Fascist Italy's Economy & The Depression

World War I had greatly damaged the economy of Italy. Much capital was lost fighting the war, after which Italy received considerably less land than it though it would. Italy was considerably weaker than other European Nations, especially Britain and France. Italy was also considerably behind in industrialization, and was far more into agriculture at the time.'

Benito Mussolini knew very well that the economy of Italy was poor. He wanted to do two things: attack the power of trade unions to control workers and increase productivity, and increase the birthrate. For economic prosperity, Mussolini introduced the "battles": The Battle for Land, Lira, and Grain.

The Battle for Land was to clear the marshes make it useable for farming, amongst other things, such as new roads. The Pontine Marshes were amongst the lands that were reclaimed for infrastructure. Many see this specific campaign as a success.

Mussolini on a Tractor in the Marshes

The Battle for Lira was for restoring the value of the Italian currency from the past days. The lira as currency was very weak, and Mussolini had to fix it in order for Italy to become a world power. He inflated the value of the lira, making exports expensive in the process. This "battle" was overall a failure, resulting in unemployment when many firms and shops couldn't sell products. Italy was hard hit during the Great Depression, with many industries failing after a bailout from the banks that was the result of worthless purchasing assets. However, since Italy was still heavily agriculturally-based, its economy didn't suffer as much as did the economies of more heavily-industrialized European nations such as Great Britain.

The Battle for Grain was to replace cheaper vegetables and fruits with more expensive grain production. This turned out to be a failure as well, since Italy wasn't industrialized enough to efficiently and productively grow and harvest grain in large amounts.

Source:

http://www.historylearningsite.co.uk/economy_in_fascist_italy.htm

The New Deal

The New Deal was a series of domestic programs enacted by the United States between 1933 and 1936. These were programs put in place by Congress and President Roosevelt, for the alleviation of the Great Depression. The programs were modeled after Roosevelt's 3 R's: Relief (for the unemployed and poor), Recovery (of the economy to normal levels), and Reform (of the financial system to prevent another depression). It was a political realignment that made the Democrats the majority. From this, the republicans were split, and the Conservatives entirely opposed the New Deal, for they thought of it as an enemy of business and growth, while liberals somewhat accepted it as they wanted to make revisions to make it more efficient. From this, the New Deal Coalition was formed.

Upon the Democratic nomination for president in 1932, Franklin Roosevelt promised a new deal to the American people, and said:

"Throughout the nation men and women, forgotten in the political philosophy of the Government, look to us here for guidance and for more equitable opportunity to share in the distribution of national wealth... I pledge myself to a new deal for the American people. This is more than a political campaign. It is a call to arms."

 He wants to greatly improve upon the American economy, obviously because they are in the midst of the Great Depression. He says he wants to share the national wealth in this New Deal.

The New Deal faced some vocal conservative opposition. The first organized opposition in 1934 came from the American Liberty League, which was led by conservative Democrats such as John W. Davis and Al Smith (presidential candidates). There was also a large but loosely affiliated group of New Deal opponents, who were commonly known as the Old Right. This group consisted of politicians, intellectuals, writers, and newspaper editors of various philosophical persuasions such as classical liberals and conservatives, both Democrats and Republicans.

 The New Deal represented a significant shift in politics and domestic policy. It mainly led to greatly increased federal regulation of the economy. It was also the beginning of many complex social programs and the growing power of labor unions. The effects of the New Deal has many viewpoints and angles to argue, in my opinion, I think the New Deal was a major stepping stone for America to get back on track during this horrid time period.

Source:  http://en.wikipedia.org/wiki/New_Deal

The "Monkey Trial"

During the 1920s, many social patterns were disrupted, often with passionate backlash. Traditionalists were worried that core values were ending. Modernist intellectuals often experimented with new methods and styles, while revivalism of the old ways developed, specifically in the South. Journalists knew that the traditionalists and modernists would soon clash spectacularly over something, and they finally found that great showdown, during the summer of 1925 in Dayton, Tennessee.

Dayton was a small town with a dropping population, from 3,000 people in the 1890s to 1,800 people in 1925. The people of Dayton, including school superintendent Walter White, wanted publicity brought to their town to increase their population. When William Jennings Bryan, the former populist presidential candidate in the 1890s, went on a Fundamentalist "crusade" to ban teaching evolution from schools, George Rappalyea, a modern Methodist and Dayton resident, approached 24-year old general science high school teacher John Scopes in Fred Robinson's drugstore. Rappalyea, with the town's desire for publicity in mind, asked Scopes about his evolutionist teachings from the Hunter's Civic Biology textbook, which was state-approved. Rappalyea told Scopes that his teachings were against the law, and asked if Scopes were willing to stand trial for a "test case." Scopes consented.

Rappalyea set out on finding people to head the defense team. He requested that famous science fiction writer H. G. Wells head the defense, but Wells turned down the offer. When William Jennings Bryan joined the prosecution team, 70-year old agnostic Clarence Darrow jumped to join the defense. John Neal, Arthur Garfield Hays, and Dudley Field Malone joined the defense as well, while Bryan Jr (Bryan's son), Ben B. McKenzie and A. T. Stewart joined the prosecution. Darrow and Bryan are the most remembered people in the case, but Hays and Stewart were equally important in the case. The judge was Judge Raulston, a flamboyant conservative Christian.

