Brenda Lange - The Stock Market Crash of 1929 The End of Prosperity by Brenda Lange

Milestonesin
american history
The Stock Market

Crash of 1929
The End of Prosperity
Milestones in
american history
The Treaty of Paris
The Monroe Doctrine
The Transcontinental Railroad
The Electric Light
The Wright Brothers
The Stock Market Crash of 1929
Sputnik/Explorer I
The Civil Rights Act of 1964

Milestonesin
american history
The Stock Market

Crash of 1929
The End of Prosperity
Brenda Lange
Cover: A crowd gathers on New York City’s Wall Street, shortly after the stock market
crashed in October 1929.
The Stock Market Crash of 1929: The End of Prosperity
Copyright © 2007 by Infobase Publishing
All rights reserved. No part of this book may be reproduced or utilized in any form or
by any means, electronic or mechanical, including photocopying, recording, or by any
information storage or retrieval systems, without permission in writing from the publisher.
For information, contact:
Chelsea House
An imprint of Infobase Publishing
132 West 31st Street
New York, NY 10001
isbn 10: 0-7910-9354-9

isbn 13: 978-0-7910-9354-2
Library of Congress Cataloging-in-Publication Data

Lange, Brenda.
The Stock Market Crash of 1929 : the end of prosperity / Brenda Lange.
p. cm. — (Milestones in American history)
Includes bibliographical references and index.
ISBN 0-7910-9354-9 (hardcover)
1. Stock Market Crash, 1929—Juvenile literature. 2. Depressions—1929—United States—
Juvenile literature. 3. United States—Economic conditions—1918-1945—Juvenile litera-
ture. I. Title. II. Series.
HB37171929 L23 2007

332.64’27309042—dc22 2006038868
Chelsea House books are available at special discounts when purchased in bulk quantities
for businesses, associations, institutions, or sales promotions. Please call our Special Sales
Department in New York at (212) 967-8800 or (800) 322-8755.
You can find Chelsea House on the World Wide Web at http://www.chelseahouse.com
Series design by Erik Lindstrom

Cover design by Ben Peterson
Printed in the United States of America
Bang NMSG 10 9 8 7 6 5 4 3 2 1
This book is printed on acid-free paper.
All links and Web addresses were checked and verified to be correct at the time
of publication. Because of the dynamic nature of the Web, some addresses and links
may have changed since publication and may no longer be valid.
Contents
1 The End of an Era 1
2 Life before the Crash 12
3 The Buildup to Black Tuesday 22
4 The Day of the Crash 33
5 The Early Years of the Great Depression 43
6 Roosevelt’s First 100 Days 55
7 Putting the Program to Work 66
8 America at Odds 79
9 Popular Culture 87
10 Lessons Learned 93
Chronology and Timeline 102
Notes 106
Bibliography 107
Further Reading 108
Index 110
70+ DVD’s FOR SALE & EXCHANGE
www.traders-software.com
www.forex-warez.com
www.trading-software-collection.com
www.tradestation-download-free.com
Contacts
[email protected]
[email protected]
Skype: andreybbrv
1
The End of
an Era
T housands packed the streets of New York City’s financial
district. Anxious investors had heard rumblings through-
out the day about mass panic on Wall Street, with rampant
selling of stocks causing values to plummet. Rumors swirled
around the crowd like snowflakes in a blizzard. The date was
Tuesday, October 29, 1929—what would forever be known as
“Black Tuesday.”
During the 1920s, people were content and the future seemed
promising. The horrors of World War I were in the past and
happy days were here again. As sons came marching home from
the war, the production of luxury items increased. Refrigerators,
radios, cars—all items the average consumer wanted and “had
to have”—were often bought using borrowed money. Buying
on credit was a fairly new concept, because most Americans
had always preferred to pay cash for purchases. Banks were

