Read the following sources and respond to the essential questions posted below.
A) a brief review of the political, economic and social developments of the 1920’s published by the US State Department:
http://usinfo.state.gov/products/pubs/histryotln/war.htm
B) a summary of the reasons why the Stock Market crashed in 1929 from PBS online:
http://www.pbs.org/fmc/timeline/estockmktcrash.htm
C) pages 194-205 in The Story of American Freedom
Consider these sources and all you learned from the text and discussions this week on the 1920s. Was the stock market crash inevitable? In your opinion, did the
Your response should be at least 200 words and include comments on at least one other post. Due Friday 4/11 before class.
20 comments:
Teresa Konopka
AP US
*I did not have the Foner book at my disposal, so I instead used documents from The American Spirit instead, which were relevant to the depression.
During the 1920s, many social, political, and economic changes were occurring. With the transition from war to peace, the economy went up. However, prices also increased. Also, after the nineteenth amendment was passed, women had the ability to vote. With suffrage came a new aura for women--flappers became prevalent. Politicians also started lowering taxes to benefit the people and gain popularity. Socially, Americans had some biases against new immigrants that were not Protestants. They felt that those newcomers could not adapt to American culture. In the late 1920s, Hoover led the national through depression with his famous Hoovervilles. Afterwards, Roosevelt won the presidency and was ready to lift up America for the 1930s.
Before the crash of the stock market in 1929, there was a slippery slope leading towards a malign economy. When stocks went up in the early 1920s, many investors thought that this would be a continuous trend. Thus, more money was profusely poured into the stocks. Conversely, in that malignant year of 1929, stocks shot down. When investors lost money in the stock market, consumer demands dropped. With such a drop, the stocks had a hard time coming back up again. To make matters worse, banks had loaned money to investors and never received a cent in return. Later, Roosevelt banned banks from loaning money for investors’ stock interests.
In The Lynds Discover Changes in the Middle-American Home (1929), it is shown how lifestyles were changing in he 1920s. Apparently, the use of electricity was going up. Also, families were becoming used to having irons, vacuums, toasters, washing machines, heaters, heating pads, refrigerators, and other devices. Concerns were based primarily on the home and familial relations. The author discusses how economics were brushed aside for more important matters, such as curfews for “good young girls.” Perhaps, one cause of the depression was families’ carefree attitude about life and disregard for any sort of fiscal future-planning.
In The Plague of Plenty (1932), Hoover delivers a speech at Stanford University. With the depression, he gave many cheerful speeches that were overflowing with optimism. However, he neglected to take any real action. As president, he had the authority to possibly help set up some sort of safety plan. Instead, he decided “not to turn Washington into one big soup kitchen.” According to his speech, he seems very antsy and worried about his reputation. Perhaps, he felt that upholding his strong facade and not caving into the depression would help him save face and possibly be reelected. Still, even with his discussion of how things are worse in communist nations, his words have failed to feed the unemployed.
Question to AP peers:
Do you feel that Franklin Roosevelt and Theodore Roosevelt shared not only last names but political tactics as well? Explain.
The Great Depression was the worst economic slump ever in U.S. history, and one which spread to virtually the entire industrialized world. The depression began in late 1929 and lasted for about a decade. Many factors played a role in bringing about the depression; however, the main cause for the Great Depression was the combination of the greatly unequal distribution of wealth throughout the 1920's, and the extensive stock market speculation that took place during the latter part that same decade. The misdistribution of wealth in the 1920's existed on many levels. Money was distributed disparately between the rich and the middle-class, between industry and agriculture within the United States, and between the U.S. and Europe. This imbalance of wealth created an unstable economy. The excessive speculation in the late 1920's kept the stock market artificially high, but eventually lead to large market crashes. These market crashes, combined with the misdistribution of wealth, caused the American economy to capsize.
In my opinion, the stock market crash was inevitable. With the invention of the credit card, less money was in the hands of the American people. I believe the phrase “overproduction and under consumption” would be best to describe the time period. New interest in foreign markets made way for more production and when items did not sell, prices plummeted.
I don’t believe there were a lot of short-term things that the United States could do in terms of saving the country from meltdown. The depression was a long time coming, due to foreign trade issues and amounting deficit in the country.
Teresa: Though they do share the same name, I think their tactics differ. I feel that Franklin D. Roosevelt was more, in terms of today, more liberal.
