Comparing The Great Depression And WWII

Great Depression and WWII
Business leaders and economists told Americans it was their duty to buy stocks

John J. Raskob
• Chairman of the board of GM
• Wrote an article stating that a person who invested $15 in a good common stock per month would have $80,000 within 20 years

Bull market of the 1920s
• Stock prices increased at twice the rate of industrial production
• Paper value outran real value
4 million Americans owned stocks
• Had been lured into the market through margin accounts
Allowed investors to purchase stocks by making a small down payment and borrowing the rest from a broker

The Crash
The Wall Street crash of 1929 was not a one or two day catastrophe
• It was a
steep slide
Bull market peaked in early September
• Prices lowered
October 23
• Dow Jones industrials lost 21 points in one hour
• Large investors concluded that the boom was over
October 28
• Dow lost 28 points (13% of its value)
October 29, “Black Tuesday”
• More than 16 million shares were traded as panic selling took hold
The market’s foundation of credit crumbled
• Based on margin debt
Many investors with margin accounts had no choice but to sell when the stock values fell
Shares themselves represented the security for their loans
• More money had to be put up to cover the loans when prices declined
Mid-November
• $30 billion in the market price of stocks had been wiped out
Half of the value of stocks listed in The New York Times was lost within 10 weeks
Political and economic leaders downplayed the impact of the crash
Andrew Mellon
• “It will purge the rottenness out of the system High costs of living and high living will come down.
People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people”

Underlying Weaknesses
The economy after the crash became less resistant to existing problems
• Workers and consumers received too small a share of the enormous increases in labor productivity
1923-1929: manufacturing output per worker-hour increased by 32%
Wages only rose 8% during the same
time
Rise in productivity encouraged overproduction
Farmers hadn’t regained their prosperity from the World War I years
• Suffered from declining prices, drop in exports, and large debts incurred by wartime expansion
Unequal distribution of income and wealth
• 1929: top .1% of Americans had and aggregate income equal to the bottom 42%
• Top 5% of Americans received 30% of the nation’s income
• Bottom 60% got only 26% of nation’s income
• 80% of the nation had no savings
• .5% of Americans owned 32.4% of net wealth of the entire population
Manufacturers decreased their production and laid off workers
• Layoffs brought further declines in consumer spending
Prompted another round of production cutbacks
• Consumers had less to spend
• Businesses were hesitant to expand
Banks began to fail as depositors withdrew their uninsured funds
• Thousands of families lost their savings
Mass Unemployment
Unemployment insurance did not exist; public relief was inadequate
• Loss of a job meant economic catastrophe for workers
Unemployment across America became a sign of a deepening depression
1930; Department of Labor
• 9% of the labor force was out of work
• Doubled by 1931
• By 1933, more than ¼ of workers didn’t have jobs
Many Americans blamed themselves for their failure in finding work
• Feelings of shame, guilt, inadequacy, uselessness, and despair Joblessness was most difficult for men between 35-55
• Family responsibilities were heaviest on these men
Unemployment upset the psychological balance in many families by undermining the traditional authority of the male
Women found it easier to hold onto jobs
• Wages were lower
Summed up strains found in families
• “Fathers feel they have lost their prestige in the home; there is much nagging, mothers nag at the fathers, parents nag at the children. Children of working age who earn meager salaries find it hard to turn over all their earning and deny themselves even the greatest necessities as a result leave home”
Hoover’s Failure Companies lacked the money and resources to deal with the worsening situation
Detroit and Chicago
• 50% unemployment by 1932
Los Angeles
• 70,000 nonresident jobless and homeless men
Hoover failed to respond to human suffering
• Administered large-scale humanitarian efforts during WWI with efficiency, but failed to face the facts of the Depression
1931 State of the Union Address
• “Our people are providing against distress from unemployment in true American fashion by magnificent response to public appeal and by action of the local governments”
Resisted calls from Congress