eager to lend money for these goods and became just as willing
to extend credit for the purchase of stocks.
Companies can be owned privately or publicly. If a com-
pany is owned privately, it does not sell stock to the public; if it
is owned publicly, it does. A stock, also called a share, is a piece
of the ownership of a company. Anyone can buy a share of a
company. Businesses and corporations sell shares of ownership
because it is an easy way for them to make money. When you
buy a share in a company, you become a part owner, propor-
tionate to the amount of stock you own. The more stock you
hold in a company, the more invested you are in its success. If a
person buys a share at a low price, and the price of the stock goes
up, that person has made money. The key to making money on
the stock market is to buy stocks when the prices are low and sell
those stocks to others when the prices have climbed. Investing
in stocks seemed like a good way to make money. Many people
were so convinced that they could get rich by investing in the
stock market, they often borrowed heavily to buy more stock,
and from 1920 to 1929 stocks more than quadrupled in value.
As stock prices continued to climb throughout the 1920s,
many investors came to believe that stocks were a sure way to
ensure a secure future for their families. It is estimated that
of the $50 billion in new shares offered during the 1920s, half
became worthless by 1930. Banks were among the biggest play-
ers, and when the market crashed, people were afraid the banks
would not have any cash for them if they wanted to withdraw
their money. This fear led many to empty their accounts. This
mass withdrawal was called a “run” on the banks and caused
many of them to go out of business.
Borrowing money to buy stock—known as buying on
margin—became commonplace. And it wasn’t only the rich
executive who bought stock. The average blue-collar worker
was able to borrow money to buy stock against the future value
of that stock. This widespread practice of buying on margin
is considered to be one of the primary causes of the market’s
The End of an Era
black tuesday
The following excerpt is from an October 30, 1929, New York Times
article that illustrates the hopeless feeling experienced by stock trad-
ers during Black Tuesday. Although investors began trading large quan-
tities of stock on Thursday, October 24, which is often dubbed “Black
Thursday,” the real panic did not begin until Monday, October 28, when
the market dropped 12.8 percent from the previous Friday. The next
day, October 29, the market fell another 12 percent, as more than
16 million shares were traded in the most cataclysmic day in the
history of the stock market. At the time, the New York Times estimated
that between $8 and $9 million was lost on Black Tuesday.
Groups of men, with here and there a woman, stood about

inverted glass bowls all over the city yesterday watching spools
of ticker tape unwind and as the tenuous paper with its cryptic
numerals grew longer at their feet their fortunes shrunk. Others
sat stolidly on tilted chairs in the customers’ rooms of brokerage
houses and watched a motion picture of waning wealth as the
day’s quotations moved silently across a screen.
It was among such groups as these, feeling the pulse of a
feverish financial world whose heart is the Stock Exchange, that
drama and perhaps tragedy were to be found . . . the crowds
about the ticker tape, like friends around the bedside of a
stricken friend, reflected in their faces the story the tape was
telling. There were no smiles. There were no tears either. Just
the camaraderie of fellow-sufferers. Everybody wanted to tell his
neighbor how much he had lost. Nobody wanted to listen. It was
too repetitious a tale.*
* “ Stocks Collapse in 16,410,030-Share Day, but Rally at Close Cheers

Brokers; Bankers Optimistic, to Continue Aid,” New York Times,
October 30, 1929.
eventual crash. There was, however, an underlying weakness

in the economy, and so the crash is seen as the beginning of
the Great Depression era, not its cause. A record 16.4 million
shares were traded on Black Tuesday, and the market lost about
12 percent. Events in the months leading up to that Tuesday—
including buying on margin and other practices—had given
some people reason to believe the market’s upward spiral was
about to reverse itself. But even highly respected economists,
businessmen, and bankers were caught up in a frenzy of
speculating in stocks, and ignored some subtle clues. Even the
most educated investors lost fortunes. It is generally accepted
that October 29, 1929, was the last day of the carefree Roaring
Twenties and the beginning of the Great Depression.
While the crash affected rich and poor investors alike,
most of the people who lost money were urban dwellers. There
were, however, ripple effects of this sharp economic downturn,
which quickly extended into rural areas and worsened an
already dangerous situation there. There had been an ongoing
agricultural depression during the 1920s, which intensified
as farm prices dropped due to overemployment within the
industry. After the Great Depression began, the shortage of
work and cash spread from the farmlands to the cities and
back again in the aftermath of the crash. By 1933, the year
Franklin D. Roosevelt was sworn in as president, the average
American’s salary had fallen about 40 percent, to about $1,500
a year, and the unemployment rate stood at 25 percent, or
about 13 million people. Those who lost their jobs were often
those who could least afford to—those already at the bottom
of the economic ladder.
A laborer in New York City, for example, with a wife and
several children at home to support, would have had little or
no savings. When production slowed and he lost his job, there
was nothing to fall back on. And if he had borrowed money to
invest in the stock market, hoping to strike it rich, he would
have to sell any personal items he could to pay back those
The End of an Era
Many American people blamed President Herbert Hoover for the dire
economic conditions experienced during the Great Depression. As a
result, the homeless and jobless named the shantytowns they were
forced to build “Hoovervilles,” because they believed the president did
little to help bring the country out of its disastrous economic situation.
Here, two Hooverville children are pictured next to signs that further
mock the president.
loans. Thousands of families found themselves in this situ-