During the opening of the trial in July of 1925, the town had a festive air, with lemonade stands, banners, and chimpanzees brought into town as sideshows. Almost a thousand spectators showed up in the courthouse. In addition, live radio broadcast was set up.

The overall goal of the defense was not to acquit John Scopes, but to bring the case into the higher courts, ultimately the Supreme Court, in order to make anti-evolution laws unconstitutional

The State of Tennessee v. John Thomas Scopes started off with opening statements portraying the struggle as good vs evil or truth vs ignorance. Bryan claimed that "if evolution wins, Christianity goes." Darrow argued, "Scopes isn't on trial; civilization is on trial." The prosecution, Darrow contended, was "opening the doors for a reign of bigotry equal to anything in the Middle Ages." To the gasps of spectators, Darrow said Bryan was responsible for the "foolish, mischievous and wicked act." Darrow said that the anti-evolution law made the Bible "the yardstick to measure every man's intellect, to measure every man's intelligence, to measure every man's learning." Darrow then cross-examined--gently, though with obvious sarcasm--the students, asking freshman Howard Morgan: "Well, did he tell you anything else that was wicked?" "No, not that I can remember," Howard answered.

 That Thursday, Johns Hopkins zoologist Dr. Maynard Metacalf countered Bryan with a speech that detailed evolution. The speech was met with standing ovation, but the judged ruled it as inadmissible, which angered Darrow. The case had to be moved out into the lawn, as there was fear that the packed courtroom floor was going to collapse. The crowd had swelled to 5,000.

Darrow continued the defense, using 8 scientists and 4 religious experts to testify, with an intent to educate the nation on evolution. On the 7th day of the trial, Hays called on Bryan to be an expert on the Bible, which Bryan accepted. Darrow asked Bryan if he took everything in the Bible literally. Bryan was asked about a whale swallowing Jonah, Joshua making the sun stand still, Noah and the great flood, the temptation of Adam in the garden of Eden, and the creation according to Genesis. After initially contending that "everything in the Bible should be accepted as it is given there," Bryan finally conceded that the words of the Bible should not always be taken literally. In response to Darrow's relentless questions as to whether the six days of creation, as described in Genesis, were twenty-four hour days, Bryan said "My impression is that they were periods." Bryan accused Darrow of attempting to "slur at the Bible." He said that he would continue to answer Darrow's impertinent questions because "I want the world to know that this man, who does not believe in God, is trying to use a court in Tennessee--." Darrow interrupted his witness by saying, "I object to your statement" and to "your fool ideas that no intelligent Christian on earth believes." The judge then ordered the court adjourned.

Bryan was reported by the press as failure during his performance in the Darrow interrogation. In their eyes, Bryan had lost.

Near the end of the trial, Darrows requested the verdict to be guilty to move the case up into higher courts. The judge complied, fining Scopes $100. This case was finally brought to the Supreme Court in Epperson vs. Arkansas, but not for another 43 years.

Source:
http://law2.umkc.edu/faculty/projects/ftrials/scopes/evolut.htm

History Repeats Itself: The Great Depression and The Great Recession

Overview In the 1930's, the United States witnessed the greatest economic downturn that would prove to have a negative impact on the government, people, and morale of the nation. This nation experienced a very similar crash in late 2008, which some now call the Great Recession. Many wonder how these events in history even occur in the first place and what attributed to it. Through events in history, we can observe a myriad of different causes that resulted in the Great Depression and Recession, but one major concept stands out and that’s the idea of credit and failure to pay off loans.

Great Depression: Stock Market Mistakes

Both failures in the economy can be credited back to the decisions of the Federal Government and its citizens. During the 1920’s, banks were giving out loans freely to people because of the great state of the nation economically. Interest rates were kept low during the Roaring Twenties and because of the great economic times people were constantly using credit to buy materials and items they did not really have the money to spend. People started using this idea of loans and margins in the stock market, where they would take out a loan and pay it off through the profit they made in the marketplace. Essentially, they were buying stock without physical money in their pockets and rather on the guarantee that the stock would rise in value and gain them enough to pay back both the loan and obtain a profit. However, in 1929 the Federal Reserve decided to drastically increase interest rates. This created a constriction on investments and when the market crashed, people now did not have the money to pay off the massive loss and loans they owed. Banks were forced to foreclose homes and repossess from the people who owed money, but often times citizens would not have anything of equivalent value. This in turn caused the banks to go bankrupt and a downward spiral in the economy.

