IGCSE: The USA, 1919-41 (Depth Study)
What were the causes and consequences of the Wall Street Crash?
Immediate and Systemic Causes
•The stock market crash of 1929,
which marked the beginning of the
Great Depression of the United
States, came directly from wild
speculation which collapsed and
brought the whole economy down
•The capitalist system is by its
nature unsound, causing
permanent depression for many
and cyclical crises for almost all.
•Clearly, those responsible for
organizing the economy refused to
recognize the causes and found
reasons other than the failure of
the system to explain the crash.
•Herbert Hoover had said shortly
before the crash: “We in America
today are nearer to the final
triumph over poverty than ever
before in the history of any land.”
•Henry Ford said the crisis was here
because “the average man won’t
really do a day’s work unless he is
caught and cannot get out of it.
There is plenty of work to do if
people would do it.” A few weeks
later, Ford laid off 75,000 workers.
•Calvin Coolidge said: “When more
and more people are thrown out of
work, unemployment results. This
country is not in good condition.”
The Economy after the Crash
•Industrial production fell by 50
percent, and by 1933 about 15
million workers—a third of the
labor force—were out of work.
•After the crash, the economy was
stunned, barely moving. The stock
market continued to plummet until
it reached a low of 28 in 1932.
•Over 5,000 banks closed and huge
numbers of businesses, unable to
get money, closed too.
•Companies that stayed in business
laid off employees and cut the
wages of those who remained,
again and again. By the end of
1930, half the 280,000 textile mill
workers in New England were out
of work. Ford Motor Company
employed 128,000 workers in 1929
but only 37,000 in 1931.
Run on the American Union Bank
(New York, c. 1930)
•There were lots of houses, but
they stayed empty because people
couldn’t pay the rent, had been
evicted, and now lived in shacks in
quickly formed “Hoovervilles” built
on garbage dumps.
•There were millions of tons of
food around, but it was not
profitable to transport it, to sell it.
•Warehouses were full of clothing,
but people could not afford it.
Hooverville in Lower Manhattan
(New York, 1932)
Seattle Hooverville resident Edwin Hall,
repairing the roof of his shack, 1939.
Children Soliciting Donations (c. 1931)
As people literally starved, they
resorted to city garbage. Scenes
like this one reported in a Chicago
newspaper became commonplace:
“Around the truck which was
unloading garbage and other
refuse, were about thirty-five men,
women, and children. As soon as
the truck pulled away from the
pile, all of them started digging
with sticks, some with their hands,
grabbing bits of food and
vegetables.” A survey in New York
City in 1932 reported that 20
percent of the children were
suffering from malnutrition.
When Russia asked Americans to
apply for six thousand skilled jobs
in 1931, it received a hundred
Beans, Bacon and Gravy (1931)
I was born long ago in 1894,
I've seen many a panic, I will own.
I've been hungry; I’ve been cold.
And now, I’m growing old,
But the worst I’ve seen is 1931.
Oh, those beans, bacon and gravy,
They almost drive me crazy.
I eat them till I see them in my dreams.
When I wake up in the morning
And another day is dawning,
I know I’ll have another mess of beans.
Well, we congregate each morning
At the country barn at dawning,
Every one is happy, so it seems.
But when our day’s work is done,
And we file in one by one,
We thank the Lord for
One more mess of beans.
We’ve Hooverized on butter,
And for milk, we’ve only water.
And I haven’t seen a steak in many a day.
As for pies, cakes and jellies,
We substitute sow bellies,
For which we work
The country road each day.
If there ever comes a time
When I have more than a dime,
They will have to put me
Under lock and key,
For they’ve had me broke so long,
I can only sing this song
Of the workers and their misery.
“There is not an unemployed man
in the country that hasn’t
contributed to the wealth of every
millionaire in America. The working
classes didn’t bring this on, it was
the big boys…. We’ve got more
wheat, more corn, more food,
more cotton, more money in the
banks, more everything in the
world than any nation that ever
lived ever had, yet we are starving
to death. We are the first nation in
the history of the world to go to
the poorhouse in an automobile.”