ation and were evicted from their homes and forced to rely
on the kindnesses of relatives, or set up housekeeping on the
streets. Hundreds of shantytowns sprang up throughout the
country, populated by the newly homeless. Mockingly named
“Hoovervilles” after President Herbert Hoover, who was
thought to be indifferent to the suffering and unwilling (or

unable) to help alleviate it, these temporary housing develop-
ments were breeding grounds for despair.
The social changes experienced during the Great Depression
were far reaching and long lasting. One of the enormous impacts
was on family structure and roles. The traditional view, that
the man was the income provider, often changed because he
could not always find work. But his wife and children might
find small jobs to bring home enough money for the family
to scrape by. This role reversal put a strain on families, leav-
ing them confused and frustrated. Families were often split—
children were often sent to live with relatives, while their parents
survived the best they could. Sometimes men simply could not
handle the hurt and anxiety, and left altogether to join other men
riding the country’s railway system in search of a better life.
And men were not the only ones who took to the road. Boys,
and sometimes girls, joined them out of necessity. Sometimes a
family simply could not feed all of its children and sent the old-
est one out to fend for himself. Life on the road was tough, but
these “hobos” survived by living together, forming what passed
as families for them during their time away from home.
During the early 1930s, a severe drought affected the Plains
states, which forced many farmers and their families to migrate
en masse toward the cities. Areas of Oklahoma, Colorado, Kansas,
and Texas experienced such prolonged drought that the area
became known as the “Dust Bowl” and its inhabitants headed
westward in droves. Chronicled in John Steinbeck’s classic novel
The Grapes of Wrath, these families often ended up as migrant
workers in California’s fruit orchards and vegetable fields. The
“Okies” were not the only ones to migrate. Thousands of blacks
moved from the South to northern cities, and millions of Mexican
and Filipino immigrants returned to their homelands.
Traditional American optimism could only carry the coun-
try so far. As the Great Depression dragged on, despair grew
deeper. Perhaps no event in the country’s history had such an
The End of an Era
encompassing effect on mass feelings and thoughts—the ways

Americans thought of themselves—since the Civil War.
The U.S. Government’s Reaction

Prior to October 1929, the average American had very little
to do with the federal government, nor the government with
him or her. President Calvin Coolidge (who served from
1923–1929) once said that the average American would
not notice if the government disappeared for six months.
That was an exaggeration, of course, but before the stock
market crashed, the government’s primary involvement in
people’s lives was through the post office and services for
war veterans.
But by the end of the Great Depression, generally consid-
ered to be around 1941, when America entered World War II,
there were dozens of federally mandated programs in place to
provide work, to help ease Americans’ suffering, to regulate the
activities of the banking industry and stock exchanges, and to
regulate business practices. One of the most important social
programs was created by the Social Security Administration
in 1935. Social Security was originally established not only as
a financial safety net for old age but also as an unemployment
insurance benefit that was overseen by the federal and state
governments jointly. Before its institution, states and private
agencies had provided some relief to orphans, widows, and
the homeless, but there was no national system in place. These
smaller agencies could not handle the sheer volume of the
destitute arriving daily at their doors. The Social Security Act
provided an additional level of security and stability that had
not been experienced before.
The new deal

