Chapter 1: What were the initial signs of the Great Depression?
a woman her face deeply lined with worry and fear sits on a city stoop her children pressed around her for comfort and warmth men once proud of steady work shuffle along in slow moving lines waiting for a bowl of soup an apple a piece of bread more and more of them sleep in makeshift shanty towns built of scrap wood cardboard and tin
In rural areas, farmers drive for sale signs into ground that can no longer sustain a living. Out on the Great Plains of the Midwest, the land itself rebels as soil becomes dry clouds of red blinding dust. This is the story of America in the early 1930s.
From Wall Street to Main Street, from farm fields to factories, Americans are worn thin without jobs or savings or the means to build their futures. This is the Great Depression. Hey, everybody. Nice to be with you. I'm Don Wildman, and this is American History Hit. Hard to believe we made it to the fourth year of this podcast series without exploring our subject today in real detail.
The Great Depression of the 1930s was the backdrop, if not motivating cause, of so much of what happened in the 20th century. It was an economic catastrophe that triggered political, military, and cultural shifts in America and around the world. When exploring America's darkest hours, as we're doing this month, the Great Depression is the stroke of midnight.
To help us understand how and why it all happened, we're joined by historian and professor John E. Moser, a specialist in American and global history whose work focuses on how economic crisis reshapes politics, power, and international relations. He is the chair of the Department of History and Political Science at Ashland University in Ohio. Fly, Tuffy, fly.
and is the author of a list of books, including, usefully for today, The Global Great Depression and the Coming of World War II, published in 2015. Greetings, Professor Moser. John, nice to meet you. Very nice to be here.
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Chapter 2: How did the stock market crash contribute to the Great Depression?
Thank you. Dark days indeed. I'm the son of Depression-era parents born in the 1920s. They were youngsters through that time. It was an era more than a singular event, one that left a deep impact on my own family, let alone the nation, of course, economically, politically, emotionally for generations of Americans. I'm curious, did you have family connections to the Depression?
Yeah, all four of my grandparents lived through the Depression. And I remember hearing that they've all passed since, but I remember hearing stories about it. And I just remember my, my grandfather, my father's father was the cheapest individual I ever encountered. And he explained, I grew up during the great depression and I learned the value of a buck.
It was a badge of honor for our middle class. It really was. It was a tough, tough time, but it left a lot of values in place that worked out pretty well for people. Let's first examine the causes of the collapse. It usually starts with the stock market crash of 1929.
But of course, it has much to do with what came before, namely the roaring 20s and more, and how the American economy had operated for decades. Can you explain that?
Well, I tend to discount the idea that there were basic problems in the 1920s that did this. Recessions are nothing new. There were a lot of people who thought maybe we're due for a recession. I think that the question is what happens that turns this recession into something so much worse and something that really lasts for 10 years.
But the real problem that was going on, well, there were two problems. There was what economists call a liquidity crisis. Money was just being drained out of the economy. And secondly, a confidence problem. People spend money. The economy works when people, A, spend money and B, invest. And you need to have a certain level of confidence to do both.
You're not going to make major purchases if you think that your job is in jeopardy. You're not going to invest in new enterprises if you think they're going to fail.
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Chapter 3: What were the major causes of the Great Depression?
confidence was the reason why the depression lingered as long as it did.
It's so interesting you say that because, I mean, now we have just a day or so ago, a big drop in the stock market. I look at my phone and go, okay, you know, it'll be up in a couple of days. I mean, that's the feeling that you have now of stability.
Of course, there's problems also, but for decades and I guess a century since then, almost a century, there has been a sense of stability in this world that has kept something like the depression happening. But There were laissez-faire policies that were very laissez-faire, right, in the early decades of this country.
Sure. In the 1920s, there was a movement away from antitrust. Taxes were reduced drastically. There wasn't much in the way of regulation. There were some problems with investing. Much of the process of the sale of securities, stocks and bonds, was almost entirely unregulated. And we know that there were shenanigans there. Whether that was enough to bring about the disaster of 1929 to 1939.
I tend to doubt it, but it's a contributing factor. The thing is, there are so many contributing factors. There is a perfect storm of bad stuff that goes on from 1929 to 1933.
It's October 1929 when this actual crash occurs. On the 24th of October, now known as Black Thursday, there was a panic selling of shares, 12.9 million of shares, a sudden fall in share prices. Almost a week later, 29th of October is now known as Black Tuesday. 16.4 million shares were sold on the stock market on Wall Street. Markets lose $14 million in one day when $14 million really counted.
A stock crash that led to a banking crisis, right?
Yeah, although the banking crisis took a little while longer to take place. The Federal Reserve reacted to the crash by pumping money into the banks, and it probably saved them. The problem is they didn't keep doing that. And there were a wave of bank failures. The first of several waves of bank failures, major ones, because bank failure was also Bank failures happened all the time.
