The Great Depression

Part I   Hard Times




·        When did the Great Depression begin?

·        Why was the Depression so much more severe than previous economic crises?

·        What were the major problems that Americans encountered during the Depression?


Few Americans in the first months of 1929 saw any reason to question the strength and stability of the nation’s economy.  Most agreed with their new president, Herbert Hoover, that the booming prosperity of the 1920s would not only continue but also increase.  “We in America today,” Hoover had proclaimed in August 1928, “are nearer to the final triumph over poverty than ever before in the history of any land.  The poorhouse is vanishing from among us.”

Only fifteen months later, those words would return to haunt Hoover, as the nation plunged into the severest and most prolonged economic depression in its history.  It began with a stock market crash in October 1929 and slowly but steadily deepened over the next three years until the nation’s economy (and, many believed, its entire social and political systems) approached a total collapse.  The Great Depression continued in one form or another for a full decade, not only in the United States but also throughout much of the rest of the world, until World War II finally restored American prosperity.

America had experienced economic crises before.  At the beginning of the 1920s, the country had experienced a postwar recession (period of economic decline) that left over five million unemployed and forced over 20,000 businesses to close during the summer of 1920 alone.  The earlier Panic of 1893 had ushered in a four-year period of unemployment, business failures, and bank collapses.  The Great Depression of the 1930s, however, affected the nation more deeply than any economic crisis that had come before, not only because it lasted longer, but because its impact was far more widely felt.  The American economy by 1929 had become so interconnected, so dependent on the health of large national corporations, that a collapse in one sector of the economy now reached out to affect virtually everyone.

The misery of the Great Depression was without precedent (previous example) in the nation’s history.  There was prolonged massive unemployment; over a quarter of the work force is estimated to have been without work in 1932, the worst year of the crisis.  Even those who retained their jobs often had to accept drastic pay cuts, reduced hours, and the continued fear of unemployment.  On the nation’s farms, the economic problems that had been growing in severity through the 1920s became far worse; great numbers of farmers lost their land, and many of them left the countryside altogether in search of work in other regions, work that generally did not exist.  For the first time in American history, emigration requests exceeded those for immigration.  In 1932 the Soviet embassy averaged 350 requests per day from U.S. citizens for jobs in the Soviet Union.

The Depression was not only a traumatic experience for individual Americans.  It also placed great strains on the political and social fabric of the nation.  Out of these strains emerged dramatic changes in the role of government in American life.  Private institutions and local governments were completely unprepared to deal with a crisis of this magnitude (size); and their efforts gradually collapsed under the burden.  Slowly, Americans began to look more and more to the national government for some solution to their problems.

The Coming of the Depression

·        What factors preceded the stock market crash?

·        What was “Black Tuesday”?


The sudden financial collapse in 1929 came as an especially severe shock because it followed a period in which the economy seemed to be performing magnificently.  In 1928-29 the nation was experiencing a spectacular boom in the stock market.  In February 1928, stock prices began a steady climb that continued for a year and a half.  By the autumn of that year, the market had become a national obsession, attracting the attention not only of the wealthy but also millions of people of more modest means.  Many brokerage firms gave added encouragement to the speculative (gambling) mania by offering absurdly easy credit to purchasers of stocks.  Many people were borrowing money to purchase stock, a practice known as buying on margin.  With only 10% down, a person could borrow 90% of the money needed to buy stock.  Unfortunately, most of these loans could only be repaid if the market continued to rise.

It was not hard to understand why so many Americans flocked to invest in the market during the late 1920s.  Stocks seemed to provide a certain avenue to quick and easy wealth.  Between May 1928 and September 1929, the average price of stocks rose over 40%.  The stocks of the major industrials, the stocks that are used to determine the Dow Jones Industrial Average (an average of a small number of large company stocks), doubled in value.  Trading mushroomed from two or three million shares a day to over five million, and at times to as many as ten or twelve million.  There was, in short, a widespread speculative fever that grew steadily more intense.  A few economists warned that the boom could not continue, that the prices of stocks had ceased to bear any relation to the earning power of the corporations that were issuing them, but most Americans refused to listen.

In the autumn of 1929, the market began to fall apart.  On October 21, stock prices dipped sharply, alarming those who had become accustomed to an uninterrupted upward progression.  Two days later, after a brief recovery, an even more alarming decline began.  Big bankers managed to stave off disaster for a while by buying up stocks to restore public confidence, but on October 29 all the efforts to save the market failed.  That day, “Black Tuesday” as it became known, saw a devastating panic.  Sixteen million shares of stock were traded, the industrial index dropped 17%, and stocks in many companies became virtually worthless (the loss in value on the New York Stock Exchange exceeded twice the value of all the currency in circulation at the time).  Variety Magazine put it more simply “Wall Street Lays An Egg.”

In the weeks that followed, the market continued to decline, dropping 40% with losses totaling $30 billion (an amount equal to what the U.S. had spend on the First World War).  Despite occasional hopeful signs of a turnaround, the market remained deeply depressed for more than four years and did not fully recover for more than a decade.

