Download U.S. Domestic Reading #2: The Great Depression, World War II, and

U.S. Domestic Reading #2: The Great Depression, World War II, and Post‐World War II Era “The Roaring Twenties” While the last reading focused on the tensions of the 1920s, the more popular image of the 1920s is that of the “Roaring ‘20s:” a time when the American economy boomed and Americans challenged traditional moral restrictions. The United States did in fact experience a great economic “boom” in the 1920s: under the pro‐business policies of Treasury Secretary Andrew Mellon (such as lower taxes on the wealthy and tariffs that shut out foreign competition), the American economy grew at unprecedented levels. The profits of industry soared, the purchasing power of millions of Americans increased, the value of the stock market skyrocketed, and the purchasing power of millions of Americans increased resulting in the creation of a mass consumer culture. The advertising industry created a desire to obtain new luxury items, and the possibility of buying goods and credit allowed Americans to buy new luxury items. The Stock Market Crash and the Great Depression The prosperity that many Americans enjoyed during the 1920s, however, masked some of the deeper problems in the U.S. economy. Although the immediate cause of the Great Depression was the stock market crash of 1929, historians agree that the causes of the Great Depression ran much deeper: ¾ Wild Speculation on the Stock Market and Buying Stocks on Margin. In the 1920s, an increasing number of Americans began to invest in the stock market. Filled with the desire “to get rich quick,” more and more Americans engaged in wild stock market speculation: high risk investments designed to make a quick profit. Speculation was also fueled by the practice of buying stocks on margin. Buying on margin meant that an investor could purchase a stock with a down payment of as little as 10% of the stocks’ cost, while covering the remaining cost by taking a loan from a broker. This strategy worked, as long as the price of the stock rose quickly enough to cover the cost of the loan and to still make a profit. For a period in the 1920s, buying on margin was a successful strategy. The rise in stock prices, however, was not the result of the quality of the companies in which people invested. Prices simply went up because so many people were buying stocks. As soon as the demand for stocks dropped in October of 1929, prices began to fall and investors sold off their stocks. The worst day for investors was the great crash of October 29, 1929 (“Black Tuesday”), on which stocks lost 10 to 15 billion dollars in value. A large number of banks and investment firms simply went under, and many citizens lost their life savings. ¾ Overproduction. In addition to stock market speculation, many economists cite overproduction as a cause of the depression. Due to the increased efficiency of industry and agriculture, businesses and farmers simply produced more goods than people were able to buy. This overproduction of goods led to a drop in prices, cutting into profits and causing some businesses to begin to lay off workers. ¾ Easy Credit and a Rise In Consumer Debt. Early in the decade consumer spending was better able to keep base with production because many consumers bought items on credit. By using installment plans, purchased items (such as automobiles and radios) with a small down payment and paid the remaining costs in the form of monthly installments (with interest charged). In the later 1920s, however, people began to pay off their debts rather than purchasing more goods. ¾ Uneven Distribution of Income. The end of buying items on credit revealed another fundamental problem with the U.S. economy: America’s wealth was unevenly distributed. In 1929, 5% of the country owned 30% of the nation’s income, while 70% of Americans had incomes below $2500 per year. The purchasing power of most Americans was not as real as it seemed, as the availability of credit simply allowed them to live temporarily beyond their actual means. The New Deal The stock market crash of 1929 was only the beginning. After the crash, America entered the most serious financial crisis it ever faced. By 1932, approximately 25% of the workforce was unemployed, while banks collapsed at a rate of 200 per month as panicked customers withdrew their savings. President Herbert Hoover responded by urging Americans to have confidence in the underlying strength of the U.S. economy. Reflecting America’s traditional laissez‐faire approach, Hoover was reluctant to allow the federal government to give relief (financial aid) to citizens. Hoover relied on state and local agencies as well as private charities to provide aid, but as the crisis weakened their resources dried up. The growing dissatisfaction of Americans with Hoover’s approach to the Depression led to a landslide victory by Franklin Delano Roosevelt in the 1932 presidential election. In his acceptance speech for the nomination, Roosevelt promised a “new deal” for the American People. The term New Deal has come to refer to the series of policies Roosevelt and his administration developed to attempt to deal with the effects of the Great Depression. The New Deal marked a major change in United States History. As a result of the New Deal, the U.S. government took an even greater role in regulating the U.S. economy and in providing programs for the financial and social well‐being of its citizens. The following were some of the more important policies of the