because every country was trying to strengthen its own industries by raising tariffs on imported goods. Because of the Great Depression, many countries changed leadership and type of government. Examples of how the poor economic conditions of the times caused changes would be the rise of the German dictator Adolf Hitler and the Japanese invasion of China. Adolf Hitler's plans to make Germany a world leader gave hope for improved conditions to the German people. Japan developed industries and mines in Manchuria (a part of China), claiming that this economic growth would relieve the depression in their own country. World War II (1939-1945) was brought about because of the militarism of the Germans and the Japanese. World War II ended the Great Depression because nations increased their production of war materials, which provided many jobs and put large amounts of money back into circulation. The severity of the Great Depression had many causes. The stage for the depression was set in the 1920's when many banks failed and farmers and factory workers had low incomes. The decade of the 1920's was a time of prosperity for businesses, but the prices of farm products fell about 40 percent in 1920 and 1921. With farm income remaining low through the 1920's, farmers lost so much money that they could not pay their mortgages and had to either rent out their farms or move. Bank failures increased during the 1920's with about 550 banks going out of business from July 1, 1928, to June 30, 1929. Most of the bank failures occurred in rural areas because farmers experienced poor conditions. This uneven distribution of money was also a cause of the depression. Farmers and workers in the coal, railroad, and textile industries did not share in the prosperity. There was a 50 percent increase in industrial production, but the wages of industrial workers rose much slower. Goods were produced faster than works could afford to pay for them, and many people started to use credit to buy goods. After a time, workers reduced their spending in order to control their debt, causing a reduction in the amount of money in circulation and business to worsen. The average price of common stocks on the New York Stock Exchange more than doubled from 1925 to 1929. This great rise in stock values encouraged many people to speculate or to buy stocks in hopes of profiting from future price increases. When stock values plunged on Black Thursday (October 24, 1929), most stock prices remained steady on Friday and Saturday before falling again the next Monday. Stockholders panicked on Tuesday, October 29, and sold a record 16,410,030 shares of stock. This giant sale caused thousands of people to lose huge amounts of money because stock values fell far below the prices paid for the stock. Banks and businesses that had purchased stock lost so much that they had to close their doors. Stock values continued to fall steadily for the next three years. The effects of the Great Depression are still felt in our nation today. Before the depression, people considered bankers and business executives to be the nation's leaders. When the stock market crashed and banks and businesses could not relieve the depression, Americans lost faith in them. When the federal government finally succeeded in improving conditions, the people decided that the government should be responsible for maintaining the national economy. Because the federal government increased federal control over banks and the stock market, the government had more power to provide money for the needy. The Social Security program in existence at this time is a result of the Great Depression because the government thought it was better to "retire" older people in order that younger people would have jobs. Since the depression, both Republicans and Democrats have sought to broaden the powers of the federal government. The government now has programs to provides hospital and medical insurance for the aged and to regulate price and wage increases. The Obama Administration has added more regulations to broaden the powers of the federal government. The attitudes of many Americans were changed by the depression. Some people who lived through the Great Depression became very concerned about material possessions and wanted material comforts lost or never previously owned. They wanted appliances, cars, homes, and financial security. Many people, like my own parents, wanted to be better prepared for any future economical down turns and saved literally everything including such things as nails, various types of materials, items of clothing, etc. This importance of material conditions and financial security that developed among many people of the depression era affected relationships between parents and children. People of my generation did not have the experience of losing everything or struggling to find work or not having food to eat and did not understand the behavior and attitudes of their parents. This emphasis on material possessions and financial security, combined with a lack of communication, helped to create the "generation gap" of the 1960's and early 1970's. Our nation and the world are now experiencing an economical downturn similar to the Great Depression. Unemployment stands at 9.5 percent. Work is hard to find. Businesses are downsizing. Homes are being repossessed. The federal government is instituting new programs to "redistribute the wealth" of our nation. It appears that my generation should have learned the lessons of the Great Depression: stay out of debt, prepare for the unexpected, maintain an emergency fund. Can the rising generation learn the lessons without having to experience the hardships? Only time will tell. Facts for this post came from an article by Robert Sobel in The World Book Enyclopedia, Vol. 8, pp 338-343.