Great Recession: Housing Bubble

Many people can observe the same concept and build up in the Great Recession of 2008 that attributed to the crash in our generation. The changed variable in our crash was in the housing market, but the concept of the government and banks allowing loans to be given out to people to spend on items they could not necessarily afford is a repeat of history. During the early 2000’s, the housing market was in a rapid increase and many people were buying houses they could not afford because they believed the houses would only continue to rise in value. The idea here is people would live in a house for a couple years and later sell it a higher value in order to pay off the loans and gain profit. This concept was the identical mentality of Americans who played the stock market in the 1920’s. As history always repeats itself, when the housing bubble popped, many people panicked and foreclosed their homes. Banks and hedge funds who invested in the housing market now suffered catastrophic losses. Ultimately, a $700 billion bailout occurred in order to compensate for the myriad of bankruptcies that resulted from the crash. The country’s economic state was once again plummeting down and would continue until 2010.

Conclusion

The Great Depression and the irrational actions taken by Americans should have been a clear warning to future generations to never commit the same actions. However, it is evident through the Great Recession of our time that history does indeed repeat itself. Failure to learn from mistakes only creates future problems and America experiencing two similar events occur should be a red flag that people take note of in order to prevent this situation from ever happening again.


Source: http://www.fee.org/the_freeman/detail/comparing-the-great-depression-to-the-great-recession#axzz2nLw5IIHV

The Struggling Life of the American People

Trying to imagine living life during the Great Depression is not even fathomable to me. The technological lifestyle of smartphones and computers that people have today may seem like heaven to the people of the 1930’s. The amount of economic struggle and social stress experienced by the average person during these times was terrible. Let’s take a look at how the Great Depression impacted the people of our nation.

There was a constant struggle to uphold a family during this time. From 1929 to 1933, the child birth rate dropped 15%. More children meant more money going out of adult’s pockets, so the Great Depression created a sense of “downsizing” on the family size. With that, people were also getting married less; it saw a decrease of 22% during the same time period. Many Americans were now experiencing new situations they were not accustomed to such as poverty and even homelessness. Whether you were middle class, working class, urban, or rural, the Great Depression devastated and affected you either way. Unemployment was an all time high at nearly 25% employed and thus many lost their main source of income. For those lucky enough to have jobs during this time, their hours and pay were still reduced. During this period, more than half of the farmers in the nation made less than $1000 a year. Factory workers earned $1449 a year and barely had enough for food and home expenses. Prices increased too rapidly and items were not affordable by the average American income. This ultimately resulted in strikes that would end via police brutality. Overall, there was no longer this sense of security and enjoyment that was booming during the 1920’s and everyone, whatever social or ethnic group you belonged, proved to be affected by the Great Depression.


Source:
http://depts.washington.edu/depress/everyday_life.shtml

The Interregnum: Roosevelt vs. Hoover

Today I wanted to take a look at the differing views of President Hoover and President Franklin D. Roosevelt and how their incongruity contributed to the failure of the nation to stabilize and materialize during the times of the Great Depression.

Overview:

The Interregnum was a 4 month gap between the transition from President Hoover, who was exiting office, and to President Franklin D. Roosevelt, the new incoming president. Due to the 20th amendment, the inauguration date was moved to January 20th. It was time where there was a lack of direction and leadership during a struggling period since both presidents had little influence; people no longer cared about a president leaving and the other one was not in officially presidency to hold power. This period was one of the lowest economic points of the Great Depression. The differing economic and political policies between Hoover and Roosevelt ultimately created the conflict that would further worsen the economic situation.

Different Views in Economic and Foreign Policies

In terms of foreign relations, President Hoover believed in eliminating all foreign debts in order to entice other nations to export American products. He believed that other nations would feel a sense of indebtedness to our country and buy from the American market. On the other hand, Roosevelt thought that foreign trade was unnecessary and wanted to focus on creating a national economy. He believed that the Great Depression occurred through domestic means, so it could be cured through domestic ways as well. Along with that, President Hoover desired to uphold the gold standard, but Roosevelt favored silver and failed to acknowledge Hoover’s plan. This created a currency devaluation at the worst possible time and further decrease in the economy.  

Political Views

In the eyes of many, President Roosevelt was seen to a have dictator like style to him. He had a firm grip on the country during these times and executed his power in unorthodox ways. FDR arguably used much of his powers for good to fix the recession. However, when the country was weak and in need he took advantage of his power to further his party’s ideas. Instances such as dissolving the Gold Standard, Security Regulations, and Public Works are examples of changes Roosevelt made with his executive decision. On the other hand, President Hoover was seen more as a progressive and reformer. He believed that the federal government should place a system to regulate the economy instead of directly intervening. In addition, he pursued to aid farmers and the agricultural market. In 1930, Hoover signed the Smoot-Hawley Tariff Act, which would raise the tariffs on imports and ultimately help protect farmers.

Conclusion

Many people blame Hoover for much of the Great Depression because of his inability to execute an effective plan and system to carry America out of the Great Depression, but a lot of it can accredited to Roosevelt’s initial complacency and stubbornness as well. The adversity between the two and the lack of cooperation as a whole during the Interregnum is the main reason for the country’s failure to recover immediately. The country may have been able to recover from it’s “wounds” much quicker if there was a better compromise between the two presidents of the time.
Sources: http://en.wikipedia.org/wiki/Franklin_D._Roosevelt
http://en.wikipedia.org/wiki/Herbert_Hoover

The Hundred Days: An Overview

In class today, Mr. Stewart mentioned that the Hundred Days was one of the chapters that was going undone in the Wiki project. I happened to read that chapter for the 40 point Wiki review worksheet, so I thought I’d give a brief overview of it.