The Great Depression was the worst economic slump ever in U.S. history, and one which spread to virtually the entire industrialized world. The depression began in late 1929 and lasted for about a decade. Many factors played a role in bringing about the depression; however, the main cause for the Great Depression was the combination of the greatly unequal distribution of wealth throughout the 1920's, and the extensive stock market speculation that took place during the latter part that same decade. The misdistribution of wealth in the 1920's existed on many levels. Money was distributed disparately between the rich and the middle-class, between industry and agriculture within the United States, and between the U.S. and Europe. This imbalance of wealth created an unstable economy. The excessive speculation in the late 1920's kept the stock market artificially high, but eventually lead to large market crashes. These market crashes, combined with the misdistribution of wealth, caused the American economy to capsize.
In my opinion, the stock market crash was inevitable. With the invention of the credit card, less money was in the hands of the American people. I believe the phrase “overproduction and under consumption” would be best to describe the time period. New interest in foreign markets made way for more production and when items did not sell, prices plummeted.
I don’t believe there were a lot of short-term things that the United States could do in terms of saving the country from meltdown. The depression was a long time coming, due to foreign trade issues and amounting deficit in the country.
Teresa: Though they do share the same name, I think their tactics differ. I feel that Franklin D. Roosevelt was more, in terms of today, more liberal.
Elizabeth Che
Block B AP US History
The “Roaring Twenties” as the 1920s was later known to be was a period of economic, social and political prosperity until the end of the 1920s. Following after Wilson’s presidency came Republican President Warren G. Harding and Vice President Calvin Coolidge. As described by the US State Department, economic prosperity did not occur in the US until 1923 and lasted for 6 years. The government mainly fostered private business and followed conservative economic measures. The Fordeny-McCumber Tariff of 1922 and the Hawley-Smoot Tariff of 1930 guaranteed “US manufacturers in one field after another a monopoly of the domestic market, but blocking a healthy trade with Europe that would have reinvigorated the international economy.” However like all things good, there is a bad. The Hawley-Smoot Tariff was a trigger of retaliation from other manufacturing nations and contributed to the collapsing cycle of world trade.
On another note, the 1920s continued American sentiments against immigrants in general. Still considered as inferiority, immigrants were feared and forced to live in inferior areas. Jobs were usually dangerous and low-paying yet they were continued to be accused for “driving down the wages of native-born-Americans. Nativism also played a part in the social developments as the Ku Klux Klan slowly revived itself amongst the American people. However, unlike the original KKK, African Americans were not the only targeted group but also Catholics and Jews. Consumerism also plays a part, as new products in the market lead to the development of economy and increased house watch. African-American culture was also noted to have flourished as “The Great Migration” led many African Americans northward to escape suffering and unjustified hangings. The Harlem Renaissance relates to the increased movement of social thinking as African-American literature and art emerges. Musicians such as Duke Ellington, King Oliver and Louis Armstrong were amongst the many African Americans who made their debut in the 1920s.
Bringing the “Roaring Twenties” to a close was the Great Depression. After the stock market crash in October 1929, “the initial American recession became part of a worldwide depression.” The US State Department further notes the closing of businesses, banks and factories. To add to personal economic trouble, by November 1932, one of every five American workers were unemployed. The presidential election of 1932 focused mainly on how each candidate proposes methods for curing the Great Depression. President Herbert Hoover tried to organize business and speed up public works schedules, establishment of the Reconstruction Finance Corporation, which supports businesses and financial institutions and an agency to underwrite home mortgages. Meanwhile, his opponent Democrat Franklin D. Roosevelt proposed to use the federal government’s authority for “even bolder experimental remedies.”
According to the PBS article, “Stock Market Crash,” the stock market system is a delicate chain of reactions that develops from the purchasing and selling of corporations. The rapid rise in stock values as Teresa mentioned, was caused by the investors belief that the stock market was a “sure thing.” By borrowing heavily from the banks and investing more money into the market, the banks were unable to function hence, increasing the impact of the stock’s decline. By 1932-1933, stocks reached down to 80% of their highs in the late 1920s. The decline in stock values also led to the decline in consumer spending. Individuals felt they were too poor to afford items due to their losses in the stock market hence, increasing the damage caused to the economy.
According to pages 194-205 of Foner’s The Story of American Freedom, the stock market crash was inevitable if prior influences and procedures were taken into effect. As mentioned in “Stock Market Crash,” the influx of stock values and continuous borrowing of money led the banks into financial trouble as the banks were left with unreturned loans and debts. However, had the government set up programs to prevent such occurrences, the stock market crash would not have happened. Franklin Roosevelt did well to bring the United States out of the Depression. He started with the employment of the New Deal of 1933-1934 which reformed “the banking system and securities industry, and providing emergency relief and public employment” (Foner 201). Following the first New Deal, Roosevelt launched “‘the second New Deal,’ with greatly expanded relief programs and a highly publicized tax on concentrated fortunes.” (Foner 201) Fortunate enough, action was applied after the Great Depression and so improved the nation’s condition. The Wagner Act was stated by Foner to be a “centerpiece” in such sense, it supported th government “behind the right to collective bargaining, Social Security, a complex system of unemployment insurance, old age pensions, and aid to the disabled and to dependent children” (Foner 201). As so, the government was able to provide aide for the desperate citizens and set the nation back on track.