Herbert Hoover

The topic for our VIP Tuesday is Herbert Hoover. Herbert Clark Hoover was the President when the Great Depression swept through the United States. He became President after establishing himself as a millionaire business man and a successful public official. The United States was experiencing a period of great prosperity at the time Hoover became President, and Americans were expecting even better days. The stock market crashed and the Great Depression started seven months after Hoover took office. Hoover as well as many members of the business world expected the depression to be short and prosperity to return. He was a member of the Republican Party and was the first President "to use the power of the federal government to fight a depression." Hoover was shy and reserved. and he had a quiet sense of humor, laughing loudly on rare occasions. He enjoyed fishing, hiking, and reading biographies and detective stories. Herbert was the first President to be born west of the Mississippi River. He was born on August 10, 1874, in West Branch, Iowa. Andrew Huber (or Hoover), one of his ancestors, came from Germany in 1738 and settled in Pennsylvania but later moved to North Carolina. His son John became a Quaker whose descendants settled in Ohio and later moved to Iowa (1853). Herbert's father was a blacksmith and dealt in farm equipment. His mother was born in Canada. Herbert had an older brother and a younger sister. Herbert's father died when he was six years old, and his mother died when he was nine years old. Relatives raised the children, and Herbert did not live with his brother and sister most of the time. He lived with an uncle for two years of his childhood. Herbert had a pleasant childhood even though he was an orphan. He enjoyed playing in the woods and fishing and swimming in the streams. He earned money to buy fireworks by picking potato bugs - one cent for every hundred bugs. He went to Newberg, Oregon, in 1885 to live with another uncle and received his secondary school education at Newberg College, a small academy where his uncle served as principal. He worked to earn money and weeded onions one summer at fifty cents per day. When his uncle opened a real estate office in Salem, Oregon, in 1888, Hoover worked as an office boy for him while studying algebra and geometry at a business college. After talking with an engineer in 1890, Hoover became interested in engineering and decided to become a mining engineer. He enrolled in the first class of Stanford University in Palo Alto, California, when he was seventeen years old. Hoover managed a laundry agency. delivered newspapers, and worked as a part-time secretary for the head of the geology department to pay his college expenses. He did geological work in Arkansas, California, and Nevada during his summer vacations and worked for a short time as a miner in California after he graduated in 1895. Hoover met Lou Henry, the daughter of a wealthy banker, in the geology laboratory at Stanford and married her in Monterey, California, on February 10, 1899. She was a brilliant woman who spoke several languages and was very interested in science, literature, and art. Herbert and Lou translated a famous old book about mining from Latin into English and were recognized for their work by Stanford with special degrees. Lou also wrote articles for many scientific and historical publications after her husband became President. The Hoovers had two sons. Hoover began his career in the office of well-known mining engineer in San Francisco in 1896. The next year at age 26, he was hired by a London company as an engineer to manage gold mines in Australia. He spent less than two years in Australia and in late 1898 accepted the position of chief engineer for the Chinese Imperial Bureau of Mines. Herbert and Lou spent their honeymoon sailing from California to China. Mrs. Hoover learned to speak Chinese while her husband made prospecting trips and directed engineering projects. When the Boxer Rebellion started in 1900, Herbert supervised the construction of defenses for the foreign settlement in Tianjin and directed the distribution of food and other supplies during the two-month Boxer siege of the settlement. After the rebellion, the Chinese government discontinued its Bureau of Mines and Hoover went to London where he helped to organize a private company to develop mines in China. He returned to China in 1901 as the company's general manager but resigned after a few months. He returned to London as a partner in a mining company with which he had been associated since 1897. He established his own engineering firm in 1908. By 1814, Hoover was a millionaire by reorganizing mines in many parts of the world. Hoover was in London in 1914 when thousands of Americans were stranded in Europe by the beginning of World War I. After being asked by United States officials