The State of the US is Depressing - The Great Depression | BETWEEN 2 WARS I 1933 Part 2 of 3 - YouTube (1)
On March 4, 1933, at the height of the Great Depression, a new President of the United
States of America takes the oath of office.
President Franklin Delano Roosevelt has promised, "a new deal for the American people" to take
them out of their economic nose dive before the American economy crashes completely and
is literally bankrupt.
There's only one thing - no one, including the President, really has a plan for how to
do that.
Welcome to Between-2-Wars a chronological summary of the interwar years, covering all
facets of life, the uncertainty, hedonism, and euphoria, and ultimately humanity's descent
into the darkness of the Second World War.
I'm Indy Neidell.
In our 1929 episode on the Wall Street Crash, we saw how it rocked not only the American
economy but also the American dream of opportunity for prosperity for all.
The psychological effect had been immediate.
Although the plummet in the value of the stock market only directly affected a minority of
Americans, its symbol as an indicator of economic progress panicked the majority.
Economic activity immediately slowed as Americans reigned in spending.
Now in 1933, the United States is caught in the throes of the worst financial crisis that
it has ever experienced- it is the Great Depression.
But the Crash alone did not cause the Depression; instead, subsequent crises created a domino
effect tumbling the US into a dramatic economic downturn.
Even in 2019, historians still debate which of these events is the event.
There are some definite measurable effects that we can conclude contributed in some way,
how much is a matter for interpretation of course.
The first measurable effect is the Stock Market collapse itself, which beyond the psychological
impact also eliminates staggering amounts of investment capital, impacting actual operations
and production.
Then the Smoot-Hawley Tariff Act in June 1930 creates some of the most radical protectionist
trade policies in the history of the US.
Raised tariffs on imported goods launch instant retaliation from America's trading partners
with their own protectionist policies, which in turn further exacerbates already ailing
foreign trade.
A bigger shock in monetary terms is the series of bank collapses that follow the crash in
waves.
Some of these are tightly linked to the international debt system, creating complex dependencies
between US banks and the also suffering global economy.
Could it have been avoided?
Well, that is a contentious issue that we will never be able to conclude finally.
Some economists say that intervention in the banking system and more involvement of the
Federal Reserve to prop up the banks could have thwarted the crisis.
Others claim the opposite; that it was too much intervention by the Fed that tipped the
balance.
Followers of John Maynard Keynes idea that an economy in shock is incapable of self-recovery,
so stimulus through public spending and tax cuts is your way out of the crisis say that
that started too late.
Opponents of the Keynesian theory say it shouldn't have started at all, and a lack of public
finance austerity aggravated the crisis.
And so on... in essence it's complicated, but I'm sure that quite a few of you have
your own opinions to share and we'll see them in the comments.
Whatever and whoever caused it, and whether or not it could have been stopped, there is
no debate about what actually happens.
The banking system slides ever deeper into crisis.
In 1931 alone nearly 3,000 banks, holding close to $1.7 billion in deposits, collapse.
Many Americans will never see their savings again.
By 1932, 11.5 million Americans, around one-quarter of the workforce, are unemployed.
The unemployment rate for African-Americans is at least 2 and in places 3 times above
the national average.
For those lucky enough to still be working, underemployment is a fact of life.
Pay and hours are slashed so that by the summer of 1932, more than half of working Americans
are only employed part-time.
Whole families lose their sources of income, are unable to make mortgage payments or pay
rent, and lose their homes.
Tumbling commodity prices, already a problem for farmers in the "roaring twenties" continue
to plummet.
In 1929, cotton farmers received around 16 cents per pound, which drops to only 5 in
the early years of the 1930s.
And already before droughts hit, hundreds of thousands of farming families become migratory
farm workers, taking work wherever they can find it.
As incomes disappear, purchasing power drops, sending prices tumbling, which in turn eliminates
purchasing power from the sellers and wholesalers, who have to drop prices further to move their
product.
A vicious circle that just pulls the economy further and further into a tailspin.
By 1933, industrial production will have fallen by 37%, prices by 33%, and real GNP by 30%.
The economic hardship has a massive affect on social relations.
No longer is there any clear separation between destitute layabouts and well-to-do working
Americans.
And many middle-class Americans, who now find themselves unemployed, struggle to accept
the harsh reality that they too need public assistance.
A doctor working at a free clinic at the time will recall in his later life:
"people of that status would find it very difficult to accept charity.
[...] Every day [...] someone would faint on a streetcar.
They'd bring him in, and they wouldn't ask any questions [...] they knew what it was.
Hunger.
When he regained consciousness, they'd give him something to eat."
It is no wonder that the bitterness and impoverishment of the era get reflected in one of the bestselling
records of the time.
Most famously recorded by Bing Crosby in 1932, "Brother, Can You Spare a Dime?" and instantly
an anthem of the time.
[Indy picks up a guitar and Sings] "They used to tell me I was building a dream
And so I followed the mob When there was earth to plow or guns to bear
I was always there right on the job They used to tell me I was building a dream
With peace and glory ahead Why should I be standing in line
Just waiting for bread?