Response
In response to Teresa’s question, Franklin Roosevelt and Theodore Roosevelt were distant cousins who shared similar beliefs. As the first of the two to obtain presidency, Theodore Roosevelt became a semi-role model for Franklin Roosevelt and so, influenced his actions. Theodore Roosevelt was quick to act and eager to strengthen the US military and navy. He was also the “police” who enforced order in the Latin American countries and territories. Meanwhile, Franklin Roosevelt had to bring the US out of the Depression and lead it back on its feet through the Federal Deposit Insurance Corporation and re-opening of banks. He then lead the United States into World War II. In some ways, Franklin dealt more with economic issues and Theodore to power; however, such differences were due to the different situations that were present during their presidency. Yet, they were both acting in desire to benefit the US.
Before and during the Great World War the US attempted to sustain neutral trade with the Allies and Central Powers because trade benefited the US economy, especially during time of war. Also, Wilson attempted to lead the US out of its mini-depression with the help of foreign trade and eventually became successful in doing so.
Leading up to the war, the US had numerous trading ships in Europe. However, all of them were sunk or destroyed. This was because if the Allies caught a US ship attempting to trade with the Central Powers they wouldn't allow it to go through and vise versa. Nevertheless, both sides continued to block US trade towards the enemy. Germany continued it's ruthless submarine warfare and that forced the US into the war. The US help was a relief for the struggling Allies as the Americans came and ended the war without any struggle.
Wilson, distracted by the war, then laid low by his stroke, had mishandled almost every postwar issue. He was caught by surprise by the growing number of social and cultural movements during the war. During this period, numerous groups such as women, workers and blacks unexpectedly put more pressure on the President and ultimately gained their rights. The US also faced problems with immigration and for the first time they limited immigration. But this was soon overturned and another wave of immigrates entered the country; most of the new cultures. Large numbers of Russian Jews, Poles, Slavic peoples, Greeks, and southern Italians all entered the US during this time creating numerous social problems.
The summary of the foresaid all lead to the crash of the stock market in October 1929. The crash alone did not cause the Great Depression, however it did show the mis-usage of American loans. Farm income fell by 50% and by the end of 1932, approximately one of every five American workers was unemployed. For those who maintained their job their pay decreased heavily. In 1932 and 1933, they hit bottom, down about 80% from their highs in the late 1920s. Many Americans blamed themselves for the depression and their economic misfortune.
The stock market crash was inevitable because during the time the politicians were most focused on international affairs and ignored national problems. Unfortunately, today is quite similar to the twenties. My mother recently told me that back in 1995 it would cost her $60 to buy groceries. Today, to buy the same amount she needs to spend at least $300. Gas is rising and our latest President has been focusing too much on the Middle East. If our next President will have similar ways as those of President Bush then we can predict that another stock market crash will occur. During the 20s the US didn't do enough to prevent the stock market and today our government is doing little for our citizens to cut back on prices.
Teresa:
Franklin Roosevelt and Theodore Roosevelt were completely two different people and had two different jobs while being President. FDR's job was to lead America out of Depression and wanted to regain America true economic power. Theodore Roosevelt became President during a prosperous time and he has the equipment and power to police the world with his big stick policy. One Roosevelt was given the job of saving the US while the other had more political freedom as he could do what he pleased during his candidacy.
John Harden
Block B
The greatest economic crisis in the history of the American nation, the Great Depression, was certainly inevitable. However, the Great Depression could have been greatly delayed if certain actions were put into play. The actions of Coolidge and Hoover, Wilson’s post-war economic carelessness due to stroke, the occurrences within the stock market and the dust bowl all significantly increased the speed by which the Great Depression would hit.
After World War I, many nations owed the American nation war debts. Germany, who was often considered the leader of the Central Powers, had the great debt to pay and as clearly unable to do so in it’s war-torn and defeated position. Wilson believed that if the United States loaned money to Germany, Germany would eventually produce even more money and give it back to America. However, this plan failed as a cycle was created. Instead of focusing on producing more cash, the nation of Germany used the money America had given it to pay off it’s debts to both France and England. Thus, America was thrown off the chain it had tried to create.