in London to aid the stranded people, Hoover organized a committee that aided about 120,000 Americans to return home. Hoover was asked in August 1914 by the U.S. ambassador in London to organize food relief for Belgium, which had been conquered by German troops. He set up the Commission for Relief in Belgium and gathered and distributed food and helped to raise relief funds from October 1914 until April 1917. Many thousands of lives were saved by the efforts of his commission. When the United States entered World War I in April 1917, President Wilson asked Hoover to head the United States Food Administration where he was given broad powers over the prices, production, and distribution of food. His campaign to save food for people in war-torn Europe was well supported by the American people. The term "Hooverize" meant to economize and to save and do without various foods with the result of meatless and wheatless days being observed. Hoover was internationally famous when he returned to Europe after the war ended in 1918 to direct the feeding of millions of people. Many people were so impressed with Hoover by 1919 that they thought he should be President, and both Democrats and Republicans wanted him to be a candidate in the 1920 election. He announced that he was a Republican but didn't do well in the primary election. He was named in 1921 by President Warren G. Harding to be secretary of commerce and held this office under both Harding and President Calvin Coolidge. Serving as secretary of state showed Hoover's great skill as an administrator and planner. He reorganized the Department of Commerce and expanded the work of the department. He was so involved in many activities that one official said that he was "Secretary of Commerce and Under Secretary of everything else." Under Hoover's directions, many conferences were held to consider such problems as industrial production, labor relations, child welfare, foreign trade, and housing; he brought order into radio broadcasting, promoted commercial aviation, and helped to end the 12-hour workday for the steel industry. Hoover became the Republican candidate for President in February 1928 a few months after President Coolidge announced that he did not "choose to run" for reelection. Prohibition was a major issue of the campaign with the Democrats wanting to repeal Amendment 18 of the U.S. Constitution. Many Americans thought the Republicans better able to keep the nation prosperous and opposed Alfred E. Smith because he was a Roman Catholic. Hoover carried 40 of the 48 states and received 444 electoral votes to 87 for Smith. Hoover's good-will tour of Latin American helped lay the foundation for the "Good Neighbor Policy" of the FDR era. Hoover expected prosperity to continue in spite of the fact that the United States had been building up to a crash for a long time. Farmers did not share in the prosperity of the 1920's, and people in the coal-mining and textile-manufacturing industries had poor working conditions and low wages. There was widespread buying on credit, which weakened the economy; thousands of people bought stocks with borrowed money. Stock prices soared. and then the stock market crashed in October 1929. The Great Depression was here. Many people, including Hoover, thought the depression would be short and that the stock market would recover within a few weeks or months. When 1929 ended losses were estimated at $40 billion, and stock values on the New York Stock Exchanged had dropped 40 percent. Fortunes were destroyed, and thousands of workers lost their jobs. Hoover called business leaders, industrialists, and labor leaders together for conferences, and all agreed to cooperate in an effort to keep wages stable and to avoid strikes. Nevertheless, the economic conditions worsened. More than 12 million people were out of work by 1932. Factories closed, banks failed, and thousands of people lost their homes because they couldn't pay their mortgages. Clumps of shacks for homeless families became known as "Hoovervilles." Germany and other nations were affected by the Great Depression, and they could not pay their war debts. Hoover was reluctant to interfere with the American economy, believing that the depression was just temporary. He expected businesses and industries to solve their own problems and to help in the national stabilization efforts. In 1932 he requested Congress to pass several laws to enable the government to help businesses and to keep banks and other firms from going bankrupt. Even though Hoover believed that the states and local communities should provide relief for jobless workers, he realized that the unemployed needed more assistance. The federal government loaned $300 million to the states for relief and provided credit for homeowners and farmers. Improvement was made in court practices and bankruptcy procedures. Hoover supported