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Title: The%20Roaring%2020s%20and%20Causes%20of%20the%20Great%20Depression


1
The Roaring 20s and Causes of the Great Depression
  • Economy, Politics, and Society, 1920s-1930s

2
Economy in the 1920s
  • Growth (Roaring 20s), but with Major Systemic
    Problems
  • 1920s, a decade of economic growth GNP
    increased 40
  • Post-WWI recession, but Fed. Reserve cut interest
    rates, ended recession, showed Fed. power
  • Pent up consumer demand after war
  • Mass consumption durable goods (appliances,
    autos, home goods)
  • New technologies
  • Buying on credit, opened up consumption to more
    people

3
New Technologies and Forms of Consumption
  • Auto Age From 1.3 million in 1923 to 4 mill. in
    1929 economic linkages (effects) forwards and
    backwards
  • Electrification first businesses and amusements,
    then 1/3 to 2/3 of homes
  • Consumer credit from 2.6 to 7.1 billion during
    1920s
  • Advertising associate product with way of life,
    sex, use of psychology
  • In 1920s, business held in high-esteem,
  • Bruce Bartons 1925 book, The Man Nobody Knows
    Jesus was greatest salesman in history
  • Calvin Coolidge the business of America is
    business factory is a temple, workers worship
    there

4
Welfare Capitalism
  • 1920s capitalist model of dealing with Labor
    Question
  • Capitalists provide amenities - cleaner, safer
    workplaces, breakrooms, bathrooms, medical care,
    Fords Sociological Department check to make
    sure that workers and families are living up to
    certain standards
  • Provide for workers leisure amusement parks,
    picnics, better wages so they can enjoy time off
  • Provide some benefits to make workers happier,
    less prone to labor unrest and unions
  • Company unions instead of labor movement answer
    to call for economic democracy give workers
    sense of power in workplace
  • Idea that employers have power to make best
    decisions for workers happiness reward workers
    so they are happier or can buy more products
  • Fordism lower cost of consumer goods workers
    could purchase the products they produced
  • Fords 5 day
  • Radicals and socialists unsure about impact
    seemed good to many

5
Problems with Welfare Capitalism
  • Question Could workers put their welfare in
    employers hands? Did employers have workers
    interests at heart? What happens when hard times
    hit?
  • Ford examples
  • Cut workforce, wages when hard times hit
  • Used Sociological Dept. to monitor/control
    workers outside of workplace
  • Was more interested in selling cars, making
    profit, than problems of his workers
  • Used violence and intimidation against workers
    who wanted to unionize

6
Causes of Great Depression/Weaknesses of 1920s
Economy
  • Overarching problem overproduction and
    underconsumption
  • Weak sectors of economy farming overexpansion,
    falling prices, debt, impacted wider economy
  • Other sick sectors rail, coal, textiles, ships,
    lumber
  • Buying on credit
  • Stock market speculation euphoria/mania (buying
    shares on margin paper economy, not real)

7
Causes of Great Depression/Weaknesses of 1920s
U.S. Economy (cont.)
  • Industrialization tied up lots of capital, fixed
    costs U.S. and Germany hit hardest b/c most
    industrial
  • Wide disparity of wealth 0.5 owned 1/3 of
    wealth
  • Wealthy invested in industry (machines),
    increased productivity overproduction
  • Overproduction when poor couldnt buy goods
  • Bad monetary policy
  • Bank failures not only bad banks failed over
    9,000 between 1930 and 1933

8
Causes of Great Depression/Weaknesses of 1920s
U.S. Economy (cont.)
  • Smoot-Hawley tariff (tax) on imports, created
    trade war with foreign countries
  • Cutbacks in lending to foreign countries
  • Hoover made France and G.B. pay back loans from
    WWI
  • Harsh reparations against Germany for WWI
  • All resulted in loss of export market just when
    domestic consumption also dropped
  • Poor economic knowledge
  • Hoovers inaction and bad actions

9
Responses to Great Depression? Alternatives?
  • Raise taxes on elites
  • Govt. employment
  • Borrow money
  • Cut or limit govt. spending balance the budget
  • Govt. programs for underdeveloped areas
  • Create jobs, revive industries, create consumers
  • Monetary policy printing money
  • Change from gold standard
  • Go to war war economy (jobs, higher wages,
    pride)

10
Charles Sheeler vs. The Grapes of Wrath
  • Compare the imagery, messages, and historical
    meaning of Charles Sheelers work and the film
    The Grapes of Wrath.
  • How are they different?
  • What kind of shifts in political, social, and
    economic ideas do they represent?
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