This combined with the ignorance of stock traders and the blissfulness of consumerist society. Consumerism had heavily influenced the Market, prices were at an all time low and production rates were faster than ever. Many people decided to buy stocks of major corporations, seeing that the predetermined only more economic boom. These people held onto to their stocks until it became evident that the American nation was about to hit a recession. At the realization of such an occurrence, many stock trader’s rushed to sell their stocks all at the same time. While, banks began to collect money from corporations and stock traders fearing that they would never be payed back in full for loans they carelessly gave out. Fear of the recession also led to a vast decline in the consumerist values of American citizens, who began purchasing only what they need. This sudden circulation of money and decline in business productiveness eventually caused the closing of many United States banks. The United States government could have put a more restrictions on stock trades and loans which banks gave out. President Franklin D. Roosevelt enacted a law banning banks from loaning money for investor’s interests in stocks. If the conservative Presidents (Coolidge and Hoover) had enacted such laws, the economic depression could have been kept silent for quite some time. Despite such actions, the depression would eventually present itself in the future due to the issue of war debts, but it would be much less disastrous.
In response to Teresa’s question: I greatly agree with Jakub that both Presidents’s had too different obstacles. Teddy had to find new market’s abroad and gain the American nation prominence as a world super power while Franklin had to take the American nation out of economic depression.
The Great Depression, the greatest stock market crash in US history, was inevitable. In the 1920's the distribution of wealth was highly unequal. The gap between the rich and the poor was wide(not as wide as it is today), and this led to unequal amunts of money going around throughout the economy. This led the economy to flounder. Also, in the 1920's, the stocks were at an all time high. The economy was flourishing due to enrichment from foreign investment. At the end of the war, war reparations allowed the US to recieve billions of dollars from the nations of Europe. This alllowed the US to recycle that money back into the failing European markets. This allowed for great rewards. Thus, enriching the US economy. Due to a rich economy, the people of the United States went into a spending frenzy. The American standard of living went well beyond what it was before,and this created the roaring party that was the 1920's. However, due to increased debt, from the credit card, and foregn investments gone bad, in 1929 the stock markets crashed and haulted the raging party that was the 1920's.
Response:
I completly agree with Liana. The Great Depression was a long time coming. However, if the distribution of wealth throuhgout the country was somewhat equal, the Great Depression could have been prevented.(thats just what I think :D)
Justin Lefkowitz
AP US History
The crash of the stock market was definitely inevitable. During the 1920s, many Americans began pouring their money into the stock market. In the late 1920’s the NYSE, or New York Stock Exchange, climbed to record high levels. Investing in the stock exchange became a way for individuals to own portions of major corporations while at the same time making a lot of money. This caused many people to purchase shares of stock in hopes of making large profits.
From 1925 to 1929, the average share price of the New York Stock Exchange more than doubled. During this timeframe, by purchasing shares of stock in major corporations, and with the growth experienced by the share price of these companies, many Americans became multi-millionaires. In an attempt to slow stock market speculation, the Federal Reserve Bank raised interest rates, hoping to cause investors to place funds into banks rather than into the stock market.
Some of the companies who grew largely due to the stock market, such as General Electric went from around $100 in 1920 to around $400 at the height of the market in 1929. Similarly, Coca Cola grew from around $10 a share to around $500, AT&T went from around $25 a share to around $300, and General Motors went from around $50 a share to around $450.
Fearing that the stock market’s rise, or boom market, would end, some investors started selling their stocks in late September 1929. The more the shares were being sold by investors the more that the market was decreasing. Panicked traders sold almost 13 million shares on what was called “Black Thursday,” October 24,1929. On Tuesday, October 29,the crisis worsened. By the end of the day more than 16 million shares had changed hands and stock prices plummeted.
The NYSE closed for a few days due to prevent more panic selling. This made shock spread across the country. Millionaires became penniless overnight and ordinary Americans who bought stock on margin, through the use of a loan using their shares as the collateral, couldn’t repay the loans and went bankrupt.
The inevitable stock market crash was a death trap waiting for people to fall in. I think that the U.S. government really couldn’t do too much about what was happening. Maybe they could have printed less money, which would have stopped inflation after the depression, but other than that, not too much could have been done. The government and the people suffered miserably due to the crash of the market.
In response to Teresa:
Theodore Roosevelt and Franklin Roosevelt have only one thing in common, which was there last names. They were two totally different people. Theodore’s goal was to make America the top dog in the Western Hemisphere and F.D.R.’s goal was to bring the American people out of the depression. F.D.R. also wanted to make America the top dog in the World.
The stock market crash was rather inevitable. With an economy booming and flourishing at such a rapid pace, it was bound to come crashing down at an even more rapid pace. During the 1920s, the amount of people feeding into the stock market skyrocketed. The United States economy developed a super strong dependency on the stock market. As Justin described it, the stock market became nothing more than a death trap that was sucking more and more people in as the days went on, and with such booming businesses and stocks, it was incredibly difficult to see any flaws in such a system. Such a strong dependency created an imbalance with nothing for the economy to fall back on. Thus, once the stock market crashed, so did the United States economy.
