Notes on the Causes of The Great Depression

Great Depression causes
Stock Market crash 1929 – crashed on Tuesday, Oct. 29; two months after the crash stockholders lots over $40 billion
Bank failures – Over 90,000 banks failed during 1930s; bank deposits uninsured so people lost their savings when banks failed; surviving banks concerned for their own survival so weren’t as willing to make new loans; exacerbated situation because fewer expenditures
Reduction in purchasing – led to a reduction in items produced and therefore reduction in workforce; people who lost their jobs were unable to pay for items they’d bought through installment plans so items repossessed; unemployment rates rose above 25%
American policy with Europe – government created Smoot-Hawley Tariff in 1930 to protect American companies as businesses were failing; high tax on imports; less trade between America and other countries
Drought – occurred in Mississippi Valley in 1930; many couldn’t pay their taxes or debts so had to sell their farms; area nicknamed “Dust Bowl” http://americanhistory.about.com/od/greatdepression/tp/greatdepression.htm http://www.archives.gov/education/lessons/fdr-inaugural/
In Canada –
Dependence on US so greatly affected by Depression in America
Prime Minister Bennett – tried to combat Depression by implementing laissez-faire policy (let economy sort itself out); situation worsened; raised export tariffs; trade decreased and increased export tariffs backfired due to competition from other countries and Canada’s lack of variety in exports
Credit – Canada bought a lot on credit including shares; Canadians had to repay huge debts following stock market crash; less money went into economy because money maintained by people was used to pay debts
Overproduction – caused prices for items like wheat to decline; prices plummeted following stock market crash; farmers had overused soil so particularly affected (also droughts and high winds in 1930s), received virtually no income; many farmers who had bought land or machinery on credit couldn’t repay debts and went bankrupt http://ibhis.wordpress.com/2010/10/06/what-were-the-political-and-economic-causes-for-the-great-depression-in-the-americas/ Hoover’s response – thought the crash was part of a passing recession; founded government agencies, encouraged labor harmony, supported local aid for public works, fostered cooperation between business and government so as to stabilize prices; tried to balance budget; focused on indirect relief from individual states and private sector; refused to involve federal government in forcing fixed prices, controlling business, or manipulating value of currency (felt this was moving toward socialism); refused to use federal money to directly aid citizens because thought it would weaken public morale; focused on volunteerism to raise money; spent hundreds of millions of dollars on public works projects like construction of Hoover Dam, Federal Farm Board (founded 1929)loaned farmers money and bought up surplus crops no one could afford, these didn’t improve situation; newly homeless people lived in communities called “Hoovervilles”; lost election to FDR https://www.gilderlehrman.org/history-by-era/new-deal/resources/herbert-hoover-great-depression-and-new-deal-1931%E2%80%931933 http://www.education.com/study-help/article/us-history-great-depression-herbert-hoover/
New Deal – LOTS of initiatives
FDIC (Federal Deposit Insurance Corporation) formed by Congress to ensure deposits up to $5000 (right after becoming Pres., FDR shut down all banks in the nation and Congress passed Emergency Banking Act which gave government opportunity to inspect health of banks), reestablished American faith in banks (not scared they’d lose all their savings in a bank), most banks found healthy and two-thirds allowed to open soon after, after reopening deposits exceeded withdrawals
Federal Emergency Relief Administration (FERA) – sent funds to depleting local relief agencies; within two hours, $5 million given out; also funded public works programs; revitalized many deteriorating relief programs
Civil Works Administration (CWA) – gave unemployed jobs building/repairing roads, parks, airports; provided psychological and physical boost for 4 million workers
Civilian Conservation Corps (CCC) – put 2.5 unmarried men to work maintaining/restoring forests, benches, parks; workers earned $1 a day, received free board and job training; funded similar programs for 8,500 women
Indian Reorganization Act of 1934 – ended sale of tribal lands, restored ownership of unallocated lands to Native American groups