many public works and conservation programs, which were designed in part to provide jobs. One such program was to build Boulder Dam (now known as Hoover Dam) on the Colorado River. The government also worked to develop inland waterways for navigation and flood control, added 3 million acres to national parks and monuments, and enlarged the national forests. The government also build more than 800 public buildings and helped states to build about 37,000 miles of major highways. In spite of everything Hoover did, unemployed workers staged hunger marches and demonstrations in several cities during the early 1930's. The White House received a new look during the Hoover Administration. They decorated it with souvenirs and art objects collected during their years of world travel. There was a large cage of canaries in the second-floor corridor surrounded by bamboo furniture and grass rugs from South America. The Hoovers entertained frequently but avoided personal publicity whenever possible. They escaped the summer heat by vacationing in the Blue Ridge Mountains of Virginia where the President enjoyed fishing for trout. The Hoovers built a summer home in the mountains and later gave it to the Shenandoah National Park. The Republicans had little hope of winning the election of 1932. New York Governor Franklin D. Roosevelt called for a "new deal" for the American people and promised to balance the budget, bring relief to the unemployed, help the farmers, and end Prohibition. Hoover defended his record, but Roosevelt carried 42 of the 48 states and won 472 electoral votes. Bank failures and unemployment increased during Hoover's last four months in office. Amendment 20 to the Constitution - the "lame duck amendment" - became law in January 1933 and took effect in October 1933. It provided that a President's term of office should end on January 20 instead of March 4. After Hoover left the White House, he spent much of his time traveling, reading, speaking and writing. He continued to develop the Hoover Institution on War, Revolution, and Peace that he founded at Stanford in 1919. The Hoovers moved from Palo Alto, California, to New York City where Mrs. Hoover died on January 7, 1944. Hoover published three books: 1) The Challenge to Liberty (1934) - an attack on President Roosevelt's New Deal program, 2) The Problems of Lasting Peace (1942), and 3) The Basis of Lasting Peace (1945). He headed a committee to collect relief funds for Finland in 1940 during the first Russo-Finnish War. After World War II, Democratic President Harry S. Truman named Hoover chairman of the Famine Emergency Commission to survey the food needs of many nations. He traveled to Europe in 1947 to report on relief needs to President Truman. In addition, in 1947, Hoover was named chairman of the Commission on Organization of the Executive Branch of the Government. The commission was called the Hoover Commission, and commission proposals that were adopted cut costs and stream-lined the federal government. Hoover was a director or a trustee of nine private educational, scientific, and charitable institutions. The Herbert Hoover Library that houses most of Hoover's official papers was dedicated in West Branch in 1962. Hoover published his three-volume Memoirs in 1951-1952 and The Ordeal of Woodrow Wilson in 1948. He also completed his four-volume work titled An American Epic in 1964. Hoover gave all his income from government employment, including his pension, to charity and to public service projects. He returned to popular favor because of his services to government and society. He lived longer after leaving the White House than any other former President. He died in New York City on October 20, 1964, at the age of 90. Our nation mourned him as a truly great American. He was buried on a rise overlooking the small house where he was born in West Branch, Iowa. Important events in the world of President Hoover are: 1) The stock market crash of October 29, 1929, which wiped out the savings of thousands of investors and helped to cause the Great Depression; 2) The Great Depression, a worldwide economic slump, caused thousands of businesses to fail, millions of workers to lose their jobs, and needy people to wait in bread lines to receive food; 3) The first practical all-electronic television system was demonstrated in 1929, and the first reliable analog computer was built in 1930; 4) Canada became an independent nation in 1931; 5) Japan invaded Manchuria on September 18, 1931, an attack that helped to start World War II; 6) The Nazi party, led by Adolf Hitler, gained power steadily in Germany during the early 1930's; 7) Labor union activity was encouraged in the United States by the passing of the Norris-LaGuardia Act of 1932. Facts and quotes for this post came from an article by Ellis W. Hawley in The World Book Encyclopedia, Vol. 9, pp.326-331.