The package of programs and laws instituted by President Roo-
sevelt’s administration is known as the “New Deal.” This phrase
encompasses a wide range of initiatives, some of which were
In 1932, Franklin Roosevelt was overwhelmingly elected the thirty-

second president of the United States, winning by a margin of more than
7 million votes and carrying all but six states. Roosevelt endeared him-
self to U.S. citizens by engaging in “fireside chats,” which were regular
national radio broadcasts that brought Roosevelt’s voice straight into
people’s living rooms.
successful, and others that did not fare as well. Roosevelt used
the power of his charismatic personality to sell the American
public on these new programs, getting them to join him in his
“great experiment.” He did that in person and through weekly
radio addresses that were known as “fireside chats.” Millions sat
raptly in front of their radios each week listening to his strong
voice encourage, inform, and reassure.
The End of an Era
The American people had supported Roosevelt in 1932 in

droves, helping him gain an overwhelming victory in the presi-
dential election over his opponent, Herbert Hoover. Roosevelt
won 42 out of 48 states. He brought a measure of hope back to
the country in his inaugural address when he promised to put
people back to work and uttered that now famous phrase, “We
have nothing to fear but fear itself.”
Two well-known programs Roosevelt established were the
Works Progress Administration (WPA), which put thousands to
work (mostly widows or women whose husbands were disabled),
and the Civilian Conservation Corps (CCC), which put thousands
of young men to work on projects such as building roads and
dams and planting trees. The Tennessee Valley Authority (TVA)
also put thousands to work building dams and bringing electricity
to that region. Together these work programs employed millions
during the Great Depression and in the process were responsible
for the creation of much-needed infrastructures (roads, dams,
bridges) and public buildings (schools and libraries).
Of course, not everyone agreed with Roosevelt’s New Deal
policies. They felt that some of his programs would lead to a
welfare state in which people would grow lazy and sit around
collecting government “paychecks.” Although Hoover was an
exception, most conservative Republicans believed that the
government should retain its former “laissez-faire” or “leave-
alone” policies and let the people fend for themselves. They felt
that reliance on government help would weaken the people’s
character and ultimately the fabric of the entire country. In fact,
Hoover had made a speech earlier in 1929, in which he uttered
the words that have become associated with the Republican
belief system. He said that Americans had always been known
for their “rugged individualism” and it was that independent
confidence and can-do attitude that would pull the country
through any storm—not direct government intervention.
Whether one supported or opposed Roosevelt’s New Deal
policies, his programs employed millions in a time of need, put
10 The Stock Market Crash of 1929
money back in their pockets, and food back on the table. These
programs also worked in an intangible way to restore a sense
of confidence and faith in the future. Most of these policies
remained in place throughout each of Roosevelt’s administra-
tions (he was reelected in 1936, 1940, and 1944). But it took
an event out of Roosevelt’s control to truly turn the nation’s
economy around. When the United States entered World
War II, factory and farm production increased in order to
Herbert Clark Hoover

(1874–1964)
The Scapegoat for

the Great Depression
Herbert Hoover was the thirty-first president of the United States,
entering office months before the stock market crash of October 29,
1929, and leaving at the height of the Great Depression in 1933.
He was born to Quaker parents in a village in Iowa, where
his father was a blacksmith. Orphaned at the age of nine, he grew
up with relatives in Oregon and attended Stanford University in
California, where he studied engineering. It was there he met his
wife, Lou Henry. Later on, the two traveled to China, where a private
mining company hired Hoover as head engineer.
From there, the couple traveled to London, where they were liv-
ing when Germany declared war on France in 1914. Hoover subse-
quently helped ease suffering abroad as the head of the Commission
for the Relief of Belgium during the war. His organization and lead-
ership earned him the reputation of being a great humanitarian. He
served during the 1920s as U.S. secretary of commerce, and when
accepting the Republican presidential nomination in 1928, said,
“We in America today are nearer to the final triumph over poverty
The End of an Era 11
provide supplies for troops overseas. This created millions of

