Week 5 – The End of a Dream: The Thirties, Depression, Roosevelt, and the New Deal

Question 1

Roaring 20s

Answer 1

• Prohibition notwithstanding, the Roaring 20s see America prosper and party.
• Under the presidencies of Calvin Coolidge (1923¬29) and Herbert Hoover (1929¬32), an economic boom sets in that is built, however, on an highly overvalued stock market and a high-risk loan policy.

Question 2

The Stock Market Crash and the Great Depression

Answer 2

• In October 1929, however, the bubble explodes.
• After an amazing five-year run that sees the Dow Jones Industrial Average increase in value fivefold, prices peak in September 1929. The market then falls sharply for a month, losing 17% of its value. Prices then recover more than half of the losses over the next week, only to turn back down immediately afterwards.
• The decline then accelerates into the so-called “Black Thursday,” October 24, 1929. A record number of 12.9 million shares are traded on that day.

Question 3

How does the Stockmarket crash?

Answer 3

• The Stock Market crashes in two parts:
• Over the weekend, the events are dramatized by the newspapers across the United States. On Monday, October 28, more investors decide to get out of the market, and the slide continues with a record 13% loss in the Dow Jones for the day.
• The next day, “Black Tuesday,” October 29, 1929, 16.4 million shares are traded, a number that breaks the record set five days earlier.
• In the panic that ensues, more and more people try to retrieve their money from the banks who, due to risky investments, cannot provide it.

Question 4

What’s the Black Thursday?

Answer 4

October 24, 1929, the first day of the stock market crash of 1929

Question 5

What’s the Black Tuesday?

Answer 5

• Tuesday, October 29, 1929, when the price of shares on the New York Stock Exchange reached its lowest level and the period called the Great Depression began
• The stock market collapse shattered illusions about unending wealth and the ease of speculation

Question 6

What are the Reasons for the Stockmarket Collapse?

Answer 6

• Up until today, there is no agreement as to a single cause for the crash.
• In the 1920s, in the U.S. the widespread use of purchases of businesses and factories on credit and the use of home mortgages and credit purchases of automobiles, furniture, and even some stocks has boosted spending but created consumer and commercial debt. People and businesses who are deeply in debt when a price deflation occurs or demand for their product decreases are in serious trouble—even if they keep their jobs, they risk default.
• Many drastically cut current spending to keep up time payments, thus lowering demand for new products. Businesses begins to fail as construction work and factory orders plunge.

Question 7

What are the Consequences of the SM collapse?

Answer 7

• Although US economy is basically sound, a downward spiral sets in.
• Massive layoffs occur, resulting in unemployment rates of over 25%.
• Banks which have financed a lot of this debt begin to fail as debtors default on debt and bank depositors become worried about their deposits and begin massive withdrawals.
• Government guarantees and Federal Reserve banking regulations to prevent these types of panics prove either ineffective or are not used in time.
• Up to 40% of the available money supply normally used for purchases and bank payments is destroyed by all these bank failures.
• The debt becomes heavier, because prices and incomes fall 20–50%, but the debts remain at the same dollar amount.
• After the panic of 1929, and during the first 10 months of 1930, 744 banks fail. In all, 9,000 banks failed during the decade of the 30s. By 1933, $140 billion of deposits have evaporated due to uninsured bank failures.
• An estimated 1/4 to 1/3 of the US working force is unemployed.

Question 8

The US Paradox

Answer 8

• In 1930 America does not lack industrial capacity, fertile farmlands, skilled and willing workers or industrious families.
• It has an extensive and efficient transportation system in railroads, road networks, and inland and ocean waterways. Communications between regions and localities are the best in the world, utilizing telephone, teletype, radio, and a well operated government mail system.
• No war has ravaged the cities or the countryside, no pestilence weakened the population, nor has famine stalked the land. The United States of America in 1930 lack only one thing: an adequate supply of money to carry on trade and commerce.
• In the early 1930s, bankers, the only source of new money and credit, deliberately refuse loans to industries, stores and farms. Payments on existing loans are required however, and money rapidly disappears from circulation.
• Goods are available to be purchased, jobs waiting to be done, but the lack of money brings the nation to a standstill.
• The government however, has no means at its disposal (as yet) to actively intervene.

Question 9

Who was hit the hardest by the stock market crash?

Answer 9

• The farmers
• In dollar terms, American exports decline from about $5.2 billion in 1929 to $1.7 billion in 1933; but prices also fall, so the physical volume of exports only shrinks in half.
• Hardest hit are farm commodities such as wheat, cotton, tobacco, and lumber, whose prices start an abysmal fall.
• Not being able to pay the loan on which many small farms are built, many are forced to sell out and to migrate.

Question 10

Franklin D. Roosevelt (1933–1945)

Answer 10

• In 1932, democratic candidate Franklin D. Roosevelt defeats Herbert Hoover, whose conservative economic policies have done nothing to alleviate the effects of the Great Depression.
• In an unprecedented change of politics, Roosevelt has the government intervene in what have been areas where it had not dared to tread.