Once I built a railroad, I made it run Made it race against time
Once I built a railroad, now it's done Brother, can you spare a dime?"
If that isn't enough to showcase the pessimism of the time, then just look at how birth rates
fall from close to three children per woman in 1928 to 2.1 in 1936... people simply can't
afford to have children.
Regardless if it's his fault or not it reflects poorly on incumbent President Hoover during
the 1932 Presidential Election campaign.
He had become an American icon during the Great War when he was at the head of the Allied
effort to feed the starving Belgian population.
He had promised a glorious future for America on the campaign trail and won by a landslide
in 1928.
But a sizable portion of the electorate now sees his handling of the crisis as inadequate.
Hoover believed that active government policy was needed to ward off recession and in 1930
works to increase federal and state spending, but the Depression only deepens.
When his first measures have little effect, Hoover tries again at the end of 1931 to save
the economy and his Presidency.
With the creation of the Reconstruction Finance Corporation (RFC), he aims to lend public
funds on a massive scale to banks and other financial institutions.
His program is historic.
Never before in peacetime has a federal government intervened so directly in the economy, but
again it fails to thwart the recession.
The fact that the RFC provides financial assistance to banks but not ordinary Americans is used
by the Democrats to accuse Hoover of being too cozy with east-coast elites.
And then a public relations disaster hits Hoover at what Ironically is at the core of
his reputation, the legacy of his WWI achievements.
In 1924, Congress had passed the World War Adjusted Compensation Act, or Bonus Act, which
provided for a retirement payment to veterans.
Immediate payments were limited and small, but most veterans received what was called
an "Adjusted Service Certificate," a specified bonus they were owed and could redeem after
their birthday in the year 1945.
When hard-times and unemployment befall them, many veterans now hope that they can somehow
receive this payment earlier.
After all, if the government can literally pay billions to the banks, then surely they
can provide financial assistance to war heroes?
It grows into a movement and hundreds of thousands of what is quickly dubbed the 'Bonus Army'
flock to Washington in the spring and summer of 1932 to lobby for a new Bonus Bill which
would release their payments earlier.
They set up in one of the many makeshift shantytowns popularly dubbed 'Hoovervilles' that have
sprung up across the United States from rampant homelessness.
At first, the government tolerates the presence of the Bonus Army.
But even when their proposed bill is defeated in mid-June, many still remain in the encampments.
Tensions begin to mount.
In late-July, Hoover orders the Army Chief of Staff, General Douglas MacArthur, to clear
out the main Bonus Army camp along the Anacostia River.
But MacArthur goes above and beyond his duty.
He orders his soldiers to destroy the camp and drive the veterans out of Washington altogether.
They fire tear gas, advance with bayonets, and burn the encampments.
Most veterans flee, but some stay to fight, hurling bricks or tin cans back at the marching
soldiers.
They're not a real match for a fully equipped army though.
A certain Major by the name George S. Patton is in charge of around 600 men in the operation
and recalls:
"Bricks flew, sabers rose and fell with a comforting smack, and the mob ran.
We moved on after them, occasionally meeting serious resistance.
Once six men in a truck threw a regular barrage of bricks, and several men and horses were
hit.
Two of us charged at a gallop, and had some nice work at close range with the occupants
of the truck, most of whom could not sit down for some days."
Many veterans had brought their families and entire life possessions with them, and now
the soldiers burn down what is essentially their homes, with no regard for the fact that
they are full of everything these families own.
Images of it all are picked up by the media, with newspapers across the country covering
the events, and the plight of the Bonus Army now elicits mass sympathy amongst the public.
Although it is MacArthur who is mostly responsible for the overreach, the buck stops with the
Commander in Chief who instantly faces an even more significant loss in reputation.
When Franklin D. Roosevelt, the Democratic presidential nominee reads about the events
in the New York Times, he expresses sympathy for the veterans, but also some satisfaction,
reportedly telling an aide that they no longer need to take Hoover seriously as an opponent
after such an unmitigated disaster.
His prediction is correct.
In November 1932, Roosevelt wins the Election in a landslide, carrying 42 out of the 48
states for the Electoral College, and 57.4% of the popular vote against Hoover's 39.7%.
But by the time FDR is inaugurated in March 1933, things have only gotten worse.
Bank failures have surged, and state governors across the country have declared mandatory
bank holidays.
In a desperate attempt to maintain prices, farmers are now burning their crops.
Ominously, and only weeks before he takes office, Roosevelt survives an assassination
attempt in Miami.
But despite the pessimism gripping the country, Roosevelt exudes optimism and confidence in
his inaugural address.
He challenges the millions of Americans who are listening on their radios; to struggle
with him to save America, famously declaring "that the only thing we have to fear is...fear
itself."
And he wastes no time before making changes.
However, it's not really a unified program, it's consistent improvisation and reaction.
Nevertheless, he and his circle of advisors –dubbed the 'Brain Trust' – now develop
a set of policies that together will famously become "The First New Deal."