Causes of the Depression

·        Explain the four major factors that led to the Depression.

·        What factors caused the nation’s money supply to shrink?  What effect did this have on the Depression?


Popular folklore has established the stock market crash as the beginning, and even the cause, of the Great Depression.  But although October 1929 might have been the first visible sign of the crisis, the Depression had earlier beginnings and more complex causes.

Economists, historians, and others have argued for decades about the causes of the Great Depression.  But most agree on several things.  They agree that what is remarkable about the crisis is not that it occurred; periodic recessions are a normal feature of the business cycle.  What is remarkable is that it was so severe and that it lasted so long.  The important question, therefore, is not so much why was there a depression, but why was it such a bad one.  Most observers agree that a number of different factors account for the severity of the crisis, although there is considerable disagreement about which was the most important.

One of those factors was a lack of diversification (consisting of many parts) in the American economy in the 1920s.  Just as the auto boom in the 1920s had benefited many other industries, a downturn in just a few key industries sent negative shockwaves throughout the economy.  Prosperity had depended excessively on a few basic industries, notably construction and automobiles.  In the late 1920s, those industries began to decline.  Expenditures on construction fell $2 billion between 1926 and 1929.  Automobile sales remained strong for a while longer, but in the first nine months of 1929 they fell by more than a third.  When the crucial construction and automobile industries weakened, no other area of the economy was ready to compensate for them.

A second important factor was the unequal distribution of purchasing power and, as a result, a weakness in consumer demand.  As industrial and agricultural production increased, the proportion of the profits going to farmers, workers, and other potential consumers was too small to create an adequate market for the goods the economy was producing.  Demand for goods was not keeping up with supply.  Even in 1929, after nearly a decade of economic growth, more than half the families in America lived on the edge of or below the minimum subsistence level, and 1% of the population possessed 40% of the country’s wealth.  These Americans were too poor to share in the great consumer booms of the 1920s, too poor to buy the houses, cars, and other goods the industrial economy was producing, and too poor in many cases even to buy adequate food and shelter for themselves.  As long as corporations had continued to expand their capital facilities (factories, warehouses, heavy equipment, and other investments), the economy had continued to grow.  By 1929, however, capital investment had created more plant space than could profitably be used, and factories were producing more goods than consumers could afford to purchase.  Industries that were experiencing declining demand (construction, autos, coal, and others) began laying off workers, further cutting mass purchasing power.  Even expanding industries often reduced their work forces because of new, less labor-intensive automated technologies; and in the sluggish economic atmosphere of 1929 and beyond, such workers had difficulty finding employment elsewhere.

John Maynard Keynes, a British economist, described his solution to the Great Depression in his 1936 book entitled The General Theory of Employment, Interest and Money.  Keynes believed high unemployment was the result of lack of demand for products and services.  His solution to the problem was for government to spend money on public works and other projects to increase the need for workers.


A third major problem was the credit structure of the economy.  Farmers were deeply in debt, their land mortgaged, and crop prices too low to allow them to pay off what they owed.  Small banks, especially those tied to the agricultural economy, were in constant trouble in the 1920s as their customers defaulted (failed to pay) on loans.  There was a steady stream of failures among these smaller banks throughout the decade (600 banks per year collapsed in the latter 1920s).  The banking system was only very loosely regulated by the Federal Reserve System.  Although most American bankers in this era were intensely conservative, some of the nation’s largest banks were failing to maintain adequate cash reserves and were investing recklessly in the stock market or making unwise loans.  A major economic disruption would cause these banks to fail as well.  In other words, the banking system was not well prepared to absorb the shock of a major recession.

A fourth factor contributing to the coming of the Depression was America’s position in international trade.  The United States was far less dependent on overseas trade than it would later become, but exports formed a significant part of the economy in the 1920s.  Beginning late in the decade, European demand for American goods began to decline.  That was partly because European industry and agriculture were becoming more productive after recovering from the world war, and partly because some European nations were suffering serious financial crises and could not afford to buy goods from overseas.  The European economy was also being destabilized by the international debt structure that had emerged in the aftermath of World War I.  The United States had been providing loans to many European countries that had allowed them to purchase American goods.  When American banks were forced to discontinue these loans, European economies crashed, further reducing the demand for American goods.  At the same time, high American protective tariffs were making it difficult for Europeans to sell their goods in American markets and they began to default on their loan payments.  The collapse of the international credit structure was one of the reasons the Depression spread to Europe (and grew much worse in America) after 1931.

The collapse of the stock market and the weaknesses in the economy soon led to the collapse of the American banking system.  Over 9,000 American banks either went bankrupt or closed their doors to avoid bankruptcy between 1930 and 1933.  Depositors lost over $2.5 billion in deposits (bank deposits were not insured).  Partly as a result of these banking closures, the nation’s money supply greatly decreased.  As banks stopped making loans, farmers, businessmen, and others found it more and more difficult to get money.  The total money supply, according to some measurements, fell by more than a third between 1930 and 1933.  The declining money supply meant a decline in purchasing power, and thus deflation (rapidly falling prices).  With fewer and fewer Americans able to buy, manufacturers and merchants began reducing prices, cutting back on production, and laying off workers.

