Nation of Nations Concise 2/e Davidson, Gienapp, Heyrman, Lytle, & Stoff
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Get-rich-quick schemes obsessed the nation in the 1920s. Speculative ventures, including the Florida real estate boom and the soaring stock market, dominated the news and diverted national attention from the economy's flaws. Only when it was too late did attention shift from the blinding allure of riches to more sober realities.

The Great Bull Market

For most of the decade a great "bull market" had been building on Wall Street. By 1928 speculative fever, incited by an excess of cash, fueled rising stock prices and transformed the market into a glittering gambling casino.

Warning signs went unnoticed but reflected real economic weaknesses. Rising corporate profits were plowed back into business expansion rather than translated into a proportionate climb in the rate of real wages. Mass purchasing power therefore declined relative to production. The consumer debt rose, and the gap between the wealthy and the middle and working classes widened. The resulting pattern of income distribution could not sustain prosperity. The percentage of national income going to farmers dropped by almost half. Rural banks began to fail, and with little centralized control of the banking business, others soon followed suit. "Sick" industries-coal, textiles, lumbering, and railroads-were characterized by overexpansion, declining demand, heavy competition, and weak management.

In October 1929 the speculative bubble on Wall Street burst and the market crashed in a heap of near-worthless stock. The stock market crash of 1929, one of the worst in the nation's history, signaled the onset of a precipitous decline that shrank the economy nearly 50 per cent. The Great Crash did not bring about the Great Depression that followed; it only accelerated the slide. Overexpansion of major industries, uneven distribution of wealth and income, the relative decline of mass purchasing power, a weak banking and corporate structure, and plain economic ignorance were the underlying causes of the Great Depression.

The American People in the Great Depression

The Great Depression was a great leveler. Deprivation ignored differences of class, ethnicity, geography, and race. Most people did not plummet to rock bottom; they simply lived leaner lives. Some tightened family budgets; others moved to cheaper quarters. A few starved to death, and more than a few foraged for food. For the first time more people left rather than entered the country. With hard times came shame, self-doubt, and a loss of confidence. Birth and marriage rates dropped, and troubled marriages broke apart. In strong and weak families alike, the role of homemaker took on added importance. More and more women worked outside the home to supplement meager family incomes, and the home itself became an inexpensive center of recreation and companionship. A depression culture emerged, but whether on film, radio, or in print, it tended to reinforce the basic social and economic tenets of American culture: middle class morality and family life, capitalism, and democracy.

An ecological disaster transformed 1500 square miles from the Oklahoma panhandle to western Kansas into a gigantic "Dust Bowl." Made partly by man, partly by nature, the Dust Bowl led 3.5 million farmers to leave the Great Plains, the only states of the country to suffer a net loss of population. A growing migration of rural refugees wandered the country in search of work.

Meanwhile outsiders, especially Mexican- and African Americans, suffered more than their share of hardship. Hard times for Anglos meant hostility toward Mexicans. The Latino population of the southwest declined by half a million. The nation's largest minority, African Americans, reported unemployment rates as high as 50 percent. The Great Depression, moreover, aggravated racial prejudice; the number of recorded lynchings tripled between 1932 and 1933.

The Tragedy of Herbert Hoover

The depth of the crisis soon exhausted private and municipal resources. By 1931 only New York had a statewide relief agency. The federal government alone possessed resources to meet the manifest need. Unfortunately President Herbert Hoover, a private and deeply sensitive man, proved unable to mobilize recovery. He applied the techniques of the New Era-self-help, voluntarism, publicity, and public calls for private cooperation-but the downward slide continued. Though he did more than any of his predecessors to combat a downturn, he could not bring himself to do more, for fear that too much government activity would unbalance the budget, impede the return of business confidence and recovery, create an unwieldy and intrusive bureaucracy, and undermine individual freedom and initiative. What Hoover tried was too little and too late.

Resentment grew. Unrest peaked in the disastrous march of the Bonus Army on Washington in 1932. In the election that fall, Hoover suffered a thundering rebuke as Democrat Franklin D. Roosevelt won nearly 58 percent of the popular vote. Just as significant, the Democratic victory laid the foundation of a powerful coalition that would dominate politics for decades to come.

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