Question 11

Roosevelt’s The New Deal

Answer 11

• Roosevelt primarily blames the excesses of big business for causing an unstable bubble-like economy.
• Democrats believe the problem is that business has too much power, and the New Deal is intended as a remedy, by empowering labor unions and farmers and by raising taxes on corporate profits.
• Moreover, the federal government regulates, and actively intervenes into, the economy, in stark contrast to Turner’s Frontier/Turner thesis

Question 12

What are the “Three Rs” of the New Deal?

Answer 12

• direct relief
• economic recovery
• financial reform

Question 13

The New Deal: Direct relief

Answer 13

Relief is the immediate effort to help the one-third of the population most affected by the depression.
- FDR expands Hoover’s Federal Emergency Relief Administration program

• FDR adds:
  the Civilian Conservation Corps
  Public Works Administration (PWA)
  Works Progress Administration (WPA)
• Added in 1935:
  Social Security
  Unemployment Insurance programs
  (two of the most significant inheritances of the New Deal that are still in effect today)
• Separate programs are set up for relief in rural America:
  Resettlement Administration
  Farm Security Administration (FSA)

Question 14

The New Deal: Economic recovery

Answer 14

Recovery is the effort in many programs to restore normal economic health. By most economic indicators this is achieved by 1937 except for unemployment, which remains high until the beginning of WWII. For this reason, U.S. involvement in the war is pushed by Roosevelt as he knows it will provide a much needed economic boost to the United States.

Question 15

The New Deal: Financial reform

Answer 15

Reform is based on the idea that the Great Depression is caused by market instability and that government intervention is necessary to balance the interests of farmers, business and labor.

It includes:
- National Recovery Administration
- Agricultural Adjustment Act (AAA) farm programs (1933 and 1938)
- Insurance of bank deposits
- Wagner Act encouraging labor unions (1935) by mandating by law that all employees in a business join a union and/or pay dues if the majority of workers agrees to form one

• Roosevelt rejects the opportunity to take over banks and railroads, while only one major program, the Tennessee Valley Authority (TVA), established in 1933, involves government ownership of the means of production.
• Roosevelt attempts an extensive regulation of the means of production, much of which is later struck down by the Supreme Court as unconstitutional.

Question 16

FDR’s New Politics

Answer 16

• FDR also makes intensive use of new technologies to promote his politics.
• His popular “fireside chats” on the radio are designed to instill assurance and new self-confidence in the population.
• His most often quoted sentence is probably “The only thing we have to fear is fear itself.”

Question 17

New Deal: Criticism Left and Right

Answer 17

• The unabashed interventionism of the New Deal creates an uproar in a country which has lived according to the premise “the best government is least government.”
• His competitor Hoover accuses the New Deal as a “remaking of Mussolini’s corporate state”; others accuse his politics as communist.
• In one of his fireside talks, he replies: “[Some people] will try to give you new and strange names for what we are doing. Sometimes they will call it ‘Fascism,’ sometimes ‘Communism,’ sometimes ‘Regimentation,’ sometimes ‘Socialism.’ But, in so doing, they are trying to make very complex and theoretical something that is really very simple and very practical. . . . Plausible self-seekers and theoretical die-hards will tell you of the loss of individual liberty. Answer this question out of the facts of your own life. Have you lost any of your rights or liberty or constitutional freedom of action and choice?”

Question 18

What’s TVA?

Answer 18

• The Tennessee Valley Authority (TVA) is a federally owned corporation created in May 1933 to provide navigation, flood control, electricity, fertilizers, and economic development in the Tennessee Valley, a region particularly hard hit by the Depression.
• It is envisioned not only as an electricity provider, but also as a regional economic development agency that uses federal experts and electricity to rapidly modernize the region’s economy and society.
• The TVA’s jurisdiction covers most of Tennessee, parts of Alabama, Mississippi, and Kentucky, and small slices of Georgia, North Carolina, and Virginia. It is a political entity with a territory the size of a major state, and with some state powers, but unlike a state, it has no citizens or elected officials. It remains the largest regional planning agency of the federal government.

Question 19

What’s WPA?

Answer 19

• The Works Progress Administration is another of the federal agencies created under the New Deal.
• At its peak in 1938, the WPA employs around 3.3 million people.
• However, even at this level of WPA employment, unemployment (counting WPA as employment) is still 12.5%.
• All these emergency programs are terminated in 1942–43, when unemployment vanishes because of WWII related employment offers.
• It also subsidized artists, musicians, painters, and writers with a group of projects called Federal One. While the WPA program is the most widespread, it is preceded by three programs administered by the US Treasury, which hires commercial artists to add murals and sculptures to federal buildings.

Question 20

What’s FSA?