—Will Rogers (1931)
Of Cherokee Indian descent, Will
Rogers was a radio broadcaster and
political commentator. His folksy
humor and honest, intelligent
observations about America
earned the respect of the nation.
Peter J. Cornell
“After vainly trying to get a stay of dispossession until January 15 from
his apartment at 46 Hancock Street in Brooklyn, yesterday, Peter J.
Cornell, 48 years old, a former roofing contractor out of work and
penniless, fell dead in the arms of his wife. A doctor gave the cause of his
death as heart disease, and the police said it had at least partly been
caused by the bitter disappointment of a long day’s fruitless attempt to
prevent himself and his family being put out on the street…. Cornell
owed $5 in rent in arrears and $39 for January which his landlord
required in advance. Failure to produce the money resulted in a
dispossess order being served on the family
yesterday and to take effect at the end of the
week. After vainly seeking assistance elsewhere,
he was told during the day by the Home Relief
Bureau that it would have no funds with which
to help him until January 15.”
—The New York Times (1932).
Bread Line in Brooklyn
(New York, 1931)
“You know my condition is bad. I used to get pension from the
government and they stopped. It is now nearly seven months. I am out
of work. I hope you will
try to do something for
me…. I have four children
who are in need of clothes
and food…. My daughter
who is eight is very ill and
not recovering. My rent is
due two months and I am
afraid of being put out”
—Letter to Congressman
Fiorello La Guardia (R-NY)
from a tenement dweller
on 113th Street, East
Harlem, New York. Harlem (photograph by John Albok, 1930)
“Brother, Can You Spare a Dime?”
In 1932, Yip Harburg penned the lyrcis to the song which became the
anthem of the Great Depression, “Brother, Can You Spare a Dime?”
Harburg told Studs Terkel how he came to write the song: “I was walking
along the street at that time, and you’d see the bread lines. The biggest
one in New York City was owned by William
Randolph Hearst. He had a big truck with
several people on it, and big cauldrons of hot
soup, bread. Fellows with burlap on their feet
were lined up all around Columbus Circle, and
went for blocks and blocks around the park,
waiting…. In the song the man is really saying:
I made an investment in this country. Where the
hell are my dividends? It’s more than just a bit
of pathos. It doesn’t reduce him to a beggar. It
Bread Line, 6th Avenue
makes him a dignified human, asking questions
—and a bit outraged, too, as he should be.”
and 42nd Street
(New York, 1932)
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?
Once I built a tower, up to the sun, brick, and rivet, and lime;
Once I built a tower, now it's done. Brother, can you spare a dime?
Once in khaki suits, gee we looked swell, full of that Yankee Doodly Dum,
Half a million boots went slogging through Hell, and I was the kid with the drum!
Say, don't you remember, they called me Al; it was Al all the time.
Why don't you remember, I'm your pal? Buddy, can you spare a dime?
The Dust Bowl
To make matters worse for
and drought in the central
southern states turned millions
of acres into a dust bowl and
drove farmers off their land.
Many of these ruined farmers
headed to California looking for
laboring work, where they
were met with hostility. The
folk singer and songwriter
Woody Guthrie, born in
Oklahoma, composed many
songs concerning the nation’s
Dust Bowl refugees.
Woody Guthrie’s “Do Re Mi”
Lots of folks back East, they say, is leavin’ home every day,
Beatin’ the hot old dusty way to the California line.
‘Cross the desert sands they roll, getting’ out of that old dust bowl,
They think they’re goin’ to a sugar bowl, but here’s what they find
Now, the police at the port of entry say, “You’re number fourteen thousand for today.”
Oh, if you ain’t got the do re mi, folks, you ain’t got the do re mi,
Why, you better go back to beautiful Texas, Oklahoma, Kansas, Georgia, Tennessee.
California is a garden of Eden, a paradise to live in or see;
But believe it or not, you won’t find it so hot
If you ain’t got the do re mi.