The Hundred Days

FDR assumed the presidency of the United States at one of the country’s more dire times. Here are the things that he did after his inauguration:

1. The banking crisis at the time saw every bank in 32 states shut down. FDR approached this first item of business by calling Congress into a special session to discuss an emergency bank measure and declaring a national bank holiday. When the banks reopened, deposits and gold began to flow back into the banking system. The banking crisis was over.

2. Soon after, Roosevelt sent another emergency measure to Congress, hoping to cut $500 million from the federal budget. This $500 million would come from such expenditures as government agencies, the pay of civilian and military government employees, an a 50% slash in payments to veterans. This was passed. Roosevelt also signed the Beer-Wine Revenue Act which re-legalized beer and light wines.

Now, federal expenditures were substantially less and revenue could be earned from the sale of beer and light wines.

3. Roosevelt’s next legislative proposal was regarding agriculture; he came up with a plan of domestic allotment. Roosevelt’s “domestic allotment” was a plan that aimed to address the grievances of the agricultural sector, which was “huge and variegated” (farmers that grew different crops from different states had no uniform voice). Agricultural income was on a downwards spiral, and the sector’s depression pre-dated the Great Depression by over a decade, but still, there was no existing unifying power that could effectively pull the agrarian community from its depression.

Domestic allotment called for government payments to farmers who agreed not to produce certain crops. These payments were to be financed by new taxes on agricultural processors (canners, millers, packers, commodity brokers). Purchasing the surpluses quickly exhausted financial resources, so domestic allotment sought to eliminate the production of any surpluses in the first place (this is where government payments would be used as incentive to keep farmers from producing certain crops).

4. FDR next requested for legislation with regards to solving the problem of unemployment of the country. His solution? The Civilian Conservation Corps. Roosevelt proposed the Civilian Conservation Corps (CCC) to deal with the nation’s high unemployment rates. The CCC was to employ 250,000 men to work on a number of public works projects, which included forestry, flood control, and beautification projects. Corps workers built firebreaks, lookouts, bridges, campgrounds, trails and museums in national forests and parks. This number swelled to 3 million by 1942 and young men were being provided with steady pay of $30 dollars a month. Unemployment relief had never been so effective or powerful.

*Note: up to this point, though all of FDR’s legislation had been successful, it did not necessarily significantly help economic recovery. Rather, it had been deflationary. So, he called for the signing of the National Industrial Recovery Act (NIRA). It had three parts:

1. Provided for federal regulation of maximum hours and minimum wages in various industries (industrial workers now had the right to “organize and bargain collectively through their representatives”).  

2. Created NRA, which would oversee government-sanctioned cartelization. Production in whole industries would be controlled, prices and wages would be raised. This would prevent unfair competition and overproduction.

3. Created the Public Works Administration (PWA) which was to undertake public construction projects.

By now, the Hundred Days were nearly over. In the final days of it, Roosevelt signed and Congress passed several acts: the Glass-Steagall Banking Act (split commercial and investment banking, created federal insurance of bank deposits), a Farm Credit Act, and a railroad regulation bill.

Sources: Freedom From Fear

Chapter 36 Vocabulary

Franklin D. Roosevelt:
He was the governor of New York and 5th cousin to Theodore Roosevelt. He was raised in a wealthy family and went to Harvard. He served as Secretary of Navy, being suave and conciliatory. He suffered from polio. He was elected as a Democratic President in 1932, and served more than 3 terms. He came up with the New Deal after the Great Depression.

Eleanor Roosevelt:
She was the wife of FDR, and she became the most active First Lady in history. She was for the rights of all Americans.

Harry Hopkins:
He was the head of the Federal Emergency Relief Administrtion (FERA). He was a friend and advisor to FDR. He worked on mortgages and unemployment during the depression.

Frances Perkins:
She was the first woman to become a cabinet member. She was the target of criticism and blame for her position and gender when she was Secretary of Labor.

Father Coughlin:
He was the infamous "radio priest" who was against the New Deal. His campaign was halted in 1942 after he was deemed as a radical.

Huey Long:
He was a senator from Louisiana who pushed the "Share our Wealth" program. He planned to run in the 1936 elections against FDR but was assassinated.

Francis Townshend:
He was a retired physician who wanted the government to give financial aid to senior citizens over 60.He thought that FDR wasn't doing enough, and had many followers, but his plans were ultimately unrealistic.

Harold Ickes:
He was called "Honest Harold" and he was the Secretary of the Interior. He became the head of the PWA (Public Works Administration), aiming to create jobs to help the unemployed and deal with industrial recovery.

George W. Norris:
He was a senator from Nebraska who helped pass an act that created the Tennessee Valley Authority with much zeal in 1933.

John L. Lewis:
He was the leader of the United Mine Works. He also formed the CIO (Committee for Industrial Organization. He led the a sit-down strike at General Motors in Flint, MI, 1936. He was also responsible for the 1938 Fair Labor Standards Act, or the "Wages and Hours" bill.