National Industrial Recovery Act (NIRA) – formed to boost declining prices; allowed trade associations in many industries to write codes regulating wages, working conditions, production, prices; set minimum wage; briefly stopped tailspin of prices, but prices rose as higher wages went into effect; continuous cycle of overproduction hurt businesses; some businesses felt codes were too complicated; NIRA later declared unconstitutional
Public Works Association (PWA) – launched projects Grand Coulee Dam
Securities and Exchange Commission (SEC) – Federal Securities Act required full disclosure of information on stocks being sold, SEC regulated stock market; Federal Reserve Board given power to regulate purchase of stock on the margin
Home Owners Loan Corporation (HOLC) and Agriculture Adjustment Administration – HOLC refinanced mortgages of middle-income home owners, AAA tried to raise farm prices; AAA used proceeds from a new tax to pay farmers not to raise specific crops/animals; lower production increased prices; farmers killed off certain animals/crops as they were told to, outrage because many Americans starving; later declared unconstitutional
Tennessee Valley Authority – created jobs in one of America’s least modernized states; reactivated hydroelectric power plant, providing cheap electric power, flood control, and recreational opportunities
Works Progress Administration – provided work for 8 million Americans; constructed/repaired schools, hospitals, airfields
Farm Security Administration – loaned over $1 billion to farmers, set up camps for migrant workers http://www.fdrheritage.org/new_deal.htm New Deal – 15 major laws designed to alleviate worst effects of depression; Banking Act one of the most significant; WPA, CCC, and AAA also pretty important; most famous was Social Security Act (established Social Security Administration, created national system of old-age pensions and unemployment compensation; also granted federal financial support for dependent children, handicapped, and blind); established many regulatory agencies like SEC (intended to prevent further crash of stock market) and FHA (ultimately made home ownership more affordable for millions); New Deal couldn’t restore nation to full employment; critics argue it went too far and brought too much government intervention; others say it didn’t go far enough and should have engaged in more comprehensive program of direct federal aid to poor and unemployed http://rooseveltinstitute.org/policy-and-ideasroosevelt-historyfdr/new-deal Effects of WWII on minorities – needs of defense industries opened skilled, high-paying jobs to people who hadn’t had a chance to take them before http://articles.latimes.com/2000/jun/13/news/cl-40272 Effects on African Americans – able to serve so could take advantage of G.I. Bill; Executive Order 9981, issued July 26, 1948, abolished racial discrimination in armed forces and led to end of segregation in services; African-American soldiers served with distinction during WWII despite unequal treatment, ex. Benjamin O. Davis, Jr. served as commander of Tuskegee Airmen and became first African American general in US Air Force; during the war, over 1 million African Americans moved to the North; over 2 million found work in defense industries; black leaders began fighting to end discrimination; in spring 1941 the president of the Brotherhood of Sleeping Car Porters with support from the NAACP called for 150,000 African Americans to march on Washington to protest discrimination in defense industries, prompting FDR to issue an executive order to prohibit discrimination in defense industries and create the Fair Employment Practices Commission; housing and transportation shortages resulting from an increasing urban population led to heightened racial tensions https://www.boundless.com/u-s-history/from-isolation-to-world-war-ii-1930-1943/social-effects-of-the-war/african-americans-in-wwii/ Native Americans – During WW2, over 44,000 Native Americans served in the military; 40% more Native Americans voluntarily enlisted than were drafted; many Native American recruits affectionately called “chiefs”; the Choctaw language had befuddled German code-breakers during WWI, so German government feared Native American communication specialists during WWII, sent Nazi agents posing as anthropologists and writers to reservations to try to learn language; some rejected because they couldn’t speak English so Navajo organized remedial English training on their reservations in order to qualify to serve; about 40,000 Native Americans ages 18-50 left reservations for the first time to find jobs in defense industries, migration led to new vocational skills and increased cultural sophistication and awareness in dealing with