Some economists argue that a severe depression could have been avoided if the Federal Reserve System had acted more wisely.  Instead of moving to increase the money supply to keep things from getting worse in the early 1930s, the Federal Reserve first did nothing and then did the wrong thing; late in 1931 it raised interest rates to prevent speculators from borrowing money to purchase gold, which contracted (shrunk) the money supply even further.

Thus the stock market crash of 1929 did not so much cause the Depression as it helped trigger a chain of events that exposed a large number of weaknesses that had long existed in the American economy.  Over the next three years, the crisis grew steadily worse.

Times of Desperation

·        Describe the suffering caused by the Great Depression.

·        Why was it so difficult for state and local governments to aid the unemployed?

·        Describe the effect that the Depression had on families and values.

·        What was the Dust Bowl?


Although President Hoover insisted that the Depression was temporary and that “prosperity was just around the corner,” others disagreed.  Someone asked the British economist John Maynard Keynes in the 1930s whether he was aware of any historical era comparable to the Great Depression.  “Yes,” Keynes replied.  “It was called the Dark Ages, and it lasted 400 years.”

The collapse was so rapid and so devastating that at the time it created only bewilderment among many of those who attempted to explain it.  The American gross national product (GNP—the total value of the country’s goods and services produced during a year) plummeted from over $104 billion in 1929 to $76.4 billion in 1932, a 25% decline in three years.  By 1933, Americans had virtually ceased making investments in the economy.  In 1929 total national investment was $16.2 billion; by 1933 this had fallen to only a third of a billion dollars.  The consumer price index (which measures the cost of items) declined 25% between 1929 and 1933.  Farm prices, already depressed in the 1920s, fell even more dramatically.  Farm income dropped from $12 billion to $5 billion in four years.  With economic activity contracting so sharply, it was inevitable that industrial unemployment would greatly increase.  By 1932, according to most estimates, one quarter of the American work force was unemployed.

The suffering extended into every area of society.  In the industrial Northeast and Midwest, cities were becoming virtually paralyzed by unemployment.  Cleveland, Ohio, for example, had an unemployment rate of 50% in 1932; Akron, 60%; Toledo, 80%.  To the men and women suddenly without incomes, the situation was frightening and bewildering.  Most had grown up believing that every individual was responsible for his or her own fate, that unemployment and poverty were signs of personal failure.  Even in the face of national distress, many continued to believe it.  Unemployed workers walked through the streets day after day looking for jobs that did not exist.  When they finally gave up, they often just sat at home, hiding their shame.  The economic hardships of the Depression years placed great strains on American families, particularly on the families of middle-class people who had become accustomed in the 1920s to a steadily rising standard of living and now found themselves plunged suddenly into poverty and uncertainty:

The third week in November 1929, he, aged 39 and having a wife and two children, lost his job.  He had been earning $37.50 a week as clerk in the accounting department of a manufactory.  He had put $1,413 in the savings bank, so he was equipped for a short layoff, and he had bought his last suit (for $32.50, at a sale) just two months before.  He went home in November to his by-the-year lease apartment, cheered up his wife, chaffed the children. But he began earnestly to look for another position.

After two unsuccessful weeks, he felt a little out of it when he met his employed friends.  He would say: “Oh, I’m all right. I’m just trying to decide if I’ll take this job or that.”  But after two weeks more he was ducking around corners to avoid the same people, for he was proud.

At the end of three months, he stayed away from the reproachful glances of his family as much as possible, though in mid-summer of this year he suffered the humiliation of moving them into two furnished rooms.  In September, his savings were all gone. Now for the first time he was willing to accept manual labor, any labor.  He was lonely, afraid, undergoing a mental and moral breakdown.  But he could not find a job.

Last week Jim Jobless in most U.S. cities shivered in the year’s first real cold snap as he joined the breadseeking or jobseeking lines.  But relief work everywhere was getting under way and Jim Jobless could read the following in the news:

In New York City, with 300,000 idle, Banker Seward Prosser’s committee had raised $2,512,000, given park-cleaning jobs to 10,000 Jims.  Police distributed 1,500,000 lb. of food in 65-lb. portions.

Detroit, with 86,000 idle, had found 11,000 jobs, expended more than $2,000,000 in relief, but the number of unemployed was 4,000 greater than when Mayor Frank Murphy’s campaign started about seven weeks ago.[1]

It was not only unemployment that shook the confidence of middle-class families, many of those that were fortunate to keep their jobs saw their hours and wages sharply reduced.