You want to buy you a home or a farm, that can’t deal nobody harm,
Or take your vacation by the mountains or sea.
Don’t swap your old cow for a car, you better stay right where you are,
Better take this little tip from me.
‘Cause I look through the want ads every day but the headlines on the papers always say…
John Steinbeck’s The Grapes of Wrath (1939)
In Oklahoma, the farmers found their farms sold under the auctioneer’s
hammer, their farms turning to dust, the tractors coming in and taking
over. John Steinbeck, in his novel of the depression, The Grapes of
Wrath, describes what happened: “And the dispossessed, the migrants,
flowed into California, two hundred and fifty thousand, and three
hundred thousand. Behind them new tractors were going on the land
and the tenants were being forced off. And new waves were on the way,
new waves of the dispossessed and the homeless, hard, intent, and
dangerous…. And a homeless hungry man, driving the road with his wife
beside him and his thin children in the back seat, could look at the fallow
fields which might produce food but not profit, and that man could
know how a fallow field is a sin and the unused land a crime against the
thin children…. And in the south he saw the golden oranges hanging on
the trees; and guards with shotguns patrolling the lines so a man might
not pick an orange for a thin child, oranges to be dumped if the price
was low….” These people, as Steinbeck said, were becoming
TOM JOAD: “Well, maybe it’s like Casy said: ‘A fella’ ain’t got a soul
of his own—just a little piece of a big soul, the one big soul that
belongs to everybody.’ Then….”
MA JOAD: “Then what, Tom?”
TOM JOAD: “Then it don’t matter. I'll be all around in the dark. I'll be
everywhere. Wherever you can look, wherever there's a fight so hungry
people can eat, I'll be there. Wherever there's a cop beatin' up a guy, I'll
be there. I'll be in the way guys yell when they're mad. I'll be in the way
kids laugh when they're hungry
and they know supper's ready, and
when the people are eatin' the stuff
they raise and livin' in the houses
they build, I'll be there, too.”
MA JOAD: “I don’t understand it,
TOM JOAD: “Well, me neither, Ma.
It’s just somethin’ I’ve been thinkin’
about. Give me your hand, Ma.” The Grapes of Wrath (1940)
“Throughout the middle west the tension between the farmers and
authorities has been growing … as a result of tax and foreclosure sales.
In many cases evictions have been prevented only by mass action on the
part of the farmers. However, until the Cichon homestead near Elkhorn,
Wisconsin, was besieged on December 6 by a host of deputy sheriffs
armed with machine-guns, rifles, shotguns, and tear-gas bombs, there
had been no actual violence. Max Cichon’s property was auctioned off at
a foreclosure sale last August, but he refused to allow either the buyer
or the authorities to approach his home. He held off unwelcome visitors
with a shotgun. The sheriff called upon Cichon to submit peacefully.
When he refused to do so, the sheriff ordered deputies to lay down a
barrage of machine-gun and rifle fire … Cichon is now in jail in Elkhorn,
and his wife and two children, who were with him in the house, are
being cared for in the county hospital. Cichon is not a trouble-maker. He
enjoys the confidence of his neighbors, who only recently elected him
justice of the peace of the town of Sugar Creek.
That a man of his standing and disposition should go to such lengths in
defying the authorities is a clear warning that we may expect further
trouble in the agricultural districts unless the farmers are soon helped.”
—The Nation (1932)
A force of 150 Cuyahoga County Sheriff’s deputies battle a “home defense” crowd of
5,000 to evict John and Sophie Sparenga of Cleveland (Ohio, 13 July 1933).
Mauritz Hallgren’s Seeds of Revolt (1933)
“England, Arkansas, January 3, 1931. The long drought that ruined
hundreds of Arkansas farms last summer had a dramatic sequel late
today when some 500 farmers, most of them white men and many of
them armed, marched on the business section of this town…. Shouting
that they must have food for themselves and their families, the invaders
announced their intention to take it from the stores unless it were
provided from some other source without cost.”