additional jobs, energized the U.S. economy, and effectively
ended the Great Depression.
The pendulum swung in a wide arc from the optimistic
Roaring Twenties to the tragedy of Black Tuesday and on through
the struggle of the Great Depression. What was the country like
before, during, and after? What did it take to rebuild fortunes
and recreate what had been lost? Can it happen again?
than ever before in the history of any land.” Many people thought
his election ensured prosperity for the United States.
Hoover cared deeply about the suffering of the American people
and was not the typical Republican; he challenged their laissez-
faire attitude in regard to government involvement in business, and
instead was proactive by asking business leaders to refrain from
laying off workers or cutting wages. In addition, he asked Congress
to appropriate money for public-works projects, including his
Reconstruction Finance Corporation (RFC), which was a large-scale
lending institution aimed at helping banks and industries to recover.
However, by 1932, it was clear that Hoover’s policies were
not working, and the citizens of the United States were more than
ready for a new leader to help the country crawl out of the Great
Depression. Franklin D. Roosevelt’s New Deal ideas sounded promis-
ing and U.S. citizens overwhelmingly elected Roosevelt president,
making Hoover the scapegoat for the country’s financial woes.
Hoover still continued to serve in various capacities in the gov-
ernment and wrote many articles and books over the years. He died
in New York City at the age of 90, on October 20, 1964.
2
Life before
the Crash
T he decade between 1920 and 1929 is often called the Roar-
ing Twenties, New Era, Prosperity Decade, or Jazz Age. It
was a time of optimism and hope, and the future looked prom-
ising. American culture had made huge strides since the end of
the previous century, and rapid changes continued to be made
during this decade.
Now, looking back on those years, it is hard to comprehend
just how different life was then. There were no televisions or
computers. Most people did not own a car. Electricity and
indoor plumbing were fairly new developments and were still
scarce outside of cities. People relied on themselves, friends,
and family both for entertainment and for help in case of an
emergency. The extent to which people were “on their own” is
hard to imagine, because today there are many social safeguards.
If a person loses his or her job today, chances are he or she can
12
Life before the Crash 13
collect unemployment insurance, which did not exist in 1930. If

an elderly woman has worked during her lifetime, she can now
collect a monthly Social Security check, another form of insur-
ance that had not yet been developed in the 1920s. Private relief
agencies existed to help out widows and orphans or the elderly
poor, but for the most part, families looked after their own.
Americans were proud of their self-sufficiency. Most did not
feel the government should play a part in their private lives and
were happy that the government felt the same way. The most
involvement the majority of people had with the federal govern-
ment was when they used the postal service to mail a letter.
With the end of World War I in 1918, the country turned
back to developing domestically. Many people were intent on
enjoying themselves. Jazz music became all the rage, filling
smoky clubs and radio airwaves. Its popularity caused writer
F. Scott Fitzgerald to call the era the Jazz Age. “The Charleston”
was one of the more popular dance crazes sweeping the nation.
And women became increasingly “modern,” cutting their hair
short, wearing baggy dresses that exposed their arms and legs,
wearing makeup, and daring to smoke cigarettes in public. These
“flappers” fought for social freedoms, while their political coun-
terparts, the suffragettes, rallied to get the right to vote (which they
did in 1920, with the passage of the Nineteenth Amendment).
The temperance movement, which worked to make the
manufacturing, transportation, and sale of alcohol illegal,
began during World War I, and was successful when the
Eighteenth Amendment to the Constitution was ratified in
1919. (It was then repealed by the Twenty-First Amendment in
1933.) During the period in which alcohol was illegal, known
as Prohibition, many people ignored the law, opening private
clubs in homes and the back rooms of stores. Known as “speak-
easies,” these clubs served alcohol and gained a bad reputation.
Many of them were owned by gangsters, and violence became
more prevalent. Other people learned to brew their own beer
or make gin at home, sometimes in large vats or even in their
The temperance movement, which promoted abstaining from drinking

alcohol, led Congress to pass the Eighteenth Amendment to the U.S.
Constitution in 1917, which prohibited the manufacture, sale, and con-
sumption of alcoholic beverages in the United States. Then-New York
City deputy police commissioner John A. Leach is pictured here watching
Prohibition agents dump liquor into a sewer after a raid in 1921.
bathtubs, earning this home-brewed alcohol the name “bath-