The Depression made family life in many ways more important economically, but also worked to erode the strength of many family units.  There was a decline in the divorce rate, largely because divorce was now too expensive for some.  More common was the informal breakup of families, particularly the desertion of families by unemployed men bent on escaping the humiliation of being unable to earn a living.  The marriage rate and the birth rate both declined.  Many households expanded to include more distant relatives.  Parents often moved in with their children and grandparents with their grandchildren, or vice versa.

An increasing number of families were turning in humiliation to local public relief systems, just to be able to eat.  But that system, which had in the 1920s served only a small number of indigents (poor people), was totally unequipped to handle the new demands being placed on it.  In many cities, therefore, relief simply collapsed.  New York, which offered among the highest relief benefits in the nation, was able to provide families an average of only $2.39 per week.  Private charities attempted to supplement (add to) the public relief efforts, but the problem was far beyond their capabilities as well.

With local efforts rapidly collapsing, state governments began to feel new pressures to expand their own assistance to the unemployed.  Most resisted the pressure.  Tax revenues were declining along with everything else, and state leaders balked at placing additional strains on already tight budgets.  Many public figures, moreover, feared that any permanent welfare system would cause the unemployed to lose any desire to work.

As a result, American cities were experiencing scenes that a few years earlier would have seemed almost inconceivable.  Bread lines stretched for blocks outside Red Cross and Salvation Army kitchens.  Thousands of people sifted through garbage cans for scraps of food or waited outside restaurant kitchens in hopes of receiving plate scrapings.  Nearly two million young men simply took to the roads, riding freight trains from city to city, living as nomads or hobos.

In rural areas, conditions were in many ways even worse, especially in a large part of the South and Midwest known as the Dust Bowl.  Between 1929 and 1932, farm income declined by more than 60% and an estimated one-third of all American farmers lost their land through mortgage foreclosures or eviction.  Much of the farm belt was suffering as well from a catastrophic natural disaster: one of the worst droughts in the history of the nation.  Beginning in 1930, a large area of the nation and particularly a group of states stretching north from Texas into the Dakotas began to experience a steady decline in rainfall and an accompanying increase in heat.  The drought continued for a full decade, turning what had once been fertile farm regions into virtual deserts.  In Kansas, the soil in some places was completely without moisture as far as three feet below the surface.  In Nebraska, Iowa, and other states, summer temperatures averaged over a hundred degrees.  Swarms of grasshoppers were moving from region to region, devouring what meager (sparse) crops farmers were able to raise, often even devouring fenceposts or clothes hanging out to dry.  Great dust storms “black blizzards,” as they were called swept across the plains, blotting out the sun and suffocating livestock as well as any people unfortunate or foolish enough to stay outside.

It is a measure of how productive American farmers were and how depressed the market for agricultural goods had become that even with these disastrous conditions, the farm economy continued through the 1930s to produce far more than American consumers could afford to buy.  With the domestic market dwindling and the international market having almost vanished, farmers were able to sell their goods only at prices so low as to make continued operations unprofitable for most of them.  In many southern and western farm communities, the situation soon became desperate:

City dwellers last week were sharply reminded of the Drought when 500 half-starved farmers and their wives raided the food stores of England, Ark. (pop. 2,408).  Most of these hungry citizens were white; had been fairly prosperous husbandmen until last year. Their crops had been ruined.  Their provisions were gone.

Assembling in England with guns tucked in their clothes, they demanded Red Cross relief.  When this was not forthcoming because the supply of Red Cross requisition blanks had been exhausted, they threatened to loot the stores.  One George E. Morris, attorney, tried to pacify them with a speech, was constantly interrupted by cries of: “We want food and we want it now!  We’re not beggars, we’re not going to let our children starve.”  Women sobbed, children whimpered.  To avert a riot, England’s merchants hard-pressed themselves by the Depression, began to dole out food to the hungry. More than 300 were each supplied with a ration worth $2.75.  Kansas farmers, in the midst of harvesting a record-breaking crop of 200,000,000 bushels of wheat last week were getting 25 cents per bu. [bushel] cash for their product. On the Chicago Board of Trade, July futures dipped to 50 1/4 cents, the lowest figure since the exchange first opened in April 1848.  Around Hutchinson, Kans. the country was dotted with great mounds of wheat—10,000 bu. to the pile—which had been dumped out of doors for lack of elevator space.  At Bucklin, one Forrest Kennett got his name in the papers by scorning a 27 cents per bu. offer, decorating his truck with jackasses labeled “Farm Board” and “Wheat Farmer,” and driving away with the tail board down so his load dribbled out through the town’s streets.  Here & there growers plowed their crop under rather than take the loss of harvesting it.[2]

Thus many farmers, like many urban unemployed, left their homes and traveled to what they hoped would be better areas.  Hundreds of thousands of families from the Dust Bowl (often known as “Okies,” since many came from Oklahoma) packed their belongings in rickety cars or trucks and traveled to California and other states, where they found conditions little better than those they had left.  Owning no land of their own, many worked as agricultural migrants, traveling from farm to farm, picking fruit and other crops at starvation wages.

