The American Yawp Ch. 23

Summary

The 1929 stock market crash triggered the Great Depression, exacerbated by overvalued stocks, narrow industry range, and wealth inequality. As the economy collapsed, unemployment soared, banks failed, and poverty deepened. President Hoover's response, including the forced removal of the Bonus Army, made him unpopular. The election of FDR brought the New Deal, which aimed to stabilize banks, provide jobs, and establish Social Security, marking a significant shift towards federal intervention in the economy.

Takeaways

• 📉 Stock market crash of 1929 was a catalyst, but underlying economic issues were already present.
• 💸 Overvaluation of stocks and borrowing to invest led to a bubble that burst in 1929.
• 🏭 Economic reliance on a narrow range of industries like automobiles and construction made the economy vulnerable.
• 💰 Wealth distribution was highly unequal, with over half of American families living in poverty before the crash.
• 🌍 The US economy was affected by reduced demand from European nations that could produce their own goods.
• 🏦 Banks failed, causing people to lose their life savings, which further destabilized the economy.
• 👥 Unemployment skyrocketed, with companies shutting down and leaving many without jobs or relief.
• 🎖️ The Bonus Army, WWI veterans demanding early payment, highlighted the desperation of the times.
• 🌪️ The Dust Bowl and farm foreclosures forced many families to migrate in search of non-existent jobs.
• 📸 'Migrant Mother' captured the plight of homeless families during the Great Depression.
• 🏚️ Hoovervilles, named after President Hoover, symbolized the widespread homelessness and suffering.
• 🔄 FDR's New Deal introduced government programs to stabilize banks, provide jobs, and establish Social Security.
• 🌳 Government work programs aimed to employ millions in various sectors to boost the economy.
• 💼 The Social Security Act of 1935 was a long-term solution to provide financial support for the elderly, disabled, and unemployed.
• 🛠️ The New Deal was a series of temporary measures, and full economic recovery only came with the onset of WWII.

Q & A

What was the primary cause of the stock market crash in 1929?

The primary cause was the overvaluation of many stocks due to Americans investing with borrowed money, leading to a bubble that eventually burst.

Why did the stock market crash have such a dramatic effect on the economy?

The crash had a dramatic effect because the industries that sustained economic growth were not diverse enough, wealth distribution was uneven, and the international market shifted away from American exports.

How did the industries of the 1920s contribute to the vulnerability of the economy?

The industries like automobiles, appliances, and construction were concentrated and not diverse, meaning that when one industry faltered, it had a devastating ripple effect on the entire economy.

What was the state of wealth distribution in America before the stock market crash?

Before the crash, over half of American families were at or below the poverty line, indicating a significant wealth disparity.

How did the international arena contribute to the onset of the Great Depression?

European nations, which had previously relied on American exports, rebuilt their production capacity and started manufacturing their own goods, reducing demand for American products.

What was the immediate aftermath of the stock market crash for American businesses and individuals?

Companies shut down, leading to widespread unemployment, and banks closed, taking people's life savings with them.

Who were the Bonus Army and what did they demand?

The Bonus Army was a group of WWI veterans who demanded early payment of their scheduled bonus payments due to the hardships of the Depression.

How did President Hoover's response to the Bonus Army affect his popularity?

His authorization of the veterans' removal, which involved burning their encampment, made him deeply unpopular.

What was the Dust Bowl and how did it exacerbate the Great Depression?

The Dust Bowl was a period of severe dust storms that damaged the ecology and agriculture of the American and Canadian prairies, causing farmers to lose their farms and join the ranks of the unemployed.

What was the significance of the photograph 'Migrant Mother' by Dorothea Lange?

The photograph captured the despair of a homeless family during the Depression, symbolizing the plight of many who were displaced and seeking work.

What was the role of the New Deal in combating the effects of the Great Depression?

The New Deal introduced various programs to stabilize banks, provide employment, and establish social security, aiming to alleviate the economic crisis.

How did the Social Security Act of 1935 differ from other New Deal programs?

The Social Security Act was designed as a long-term solution, creating a system where workers and employers contribute to support those unable to work due to age, disability, or unemployment.