Memorial Day Massacre:
Unionists from the Republic of Steel Co. wanted to join CIO, and a fight broke out during a strike in 1937, where 10 demonstrators were shot and killed by the police.

Alfred M. Landon:
He was the the Republican candidate in 1936. He was an honest and wealthy man from Kansas who lost to FDR, stressing balancing the budget.

Parity:
It was a plan to help farmers suffering from low prices and overproduction. It wanted to return the prosperity of farmers from 1909-1914. The AAA government agents paid farmers to reduce their production in return for taxes from the makers of pricey farm equipment.

New Deal:
After FDR was inaugurated in 1933, he decided the US must improve economically in order for recovery from the Great Depression to take place. The New Deal focused on the 3 R's. Short term goals were relief and fast recovery. Permanent recovery and reform were to come next. Unemployment, minimum wage, and other social issues were reformed.

Brain Trust(s):
They were reformist intellectuals, mainly college professors, who worked as a kitchen cabinet for FDR and looked into the legislation of the New Deal.

The three R's:
They were relief, recovery, and reform. Relief was the first objective, followed by recovery in a couple years, then long-term reform to prevent another great depression. It was announced by FDR on March 4, 1933.

Glass-Steagall Act:
It was an act passed in 1933 that allowed banks to reopen, giving FDR the power to regulate banking transactions and foreign exchange.

Civilian Conservation Corps (CCC):
This organization was created by the Unemployment Relief Act of 1933. It provided employment in govt. camps for 3 million young men. They worked on reforestation, firefighting, flood control, and draining swamps.

Works Progress Administration:
The WPA was created by Congress in 1935 as a job agency that helped the unemployed. The WPA worked on bridges, roads, and govt buildings. It spent 11 billion dollars and gave almost 9 million jobs to people.

Tennessee Valley Authority:
It was the first corporation to be owned by the government. It was for creating jobs and building dams in the Tennessee River Valley to supply electricity to impoverished areas.

Social Security Act of 1935:
It was a law that created a federal insurance program based on the automatic collection of taxes from employees and employers. The money was given through a monthly pension when they reached age 65. Unemployed people, disabled people, and mothers were given this money as well.

Wagner Act:
It was the same as the National Labor Relations Act in 1935 and set up the National Labor Relations Board. It reasserted the right of labor to engage in self-organization and to bargain collectively.

National Labor Relation Board:
This was created by the National Labor Relations Act by Congressman Wagner in the 1930s, being sympathetic to labor unions.

Congress of Industrial Organizations:
The CIO was a labor union formed in the AF of L, consisting of unskilled workers. The AF of L broke up with it in 1938. The CIO had 4 million members in 1940, being very influential.

Liberty League:
It consisted of conservatives that opposed FDR's New Deal, and they were afraid of socialism through the New Deal, thinking that it would actually hurt the economy.

Twentieth and Twenty-first Amendments:
The 20th Amendment changed the date of inauguration of the president to January 20th, shortening the term of lame-duck presidents. The 21st Amendment ended the Prohibition of alcohol.

Court-packing scheme:
This was a plan by FDR to put 6 extra judges on the Supreme Court, all of whom presumably would support him, upsetting the balance of the original 9 justices. Congress refused, since it would give FDR too much power.

Source:
The American Pageant

REVIEW PART 3: The Day of the Stock Market Crash

This is an overview of the actual day of the big stock market crash, October 24, 1929.

As I mentioned in my last post, people in the times leading up to the Great Depression were using credit heavily, especially in the purchase of credit (also known as margin). By the day of the big stock market crash, the value of stock had already been in decline. The actual day of the stock market crashed saw widespread panic on the trading floor, everybody trying to sell their stock, and the liquidation of accounts.

When prices started going down, stock brokers who had loaned their money to investors needed their investors to put in more cash to compensate for the loss of stock. Because so many investors had bought stock on credit, they couldn’t pay brokers back. Investors’ accounts were then were liquidated.

As margin calls and liquidation happened, people frantically tried to sell their stock in order to get as much money as they could out of the quickly depreciating stock. Some people sold bad stock and got so desperate that they began selling good stock in hopes of balance out the losses of bad stock. On this day, even good stocks lost their value.

So many shares sold that day that the ticket reader was running 4 hours late, meaning people were not getting accurate, up to date information, and didn’t know the most recent status of the market when they were frantically selling stock. This added to the already chaotic scene of the trade floor.   

Richard Whitney, the Vice President of the New York Stock Exchange at the time, met with banks and marched onto trading floor to and bought 20 million dollars worth of stock in a matter of minutes. Though it seems like he was trying to save the market, this was not the case. Instead, he was trying to fool the market by tricking people into cease selling stock and stop the crash, so that banks get out with as much money as possible. This, though initially positive, led to an even greater crash. This bigger crash would continue for 3 years.

Some statistics:

- At its height, General Motors stock was worth $1075 and fell to $45 at the lowest point of the stock market crash.
- The Dow Jones Industrial average fell 89%

- 72 billion dollars worth of stock was wiped out on the day of the great stock market crash

- In 1928, American banks were in debt from issuing too much credit. They had a $200 million inventory, and outstanding loans of $8 billion.