For urban and rural Americans alike, malnutrition and homelessness became a growing problem.  City hospitals reported an alarming increase in deaths by starvation.  Although such deaths in rural areas often went unreported, they too were increasing.  People who had lost their farms or their homes were often unable to afford any permanent shelter.  Large shantytowns began to spring up on the outskirts of major cities, where homeless families lived in makeshift shacks constructed of flattened tin cans, scraps of wood, abandoned crates, and other debris.  Many homeless Americans simply kept moving sleeping in freight cars, in city parks, in subways, or in unused sewer ducts.

No assumption would seem to have been more in question during the Depression than the belief that the individual was in control of his or her own fate, that anyone displaying sufficient talent and effort could become a success.  People became more accustomed during the 1930s to looking to their government for assistance; they learned to blame corporate moguls, international bankers, “economic royalists,” and others for their distress.  At the same time, millions responded eagerly to reassurances that they could, through their own efforts, restore themselves to prosperity and success.  Dale Carnegie’s How to Win Friends and Influence People (1936), a self-help manual preaching individual initiative, was one of the best- selling books of the decade.

Depression Culture

·        What two major conflicting themes dominated Depression Era literature and films?


Not all Americans, of course, responded to the crisis of the Depression so passively.  Large groups of men and women did come to believe that the economic problems of their time were the fault of society, not of individuals, and that some collective social response was necessary.  John Steinbeck’s The Grapes of Wrath (1939) portrayed the trials of a migrant family in California, concluding with an open call for collective social action against injustice.  John Dos Passos’s U.S.A. trilogy (1930) explicitly attacked modern capitalism.  Similar beliefs found expression in books such as Tobacco Road (1932), by Erskine Caldwell, a novel about life in the rural South, which later became a long-running play.  James Agee produced one of the most powerful portraits of the lives of sharecroppers in Let Us Now Praise Famous Men (1941), a careful description of the lives of three Southern families, illustrated with photographs by Walker Evans.  Other writers and artists turned their gaze on social injustice in other settings.  Richard Wright, a major black novelist, exposed the plight of residents of the urban ghetto, in Native Son (1940).  James T. Farrell, in his Studs Lonigan trilogy (1932- 1935), depicted the savage world of urban, lower class white youth.

For the most part, however, the cultural products of the 1930s that attracted wide popular audiences were those that diverted attention away from the Depression rather than those that illuminated its problems.  The two most powerful instruments of popular culture in the 1930s, radio and the movies, were particularly careful to provide mostly light and diverting entertainment.  The staple of the radio broadcasting was escapism—comedies such as Amos ‘n Andy (a program that featured white actors imitating urban blacks), adventures such as Superman, Dick Tracy, The Lone Ranger, and other programs designed to be pure entertainment.  Hollywood continued an effort begun in the late 1920s to exercise tight control over its products through its censor Will Hays, redoubling efforts to ensure that movies carried only safe, conventional messages.  There were some films that did explore provocative political themes.  The film version of The Grapes of Wrath (1940) faithfully represented Steinbeck’s social criticism.  Director Frank Capra provided a muted social message in several of his comedies Mr. Deeds Goes to Town (1936), Mr. Smith Goes to Washington (1939), and Meet John Doe (1941) which celebrated the virtues of the small town and the decency of the common people in contrast to the selfish, corrupt values of the city and the urban rich.  More often, however, the commercial films of the 1930s were deliberately and explicitly escapist: lavish musicals and “wacky” comedies designed to divert audiences from their troubles and, very often, satisfy their fantasies about quick and easy wealth.

Popular literature, similarly, offered Americans an escape from the Depression.  Many of the best-selling novels of the decade were romantic sagas set in bygone eras—Margaret Mitchell’s Gone with the Wind (1936) became the source of one of the most celebrated films of all time.  Leading magazines, and particularly such popular new photographic journals as Life, did offer occasional glimpses of the ravages of the Depression, but for the most part they concentrated on fashions, stunts, and eye-catching scenery.  Even the newsreels distributed to movie theaters across the country tended to give more attention to beauty contests and ship launchings than to the Depression itself.  The American people lived through the 1930s without experiencing a radical change in their values in part because they managed so frequently and effectively to divert themselves from their problems.

Black Americans and the Depression

·        What special problems did Black Americans experience during the Depression?

·        What effect did the Depression have on black population patterns?

·        What was the Scottsboro Case?


Those Americans whose access to opportunities had been limited even in prosperity found the Depression especially devastating.  Thus Black Americans encountered special hardships in the 1930s.  They had not generally shared in the prosperity of the previous decade; they now experienced the problems of unemployment, homelessness, malnutrition, and disease to a greater degree than in the past, and to a far greater degree than most whites.