tub gin.”
Moving into the 1920s

Up until the late 1800s, Americans grew or made just about
everything they needed to live, buying the few items they
could not produce at home. But as the country became
increasingly industrialized, Americans began to purchase

more household items. Farmers also began to join this “mar-
ket economy.” Instead of raising a variety of livestock and
a diversity of crops, they increasingly raised just one crop,
sold it, and bought everything else. As farms became more
efficient through the development of new machinery for
harvesting crops and baling hay, for example, a surplus was
created that could be sold elsewhere. During World War I,
buyers for those products were found in the war-torn coun-
tries of Europe, which were too damaged to produce enough
food for their citizens.
Electricity allowed many homes to run such newly invented
luxuries as refrigerators, fans, toasters, washing machines, vac-
uum cleaners, and radios. Suddenly, these became “must-have”
items and a shift in the cultural mind-set occurred. Before long,
the traditional values of frugality and saving for the future gave
way to something new: buying on credit. By 1929, almost 15
percent of all purchases were made on credit. And this “easy
way to buy” was encouraged by advertisers, who found their
job even easier by promoting their products on the radio.
With all these new gadgets cutting the time spent on
housework in half, Americans suddenly had newfound lei-
sure time. Some of them used this free time to take drives in
the country in their new cars. Henry Ford’s Model T was a
car for the masses, and at around $600 to $800, many people
could afford one—on credit, of course. Another favorite
leisure activity was watching sports games or listening to
them on the radio. Baseball and boxing fans listened avidly
to broadcasts of their favorite teams and bouts and followed
the lives of sports figures, who were the celebrities people
most admired. Lou Gehrig and Joe Louis, for example, were
seen as heroes for their achievements on the field and in their
everyday lives, too. So for many, or even most Americans,
the 1920s was a time to live life to the fullest, without much
thought of the future.
The state of the economy

Although unemployment was low during the 1920s, wages were
also low, and company owners had little incentive to raise them.
The bulk of the country’s wealth was concentrated in the hands
of a few. Six out of 10 families had incomes of less than $2,000
per year and only 3 of every 100 families earned incomes of
more than $10,000 a year, the equivalent of about $116,000 in
today’s dollars. The bottom line was that only a small propor-
tion of the population had the money to make purchases with
cash. The increasing debt load on individuals and families wors-
ened the Great Depression, as many consumers simply could
not repay their loans. In addition, new technologies meant that
factories were able to produce goods faster than consumers were
able to purchase them, leaving factories with surplus products.
This forced factory owners to lay off workers, because there was
no longer a great need to churn out products.
Railroads, factories, mines, and other industries were owned
by private individuals who ran their companies in their own ways.
There were few, if any, governmental controls over management.
Employees often worked long hours for low pay, but as long as
there was a steady supply of new immigrants and an influx of
young men from rural locations to the cities, all of whom were
eager and willing to work for whatever salary and under what-
ever conditions, the status quo was not about to change.
Some changes had been made in working conditions by
President Theodore “Teddy” Roosevelt, who entered office
in 1901 after President William McKinley was assasinated.
Unfortunately, some of those reforms hurt, rather than helped,
certain industries and their employees. For example, as oil
became more popular than coal for heating homes, unem-
ployment rose in coal-mining areas such as the Appalachian
region. As newly developed synthetic materials replaced cotton
in clothing (as well as the fact that styles of the day used less
fabric to begin with), the cotton industry suffered. Then there
were the farmers, who did not know what to do with their
surplus crops. As Europe recovered from the war and its farm-
ers went back to their fields, American farmers lost a valuable
market. This loss created a cash shortage, keeping American
farmers from buying necessary farm equipment and fertilizer.
Planting the same crop year after year in the same field used up
the nutrients in the soil, and the weather during this period was
uncooperative. Drought followed by floods decimated crops
and added to the downward cycle of events.
The federal government may have been able to help farm-
ers recover more quickly from some of their losses, but Calvin
Coolidge, the president at the time, told the chairman of the
Farm Loan Board, “Farmers have never had money. I don’t
believe we can do much about it.”1 Coolidge twice vetoed
legislation that would have provided relief to farmers and
protected them from foreign competition. Most Americans at
the time believed in this form of “leave-alone” or “laissez-faire”
governing. They believed that their system of government and
economy had built-in checks and balances and they did not
want the federal government solving their problems or telling
them what to do.
So for some, the Great Depression began almost 10 years
before it did for the rest of the country. Many farmers could
not make their mortgage payments, and banks became over-
whelmed by properties they had seized after farmers failed to
make their payments. The banks then tried to sell those prop-
erties, but no one wanted to buy land to grow crops for which
there was not a market. More than 1,500 banks closed between
1926 and 1928 because they had overextended credit.
Economies rise and fall; consequently, this depression was
not the first the United States had experienced. In fact, it was
the nineteenth depression since the American Revolution. In
1837 and 1857, depressions occurred in the United States due
to several factors, including over-speculation in railroads and
real estate, an increase in agricultural production, and a shift
to more of a manufacturing economy. Again, in 1869, after
the gold rush in California, investors raced to buy up gold,