“Detroit, July 9, 1931. An incipient riot by 500 unemployed men turned
out of the city lodging house for lack of funds was quelled by police
reserves in Cadillac Square tonight….”
“Indiana Harbor, Indiana, August 5, 1931. Fifteen hundred jobless men
stormed the plant of the Fruit Growers Express Company here,
demanding that they be given jobs to keep from starving. The company’s
answer was to call the city police, who routed the jobless with menacing
“Boston, November 10, 1931. Twenty persons were treated for injuries,
three were hurt so seriously that they may die, and dozens of others
were nursing wounds from flying bottles, lead pipe, and stones after
clashes between striking longshoremen and Negro strikebreakers along
the Charlestown-East Boston waterfront.”
“Detroit, November 28, 1931. A mounted patrolman was hit on the head
with a stone and unhorsed and one demonstrator was arrested during a
disturbance in Grand Circus Park this morning when 2000 men and
women met there in defiance of police orders.”
“Chicago, April 1, 1932. Five hundred school children, most with haggard
faces and in tattered clothes, paraded through Chicago’s downtown
section to the Board of Education offices to demand that the school
system provide them with food.”
“Boston, June 3, 1932. Twenty-five hungry children raided a buffet lunch
set up for Spanish War veterans during a Boston parade. Two
automobile-loads of police were called to drive them away.”
“New York, January 21, 1933. Several hundred jobless surrounded
a restaurant just off Union Square today demanding they be fed
“Seattle, February 16, 1933. A two-day siege of the County-City Building,
occupied by an army of about 5,000 unemployed, was ended early
tonight, deputy sheriffs and police evicting the demonstrators after
nearly two hours of efforts.”
The Bonus Army
The anger of the veteran of the First World War, now without work, his
family hungry, led to the march of the Bonus Army to Washington in the
spring and summer of 1932. War veterans, holding government bonus
certificates which were due years in the future, demanded that Congress
pay off on them now, when the money was desperately needed. And so
they began to move to Washington from all over the country with wives
and children or alone. They came in broken-down old autos, stealing
rides on freight trains, or hitchhiking. They were miners from West
Virginia, sheet metal workers from Columbus, Georgia, and unemployed
Polish veterans from Chicago. One family—husband, wife, three-year-old
boy—spent three months on freight trains coming from California. Chief
Running Wolf, a jobless Mescalero Indian from New Mexico, showed up
in full Indian dress, with bow and arrow. More than twenty thousand
came. Most camped across the Potomac River from the Capitol on
“The men are sleeping in little lean-tos
built out of old newspapers,
cardboard boxes, packing crates,
bits of tin or tarpaper roofing,
every kind of cockeyed makeshift
shelter from the rain scraped
together out of the city dump”
the lawn of
—John Dos Passos.
“The US Bonus Army”
British Pathé Newsreel (1932)
In Congress, the bill to pay off on
the bonus passed the House of
Representatives but was defeated
in the Senate, and some veterans,
discouraged, left. Most stayed—
some encamped in government
buildings near the Capitol, the rest
on Anacosta Flats.
President Hoover ordered
the army to evict the
veterans. Four troops of
cavalry, four companies of
infantry, a machine gun
squadron, and six tanks
assembled near the White
House. General Douglas
MacArthur was in charge
of the operation, Major
Dwight Eisenhower his
aide. George S. Patton
was one of the officers.
MacArthur led troops
Avenue, used tear gas to
clear veterans out of the
old buildings, and set the
buildings on fire.
Then the army moved across the bridge to Anacostia. Thousands of
veterans, wives, children, began to run as the tear gas spread. The
soldiers set fire to some of the huts, and soon the whole encampment
was ablaze. When it was all over, two veterans had been shot to death,
an eleven-week-old baby had died, an eight-year-old boy was partially
blinded by gas, two police had fractured skulls, and a thousand veterans
were injured by gas.