It was just part of life. There was a major wave in 1930, but that was tied more closely to a drought in the southeastern part of the United States. And a major investment house in Tennessee, Caldwell and Company, collapsed. and pulled down a lot of other banks with them. There was another round of bank failures in 1931 in response largely to stuff happening in Europe.
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Chapter 4: How did unemployment rates change during the Great Depression?
The thing is, the crash had a ripple effect in that it convinced people that bad stuff was happening. And that caused people to stop spending. There was a huge drop in spending on durables in the last quarter of 1929, and that would continue for the next several years.
Was there a sense, I mean, today we talk about the consumer economy like it's, you know, the weather. I mean, it's such an of course about how America works. Was that not understood at that time and discussed the same way? It was discussed a great deal.
In fact, when Herbert Hoover, who was sometimes very falsely portrayed as a do-nothing president, Hoover jumped into action with this plan to keep wages high. He secured promises from most of the country's major corporations not to reduce wages, to let their profits be hit before their wages did. And most of those companies maintained that pledge until 1931.
And at that point, they said, we can't do this anymore. The idea was if you keep wages high at a time of deflation, right? Prices were going down. Hoover's thought was this is going to cause a burst of consumption. That's going to save the economy. And it didn't do it. Your average worker who was lucky enough to have a job between 1929 and 1933 was
had more money than they had before because their wages were the same, but prices were going down. So in real terms, they were doing better, but that didn't give them the confidence to spend it. They put that money aside rather than risk it on some major purchase like a car or a refrigerator or anything like that.
Right. There had also been factors in industrial America. Unemployment was reaching a higher level and things like the coal mining industry, textiles, railroads, shipbuilding. There was an overproduction of goods and underconsumption.
In certain areas, of course, these were areas that had been struggling even before this point. For instance, New England textiles. Yes. Had been in bad shape. Coal mining was already starting to suffer even before the depression started. So you had serious systemic unemployment in those areas that as the economy started to fail, they did worse, obviously. Yeah.
And corporations, they kept their wages high, but at the same time, they said, look, we don't have as much work as we did. So they did lay off people.
Mm-hmm.
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Chapter 5: What role did Herbert Hoover play during the Great Depression?
And a lot of the myths are... Not entirely wrong, but the thing is, as you say, it's complicated. There are lots of different factors at play. The cumulative effect of a series of disasters between 1929 and 1933 converted what otherwise would have been a blip in the economic history of the United States into an absolute catastrophe.
And what we're establishing is that there are all these different factors of sort of preconditions to this situation that when this crash happened, which was probably more popularly known about just because media was a bigger factor at that time than prior bank crises or other things that happened. And it's just that ripple effect became a roar, right?
Sure. Yeah. Yeah. When studying any period in history, it's easy to forget that the people who lived through it didn't know what things were going to be like in two years, two weeks, two months, even, even two weeks. So the, the, the attitude in 1930 was okay. The, This stuff happens in the economy. We're in a tough spot now, but within a few weeks, within a few months, it's going to improve.
But then something else would happen, a round of bank crises. And it contributes to this overall mood of gloom that causes people who have large amounts of money not to want to invest to And those with some money not to want to spend it on durable consumer goods.
It comes to mind, It's a Wonderful Life, which everybody watches over Christmas and that whole moment when everybody goes storming into his savings and loan and tries to take their thing. That was not, I mean, while that was a parody, of course, of the situation or an extreme version of it, that did happen, right? I mean, those people crowded into those rooms and wanted their money.
And there was nothing unique about it to the Great Depression except the scale of them. Bank failures happened, as I think I said earlier. They happened routinely. Starting in 1934, they became extremely rare. And a lot of it had to do with the banking policies put into effect in the early part of the New Deal. FDIC was, which by the way, FDR opposed, but Congress insisted on it.
FDIC really made bank crisis obsolete. Banks don't fail anymore.
Let's talk about Herbert Hoover Moore. I'm interested in your take. Elected president in 1928. 1928. He's inaugurated March 4th, 1929. He's only in the White House for going on eight months when this crash happens. He is, however, painted with the brush of failure in the face of this crisis. Why so? What has been the take that is right or wrong about Herbert Hoover?
Well, I think it's right to say he was a failure at addressing the Depression, but it's not for lack of trying. What's often forgotten is there was a huge difference. I think there was a bigger difference between Calvin Coolidge and Herbert Hoover than there was between Herbert Hoover and Franklin Roosevelt. Herbert Hoover was a Teddy Roosevelt supporter.
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Chapter 6: How did the New Deal aim to address the economic crisis?
But he kind of put that idea aside and said, well, you know, eventually there may be another opportunity to do it. And in fact, there was a huge jump in public works early on in the depression. Hoover spent more money in peacetime. than any previous president, not just in nominal terms, but in real terms. He put a lot of federal, he oversaw a vast increase in federal spending.