• Wanted a greater federal role in relief efforts or public works projects
• Worried about “injuring the initiative and enterprise of the American people”
The President’s Emergency Committee for Unemployment (1930) and the President’s Organization for Unemployment Relief (POUR)
• Encouraged local groups to raise money to help the unemployed
• Plan for recovery centered on restoring business confidence
Reconstruction Finance Corporation (RFC)
• Based on the War Finance Corporation of the WWI years
• Made government credit available to banks, railroads, insurance companies
• Stimulated economic activity
• Assumed the credit problem was one of supply rather than demand 1932; Democrats pushed through the Emergency Relief Act Authorized the RFC to lend $300 million to states that had exhausted their own relief funds
• Hoover reluctantly signed the bill Protest and the Election of 1932
March 7
• Communist organizers led a march of auto workers and unemployed for the Ford River Rouge factory
Ford-controlled police fired tear gas and bullets Killed four and wounded 50 others Farmers’ Holiday Associations Desperate farmers in Iowa Aimed to raise prices by refusing to sell product 1,500 farmers turned back cargo trucks outside Sious City Dumped milk and other perishables into ditches
• Bonus Army Protest descending on Washington D.C. in 1932 Veterans who were given bonds after WWI demanded immediate payment of the bonus in cash By the summer, they camped out all over the capital city House passed a bill for immediate payment Senate rejected the bill, most of the veterans left July General Douglas MacArthur forcibly evicted the remaining veterans from their encampment Provided the most disturbing evidence of the failure of Hoover’s administration
• 1932; Democrats nominated Franklin D. Roosevelt as their candidate “I pledge you, I pledge myself, to a new deal for the American people” Roosevelt’s plans for recovery were vague Roosevelt won the election by a landslide
Democrats won big majorities in both the House and the Senate
• FDR and the First New Deal FDR the man Born in 1882 in Dutchess Country, New York Was an only child His mother, Sara Delano, was the dominant figure in his childhood Roosevelt’s education reinforced the aristocratic values of his family
• Groton
• Harvard
• Columbia Law School He believed in:
• A strong sense of civic duty
• The importance of competitive athletics
• Commitment to public service In 1905, FDR married Eleanor Roosevelt (distant cousin)
• Niece of Theodore Roosevelt Elected as a Democrat to the NY State Senate in 1910 Was assistant navy secretary from 1913-1920 Summer of 1921:
• FDR gets polio Was told he would never walk again without support
• Eleanor encouraged him to fight his handicap and continue his political career
• “Once I spent two years lying in bed trying to move my big toe, anything else seems easy”
Governor of New York in 1928:
• Instituting unemployment insurance
• Strengthened child labor laws
• Provided tax relief for farmers
• Provided pensions for the old
• Set up a Temporary Emergency Relief Administration
• Set up a group of key advisers; the “brains trust”: rejected the old progressive dream of re-creating an ideal society Raymond Moley Rexford G. Tugwell Adolf A. Berle Samuel Rosenman Basil O’Connor
Felix Frankfurter
Restoring Confidence
Roosevelt conveyed a sense of optimism
• Helped restore the shaken confidence of the nation Called for a four day “bank holiday”
• Help the country’s ailing financial system
• More than 1,300 banks failed in 1930
• Contemporary investigations revealed… Illegal loans to bank officials
Tax evasion that helped erode public confidence in the banking system
• Between election day and the inauguration the bank system had come close to shutting down altogether Due to widespread bank failures and hoarding of currency Fireside chat
• Radio broadcasts that became a standard part of Roosevelt’s political technique
• Were enormously successful
• Gave courage to Americans
• Communicated a sense of compassion from the White House Emergency Banking Act
• Gave the president broad powers over all banking transactions and foreign exchange
• Authorized healthy banks to reopen under licenses from the Treasury Department
• Provided greater federal authority to be present in managing the affairs of failed banks The hundred days March to June 1933
• “The Hundred Days”
• FDR pushed a number of acts through Congress o Designed to combat various aspects of the Depression
• New Deal was no unified program to end the Depression Improvised series of reform and relief measures Some contradicted each other