Outlines

00:00

📉 The Stock Market Crash and the Great Depression

This paragraph discusses the 1929 stock market crash and its profound impact on the US economy, marking the beginning of the Great Depression. It highlights several underlying factors including overvalued stocks due to borrowing, a lack of industry diversity leading to a narrow economic base, and the uneven distribution of wealth with over half of American families living in poverty. The international context is also considered, with European nations rebuilding their production capacities and reducing reliance on American exports. The paragraph concludes with a rapid succession of economic and social crises following the crash: company closures, unemployment, bank failures, and the emergence of the Bonus Army, a group of WWI veterans protesting for early payment of their bonuses. The response of President Hoover, including the forced removal of the Bonus Army, contributed to his unpopularity. The Dust Bowl further exacerbated the situation, leading to mass displacement and the rise of Hoovervilles, shantytowns named in讽刺 of Hoover's perceived inaction.

05:04

💼 The New Deal and Economic Recovery

The second paragraph focuses on the response to the Great Depression under President Franklin Delano Roosevelt. It details the New Deal's efforts to stabilize the banking system, establish government programs to provide employment, and the introduction of the Social Security Act of 1935. The New Deal aimed to address the immediate crisis with temporary measures such as public works projects and social services, while Social Security was designed as a long-term solution to provide financial support for the elderly, disabled, and unemployed. The paragraph concludes by noting that despite these efforts, the US economy did not fully recover until the onset of World War II.

Keywords

💡Stock Market Crash of 1929

The Stock Market Crash of 1929 refers to the sudden and dramatic collapse of the US stock market on October 29, 1929, which marked the beginning of the Great Depression. This event is central to the video's theme as it sets the stage for the economic turmoil that followed. The script mentions that many Americans were investing with borrowed money, leading to overvalued stocks, which contributed to the crash.

💡Great Depression

The Great Depression was a severe worldwide economic depression that lasted from 1929 to the late 1930s. It is the main theme of the video, detailing the economic hardships faced by the United States during this period. The script describes how the economy crumbled, leading to widespread unemployment, poverty, and a lack of economic diversity.

💡Overvalued Stocks

Overvalued stocks are shares of a company that are priced higher than their actual worth. In the context of the video, the overvaluation of stocks in the 1920s led to the stock market crash, as many Americans were investing with borrowed money, creating a bubble that eventually burst.

💡Economic Diversity

Economic diversity refers to a broad range of industries and sectors in an economy. The video explains that the lack of diversity in industries like automobiles, appliances, and construction during the 1920s made the US economy vulnerable. When one industry faltered, it had a domino effect on the entire economy.

💡Wealth Distribution

Wealth distribution is the way in which income and assets are shared among the population. The video points out that despite the popular image of the 1920s as a prosperous era, over half of American families were at or below the poverty line before the stock market crash, indicating a significant wealth disparity.

💡International Trade

International trade involves the exchange of goods and services across international borders. The video mentions that after WWI, European nations rebuilt their production capacity, reducing their reliance on American exports. This shift in international trade dynamics contributed to the economic downturn in the US.

💡Bonus Army

The Bonus Army was a group of World War I veterans who marched to Washington D.C. to demand early payment of their service certificates, or 'bonuses,' due in 1945. The video uses the Bonus Army as an example of the desperation and economic hardship faced by many Americans during the Great Depression.

💡Hoovervilles

Hoovervilles were shantytowns that sprang up in the US during the Great Depression, named after President Herbert Hoover, who was blamed for the economic crisis. The video describes these settlements as a symbol of the widespread poverty and homelessness during this period.

💡New Deal

The New Deal was a series of programs and policies implemented by President Franklin D. Roosevelt to provide relief, recovery, and reform during the Great Depression. The video highlights the New Deal as a significant response to the economic crisis, including initiatives to stabilize banks and create jobs.

💡Social Security Act of 1935

The Social Security Act of 1935 established the Social Security system in the US, providing financial support for retired workers, the unemployed, and disabled individuals. The video emphasizes this act as a lasting piece of legislation from the New Deal that aimed to provide long-term economic security.

💡Dust Bowl

The Dust Bowl was a period of severe dust storms causing major agricultural damage in the US during the 1930s. The video connects the Dust Bowl to the Great Depression, illustrating how it exacerbated the economic hardships faced by farmers and contributed to the mass migration in search of work.

Highlights

Stock market crash of 1929 triggered the Great Depression.

Americans invested in the market with borrowed money, leading to overvalued stocks.

Economic growth in the 1920s was sustained by a narrow range of industries.

Automobiles, appliances, and construction were major industries but not diverse enough.

Wealth distribution was uneven, with over half of American families living in poverty before the crash.

International factors played a role as European nations began producing their own goods.

The American economy was on the brink of collapse even before the stock market crash.

