The American Yawp Ch. 23
Summary
TLDRThe 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
📉 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.
💼 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.
Mindmap
Keywords
💡Stock Market Crash of 1929
💡Great Depression
💡Overvalued Stocks
💡Economic Diversity
💡Wealth Distribution
💡International Trade
💡Bonus Army
💡Hoovervilles
💡New Deal
💡Social Security Act of 1935
💡Dust Bowl
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.
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