• Civilian Conservation Corps (CCC) Unemployment relief effort Provided work for jobless young men in protecting and conserving the nation’s natural resources Road construction Reforestation Flood control National park improvements Workers received room and board and $30 a month Federal Emergency Relief Administration (FERA) $500 million given from Congress ½ the money went as direct relief to the states The rest was distributed on the basis of: A dollar of federal aid for ever three dollars of state and local funds spent for relief Establishment of work relief projects was left to state and local governments
Harry Hopkins Former NYC social worker Driven by deep moral passion to help the less fortunate Emerged as a key figure for New Deal relief programs Agricultural Adjustment Administration (AAA) Provided immediate relief to the nation’s farmers Established a new federal role in agricultural planning and price setting Established parity prices for basic farm commodities Corn, wheat, hogs, etc Parity pricing
• Based on the purchasing power that farmers had enjoyed during the prosperous years of 1909-1914
Incorporated the principle of subsidy Farmers received benefit payments in return for reducing acreage or cutting production where surpluses existed Landlords often failed to share their AAA payments with tenant farmers Frequently used benefits to buy tractors and other equipment that displaced sharecroppers
• Tennessee Valley Authority (TVA) One of the most unique projects of the New Deal era Built dams and power plants Produced cheap fertilizer for farmers Brought cheap electricity for the first time to thousands of people Stood as a model of how careful government planning could dramatically improve the social and economic welfare of an underdeveloped
region
• National Industrial Recovery Act Each industry would be self-governed by a code hammered out by representatives of business and labor Led by General Hugh Johnson
Symbolized by the Blue Eagle stamp Almost all the NRA codes were written by the largest firms in any industry
• Public Works Administration (PWA) Led by Secretary of the Interior Harold Ickes Authorized $3.3 billion for the construction of roads, public building, and other projects Idea was to provide jobs Stimulate the economy through increased consumer spending “priming the pump”
- Lost a close general election only because the republican candidate received heavy financial and tactical support from Hollywood studio executives and frightened regular Democrats.
• Old Age Revolving Pension plan Created by Francis E. Townsend
- Retired doctor
- Created a large following among citizens with this plan
- He called for payments of 200 dollars per month to all people over 60, but had to be spent within 30 days Attracted a nationwide following of more than 3 million by 1936
• Huey Long posed as the greatest potential threat to Roosevelt’s leadership Long captured LA’s governor ship in 1928 by attacking the state’s oil industry He significantly improves public education, roads, medical care, and other public services Long first supported Roosevelt but in 1934, his own presidential ambitions and his impatience with the pace of the New Deal measures led it a break with Roosevelt
• Share Our Wealth Society Organized by Huey Long Its purpose was to “break up the swollen fortunes of America and to spread the wealth among all our people.” Homestead worth $5000 and a $2500 annual income for everyone was promised by Long Long’s economics were not clear

• Monday, July 16, 1945 First atomic bomb exploded Heat generated by the blast was 4 times the temperature at the center of the sun Blew out windows in houses more than 200 miles away Killed every living creature within a mile Ruby Wilkening joined several other women waiting for the blast Worried about her husband who was already at the test site No one knew what to expect Franklin D. Roosevelt was convinced that the Nazis might develop an atomic bomb Inaugurated a small nuclear research program in 1939 President released resources to create the Manhattan project Placed it under the direction of the Army Corps of Engineers 1942: Enrico Fermi, Novel Prize winner, produced the first chain reaction in uranium under the University of Chicago’s football stadium Government moved key researchers to Los Alamos, New Mexico slowly build houses men averaged at an age of 27 these scientists and their families formed a close-knit community united by the need for secrecy & shared antagonism toward their army guardians Army atmosphere was oppressive
• Cordoned off by barbed wire and guarded by military police