President Hoover’s Inaction
President Hoover believed that
the economy of the United States
had been pulled down in 1929 by
the weakness of the European
economy. He also believed in the
self-correcting business cycle. He
hesitated until 1931 to use the
artificial power of the federal
government to try to control a
business cycle because to bring
politics into the marketplace was
to profane the sacred. He never
said “prosperity was just around
the corner,” but his assurances
and his inaction implied good
times were around the corner.
Kemp Starrett, “Speaking of Unemployment”
(Life, 12 September 1930)
In 1914, England and Germany, the major European industrial nations,
had implemented certain social services: pensions for the retired,
unemployment compensation, and medical insurance. In the US, the
implementation of national social services was impeded by the division
of powers between the state governments and the federal government.
Traditionally , relief was a local and state responsibility, and, while the
efforts of city and state governments were woefully insufficient, Hoover
refused to break with tradition. Instead, he encouraged private charity.
With unemployment approaching 40 percent in most of the major cities,
private charity as an alternative to
government-provided social welfare
proved utterly inadequate. The yearly
Community Chest drives organized in
towns and cities by business to provide
private charity for the poor, the ill, and
the elderly were little more than
publicity schemes. A 1930 Community Chest Drive
Like many middle and upper class
Americans, President Hoover held
the puritanical belief that federal
relief in the form of social services
would corrupt the American
character. People would no longer
feel the spiritual pressure to
become self-made successes; they
would lose their ambition. In
America, Hoover declared, “it is as
if we set a race. We, through free
and universal education, provide
the training of the runners; we give
to them an equal start; we provide
in the government the umpire of
fairness in the race. The winner is
he who shows the greatest ability,
and the greatest character.”
By 1931, Hoover feared the
capitalist system was threatened
and hypocritically abandoned his
principles, giving federal relief not
to the impoverished lower class in
desperate need but to the wealthy
ruling class. Hoover asked Congress
to create the Reconstruction
Finance Corporation. The purpose
of the RFC was to loan money to
private corporations to keep them
from collapsing. Otherwise,
corporate failures might ruin the
banks and the mortgage and life-insurance
companies that had
loaned them money, undermining
the entire capitalist system.
The 1932 Presidential Election
The Democratic Party presidential
candidate in 1932 was Franklin Delano
Roosevelt. Born to an old, established
family, FDR had not rebelled against its
model of the relaxed gentleman. Satisfied
with mediocre academic achievement at
Harvard, he had participated fully in the
social life of the college. When he became
active in politics during the “progressive”
years, his reform philosophy was close to
the paternalism of English conservatives. He
was so sure of his place in the social and
economic order, and in the strength of that
order, that he could contemplate the
government of his class providing organized
charity for the poor and dependent masses. Franklin Delano Roosevelt and
Eleanor Roosevelt (1932)
Hoover, the Republican, feared and distrusted the Democrat Roosevelt.
The difference between Hoover and Roosevelt was as deep and as
emotional as the difference between fundamentalist and liberal
Protestants. Hoover was the fundamentalist capitalist and Roosevelt, the
liberal. Roosevelt was willing to use political power in the marketplace
without the sense of reluctance or agonized conscience that Hoover felt.
During the 1932 campaign, however, Roosevelt and his advisers revealed
no dramatic or radical plans to deal with the Great Depression. Instead,
Roosevelt’s speeches criticized Hoover’s experiments as irresponsible.
Hoover had raised the national debt from $16 billion to $19 billion, and
Roosevelt said, “Let us have the courage to stop borrowing to meet
continuing deficits.” Hoover had asked farmers to reduce their crops and
livestock, and Roosevelt said that it is a “cruel joke” to advise “farmers
to allow 20 percent of their wheat lands to lie idle, to plow up every
third row of cotton, and shoot every tenth dairy cow.” At the same time,
Roosevelt said, “the country needs and demands bold, persistent
experimentation. It is common sense to take a method and try it. If it
fails, admit it frankly, and try another. But above all, try something.”