And a lot of this was for Public Works Project to soak up unemployment. Nothing less than Hoover Dam, which is why it's named for him, right? Yeah, although in the short term, it was not named Hoover. When it first opened, it was called Boulder Dam. And then later on, they said, well, you know, Hoover deserves some credit.
Hoover was so unpopular in the 1930s that, yeah, they didn't want to name the dam after him, even though he was responsible for its construction.
We've done a piece on Hoover. I like the man myself. I've always enjoyed his story. And, you know, he's a Quaker. He's got his heart's in the right place in the things he's trying to do. Tell me about the Garner-Wagner relief bill. It was a plan by Congress, which addresses what you're talking about.
Yeah, so they proposed a relief bill in 31, I want to say it was late in 31, that would have spent far more money than Hoover was comfortable with. And the money was to come through the Reconstruction Finance Corporation, which Hoover himself had created. This was actually, would end up being one of the most important agencies of the New Deal, but it was in fact a Hoover creation.
Hoover envisioned the RFC as, as a vehicle for bailing out the most important economic institutions in the country. Banks, railroads, insurance companies, etc. On the theory that if those go down, they're going to completely tank the economy. Yeah. Well, the problem with that was it opened up the Hoover administration to the accusation that he just cared about his buddies in big business.
What about... Joe Sixpack on Main Street and struggling families. So the Garner-Wagner relief bill was going to have RFC put all sorts of money into relief. Hoover said, this is the most economically irresponsible thing I've ever heard of. I'm absolutely going to veto it. And he did, although just a few weeks later, he signed another bill that was smaller.
So he was definitely not opposed in principle to large-scale federal spending. He just believed that Garner-Wagner crossed the line.
Yeah, and would this have been the first time that people in Congress, especially, were considering this on a large scale, the federal government stepping in and funding these programs that normally would have been state-run things, right?
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Chapter 7: What social impacts did the Great Depression have on American families?
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So are we saying that those steps that Hoover blocked, mitigated by that which he was trying to do also, but those were the steps that got him so unpopular that are the reason that we paint him with this brush?
Yeah, well, he tried and he failed. And a lot of his popularity simply comes from the fact that the economy was worse at the end of his, far worse than it was at the end of his administration than it was when it started. But beyond that, the guy was, There was something unlikable about him as a public figure. Yes.
He was an engineer and I don't want to cast any shade on engineers, but engineers often are perceived rightly or wrongly as just caring about facts, facts, facts, and statistics. We're going to go in and we're going to tackle this. We're going to solve problems, but they're not really good at the human aspect.
Yes.
So Hoover could go on the radio or give a speech where he says recovery is right around the corner, but he didn't sound convincing. Mm-hmm. Franklin Roosevelt, probably his greatest asset is he had lots of what we would today call emotional intelligence. Mm-hmm. He could identify what his listeners needed emotionally and could provide that.
Long before Bill Clinton, FDR could say, I feel your pain, and people believed it.
There's such a unique characteristic of people that can read a room like he could, you know, and run a room then as a result. But he really had that radar that is rare in human beings to the degree that he had it anyway.
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Chapter 8: When and how did the Great Depression officially come to an end?
This was that time period?
Yeah, that's more associated with the actual stock market crash, the ideas of brokers jumping out of windows because they've lost everything. It happened. It's definitely exaggerated. If you look at the suicide rate, it doesn't really make a difference in the overall suicide rate.
Gotcha. Now, the images that tell the truth, in my mind, are there's the burning, you know, the searing images of Dorothea Lange, you know, in the in the Midwest and all these sort of things that she tells these stories with. It's just an extraordinary picture of a country that had prided itself on its steady rise. And suddenly every the trust of the rug is pulled out from under him.
That's the sense that you get.
Yeah, especially the most memorable images are from rural America. And rural America was suffering from a number of problems. The 1920s weren't all that good for farmers either because the high prices for agricultural products that characterized World War I, the prices throughout the 20s were much lower than they had been during the war. And then during the Depression, they fell even further.
I think the price of wheat... The price of wheat in 1933 fell to its lowest price ever recorded. And a lot of these bankers had taken on debt, debts that they couldn't pay. And by the way, this is a big contributor to bank failure. People who were stuck with banks who had made, in effect, bad loans.
Yeah.
Part of the problem is that you've got this emergency crisis happening that is very unfamiliar to the extreme they're in. But then there's also no experience on how we get out of this. You know, there's no tools that people naturally fall back on. Now we have the federal government, all these things. And so that's really why it becomes such a dark hour for America, isn't it?
Yeah. So there is this high wage theory that Hoover buys into. So if we keep wages high, it's going to work. Well, it didn't. FDR was motivated by that as well. So a lot of FDR's policies were aimed at raising wages and prices, by the way. that didn't work so well either. John Maynard Keynes, his theories would really become popular. It really became popular after World War II.
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