As the Depression began, over half of all Black American still lived in the South, most of them as farmers or farm workers.  The collapse of prices for cotton and other staple (basic) crops left many with no income at all.  Those who stayed on their farms had to grow their own food or scavenge or beg for it.  Many left the land altogether either by choice or because forced to by landlords who no longer found the sharecropping (a system by which the poor farmed someone else’s land and in return were allowed to keep a portion of the crops) system profitable.  Some migrated to Southern cities where it was now difficult to secure even the menial (low level) jobs traditionally considered suitable for blacks.  Unemployed whites believed they had first claim to all work, and some now began to take positions as janitors, street cleaners, and domestic servants, displacing the blacks who formerly occupied them.  Even for those blacks that could find work, life in the South offered very little.  The median (middle level) income of black families was only 34% of that of white familes.  A typical black domestic worker commonly worked six twelve-hour days for a salary of between $3 and $8 per week.

As the Depression deepened, whites in many Southern cities began to demand that all blacks be dismissed from their jobs.  In Atlanta in 1930, an organization calling itself the Black Shirts organized a campaign with the slogan “No Jobs for Niggers Until Every White Man Has a Job!”  In other areas, whites used intimidation and violence to drive blacks from jobs.  By 1932, over half the blacks in the South were without employment.  What limited relief there was went almost invariably to whites first; benefits for blacks were consistently lower than those for whites.  Some private organizations and local governments refused to provide any assistance at all to blacks.

Unsurprisingly, therefore, many Southern blacks (perhaps 400,000 in all) left the South in the 1930s and journeyed to the cities of the North.  There they found less direct discrimination, but conditions that were in most respects little better than those in the South.  In Harlem (a black section of New York), the median income of skilled workers dropped by nearly half between 1929 and 1932.  But most blacks were unskilled workers, and as always, they tended to be the first fired when layoffs began.  In New York, black unemployment was nearly 50%.  In other cities, it was even higher.  Two million blacks, half the total black population of the country, were on some form of relief by the mid1930s.

Relatively few white Americans showed any sensitivity to the special plight of blacks during the Depression.  Traditional patterns of segregation in the South survived largely unchallenged.  The tragic phenomenon of lynching (murder of blacks by whites for political reasons) continued with all efforts to win passage of a law making the practice a federal crime frustrated by the opposition of national leaders afraid of antagonizing powerful white Southern politicians.  Despite this general indifference to the plight of Black Americans, several particularly notorious examples of racism did attract the attention of the nation.

The most notable example of 1930s racism was the Scottsboro Case.  In March 1931, nine black teen-agers were taken off a freight train in Alabama (in a small town near Scottsboro) and arrested for vagrancy and disorder.  Later, two white women who had also been riding the train accused them of rape.  In fact, there was overwhelming evidence, medical and otherwise, that the women had not been raped at all; they may have made their accusations out of fear of being arrested for prostitution.  Nevertheless, an all-white jury in Alabama quickly convicted all nine of the “Scottsboro Boys” (as they were known to both friends and foes) and sentenced eight of them to death.  In his summation to the jury, the prosecutor had said “Guilty or not, let’s get rid of these niggers.”

After the Supreme Court overturned the convictions in 1932, a series of new trials began that gradually attracted national attention.  This was in part because the International Labor Defense, an organization associated with the Communist Party, came to the aid of the accused youths and began to publicize the case.  The trials continued throughout the 1930s.  Although the white Southern juries who sat on the case never acquitted any of the defendants, all of them eventually gained their freedom, four because the charges were dropped, four because of early paroles, and one because he escaped.  The last of the Scottsboro boys did not leave prison until 1950.

The Political Left

·        What factors led some Americans to support leftist groups during the Depression?

·        What activities did the Communist Party of the United States engage in?

·        What effect did the leftist groups have on the politics of the decade?


For a relatively small but important group of Americans intellectuals, artists, workers, blacks, and others who became disenchanted for various reasons with the prevailing values of American life the Depression meant a commitment, for a time at least, to radical politics.  The Great Depression marked the greatest economic crisis in the country’s history, and perhaps it is only logical that many Americans showed an interest in capitalism’s strongest critic, the ideology of communism.  Some became members of the American Communist Party, which achieved a size and visibility in the 1930s it had never attained before and would never attain again.  Others expressed sympathy for the party and its ideas without actually becoming members.  The United States has always been distinctive for the weakness of radicalism in its political tradition.  Even during the Depression the political left remained, by the standards of other countries, fairly small.  But by America’s own modest standards, the 1930s represented one of the high-water marks of radical activism. 

For intellectuals, in particular, the left offered an escape from the lonely and difficult stance of detachment and alienation (anger at society) that many had embraced in the 1920s.  It combined a harsh critique of mainstream American society with an intense commitment to a political movement that seemed to give meaning and purpose to their lives.  The particular importance of the Spanish Civil War to many American intellectuals was a good example of how the left’s sense of commitment proved appealing.  A democratically elected leftist government was in danger of being overthrown by fascists led by Francisco Franco, who was receiving support from Hitler and Mussolini.  The fight against Spanish fascism attracted 3,000 young Americans who formed the Abraham Lincoln Brigade and traveled to Spain to fight for the Spanish Republic.  About a third of its members died in combat; but for those who survived the experience was profoundly rewarding.  Ernest Hemingway, who spent time in Spain as a correspondent, wrote in For Whom the Bell Tolls of how the war provided those Americans who fought in it with “a part in something which you could believe in wholly and completely and in which you felt an absolute brotherhood with others who were engaged in it.”