and when the supply of gold grew and prices dropped, a panic
ensued. The depression of the 1930s, however, was by far
the worst.
The Allure of Money

Many people are naturally attracted to making money. Buying
and selling stocks was, and often still is, seen as a way of mak-
ing money quickly and easily. When enough people invest in a
certain stock, it can cause the price to rise. If too many people
continue to buy and share prices continue to rise, stock prices
will eventually become unrealistic in relation to the true value
of the company they represent. Unless that true value “catches
up” with the stock price, the price will begin to fall. When a
share of stock loses value, some people sell their shares, afraid
they will lose everything if they do not get rid of the devalued
stock. If too many sell too quickly, panic can set in, with inves-
tors believing they won’t get back at least what they paid for the
share. This is what happened in October 1929.
People’s overuse of credit soon extended to buying stocks
on credit. Known as buying on margin, investors could now
buy more stock than they could afford, buoyed by the belief
that when the value of their stock rose, they could sell it and
pay off their debt. People invested a great deal of their money in
such companies as General Motors, DuPont, and RCA (Radio
Corporation of America). RCA was just about the most popu-
lar stock of the 1920s because of the growing popularity of
radio and the company’s domination of that market.
Individuals were not the only ones who bought stock for
themselves. Banks invested their depositors’ money and others
formed companies that existed solely to buy up enough stock
of other companies to gain control of them. These “holding
companies” grew in popularity and there were many of them.
“Stock manipulators” sold stocks and bonds and used the
income to buy up enough stock in an existing company to
In 1929, Radio Corporation of America (RCA) was the most heavily

traded stock on the New York Stock Exchange. The corporation was
founded in 1920 and soon held a monopoly over the communications
industry, leading to its astronomical stock price of $114 per share in
1929. Here, RCA’s mascot, Nipper the Dog, is depicted in an advertise-
ment for Victor phonographs.
control it. Whenever the promoters needed cash, they created

another holding company, and so on. After October 29, 1929,
there were no more customers who wanted to buy stock with
cash. The owners of the holding companies could no longer
make payments on the bonds they had sold. Empires that were
built during the 1920s in the entertainment, railroad, and utili-
ties industries often fell hard.
One such empire was built by Samuel Insull, an Englishman
who had once been inventor Thomas Edison’s private secre-
tary. Insull’s company, Commonwealth Edison, was billed as
“the world’s safest investment.” He became a millionaire by

manipulating stock from his base in Chicago, where he was
active politically and socially. Because of his reputation for
being trustworthy, many invested in his utility company, which
at one point produced nearly one-eighth of all electric power
in the country. However, Insull went bankrupt in 1932, taking
thousands of people with him.
Herbert Hoover took office as president in 1929, and
soon afterward he commissioned a study by some of the most
respected sociologists of the time. The statistical study was to
be used as a basis to establish “sound national policies” in the
United States for the coming years. The resulting document,
titled Recent Social Trends, was 1,500 pages long and full of all
kinds of data about American life. The scientists discovered
that the years since 1890 (they used the 1890 national census as
their point of reference) had experienced huge social and eco-
nomic changes, more than in the entire preceding 100 years.
One of the biggest contradictions they found was the dif-
ference in standards of living between the country and the city.
(The suburbs did not exist yet.) Almost half of the national
population was still living in rural areas in 1929, living a life-
style that had changed little from 100 years before. Immigrants,
who had poured into the United States around the turn of
the twentieth century, had a huge impact on American life,
economically and culturally. But during the 1920s, the govern-
ment began to pass laws that limited how many new people
the country would accept. In 1928, more than 300,000 people
immigrated to the United States, but that number dropped to
23,000 by 1932. And during the decade of the Great Depression,
from 1930 to 1940, for the first time the number of people who
left the country actually exceeded those who arrived.
Contrary to what many believed and how many lived, the
ongoing “bull” market—when people are buying stock and
prices are rising—could not last forever. Many believed prices
would keep climbing indefinitely, but a few small breaks in the
rise of prices made others nervous. Some signs of danger that