The Election Results
The hard, hard times, the inaction of the government in helping, the
action of the government in dispersing war veterans—all had their effect
on the election of November 1932. Democratic party candidate Franklin
D. Roosevelt defeated Herbert Hoover overwhelmingly, took office in the
spring of 1933, and began a program of reform legislation which became
famous as the “New Deal.” When a small veterans’ march took place
early in his administration, Roosevelt greeted
them and provided coffee; they met with one
of his aides and went home. It was a sign of
Result of the 1932
“It’s His ‘Baby’ Now!”
• What was the Wall Street Crash and what were its financial, economic
and social effects? The Wall Street Crash occurred in October 1929
when the speculative stock market bubble of the 1920s collapsed.
Investors were financially ruined, and banks which had loaned money
to investors failed when the loans could not be repaid. As the banks
closed, businesses lost access to financing and laid off workers. As
workers were laid off, demand for products fell, increasing lay offs,
introducing a downward economic spiral. The links between the US
economy and other national economies spread the Great Depression
around the globe. The social effects were profound—the poor lived in
shacks in Hoovervilles relying on the private charity of bread lines for
survival. President Hoover and the Republicans in control of Congress
refused to interfere with the business cycle, so the financial, economic
and social effects of the Wall Street Crash did not abate. Social unrest
grew as the poor became more desperate.
• How far was speculation responsible for the Wall Street Crash?
Speculation triggered the Wall Street Crash, but speculation was not
the cause of the Wall Street Crash. Nor was speculation the cause of
the Great Depression. Capitalism was responsible for the Wall Street
Crash and for the Great Depression. At all times, capitalism creates
permanent crises and depression for some and periodic crises and
depression for nearly all people. The US economy of the 1920s was
characterized by specific structural weaknesses which made the crash
and the depression both predictable and inevitable. These weaknesses
included an extreme income gap separating rich and poor, an
extremely regressive taxation policy, unemployment, a depressed
agricultural sector, high tariffs which weakened the ability of trading
partners to repay loans, monopolistic corporate and banking
structures, economic misinformation, and a consumption-led business
strategy in an economy in which only the top ten percent of the
population had income with which to consume resulting in a slump in
the construction and consumer goods industries. On top of this, the US
ruling class refused to recognize how their policies caused the crash.
• What impact did the crash have on the economy? The crash brought
the whole economy down.
• What were the social consequences of the crash? One-third of the
nation was unemployed, living in poverty, malnourished. Social unrest
grew as business and government leaders refused to provide relief to
• How did President Hoover react to the crash? President Hoover
believed the Great Depression had been caused by the weakness of the
European economy. He believed that politicians should not interfere
with the self-correcting business cycle. He also believed that providing
relief would harm the morality of Americans, and that social services
were the responsibility of local and state governments. Hoover
encouraged businesses not to lay off workers and not to cut wages.
Hoover encouraged farmers to produce less to raise prices. But Hoover
took no action until 1931 when he asked Congress to create the
Reconstruction Finance Corporation to loan money to banks to
preserve the capitalist system. Displaying an attitude that “prosperity
was just around the corner,” Hoover did very little to react to the crash.
• What issues were involved in the presidential election of 1932?
Compare Hoover’s and Roosevelt’s platforms. The central issue of the
presidential election was how to react to the Great Depression. Hoover
was a fundamentalist who believed in not interfering with the
marketplace. Roosevelt was a liberal who promised to experiment with
government interventions in the marketplace to restore the economy.
While Hoover’s platform was “prosperity is just around the corner,”
Roosevelt’s platform was vague. Roosevelt did not offer any radical or
specific programs to end the Great Depression. Rather, Roosevelt’s
platform attacked Hoover’s actions as irresponsible. Hoover’s eviction
of the Bonus Army rallied support for Roosevelt, who met with
veterans after his electoral victory.
• Why did Roosevelt win the election of 1932? The American voters
perceived Hoover as a do-nothing president simply waiting for
prosperity to arrive. Roosevelt represented a change. Roosevelt
promised Americans a “New Deal.”