During the Great Depression of 1929 – 1935, the United States tried to regulate and stabilize to the economy. However, to do such a thing under such terrible circumstances is a rather difficult task; thus, to the American citizens it seemed as though not much prevention and alleviation was occurring. Upon his inauguration as president, Franklin D. Roosevelt kept his hopes up and tried to employ an American optimism in his efforts to alleviate the situation. Through the establishment of the Federal Deposit Insurance Corporation, Roosevelt was helping to ease the economic strife, as well as ensure further stabilization and prevention of future depressions and recessions.
Ashley Aydin.
AP US – Block B.
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During the early 1920s, America flourished in a capitalist paradise. Manufacturing productivity and output skyrocketed during a period of consumption, automobiles, homes, radios, and appliances. Employment, wages, and profits climbed steadily as consumers went on a buying binge and three consecutive Republican administrations cut taxes, raised protective tariff levels, and otherwise promoted the desires of the business community. “The Republicans tried to create the most favorable conditions for U.S. industry”. The rising value of stocks and readily available credit for ‘margin buying’ induced millions of new investors to take the plunge and play the market. Many pupils were accumulating great capital and influence. Herbert Hoover, seeing that the United States was thriving, issued a glowing prediction that the final triumph over poverty was to be experienced in the United States more so than ever before. Nonetheless, within a year the stock market collapsed and the Great Depression, which would last an entire decade, began. Hoover, who had been praised for helping produce the economic boom of the 1920s in his capacity as Secretary of Commerce, now suffered one of the crueler fates of history when the boom turned to bust.
There existed many factors – all preventable – that could have eliminated the Great Depression. One of these factors was the increasingly inequitable distribution of wealth in the United States. Almost all Americans benefited to some degree from the boom – as wages rose steadily and agricultural production improved. However, increased business profits far outdistanced all other sectors of the economy. The various reductions in the federal income tax, enacted at the urging of Secretary of the Treasury Andrew W. Mellon, were greater at the upper income levels. Therefore, more and more of the nation's wealth was funneled into the hands of fewer and fewer people. By 1929, the wealthiest five percent of the population possessed one-third of all assets.
A second major economic trend leading to the cause of the Great Depression was the United States’ trading polices. “Over the next three years, an initial American recession became part of a worldwide depression”. World War I fundamentally altered America's economic relationship with Europe. The U.S. became a creditor nation during the war, and so demanded that European nations repay their debts at the same time more foreign materials were being received. The United States attempted to simultaneously be the world's greatest banker and industrial manufacturer. Increasingly, during the 1920s, this refusal to adjust our trading relationship drained the wealth of Europe. By the end of the decade European nations could only continue importing goods from the United States and repay World War I debts by borrowing money from American bankers. This created a very shaky economic relationship subject to collapse in the event of an economic downturn or European cancellation or reduction of debts.
Likewise, the increasing pyramiding of holding companies was a third major weakness of the American economy. “Throughout the twentieth century, most of the capital in the United States was represented by stocks. A corporation owned capital. Ownership of the corporation in turn took the form of shares of stock”. Each share of stock represented a proportionate share of the corporation. The practice of holding companies was an organizational technique designed to give investors inordinate control over a number of companies with a minimal investment. The technique also led to the creation of companies primarily so that speculation in their stocks could produce profits. As the boom began the early 1920s, the trading of stocks on the exchange became more active and the value began to increase swiftly. Increasingly, individual and institutional investors - banks, trust funds, and businesses - began to purchase immense volumes of stocks, not for their security or dividend returns, but for relatively quick resale at inflated prices.
In due course, unemployment skyrocketed, wages fell, bank savings vanished, and home/ farm mortgage foreclosures soared. In empty lots on the edge of industrial cities, homeless men, sometimes with families, built crude shelters of packing crates and old pieces of metal. In the larger cities, whole colonies of "Hoovervilles" were established, housing the needy and deprived. At exactly the time that federal, state, and local governments desperately needed more profits to try to cope with the ravages of the depression, tax revenue plummeted. Furthermore, the value of property shrunk rapidly once the deflationary spiral of the depression began. Homes and farms had to be reassessed downward, and thus shrinking tax bases were a fact of life for all governmental entities. The U.S. governments philosophically tried to balance budgets, but were unable to borrow money from investors paralyzed with fear about the economic future of the nation. Accordingly, the administration slashed budgets and services during a time when the majority of Americans needed aid and general assistance. Since the government was tied into the early boom, they overlooked the potential downfall of the economy. Many individuals, including politicians and leading figures, were solely concerned about receiving mass income and influence – ultimately affecting the social and political status of the nation.