Answer 20

• The FSA (Farm Security Administration) hires both photographers and writers to document the plight of farmers and tenants across the Mid-West and the South.
• The FSA photography project is mainly responsible for creating the image of the Depression in the U.S. Many of the images appear in popular magazines.
• The photographers are under instruction from Washington as to what overall impression the New Deal wants to give out. Its director’s (Roy Stryker) agenda focuses on the poor conditions among cotton tenant farmers and the very poor conditions among migrant farm workers.
• Stryker demands photographs that “relate people to the land and vice versa,” in order for these photographs to reinforce the position that poverty could be controlled by “changing land practices.”
• Though Stryker does not dictate to his photographers how they should compose the shots, he sends them lists of desirable themes, such as “church”, “court day”, “barns.”

Question 21

Photography and the New Social Realism

Answer 21

Torn between their claim to authentically document the plight of the farmers, but on the other hand the demand to arouse pity in order to push certain politics, the new documentary photography oscillates between arranged photographs, designed to create empathy, direct shots, and a form of aestheticization of its subjects.

Photographers of the time: Dorothea Lange, Walker Evans, Margaret Bourke-White

Question 22

The Dust Bowl

Answer 22

• The agricultural market is particularly unstable during the 1930s, due to overproduction and the fall of prices for cotton, tobacco and wheat. National and international market forces during the war have caused farmers to push the agricultural frontier beyond its natural limits. Increasingly, marginal land that is previously considered unsuitable for use is developed to capture profits from the war, usually with loans.
• On November 11, 1933, a very strong dust storm strips topsoil from desiccated South Dakota farmlands in just one of a series of bad dust storms that year. Then on May 11, 1934, a strong two-day dust storm removes massive amounts of Great Plains topsoil in one of the worst such storms of the Dust Bowl.
• The dust clouds blow all the way to Chicago where it falls like snow, dumping the equivalent of four pounds of debris per person on the city.
• Several days later, the same storm reached cities in the east. That winter, red snow falls on New England.
• On April 14, 1935, known as “Black Sunday”, twenty of the worst “Black Blizzards” occur throughout the Dust Bowl, causing extensive damage, turning the day to night.

Question 23

John Steinbeck

Answer 23

Educated as a journalist, Steinbeck in 1938 is commissioned to write a series of articles on uprooted tenant farmers from Oklahoma. The result is the novel The Grapes of Wrath (1939), which many consider to be his finest work, and for which is awarded the Pulitzer price one year later.

Question 24

The Grapes of Wrath

Answer 24

• John Steinbeck’s The Grapes of Wrath describes the fate of migrating “Okies” looking for the lost American Dream in the West, in California.
• The myth of the farmer (yeoman), once the icon of moral integrity and the backbone of American society, as well as the myth of the “common man” are severely shattered.
• To make things worse, due to the Great Depression, not even the promised land in the West provides shelter and the opportunity for a new beginning.

Question 25

Grapes of Wrath Controversies

Answer 25

• The novel is received rather controversially, as Steinbeck’s liberal political views, portrayal of the ugly side of capitalism, and mythical reinterpretation of the historical events of the Dust Bowl migrations, led to a backlash against the author, especially close to home.
• In fact, claiming the book was both obscene and misrepresented conditions in the county, the book is banned in the public schools and libraries of Kern County, California.
• Of the controversy, Steinbeck himself writes: “The vilification of me out here from the large landowners and bankers is pretty bad. The latest is a rumor started by them that the Okies hate me and have threatened to kill me for lying about them. I’m frightened at the rolling might of this damned thing. It is completely out of hand; I mean a kind of hysteria about the book is growing that is not healthy.”

Question 26

The Grapes of Wrath: A New Aesthetics and a New Ethics

Answer 26

• In many ways, The Grapes of Wrath is “revolutionary” – not only politically
• Although Steinbeck is sympathetic to socialism, he is a strong supporter of Roosevelt’s New Deal policy.
• The new social realism and its documentary style that has developed in photography are also visible in The Grapes of Wrath

Question 27

The Grapes of Wrath

Answer 27

• Similarly to the photographs of Evans and Lange, Steinbeck tries to negotiate between an emphatic representation of the migrant farmers, as well as a non-condescending view on their plight.
• He achieves this by an innovative mixture between a detached stance in his commentary sections, and an engaged one in his more narrative chapters.
• His highly poetic prose, as well as the sometimes mythic undertones, serve as aestheticizing tools.

Question 28

American Adam – American Eve

Answer 28

• What makes Steinbeck’s novel so innovative is also the fact that the archetypal figure of the American Adam is replaced by the figure of the American Eve.
• It is the women that hold together the family; the one basic social unit still left.
• And if in the first chapter Steinbeck writes “Women and children knew deep in themselves that no misfortune was too great to bear if their men were whole.”
• The narrative itself, but especially the ending of the novel – which was the main reason why the book was banned as “obscene” – project both strong female figures, as well as a new communitarian ethics.