New Deal: ¾ Banking Reforms. On the second day of his presidency, Roosevelt declared a national bank holiday and closed all of the nation’s banks. Congress immediately passed the Emergency Banking Relief Act, which provided loans to banks that could be saved and closed those that could not. Congress also created the Federal Deposit Insurance Commission (FDIC), which provided government insurance for deposits to restore confidence in banks. ¾ Increased Regulation of the Economy. During the first one hundred days of Roosevelt’s presidency, Congress also passed the National Industrial Recovery Act, which increased government regulation of and promoted cooperation among industry and the government. The act created the National Recovery Administration which engaged in economic planning by heavily regulating prices, wages, and working conditions. ¾ Public Works Programs. Roosevelt and his advisors were reluctant to simply give money to citizens, so it set up vast public work programs so that people could earn wages and begin spending money again to try to jump start the economy. Millions of Americans engaged in public work programs such as the Works Progress Administration (which built roads, highways, and other public buildings), the Civilian Conservation Corps (which worked on conservation projects and reforestation), and the Tennessee Valley Authority (a massive hydro‐electric power program). ¾ Agricultural Reforms. Under the Agricultural Adjustment Act, the government actually paid farmers NOT to produce certain goods and to destroy some crops that had already been planted. These reforms‐ which resulted in millions of acres being ploughed under and 6 million piglets being slaughtered‐ appalled many Americans since so many were going hungry. The reforms, however, were designed to eliminate agricultural surpluses in an attempt to raise prices. ¾ Social Security. The Social Security Act is the single most enduring piece of legislation from the New Deal era. Passed in 1935, the act provided pensions for retirees over the age of 65 and compensation for unemployed workers (the pensions and benefits are funded by deductions from workers’ paychecks). While most economists agree that the New Deal did not pull America out of the Great Depression, its policies did provide a boost to struggling Americans. The legacy of the New Deal was also enormous: the role of the Federal Government greatly expanded, and more (although not all) Americans accepted that the U.S. government had a role in providing for the social and economic well‐being of its citizens. The Domestic Impact of World War II Although providing relief to millions of Americans, New Deal Programs failed to pull America out of the Great Depression. America’s mobilization for World War II, however, spurred industrial production at unprecedented levels and ultimately brought the Great Depression to an end. America’s mobilization created approximately 17 to 19 million new jobs, and nearly doubled incomes for many American families. America’s mobilization for war also affected society in some of the following ways: ¾ Government Regulation of Industry. The government, whose economic role had already expanded during the New Deal, carefully regulated the economy in an attempt to maximize America’s industrial output. Just as Roosevelt had set up government organizations to oversee the New Deal, he now oversaw the creation of organizations to manage the mobilization of the economy. The government also set up a system of rationing (limiting) the use of certain resources and products needed for the war effort, while also encouraging citizens to buy war bonds to help finance the war’s cost. ¾ Migrations of Workers. Millions of Americans moved during the war to seek jobs in factories. While many Americans moved to work in shipyards in the Northeast and the already established industrial centers in the Midwest, Americans increasingly moved to areas in the South and West. Factories, increasingly built on the Pacific coast because of the need to send supplies to troops fighting in the Pacific, encouraged Westward migration. ¾ Increased Opportunities for Women and Minorities. Mobilization for war in combination with the military draft created a shortage of labor in the United States. During the war, women and minorities increasingly entered the workforce in positions traditionally closed to them. Encouraged by the famous image of Rosie the Riveter, 19 million women took factory jobs during World War II and made up 35% of the industrial work force by the war’s end. African Americans entered the industrial workforce in growing numbers as well, but still faced racism and discrimination (for example, they were paid less or banned from union membership). The demand for factory jobs also created a shortage of farm labor in the South, prompting the U.S to negotiate the bracero program with Mexico. The program allowed Mexicans to temporarily work in the United States which greatly aided the growth of American agriculture and was extended after the war until 1964. Chinese Americans also entered the industrial workforce in larger numbers during World War II. For example, during World War II 15% of shipyard workers in San Francisco were Chinese Americans, when before the war they had been limited to lower paying jobs in places such as restaurants and laundries. ¾ The Internment of Japanese Americans. While the above groups in many ways benefited from America’s mobilization, the same cannot be said for Japanese Americans. After Japan’s