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*Response: Rachel
I concur with Rachel’s comments about the rushed interest in the U.S. economy. Since Americans were specifically focused on amassing wealth and pride, they were blinded by temporary good feelings. It is not manageable for a nation to experience total economic prosperity for an overly extensive amount of time. With a rapid increase in a country’s production and fiscal status, one must question how the improvement will continue without flawed monetary practices and an ultimate collapse.
The stock market crash in 1929 was inevitable, as all good things must eventually rear to an end. During the roaring twenties, Americans were beginning to loosen up and enjoy life with a drink and a dance. The 1920’s evidently represented the party life, as the Americans just finished fighting in WWI. The economic boom that followed WWI coexisted with rapid increases in consumer prices.
With the booming economy, Americans felt confident and content with their money, choices and life. Before the Great Depression, Americans were enjoying their first automobile along with their first refrigerator, vacuum cleaner and radio. Yet just like the Era of Good Feelings, life eventually hits hard when things are going fine and dandy. Thus, social tensions amongst Americans began to heat up as foreign immigration was sharply restricted.
The clash of cultures led to violent gang groups like the Ku Klux Klan, who found any reason to kill off an African American. Besides social issues within America, money was continuously poured into stocks. Beliving that stocks were the best investments around, investors lost loads of money once the consumer demand dropped. The booming economic began to collapse during the mid 1920’s. On October 1929, the stock market inevitably crashed causing nothing but turmoil and doubt within American society.
Nevertheless, the US government could only do so much before it is seen as intervening or overpowering. The government could have probably done more to alleviate the economic crisis, yet in times of conflict its hard to act correctly and beneficially. In response to Liana, the United States couldn’t have done much to prevent the country from experiencing a serious ‘melt-down’. The stock market crash wasn’t just an over night transformation, yet a long time process. Nonetheless, a smooth road to success isn’t normal. Thus, the Great Depression was necessary for American to witness, as it takes experience to learn and progress to a better future.
The Stock Market crash of 1929 was indeed inevitable, since all good things must come to an end. The Roaring 20s was a time of advancement and prosperity. As World War One ended, there were many new technologies including the radio and the automobile. In addition, the Stock Market was booming. Many people felt safe investing their money in stocks since it seemed safe due to the economic boom. On the contrary, the Stock Market was bound to crash, and finally did so in 1929. By this time the Fed raised interest rates several times to ease the overheated stock market. On Thursday, October 24, 1929, better known as “Black Thursday,” investors realized the stock boom had been an over inflated bubble and a mass amount of panic selling occurred.
It doesn’t seem that there was anything the government could’ve done to prevent the crisis. The country was in complete financial turmoil. Even banks had invested their deposits in the stock market, thus forcing them to lose their depositor’s money. Roosevelt tried to take every safety measure he could think of, including a “bank holiday.” He relied on optimism which actually won him the vote in the first place. When the country has already dug themselves so deep, there’s only so much the government can do. As HEATHER stated, the depression was a long term process and not just an overnight occurrence. Therefore, unless the government caught the problem early on, there was no easy solution by 1929. Since everyone was so caught up in the booming economy, (even banks!), it seems there was no easy way to solve the problem early on.
Sarah Berfond
Block B
There is no doubt that the depression and economic crisis which occurred between 1929 and 1935, could have been prevented by a more sophisticated government, a reduction in the population’s greed and a greater distribution of income among workers. In the 1920’s the top 1/10 of 1% of the population earned as much as the entire bottom 2%. This made it impossible for society to absorb all the products that were being produced by American factories. The American government’s policies during the roaring 20’s lead by President Harding was basically to give business and financial interests all of the benefits and help they needed at the expense of the working man and woman. To support American manufacturers the government increased the tariff on imported goods, which in turn caused foreign countries to place tariffs on American goods. At the same time, the government abandoned farmers when post war international demand increased and prices collapsed. During the post war boom, the federal government cut taxes, reduced regulation on business and allowed monopolies to grow. The republicans in power believed that if the government helped private business, benefits would trickle down to the rest of the populations. At the same time labor unions were constantly criticized, often destroyed and labeled “un-American.” While the government encouraged businesses to grow, it did little to help the working man. At the same time, any American with savings put their money into the stock market which became inflated. In the 1920’s people believed they were wealthy because their stocks increased in value, but the value had no basis in fact. Although the stock market crash did not cause the Great Depression, the loss of wealth by so many people triggered problems in the economy which resulted in the depression. If the republicans had a little bit of self discipline and compassion for workers and unions, they would not have been blinded by big business. A greater focus on the general welfare of the people rather than the general welfare of business would have gone a long way in preventing the Great Depression.