non-Native Americans; incredible contribution to the war despite being at the lowest rung of the economic ladder; women took over men’s traditional duties on reservations and became mechanics, lumberjacks, farmers, delivery personnel, and welders in aircraft plants; many women joined volunteer organizations like American Women’s Volunteer Service; federal government designated some Native American lands and even tribes as essential natural resources, appropriating tribal minerals, lumber, and lands for war effort; after the war, Native Americans discovered their service for the war effort had depleted their resources without reward http://www.shsu.edu/~his_ncp/NAWWII.html Women – for the first time in history, married working women outnumbered single working women (6.3 million women entered the workforce during the war); working mothers were blamed for the rise in juvenile delinquency during the war; more than 250,000 women had joined auxiliary military units by 1945; the conventional image of women was challenged; many women worked in factories and defense industries instead of traditional women’s occupations http://www.digitalhistory.uh.edu/disp_textbook.cfm?smtid=2&psid=3493 Truman: containment and its implications for the Americas –
Containment was a US policy consisting of various strategies to “contain” communism; following the communist revolution in Russia (1917), several world leaders including Pres. Wilson called for containment of the Bolshevik influence, but the US and USSR became Allies during WW2; Truman was the first President to embrace it and use it as his policy; he funded Greek and Turkish governments ($400 million) to rebuild after the war to prevent communism from taking hold in weak countries (pledged to “support free peoples who are resisting subjugation by armed minorities or by outside pressures”); he initiated the Marshall Plan and supported NATO to have military and financial links among the Western nations; the policy was implemented in response to the USSR’s attempt to expand communist influence to Eastern Europe, China, Korea, and Vietnam; measures to contain Soviet influence also included European Recovery Program; containment required detailed info about Communist actions so government relied heavily on CIA (established by National Security Act of 1947, conducted espionage in foreign countries, usually in secret)
George Kennan was the “father of containment”; in the late 1940s, his writings inspired the Truman Doctrine and the US policy of containment, making him a leading authority on the Cold War; he believed the Soviet regime was expansionist and had to be “contained” in very strategic areas
National Security Council Report 68 (NSC-68) was a top secret policy paper issued by the NSC on Apr. 14, 1950 during Truman’s presidency; it largely shaped US foreign policy for the next 20 years and involved the decision to make containment a high priority; it outlined a strategy that ended in the collapse of the Soviet regime and creation of a “new world order” with American liberal-capitalist values; Truman signed it Sept. 30; prompted by first Soviet nuclear test; said massive military buildup needed to counter Soviet threat https://www.boundless.com/u-s-history/the-politics-and-culture-of-abundance-1943-1960/the-policy-of-containment/containment-in-foreign-policy/ McCarthyism became present in American politics shortly after WW2; it’s the practice of investigating and accusing people in power of disloyalty/subversion/treason; Republican-led committees recklessly accused the government of being full of communists; notable practitioners of McCarthyism were Sen. Joseph McCarthy and Sen. Richard Nixon; government employees, entertainment industry, teachers/professors, and union activists were primary targets; people accused usually dismissed from government jobs or imprisoned without much evidence (or fake evidence); most verdicts later overturned, dismissals deemed illegal, some laws used to convict declared unconstitutional; famous example was investigation into motion picture industry by House Un-American Activities Committee (HUAC); also investigations conducted by McCarthy’s Senate sub-committee that ended in hearings concerning subversion in the Army (1954); both committees were given info from FBI under Director J. Edgar Hoover; other McCarthyists included Gen. George C. Marshall (Army Chief of Staff during WW2, main architect of Marshall Plan), Dean Acheson (Truman’s Secretary of State) http://www.authentichistory.com/1946-1960/4-cwhomefront/1-mccarthyism/ Truman’s Cold War foreign policy –