Roaring Twenties

The term "Roaring Twenties" is used to describe a colorful decade of the 1920's in the United States. Other nicknames for this time period include the Jazz Age and the Dollar Decade. The Roaring Twenties era was a restless time that brought to the United States spectacular economic growth, generally rising prosperity, and great social change.

World War I (1914-1918) was over, and large numbers of Americans simply wanted to forget about the troubles of Europeans and enjoy life. They chose to amuse themselves with shocking morals for the day, illegal liquor, short skirts, and soaring stock profits.

This was a time of booming business profits and a rising standard of living for most Americans. New industries were opening, and even families with low incomes were able to buy one of Henry Ford's inexpensive automobiles called the Model T. The numbers of passenger vehicles increased from about 7 million in 1919 to about 23 million in 1929. The increased traffic crowded the highways and created the need for gas stations, roadside restaurants, and tire manufacturers.

The economy was revolutionized by radio and credit. Radio sales values increased from $60 million in 1922 to almost $850 million in 1929. Radio listeners were encouraged to spend more of their increasing income. Stores encouraged listeners to "Buy now, pay later" when they developed their installment payment plans. Millions of Americans were able to buy their first automobile, refrigerator, and washing machine because of higher wages and increased use of credit.

Most American's agreed with President Calvin Coolidge who said, "The business of America is business." Three Republican Presidents - Warren G. Harding, Coolidge, and Herbert Hoover - were elected during the 1920's. They all had policies reflecting the belief that the economy can regulate itself without government interference.

Americans were convinced to buy stocks because of promises such as "$15 a month in the stock market could make $80,000 in 20 years." Stock prices, which rose gradually in the early 1920's, soared in 1927 and 1928.

Americans wanted no more of European political affairs and distrusted foreigners. A secret organization called the Ku Klux Klan was created, and it terrorized blacks, Jews, Roman Catholics and foreigners. The political corruption made the news when the Secretary of the Interior under President Harding was convicted of being bribed by two oil companies in what became known as the Teapot Dome scandal.

After the Eighteenth Amendment to the Constitution, prohibiting the manufacture and sale of alcoholic beverages, went into effect in 1920, many Americans started making alcohol illegally at home. Gangsters brought liquor from Canada, sold it to illegal bars, and bribed the police to not interfere. The various underworld mobs fought for control of the liquor traffic, resulting in hundreds of gangland murders.

Moral values changed during the 1920's. Women, who had previously worn long hair, ankle-length dresses, and long cotton stockings, changed their dress code to short, tight dresses, a boyish hair style called the bob, and flashy lipstick and other makeup. Couples danced cheek-to-cheek to the loud jazz music.

The Roaring Twenties was an era of a good time. Crowds were attracted to theaters to see Charlie Chaplin, Mary Pickford, Rudolph Valentino, and other stars. Sports stadiums were filled with fans wanting to watch Babe Ruth slug home runs and boxing champion Jack Dempsey. Charles A. Lindbergh made the first solo nonstop airplane flight across the Atlantic Ocean.

The changing values in America were shown in the literature, art, and music of the era. Sinclair Lewis wrote Main Street (1920) in which he wrote about the dull lives and narrow-minded attitudes of people who lived in small towns. Other America authors of the time included F. Scott Fitzgerald and Ernest Hemingway, who both lived in Paris during this era. George Gershwin created Rhapsody in Blue (1924) and An American in Paris (1928).

Despite soaring stock profits, the good times came to an end in 1929. After World War I, farm prices dropped forty percent below their pre-war level. The profits fell so low that many farmers could not repay their bank loans. About 550 banks went out of business between July 1928 and June 1929. People could not afford to purchase manufactured good as fast as they were being produced because industrial production increased about four times faster than wages.

The illusion of unending prosperity came to an end on October 24, 1929, when investors began to sell stock that they had purchased on credit. This caused a panic, and about 16,410,030 shares were sold by stockholders on October 29. Stock prices plunged by 40 percent by mid-November, and the crash of the stock market led to the Great Depression. The false sense of prosperity and national well-being came to a sudden end. The Roaring Twenties died in a whimper of pain.

Facts for this post came from an article by E. David Cronon in World Book Encyclopedia, Vol 16, pp 363-364