Instrumental in creating the Lincoln Brigade, and directing many of its activities throughout its existence, was the American Communist Party.  The Communist Party’s membership peaked at 100,000 during its heyday in the mid-1930s.  The party performed functions in the 1930s that even many Americans unsympathetic to its long-range goals found appealing.  It was active in organizing the unemployed in the early 1930s and staged a hunger march in Washington, D.C., in 1931.  Party members who worked in the labor movement were often among the most effective union organizers in some industries.  The party was one of the few political organizations to take a firm, unequivocal stand in favor of racial justice; its active defense of the Scottsboro Boys was but one example of its efforts to ally itself with the aspirations of blacks.  It also helped organize a union of black sharecroppers in Alabama.  Despite its efforts to appear as a humane, patriotic organization, the American Communist Party, however, was always under the close and rigid supervision of the Soviet Union.  Its leaders took their orders from Moscow and most members followed the “party line” or found themselves expelled from its ranks.  As a result, communism continued to be viewed by most Americans as an alien force.

Another leftist group, the Socialist Party of America, now under the leadership of Norman Thomas, also cited the economic crisis as evidence of the failure of capitalism and sought vigorously to win public support for its own political program.  The party, however, never made any real progress toward establishing socialism as a major force in American politics.  By 1936, membership in the Socialist Party had fallen below 20,000.

In the end, what is most striking about American radicalism in the 1930s is less its unprecedented strength than its continuing limits.  Neither the Communist Party nor any other radical organization ever achieved dimensions during the Depression sufficient to make it a truly important political force.  However strong radical sentiment may have become, the tradition of anti-radicalism remained far stronger.

Hoover and the Depression

·        What measures did President Hoover employ to combat the Depression?  Why did these efforts fail?

·        What were “Hoovervilles”?

·        What was the RFC?  Why did it fail?


Herbert Hoover entered the presidency in March 1929 believing, like most Americans, that the nation faced a bright and prosperous future.  For the first six months of his administration, he attempted to expand the policies he had advocated during his eight years as Secretary of Commerce, policies that would, he believed, sustain a successful economy.  The economic crisis that began before the year was out forced the president to deal with a whole new set of problems; but for most of the rest of his term, he continued to rely on the principles that had always governed his public life.

After the stock market crash, President Hoover held a series of highly publicized meetings, summoning leaders of business, labor, and agriculture to the White House and urging upon them a program of voluntary cooperation for recovery.  He implored businessmen not to cut production or lay off workers; he talked labor leaders into forgoing demands for higher wages or better hours.  For a few brief months, the president’s efforts seemed to be having some effect; but by mid-1931, economic conditions had deteriorated so much that the structure of voluntary cooperation had collapsed.  Frightened industrialists soon began cutting production, laying off workers, and slashing wages.  Hoover was powerless to stop them.

Hoover also attempted to use government spending as a tool for fighting the Depression.  Rejecting the demands of some fiscal conservatives that the government cut back its own programs to ensure a balanced budget.  The president proposed to Congress an increase of $423 million, a substantial sum by the standards of the time, in federal public works programs; and he urged state and local governments to engage in the “energetic yet prudent pursuit” of public construction in hopes that this would combat unemployment.  Nevertheless, Hoover’s spending programs were in the end no more effective than his efforts at persuasion, as he was not willing to spend enough money, or to spend it for a long enough time, to do any good.  He viewed his public works program as only temporary, something to promote a rapid recovery.  When economic conditions worsened, he became less willing to increase government spending, worrying instead about attempting to maintain a balanced federal budget.  In 1932, at the depth of the Depression, he favored raising interest rates and proposed a tax increase to help the government avoid a deficit.

Hoover’s efforts also failed to aid American farmers in any significant way.  They relied on voluntary cooperation among farmers and gave the government no authority to do what the agricultural economy most badly needed—limit production.  Hoover’s call for a reduction of the wheat crop, for example, resulted in a drop in acreage of only 1% in Kansas.  Prices continued to fall despite his efforts.  The Smoot-Hawley Tariff of 1930, designed to favor American products over foreign imports, was an unqualified disaster.  It provoked foreign governments to enact trade restrictions of their own in reprisal, further diminishing the market for American agricultural goods.

By the spring of 1931, large portions of the public were beginning to hold the president personally to blame for the crisis, and Hoover’s name soon became synonymous with economic distress.  Shantytowns established on the outskirts of cities were known as “Hoovervilles.”  Newspapers became “Hoover Blankets” and rabbits, “Hoover Hogs.” 

Progressive reformers, both inside and outside the government, urged the president to support more vigorous programs of relief and public spending, but Hoover ignored the recommendations.  Instead, he seized on a slight improvement in economic conditions early in 1931 as proof that his policies were working announcing, “prosperity was just around the corner.”  The international spread of the Depression during the spring of 1931 destroyed any illusion that the economic crisis was coming to an end.