Response to Jackie’s comment- I disagree with your opinion that the Great Depression was inevitable. Although the successful economy was not going to last forever the change could have been less drastic. If a more suitable government was in place, there might have been some impact on the economy, but not a total depression.
Margaret Scalesci
Block- B
4-11-08
In the 1920’s America was thriving in its Capitalistic world, this was a new thing for America and it seems that people went a little crazy with everything. All of this was happening in a post War World War I world. During this time things were becoming very advanced and things were changing. Products were being made faster and cheaper, which made things easier to come by. Cars, radios and other consumer products were becoming very popular and many people were spending their money on these things. There was also an increase in wages, which helped people in their financial situations. Women voted in their first presidential election, which was an amazing accomplishment. It seemed that everything was going great until the Stock Market crash.
The Great Depression could have been avoided if things had been handled better. “Wilson, distracted by the war, then laid low by his stroke, had mishandled almost every postwar issue. The booming economy began to collapse in mid-1920.”According to this quote Wilson could have handled America’s affairs better and the Great Depression could have been avoided. The Great Depression occurred on October 29, 1929, which is also known as Black Tuesday. This caused the beginning of a decade of high unemployment, poverty, and deflation. The banks were going out of business and everyone in America was suffering along with other countries throughout the world. Herbert Hoover was president during this time and thought that he would finally rid of poverty, but it came back twice as hard. This was a time of vast change, because one minute everyone was doing great and the next everyone was losing their money. The beginning of the 1930’s was a downward spiral because things were getting worse. By November 1932, one of every five American workers was unemployed, which made things worse because there were less people getting paid and no one had as much money as they used to. The Dust Bowl, which occurred a short time before the Stock Market crash, made America’s economic status very poor. The prices of consumer goods were very low and the production rate was increasing. Some people knew that something was coming and then many people sold their shares all at the same time, which resulted in the crash.
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I agree with Sarah because I also believe that the Great Depression could have been avoided and it was just a result of carelessness and the failure to take notice of what was going on. I’m sure it wasn’t something that just came out of the blue, but it was something that was slowing progressing and sneaking up on everyone.
Of course the Great Depression was inevitable! People were living well beyond their means, living off credit and stocks that had no monetary guarantee. Everybody knows that you can't live on credit. But Americans in the 1920s apparently thought you could. People would take out loans to buy stocks, and then would repay the loan with the money from the stock!
As John said, the government actually intensified the speed with which the Great Depression came about. Unknowingly, of course, but still. The actiosn of Wilson, Hoover and Coolidge were quite irresponsible and were rather lacking in long-term ideas and thinking ahead. It was quite a far cry from doing all they could to prevent the crisis. Granted, once the meltdown began of course the government was working overtime in order to help alleviate the financial crisis. Roosevelt's numerous plans, actions, and ideas considerably lightened the financial burden that Americans were faced with.
Therefore, it is quite easy to come to the conclusion that, although the government was worse than useless in preventing the Great Depression, it certainly did all that it could tp help alleviate it, even though in the end it was only World War II that pulled the nation firmly out of the crisis.
Was the stock market crash inevitable?
The stock market crash of 1929 was definitely inevitable “Throughout the 1920s a long boom took stock prices to peaks never before seen. From 1920 to 1929 stocks more than quadrupled in value. Many investors became convinced that stocks were a sure thing and borrowed heavily to invest more money in the market,” states article B. With growing reliance on stock for profits, the crash was inevitable. The government generally did not know about the possible domino effect possibility triggering a massive depression, or proper government procedures would’ve been taken before the crash. The crash was caused when banks attempted to claim money on loans, but couldn’t. Many lost their money during a decline in the stock market. To make matters worse, banks also invested heavily on stock. “When word spread that banks' assets contained huge uncollectable loans and almost worthless stock certificates, depositors rushed to withdraw their savings,” states article B. This made the crash even worse, as investments died down.
In your opinion, did the US government do all it could have to prevent and alleviate the economic crisis that swept the nation from 1929- 1935? Provide evidence to support your views.