As Mr. Stewart said: “The stock market is like a wolf. Every now and then, it’s going to lick your face, and sometimes it’ll bite your face off.”

Sources: Mr. Stewart Video Documentary

Radio in the Early 1900s

Orson Welles' infamous War of the Worlds broadcast in 1938 dramatized the near destruction of the world by invading Martians. The broadcast ended with the Martians vanquished by bacteria their immune systems had no defense to, but many of the listeners had already stopped listening and were panicking. They prepared to move, contemplated killing themselves, and swarmed the streets, all because of a radio broadcast. Many of the listeners later stated that they had only believed the hoax because "they had learned-- appropriately, many felt -- to have faith in the radio". The radio was increasingly important in the 1930s. "Listeners formed imagined but meaningful relationships with radio voices. Through radio, listeners remade the frightening public sphere in comfortable and comprehensible private terms."

It is no surprise, then, that President Roosevelt's famous "fireside chats", broadcasts sent out in order to speak directly with the masses, were so effective, as the radio was "the most direct means of access to the American people". His first "fireside chat" was used to reassure the American people that the banks were safe once more, that money could, once again, be put within them. Hearing the President, a voice of sure authority, talk to them personally, must have reassured many Americans, as the banks slowly recovered afterward as people deposited their money again. Roosevelt's use of the "fireside chats" persisted through the Great Depression and into World War I, and served as a way for him to get his ideas directly to the public and address the concerns of the people in an almost "private" manner.

Sources:

http://press.uchicago.edu/Misc/Chicago/471921.html
http://www.archives.gov/education/lessons/fdr-fireside/

The 1920's

The Roaring Twenties ushered in an exciting time of social change and economic prosperity, as the recession at the end of World War I was quickly replaced by an unprecedented period of financial growth. The stock market soared to unimaginable heights, buoyed by the so-called second Industrial Revolution of the turn of the twentieth century, which saw the development of new inventions and machines that changed American society drastically. For example, industry leader Henry Ford developed the assembly line, which enabled mass production of the automobile—the invention that changed the nation more than any other during the era. The car helped give rise to suburban America, as thousands of middle-class Americans left the congested cities for nicer communities in the city outskirts. The airplane, radio, and motion picture ranked with the automobile as popular new inventions of the time. At the same time, a new age of American literature blossomed in the 1920s.

Source:

http://www.sparknotes.com/history/american/depression/summary.html

This section form spark notes gives a good overview of the amazing achievements of the 1920's. The assembly line was formed and produced automobiles, or Model T's, invented by Henry Ford. With the assembly line, a new automobile was produced every ten seconds. This was a great industrial achievement. Then America grew wings, when the Wright Brothers took flight for a total of 12 seconds. Soon came the first person to ever fly across the Atlantic, Charles Lindbergh, who flew solo from New York to Paris in the Sprit of St. Louis. But as the automobiles and planes drew people away from their homes, the invention of the voice carrying radio drew people back in. The first ever radio broadcasts originated from the station KDKA in Pittsburgh, Pennsylvania. But one invention that changed entertainment forever was the motion picture. And the first ever movie, The Great Train Robbery in 1903 lasted ten minutes long, and revolutionized/initiated the film industry. The 1920's had the stock market at the highest it has ever been, and no one saw what was ahead of all of this excitement. Sure, the 1920's revolutionized American technology, but the greta Depression which followed shortly after seemed to take all of this away. 

REVIEW PART 2: Mr. Stewart’s 4(.5) Causes of the Great Depression

Hey guys, this is just a continuation of my first review post (in which I discussed the Roaring Twenties: http://ushaplahs2013.blogspot.com/2013/12/review-part-1-roaring-twenties.html) Hope this helps. Also, be sure to check out Ashwin’s post http://ushaplahs2013.blogspot.com/2013/11/some-causes-of-great-depression.html and Ian’s post http://ushaplahs2013.blogspot.com/2013/12/causes-of-great-depression-many.html about causes of the Great Depression. Feel free to add on to any of the points that I talk about here.

Mr. Stewart outlined 4(.5) main causes of the Great Depression:

1. Lack of Diversification in the American Economy

At the time, there were 2 driving forces of the growing American economy: the automobile industry and the construction industry.

- Construction: With the growth of cities and urban areas, construction of such things as buildings, roads, bridges, houses, etc. was necessary.

- Automobiles: Henry Fords’ revolutionary T-Model, assembly lines and mass production of automobiles, came to be the second of America’s big industries at the time.

It is important to understand that these two industries, on top of driving most of the country’s economic activity, also affected other, smaller industries. As such, their performance affected other industries’ performances as well. The industries of the materials and resources that go into construction and cars: electricity, steel, wood, fuel, rubber, etc., were also brought down when these two main industries suffered.

When symptoms of the Great Depression began emerging and these two industries were badly hit, (construction expenditures decreased from $11 billion to $9 billion from 1926-1929 and car sales fell by 33% in the first 9 months of 1929), these smaller industries were also hit hard.  