Hoover now argued that it was not the domestic American economy that was to blame for the Depression, but the structure of international finance.  The proper response to the crisis, therefore, was not to adopt active social and economic programs at home but to work to restore international stability.  Hoover’s solution was to propose a moratorium (pause) first on the payment of all war debts and reparations, then on the payment of international private debts as well.  It was a sound proposal, but it came too late to halt the panic.

By the time Congress convened in December 1931, conditions had grown so desperate that Hoover finally decided to support an expanded federal role in the economy.  The most important piece of legislation of his presidency was a bill passed in January 1932 establishing the Reconstruction Finance Corporation (RFC), a government agency whose purpose was to provide federal loans to troubled banks, railroads, and other businesses.  It even made funds available to local governments to support public works projects and assist relief efforts.  It was an unprecedented use of federal power; and unlike some earlier Hoover programs, it operated on a large scale.  In 1932, the RFC had a budget of $1.5 billion for public works alone.

Nevertheless, the new agency failed to deal directly or forcefully enough with the real problems of the economy to produce any significant recovery.  Much of its money went to large banks and corporations, prompting some critics to dub it a “bread line for big business.”  The RFC could only provide loans; it could not purchase stock or otherwise provide capital to troubled institutions, even though that was what they most desperately needed.  At Hoover’s insistence, the RFC helped finance only those public works projects that promised ultimately to pay for themselves (toll bridges, public housing, and others), thus severely limiting the scope of its efforts.  Its chairman, the conservative Texas banker Jesse Jones, prided himself on following sound, traditional banking practices.  This meant that the RFC itself remained healthy by refusing to make loans to those institutions that most desperately needed them.  Above all, the RFC did not have enough money to make any real impact on the Depression; and it did not even spend all the money it had.  Of the $300 million available to support local relief efforts, the RFC only lent out $30 million in 1932.  Of the $1.5 billion public works budget, it released only about twenty percent.  Even Hoover’s most vigorous and expansive program had been crippled by the fiscal conservatism of his administration.

The Bonus March

·        What factors led to the creation of the Bonus Army?

·        Why was the government’s handling of the protesters controversial?

The most celebrated protest movement of the early Depression emerged from an unlikely quarter—American veterans.  In 1924, Congress had approved the payment of a bonus to all those who had served in World War I with the money to be distributed in 1945.  By 1932, however, economic distress had mobilized a widespread demand among unemployed veterans that the bonus be paid immediately.  Hoover would not consider the request, fearing that it would ruin his hopes for a balanced budget; but the veterans refused to accept his arguments.  In June, more than 20,000 veterans, members of a self-proclaimed “Bonus Army,” marched into Washington, built crude camps, and promised to stay until Congress approved legislation to pay the bonus.  A few of the veterans departed in July, after Congress had voted down their proposal.  Most, however, remained where they were.

Their continued presence in Washington was an irritant and an embarrassment to President Hoover, who had problems enough already, gradually became defensive and even paranoid about the protesters.  Finally, in mid-July, he ordered police to clear the marchers out of several abandoned federal buildings in which they had been staying.  The police arrived, a few marchers threw rocks at them, someone opened fire, and two veterans fell dead.  To Hoover, the incident seemed proof of dangerous radicalism, and he ordered the U.S. Army to assist the police in clearing out the buildings.

General Douglas MacArthur, the army chief of staff, chose to carry out the mission himself, and in doing so greatly exceeded the president’s orders.  In full battle dress, he led the Third Cavalry, two infantry regiments, a machine-gun detachment, and six tanks down Pennsylvania Avenue in pursuit of the motley Bonus Army.  The veterans fled in terror as troops hurled tear gas canisters and flailed at them with their bayonets.  MacArthur followed them across the Anacostia River, where he ordered the soldiers to burn their camp to the ground.  More than a hundred marchers were injured, and one baby died.

The incident served as perhaps the final blow to Hoover’s already battered political standing.  Many American newspapers (owned by conservative publishers) applauded the use of troops; but to much of the public, he now stood confirmed as an aloof (indifferent) and insensitive figure, locked in the White House, uncomprehending of the distress around him.  Hoover’s own cold and gloomy personality did nothing to change the public image, and some of his embattled public statements at the time made his plight even worse.  “Nobody is actually starving,” he assured reporters (inaccurately) in 1932.  “The hoboes, for example, are better fed than they have ever been.”  The “Great Engineer,” the personification of the optimistic days of the 1920s, now became a symbol of the nation’s failure to deal effectively with its startling reversal of fortune.[3]


Jeffrey T. Stroebel, The Sycamore School, 1995.  Revised 2001.

[1] Time 8 December 1930.

[2] Time 12 January 1931

[3] Portions of this chapter have been adapted from Compton’s Encyclopedia of American History, Compton’s New Media, 1994.