• Scientists were followed by security personnel whenever they left Los Alamos
• Outgoing mail was censored
• Code names were used
• 16 million men and women left home for military service “a great arsenal of democracy” States in the South and Southwest experienced huge surges in population President Roosevelt ordered relocation for 112,000 people to internment camps Suspecting Japanese Americans of disloyalty
• The coming of World War II The shadows of war War spread first across Asia
• Japan turned its sight on China Seized Manchuria in 1931
• Japan withdrew from the League of Nations
• Japan launched a full-scale invasion of China in 1937
• Japan’s army murdered 300,000 Chinese people while destroying the city
• Within a year, Japan controlled all but China’s western interior and threatened all of Asia and the Pacific Italy and Germany
• Rise of authoritarian nationalism Germany
• Resentment over the terms of the Treaty of Versailles Rise of demagogic mass movements
• National Socialists (Nazis)
Led by Adolf Hitler Combined militaristic rhetoric & racist doctrine of Aryan supremacy Biological superiority for peoples of northern Europe and classified nonwhites as “degenerate races” Hitler prepared for war Destroyed opposition and made himself dictator Began to rebuild German armies
• Hitler sent 35,000 troops to occupy Rhineland Region demilitarized by the Versailles treaty Italy
• Benito Mussolini Italian Fascist dictator “We have buried the putrid corps of liberty”
• Invaded Ethiopia and claimed the impoverished area as a colony When the Spanish Civil War broke out later in 1936, Italy and Germany both supported the fascist insurrection of General Francisco Franco
• Drew up a alliance in November Rome-Berlin Axis
• Hitler then was ready to put his plan to secure living space for Germany into action (Lebensraum) Further territorial expansion After annexing Austria, Hitler turned his attention to Czechoslovakia
• Both Britain and France were pledged to treaty to assist
• Munich Conference allowed Germany to annex the Sudetenland
• Hitler pledged to stop his territorial advance Less than 6 months later, Hitler broke this pledge and seized the rest of Czechoslovakia 1935: Hitler published the Nuremberg Laws
• Denying civil rights to Jews
• Campaign against them became more vicious November 9, 1938: Kristallnacht; “Night of Broken Glass”
• Nazis rounded up Jews
• Beat and murdered them
• Smashed windows in Jewish shops, hospitals, and orphanages
• Burned synagogues to the ground
• Hungary and Italy also enacted laws against Jews
Isolationism
Many Americans believed that the US should stay clear of “entangling alliances” In 1937, 70% of Americans in a poll thought that US involvement in WWI was a mistake Gerald P. Nye Headed a special Congress committee that charged weapons manufacturers with driving the US into WWI 1935
• Congress passed the first of five Neutrality Acts Deter future entanglements Required the president to declare an embargo on the sale and shipment of munitions to all belligerent nations 1938: Keep America Out of War Congress Led by Norman Thomas
• Communist-influenced
• Against War and Fascism
• More than 1 million members 1940: Committee to Defend America First
• Led by Robert E. Wood
• Opposed US intervention
• Some members championed the Nazis; some simply advocated American neutrality
• Gained attention from many celebrities Roosevelt Readies for War October 1937
• FDR called for international cooperation to “quarantine the aggressors”
• 2/3 Congress opposed economic sanctions “back door to war”
• FDR still won $1 billion to enlarge the navy September 1, 1939
• Hitler invades Poland Great Britain and France issued joint declaration of war against Germany After the fall of Warsaw, the fighting slowed
• French and German troops did not exchange fire even on their border Two weeks before Hitler attacked Poland, the Soviet Union signed a nonaggression pact with its former enemy
• Red Army entered Poland
• Split the nation between them
• Headed north; invaded Finland April 1940
• Hitler begins a crushing offensive against Western Europe
• Blitzkrieg Lightning war Fast-moving columns of tanks supported by air power
• Nazis take Denmark and Norway; then Holland, Belgium, & Luxembourg Germany & Italy took over France in June 1940 Battle of Britain
• Nazis pounded population and industrial centers while U-boats cut off incoming supplies Opinion polls in the US during this time still wanted to stay out of the war
• Roosevelt believed that the security of the US depended on A strong defense The defeat of Germany