National Security Act (1947) – unified Army, Navy, & Air Force under National Military Establishment headed by Secretary of Defense (renamed Department of Defense); created CIA, established NSC to advise President on issues mostly relating to foreign policy; grew in power due to US involvement in Korean War
Issues with USSR – at Yalta Conference (Feb. 1945), Russia agreed to establishment of freely elected governments in newly liberated areas of Eastern Europe but then established a puppet government in Poland (spring 1945), its first European satellite; Truman believed in tough-minded negotiation and occasional compromise was the best solution; USSR tried to extend influence to Turkey and Iran but US used diplomacy and a show of military strength to lessen that influence; US gave Britain $8.75 billion loan to rebuild; Secretary of State Byrnes promised US help in reconstructing Germany economically and politically and to keep troops there as long as needed; Truman dismissed Secretary of Commerce Henry Wallace in Sept. 1946 after he spoke out against the administration’s anti-Soviet policy
Truman Doctrine – US government growing more concerned Eastern European nations would elect indigenous communist governments that would associate them with USSR; British government told US it couldn’t continue to be watchdog of Eastern Mediterranean; Truman Doctrine announced Mar. 1947and pledged US support for pro-Western governments in Greece and Turkey (and any other country threatened with Soviet influence)
Marshall Plan – introduced by Sec. of State George Marshall; multi-billion dollar aid program for Europe; aimed at encouraging political and economic stability and reduce attraction of communism to European people; Feb. 1948 Soviets took Czechoslovakia, last remaining independent democracy in Eastern Europe; in March Truman administration won approval for Marshall Plan; during spring and summer, US, England, & France (each occupied a part of Germany) accelerated process of merging these areas into nation of West Germany; Soviets responded by blockading western access routes to Berlin which was divided among all four powers; Truman ordered airlift of food and fuel to break the blockade; stand-off lasted until May 1949 when Soviets called off blockade in return for conference on Germany’s future; Stalin refused US and British offer to make Soviet part of Germany part of a democratic, unified Germany; Feb. 1948 Communist coup in Czechoslovakia spurred formation of alliance among US, Canada, and Western Europe (NATO)
Domestic policy – Nov. 1946 Truman created temporary loyalty security program for federal government to uncover security risks (Communists); five months later issued order making program permanent; 1948, Whitaker Chambers (former Communist, TIME editor) accused Alger Hiss (former FDR aide, State Department official) of being Soviet spy; HUAC investigated charges, Hiss convicted of perjury in Jan. 1950; less than a month later, British government arrested Klaus Fuchs, German scientist who had worked on Manhattan Project, convicted of passing along atomic bomb secrets with help of American citizens David Greenglass and Julius and Ethel Rosenberg (Rosenbergs executed 1953 by US government); Truman tried to calm McCarthyism hysteria http://millercenter.org/president/truman/essays/biography/4 US involvement in Vietnam War –
Nature of involvement – 1961 South Vietnam signed mutual military and economic aid treaty with US leading to 1961 arrival of US support troops and 1962 formation of US Military Assistance Command; early 1965 US began air raids on North Vietnam and communist-controlled areas in South; by 1966 190,000 US troops in S. Vietnam; N. Vietnam received arms and technical assistance from USSR and other communist nations; in 1969, 550,000 US troops in Vietnam
US entered war incrementally; May 1950, Truman authorized program of economic and military aid to French who were fighting to keep control of Indochina colony which included Laos, Cambodia, & Vietnam; communist-led Vietnamese Nationalist Vietminh army defeated French forces in 1954, French had to accede to creation of Communist Vietnam in north but US refused to accept this
Kennedy secretly sent 400 Special Operations Forces-trained (Green Berets) soldiers to teach S. Vietnamese how to fight a “counterinsurgency” war against communist guerillas in south; upon his assassination, over 16,000 US military advisors in S. Vietnam and over 100 Americans killed; Johnson committed US fully to the war; August 1964 secured declaration of war from Congress (functional, not actual), the Tonkin Gulf Resolution; Mar. 8 dispatched 3,500 Marines to S. Vietnam
