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.