bombing of Pearl Harbor, many Americans vented their frustration against Japanese Americans. Fears grew that Japanese Americans were disloyal, or were even spies for the Japanese who would undermine the American war effort and aid in an attack of America’s west coast. Under growing pressure, President Roosevelt signed an executive order allowing the government to move the Japanese Americans to internment camps located in the U.S. interior. Roosevelt’s actions were found legal in the Supreme Court case Korematsu v. United States, but not a single Japanese American was found guilty of espionage during the war. Later in became clear that the government’s action were the result of war time hysteria, and in 1988 the U.S. Congress passed legislation granting $20,000 to each surviving Japanese American who had been interred. The Domestic Impact of the Cold War The perceived threat of Japanese Americans during World War II would be replaced by a new threat in the post‐World War II era. As the Cold War developed in the late 1940s, Americans turned their fear towards suspected communists who they feared had infiltrated the U.S. government and society. The Red Scare of the 1950s was most associated with the Wisconsin Senator Joseph McCarthy, whose accusations (most often wild and unfounded) against suspected Communists became known as McCarthyism. In an era of uncertainty‐ when the U.S. failed to stop the Soviet dominance of Eastern Europe, when China fell to Communism, and when communist North Korea invaded democratic South Korea‐ McCarthy found many Americans who were willing to listen to his claims. None of McCarthy’s charges were ever proven true, but his actions had a devastating impact on many Americans. Government employees were often subjected to loyalty review programs and sometimes removed from their jobs, while many Hollywood producers or actors found themselves “blacklisted” for producing “un‐American” films. The Senate finally voted to censure McCarthy in 1954 in the midst of failed hearings to uncover a communist presence in the armed forces. The Era of Post‐War Prosperity America emerged from World War II as the world’s greatest economic superpower: it had successfully mobilized its workforce and industry, and its territories (except for the attack of Pearl Harbor) were untouched by the war. Although many Americans feared the transition from a wartime economy to a peacetime one would be difficult, the transition from the wartime to a peacetime economy went rather smoothly. The decade of the 1950s was one of the most prosperous eras of American history: between 1940 and 1955 the average income of the American family tripled, and between 1948 and 1960 the gross national product almost doubled. Signs of America’s growing wealth can in particular be seen in the increase of Americans who owned homes. In the era after World War II, a greater number of Americans than ever before built homes in the suburbs: newly emerging cities just outside of large urban centers. The growth of suburbs was spurred on by an increase in automobile ownership (which made living in the suburbs possible) and advances in home building (which allowed for the quick production of affordable homes). The Civil Rights Movement Yet while many Americans prospered in the years after World War II, African‐Americans remained second class citizens and were not able to equally enjoy America’s growing wealth. Although the decision in the landmark Supreme Court case Brown v. Board of Education legally brought segregation to an end in schools, segregation (which was once enforced by Jim Crow laws) remained deeply entrenched in the South. Realizing that legislation could not change what was in the hearts and minds of Americans, Civil Rights Leaders (such as Martin Luther King, Jr) in the mid 1950s began to organize mass public demonstrations to try to bring segregation to an end. Organizations such as the Southern Christian Leadership Council (SCLC) and the Congress of Racial Equality (CORE), led mass campaigns of civil disobedience. The concept of civil disobedience, borrowed from the great India civil rights leader Mohandas Gandhi, held that one should never follow a law one considers unjust no matter what the consequences. Through mass actions of civil disobedience such as sit‐ins (sitting at white only facilities in restaraunts) and boycotts (refusing to frequent businesses that practice segregation), Civil Rights leaders would begin to win approval for their cause. The efforts of Civil Rights Reformers eventually led to Congress practicing the landmark Civil Rights Act of 1964, which was the most comprehensive law banning racial discrimination in public places. The Legacy of the Civil Rights Movement The Civil Rights Movement not only won important legislative victories, but it also provided an example for other groups in America who were the victims of discrimination. Inspired by the example of the Civil Right Movement, women formed the National Organization of Women, Hispanic‐Americans formed the United Farms Workers Movement, and Native Americans formed the American Indian Movement. All of these groups sought to address years of discrimination and other forms of unfair treatment. The method of civil disobedience also greatly impacted protests in the era after the civil rights movement. For example, during the era of the Vietnam War many young Americans staged “sit‐ins” and universities to protest the war and many young men burned their draft cards to protest what they viewed as an unjust war.