As a whole, the entire economy was suffering because no other area of the economy could compensate for the fall of the economy's two biggest sectors.

Leading up to the Great Depression, things in America were running smoothly; business was booming. But at some point, the aforementioned industries become oversaturated (they produced too much of their product!) In order to maximize profits, the two industries almost had to guess how demand would play out in future years and gambled on things. Expecting a growth in demand, they hurried to build their respective products (cars/buildings), in anticipation of customers solving the problem of this oversaturation. This was not the case. When oversaturation began cutting substantially into a companies’ profit, they began cutting employees to compensate for the loss of money. Not only were two biggest industries laying off workers in droves to save money, all of the smaller industries under them must have had to as well.

To summarize: Symptoms of Great Depression in addition to oversaturation → 2 big industries hit hard means all smaller industries suffer as well → 2 big industries and smaller industries lay off workers → Downwards spiral of American economy

2. Maldistribution of Wealth

At the time, similar to how it is now, there was a maldistribution of the wealth, meaning there was a top 2% of society (probably people like the robber barons), a small middle class (~30--40%) and a lower class of around 60%. This distribution of wealth augmented the problems of the Great Depression greatly when they rolled around.

The American economic model at the time was set up in such a way that big businesses did not pass off their wealth and profits to consumers. Only the top 2% was getting rich, while the rest of the people lived in near poverty (just so you get an idea of things: by 1929, over ½ families lived at below subsistence level, the level at which adequate life is barely supported).

As you can imagine, the problem worsened when many in the already suffering bottom 60% of Americans were laid off (see why they were laid off in first point). So, people had even less money, considering they had no jobs anymore.

With 2% of Americans at the top and 60% at the bottom, the middle class represented a modest 38% (around 30-40). The disadvantages of having a small middle class became visible when the stock market crash happened. When the stock market began to crash, the upper 2%, in an effort to minimize money loss, was spooked and stopped investing. The bottom 60%, being in the financial rut that it was in, did not invest either. This left the onus of establishing balance on the middle class: the urban professionals of American society. But, America, with its small middle class, couldn’t compensate for both the upper and lower classes not investing in stock. There was too much concentration at the top, too much poverty, and not enough middle class for the economy to bounce back from a decline in investment in stock. This was the maldistribution of wealth.
To summarize: 2% rich, 38% middle class, and 60% lower class → nobody to assume burden of stock market crash and majority of people getting poorer while minority gets richer.

3. Credit Structure of the Economy

The early 1900s saw a rise in the popularity of the use of credit. People began using credit to purchase everything-furniture, cars, and even eventually, stock. According to the video that we watched in class, people in the 1920s purchased 75% of their household items purely on credit.

Banks and investment groups who loaned the money to these people charged interest on their credit, and this system works as long as enough people borrowing money from said banks and investment groups can pay back their money. Problems arise when the people fail to pay back their loaned money.

Around this time, people began borrowing money to buy stock, also known as buying on margin.

Stock brokers at the time offered people stocks for much less (as low as 10%). They offered such deals because they understood that as long their stock went up in value, they could sell the stock at any point and still make a profit. As soon as stocks went down in value, however,

these brokers would ask the people to whom they had loaned money to sell the stock, just to make sure they didn’t lose money. The stock acted as collateral to counterbalance debt.

This system works perfectly, until the price of the stock drops. When stock drops, then numerous parties are affected. The buyer, the seller of stock, and the company are all, as Mr. Stewart said, “out”. During the Great Depression, people had bought stocks on margin, meaning that when the stock market crashed, they could neither sell their quickly depreciating stock (nobody wanted to buy it) nor pay back stock brokers. Everyone seemed to realize that stocks weren’t worth the value that they had been advertised to be; they were inflated.

4/4.5. International Trade and International Debt

International Trade

While the American economy was suffering internally, things weren’t doing too well externally, either. Demand for American products internationally (specifically Europe) was in decline.

Initially, European nations hadn’t recovered from the destruction of WWI and the demand for American products was high. But by the 1920s, as many European nations began to recover, there was a decline in demand for American products because these nations were capable of  making their own products. Still, other European nations hadn’t recovered as quickly, and couldn’t afford American products altogether. With some European nations not needing American products and others incapable of buying American products, the general trend for international trade for the U.S. was downwards.

This problem was further augmented because of tariffs added to American products in order to protect domestic products. For example, the Hawley-Smoot Tariff hiked up prices of American products by 60%. These American tariffs were with a set of European tariffs on their products. Trade was hurt even more.

To summarize: Recovering European nations and other European nations who can’t afford American products and tariffs placed on American products → Less demand for American products abroad, less trade, bad for economy

International Debt

The international debt triangle that we saw in class can be explained as follows:

The Allies, owing the U.S. money, turned to the war reparations that were outlined in the Treaty of Versailles that Germany was supposed to pay them. As the Allies demanded money from Germany, Germany turned to the U.S. loans to pay back the Allies, who had to pay back the U.S. This essentially created the triangle (as we saw in Mr. Stewart’s diagrams).