When Johnson began bombing Vietnam, intention was to keep war limited (early 1956); he and his advisors were concerned overuse of US firepower would prompt Chinese involvement; not expected that N. Vietnamese and NLF would hold out long against military; massive bombing had little effect on decentralized economy of N. Vietnam; Johnson endorsed Kennedy’s strategy of counterinsurgency warfare (win the “hearts and minds” of Vietnamese peasantry) but this was underdeveloped; Presidents were reluctant to mobilize American society to the extent that the generals thought was necessary to win the war http://www.infoplease.com/encyclopedia/history/vietnam-war-us-involvement.html Reasons for involvement –
Basically every US President regarded Vietminh, its 1960s successor the National Liberation Front, and the N. Vietnam government led by Ho Chi Minh as agents of global communism; wanted to prevent spread to nearby countries
Truman hoped assisting French in Vietnam would shore up developed non-Communist nations who would actually be affected by outcome of Vietnam and basically all of Southeast Asia if communist influence spread; free world dominion would provide markets for Japan, which was rebuilding with American help; US involvement reassured the British, who linked postwar recovery to revival of rubber and tin industries in their colony of Malaya, a neighbor of Vietnam; with US help French could focus on economic recovery and hope to eventually recall their Indochina officer corps to oversee rearmament in W. Germany http://www.english.illinois.edu/maps/vietnam/causes.htm Domestic effects –
Johnson chose not to rally support for his decision to make Vietnam War an American war; feared public response would be a demand for full-scale war that could have led to Chinese/Russian involvement; also, after Democrats won by a landslide in 1964, Johnson believed he had two years to push his Great Society plan through Congress legislation (ambitious set of reforms); he was aware of what had happened with FDR’s reform programs once they fell victim to “guns-over-butter” decisions so decided to have “guns and butter” without increasing taxes to fund both projects; had big economic impact; didn’t rally support for war so largest and most effective antiwar movement in US history
After 35,000 (mostly) young people protested at Pentagon Oct. 21-22 1967, Johnson launched public relations campaign to emphasize how well war was going; when communists launched seemingly successful nationwide Tet Offensive Jan. 30, 1968, Americans felt they’d been deceived by government; Johnson then decided Mar. 31 1968 not to escalate further or run for reelection
Nixon sent ultimatum to Hanoi (capital of Vietnam) to alter its bargaining position at Paris Peace Talks by Nov. 1 or confront major escalation; N. Vietnamese called his bluff (knew he wouldn’t escalate war due to widespread antiwar sentiment); both Johnson and Nixon were convinced the perceived popularity of antiwar movement (a lot of people actually found antiwar demonstrations distasteful) were influencing Vietnamese Communists so their policies were affected by how they thought Hanoi interpreted success of the antiwar movement; led the Presidents to take extralegal and illegal actions against antiwar critics/organizations (became part of the Watergate scandal, ex. Nixon authorized illegal wiretaps May 1969 to find who told a New York Times reporter that US was secretly bombing Cambodia); war affected presidential elections of 1968 and 1972; in 1968, candidacy of Hubert Humphrey weakened by bloody confrontation in Chicago between police and young antiwar critics at Democratic National Convention http://www.english.illinois.edu/maps/vietnam/domestic.htm End of the war – fighting between communists and S. Vietnamese continued despite peace agreement until N. Vietnam launched offensive early 1975; S. Vietnam’s requests for aid were denied by US Congress; Thieu (S. Vietnamese President) abandoned northern half of the country; S. Vietnamese resistance collapsed; N. Vietnamese troops marched into Saigon and renamed it Ho Chi Minh City; US casualties in Vietnam during era of direct US involvement was over 50,000 dead; over 400,000 S. Vietnamese estimated dead; over 900,000 Viet Cong and N. Vietnamese estimated dead http://www.infoplease.com/encyclopedia/history/vietnam-war-end-war.html Mackenzie King (Canada Great Depression) – reluctant to acknowledge scale of economic crisis; at first didn’t believe Depression would seriously affect Canada and refused to provide federal funding to provinces with high unemployment rates
Bennett’s policies included work camps, Prairie Farm Rehabilitation Act, Canadian Wheat Board, and Bennett’s New Deal; policies failed to adequately address nation’s problems