The government definitely did all it could to alleviate and prevent the economic crisis. The only reason the economic crisis occurred is because the government did not have proper procedures in place to prevent it. The system that people would be reimbursed if banks failed emerged from the Stock Market Crash. The government learned from its mistakes, and there’s no denying if the government knew such a thing was highly possible, it would’ve brought about this system sooner. Following the crash, the government did all it could’ve to alleviate the crisis, but its inexperience prevented good progress. Document A states, “President Herbert Hoover, unlucky in entering the White House only eight months before the stock market crash, had tried harder than any other president before him to deal with economic hard times. He had attempted to organize business, had sped up public works schedules, established the Reconstruction Finance Corporation to support businesses and financial institutions, and had secured from a reluctant Congress an agency to underwrite home mortgages. Nonetheless, his efforts had little impact, and he was a picture of defeat.” After learning from mistakes, the government was able to properly alleviate the economic crisis. “Roosevelt closed all the banks in the United States for three days - a "bank holiday." Some banks were then cautiously re-opened with strict limits on withdrawals. Eventually, confidence returned to the system and banks were able to perform their economic function again. To prevent similar disasters, the federal government set up the Federal Deposit Insurance Corporation, which eliminated the rationale for bank "runs" - to get one's money before the bank "runs out." Backed by the FDIC, the bank could fail and go out of business, but then the government would reimburse depositors. Another crucial mechanism insulated commercial banks from stock market panics by banning banks from investing depositors' money in stocks,” Document B states. Governments learn from mistakes, and the Great Depression proves this. The US government did try its best to alleviate and prevent the problem, but inexperience and non acknowledgment hampered its efforts.
Question to AP peers:
Do you feel that Franklin Roosevelt and Theodore Roosevelt shared not only last names but political tactics as well? Explain.
Well, both of them attempted to improve the economy. For instance, Theodore busted many trusts, and Franklin made a Bank Holiday and slowly opened banks with limits to restore confidence.
Dominique D. Johnson
Block B. AP U.S. History
April 11, 2008
The Great Depression was as a result of a stock market crash in 1929. The booming twenties was an era where the United States was modernizing economically and socially. Affirmative action was taking place by female and African American social groups. Although women got the right to vote, there was still more fighting to do for them to get equality. African Americans from the south were migrating to the north and were establishing a positive culture and atmosphere in Harlem and Chicago by using art, music, and furthering education. Companies were expanding with productive gains by replacing electricity with steam. This switch was building the economy thus, over creating goods. The American society was into cars and name brands. They were concerned with the latest technology, fashion, and movies. During the 1920s the American government set up restrictions on immigration to the country. This was a period of great change. But, all good things must come to an end. This end was tragic to the American population. Everyone was affected by this shut down in 1929.
According to the first source, Outline of U.S. History, the collapses of the stock market did not cause the Great Depression. Rather, the response of the people after the collapse is what caused the Great Depression. The Great Depression of America was a world wide depression, especially through out Europe that depended on the loans of the U.S.
“Business houses closed their doors, factories shut down, banks failed with the loss of depositors' savings. Farm income fell some 50 percent. By November 1932, approximately one of every five American workers was unemployed.” Although Herbert Hoover tried his best to build up America with his finacial designs, he still was unsucessful. At the turn of his elcetion in 1932, he lost to former New York governor Frankin D. Roosevelt. The United States entered a new era of economic and political change.
Franklin D. Roosevelt did his best as president to build the country again especially when it came to operating the bank system. Since many banks were using depositors money to invest in stocks, by the end of the collapse there was no money to reimburse the depositors.
The third source, The First Measured Century, gave a break down of what actions made the depression very great. Banks were one of the crucial factors as to why many people during the great depression ended up loosing everything. Framing went down 50 percent and this was a tragedy for the American population. One out of every five American people was employed.
According to An American Freedom by Eric Foner, the Great Depression took an enormous toll on the working class. Out of the 15million Americans, 25 percent of the labor forces were out of work. For those who had their jobs still, wages were close to nothing. 100 percent of the American population was suffering. The depression led to a political revolution. It was a crisis for American's since they had no one to turn to. Not even the president could help them. They had nothing.
Response to Teresa’s Question
Franklin D. Roosevelt and Theodore Roosevelt may share the same last name, but they were far from sharing the same political views. Franklin D. Roosevelt’s presidential term was based on a more radical liberal move in order to regain the American hope and faith.
Theresa - G+ : GOod save, but I feel I should deduct some points since you didn't do the right assignment. Were this an actual college course, you'd be expected to have course materials at your disposal. Good save, summary and a very compelling question you posed. I'd say Roosevelt and FDR were quite different - FDR was a staunch isolationist, and even when Japan invaded China he remained pretty hands-off. It was only once US safety was in severe jeopardy that we joined the war effort officially. I could be convinced otherwise, though.
Liana - G: THoughtful but could use some more specificty.
Elizabeth: E- Detailed and logical, though I'm not sure what you mean by TR exercising more "power" and FDR being more concerned with the economy. Weren't both econonomic powerplays?
Jakub- E: Unique, analytical and informed post. Nice work.
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