The problem arose when the Great Depression hit the U.S. With U.S. banks in trouble (they made too many loans and were in debt; people couldn’t pay them back because of credit, etc. etc.), they didn’t want to loan Germany money any more. This disrupted the flow of money in the triangle: Germany now couldn’t pay back the Allies, who, by consequence, couldn’t pay back the U.S.

IN THE END

In American history, panics are many. Basically, what set the Great Depression apart from other panics was that it was essentially a synthesis of every single cause of a panic possible.

Sources: Mr. Stewart

Video Documentaries in class

Roosevelt vs. The Supreme Court

After having been reelected for a second term in 1937, President Roosevelt took it a sign that the public was all for the New Deal and wanted to him to proceed. Roosevelt planned to do just this but saw the nine judges sitting on the Supreme Court as the roadblocks to success.

The Supreme Court at this time was made up of ultraconservatives who thought it was their civic duty to prevent Roosevelt's "socialistic" reforms. The Supreme Court judges were old, most of them over the age of seventy, and none had been appointed by Roosevelt. Although judges are allowed to serve until death, Roosevelt was anxious to get them out of their positions of power.

In one of the more costly moves of his career, Roosevelt declared he wanted a bill passed that would allow him to add a new justice for every justice over the age of seventy. His declaration shocked the public and Congress and caused Roosevelt to henceforth be seen under a socialist light. Many people saw this as a sign of his intentions to become a dictator.

Although his proposed legislation never came to pass, the threat of it was enough to make Justice Owen J. Roberts, a conservative, begin siding with liberal policies. This allowed for several rulings in Roosevelt's favor, including the state minimum wage for woman, the Wagner Act and the Social Security Act.

Roosevelt may have lost public respect by his blatant attempt to take over the Supreme Court, but in the end everything turned out in his favor. Not only did the Supreme Court pass reform bills, but a slew of deaths and resignations* gave Roosevelt the opportunity to appoint nine judges, a feat unseen since Washing's time.

*Resignations most likely occurred due to a bill passed by Congress which agreed to full pay for justices over the age of seventy who retired.

Education During the 1930s

Hey guys, so sort of like my "Great Depression & The Rise of Hitler" post, I got to thinking about education during the same time period. We have studied about how awful it was economically for most of the country, so I asked what kind effect did this have on the education system in America?  There wasn't as much as I thought there would be, but here's what I found:

Unlike most other countries around the world, America prided itself on its advanced education system even before the stock market collapse in 1929. When it did crash and the entire economy tanked, many students still wanted to attend, and children wanted to learn. However, the depression resulted in tremendous losses for schools' budgets and teacher salaries. Even though the issue of education was listed among the most pressing problems the United States faced during the Great Depression, it was never truly resolved until after the depression's end. Thousands of Americans simply gave up fighting for their and their children's' education. Money became tighter and tighter as the country dove farther into depression, and children were often sent out to earn money rather than attend school.

During this time period, schools, and society as a whole, were largely divided by both class and race. In the South, there were only a handful of black students attending high school during the 1930s. However, with this being said the Great Depression did in some ways help black students. In the North, schools saw desegregating as a way of saving critical funds. Down South, fear of desegregation led to the construction of schools for blacks. White southerners reasoned that it would be better to pay for the construction than it would be to have youths running around reeking havoc.

All in all, the Great Depression simply made it much more difficult for low income families to send their children to school. Schools themselves suffered from serious lack of funds, although in some areas in the South they were constructed to prevent desegregation.

Federal Project Number One

Amid all of the federal programs that provided aid to unemployed workers, the majority of them focused on construction based industries and public works projects. The Federal Project Number One (Federal One for short), a subdivision of the WPA (Works Progress Administration), however, was implemented in 1935 to provide relief for artists. Under the Federal Project Number One, there were divisions for each artistic medium. It included the Federal Writers’ Project, the Federal Art Project, the Federal Music Project, and the Federal Theater Project.

The Federal Writers’ Project was lead by Henry Alsberg, and sponsored written works, including compilations of local histories and guides, oral histories, children’s books, and ethnographies. One of its most prominent publications was the American Guide Series, was a series of books that contained a comprehensive history if the nation by state.

The Federal Art Project sponsored American artists, some of the most notable being Mark Rothko, Lee Krasner and Jackson Pollock, some of the greatest abstract impressionists. It also sponsored community art centers and classes to cultivate appreciation.

The Federal Music Project funded displaced composers and musicians. It instituted classes for all ages, and sponsored the formation of bands and orchestras. Through its music festivals, recitals, and concerts, the FPA employed many musicians and raised appreciation for music.

The Federal Theatre Project was the most controversial of the Federal One programs. It sought to employ workers in theater, from actors and directors, to technicians and designers. It employed thousands of laborers, but many saw it was a huge propaganda effort by the government. Critics claimed that the FTP was spreading communist messages through its plays. Laws protecting employees from political discrimination were seen as protecting members of the Communist party. In addition, employees of the FTP ran a newspaper called  Living Newspapers. They focused on immediate social issues, often taking progressive themes. In 1939, the Federal Theatre Project was cancelled, in part because of Congressional disapproval of the left-wing themes of many of its productions.