After the crash, companies shut down, leading to widespread unemployment.

Banks closed, causing people to lose their life savings.

The Bonus Army, WWI veterans, demanded early payment of their bonuses during the Depression.

President Hoover's response to the Bonus Army was unpopular.

The Dust Bowl exacerbated the nation's suffering as farmers could not pay their mortgages.

Many families became homeless, leading to the formation of Hoovervilles.

Hoover was blamed for the country's suffering and lost the 1932 election.

Franklin Delano Roosevelt won the 1932 election with a plan to expand federal government's role.

Roosevelt's administration reformed banks and insured deposits to restore confidence.

Government programs were established to employ millions of Americans in various works.

The Social Security Act of 1935 was a lasting piece of New Deal legislation.

The New Deal was a temporary response, and the nation fully recovered during WWII.

Transcripts

When the stock market crashed in 1929, the nation's economy crumbled. Why would a seemingly

isolated event have such a dramatic effect? In this chapter, we consider some of the underlying

factors behind the Great Depression as well as the response that was mounted by federal

authorities. The first aspect we must consider is embedded within the stock market itself.

You will remember that many Americans were investing in the market during the 1920s

with borrowed money, and that the prices of many stocks were thus dramatically overvalued.

But there were other factors beneath the surface of the economy during the 1920s,

and these cracks would ultimately pull the economy

apart. The industries that sustained the unprecedented

economic growth of the 1920s were not diverse enough. Automobiles, shown here in this image

of the Ford Motor Company assembly line, were a major industry, as were appliances, such

as radios, and the construction industry. But this was still a relatively narrow range

of industries, which meant that when one fell, it would have a devastating ripple effect

on the economy. Another factor had to do with the distribution of wealth. Although our popular

memory of the 1920s may resemble the glamorous flappers and high living captured by F. Scott

Fitzgerald in The Great Gatsby, in reality many Americans were suffering. Before the

stock market crashed in 1929, over half of American families were at or below the poverty

line. Our position in the international arena would

also be a significant factor in the onset of the Depression. At the close of WWI, European

nations had relied upon American exported goods. By the late 1920s, however, they had

rebuilt their production capacity, and could manufacture their own goods. For all these

reasons and others, the American economy was poised for collapse even before the crash

of the stock market. Once that crash occurred, events unfolded quickly. Companies shut down,

leaving many Americans unemployed and relying on relief. Banks closed by the thousands,

taking with them people's entire life savings. Here we see an image of the Bonus Army. They

were a group of WWI veterans who had been scheduled to receive a bonus payment in the

distant future. As the Depression set in, they demanded the payment be made early, marching

to Washington and setting up a camp in protest. President Hoover authorized the veterans'

removal--General MacArthur burned out their encampment and sent them fleeing. By this

point in 1932, Hoover was deeply unpopular, and his re-election seemed highly unlikely.

As the Dust Bowl compounded the nation's suffering, farmers were unable to pay the mortgages they

owed on their farms. Many families loaded up their belongings and left home, looking

for better jobs that were nowhere to be found. This famous photograph, known as Migrant Mother, was

taken by Dorothea Lange. It captures the weariness and worry of a family with no home.

The settlements of homeless individuals and families such as the one shown here were known

as Hoovervilles. They were named after President Hoover, who was increasingly blamed for the

suffering of the country during the Great Depression. He would lose the 1932 election

to Franklin Delano Roosevelt, a Democrat who believed in enlarging the power and scope

of the federal government in order to fight the effects of the economic crisis. Roosevelt's

administration would reform the banks, stabilizing them and insuring deposits so that Americans

would be willing to put their money once again into the banks.

Many different government programs would be established to put Americans back to work.

Unemployment had peaked in the winter of 1932, when 25% of Americans were out of work. Government

programs put millions of Americans to work, building airports and schools, improving national

parks and forests, sweeping streets, giving music lessons, recording oral histories, and

doing many other types of work. Americans embraced these kinds of programs, preferring

to work for a living than to feel they were receiving a handout. The most lasting piece

of New Deal legislation, though, would be the Social Security Act of 1935. This Act

would create the system we know today, in which both workers and their employers pay

into a federal system that then makes payments to those who are unable to work because of

their age, disability status, or temporary unemployment. While most of the other New

Deal programs were designed to be a temporary response to the crisis, Social Security was

engineered to last. All these programs put forth in the New Deal were like Band-Aids

on the economy, though--the nation would not fully recover from the Depression until the

onset of WWII.