were mostly ignored included the slowdown in the textile, coal,
and farming industries and in business overall. Unemployment
had grown slightly throughout 1928, and—a real warning sign
for many—construction of new homes declined in 1927. When
new homes are not being built, there is less need by consum-
ers for new refrigerators, carpets, furniture, and other home
supplies. Fewer factory workers were needed to produce the
same amount of products because of improved machinery
and production methods. Production then had to be reduced
because the supply far exceeded the demand. This was followed
by worker layoffs, creating a downward spiral. In addition, most
people who could afford a car, radio, or refrigerator, or who
wanted to buy these items on credit, already had them by 1929.
The stock market crash of 1929 had devastating and long-
lasting effects, unlike those depressions that had come before,
which passed fairly quickly. The 1929 crash joined other factors
in triggering the Great Depression. It was a decade-long period
of economic downturn that affected virtually every resident of
the United States and spread throughout the world.
3
The Buildup to
Black Tuesday
T he upward spiral in stock prices throughout the 1920s
slowed somewhat during 1929, although this mild recession
(a short-lived, minor economic slowdown) was barely noticed by
most investors. There were subtle signs of a weakening economy,
including a few small breaks in the rise of stock prices and the
slowdown in industry and new home construction. But overall,
no one questioned the bull market, including some leading
economists and respected bankers who preached optimism.
Gradually, however, the occasional reports that overspec-
ulation was weakening the market grew more frequent. More
and more investors became nervous that perhaps prices had
become inflated and they might lose money rather than
make more. There were some who predicted a messy end.
Shortly after he took office in early 1929, Herbert Hoover
attempted to curb the buying frenzy by encouraging financial
22
The Buildup to Black Tuesday 23
boards in the government to do what they could to slow it

down. He even encouraged newspaper editors to warn their
readers about the dangers of overspeculation and the inflated
prices of stocks. For the most part, Hoover’s entreaties were
ignored, because no one wanted the “party” of the Roaring
Twenties to end.
What Caused the Crash?

As has been stated, the consensus among economists and histo-
rians today is that no single issue caused the stock market crash
of October 29, 1929. Rather, a combination of events, natural
and man-made, along with governmental policies, improve-
ments in manufacturing, and the rise in buying on credit, all
contributed to the market’s sudden downturn. Despite hard les-
sons learned from past market collapses, speculators continued
to borrow and buy, driving stock prices higher and higher.
Many New York banks could not keep up with the demand
to buy stocks on margin and had to borrow money from other
banks. Often, they would borrow money at low interest rates
from the Federal Reserve Bank and then turn around and loan
it out at a higher interest rate. The Federal Reserve bank system
was created by the Federal Reserve Act of 1913 to establish a
central bank to strengthen the country’s financial system. It
is made up of a board of governors and 12 regional Federal
Reserve banks around the country, as well as other, smaller
banks. Some economic experts feel that at the time of the stock
market crash, the Federal Reserve should have loosened restric-
tions on borrowing money instead of tightening them.
After large gains were made in the market in early Septem-
ber 1929, some economists made positive predictions for
the final quarter of the year. One of these fortune-tellers was
Irving Fisher, an economics professor at Yale University, who
said on October 17 that prices had reached “what looks like a
permanently high plateau.”2 Fisher had been respected for his
writing and teaching about economic theories and his opinion
Even several months after the stock market crash in October 1929, Yale
economics professor Irving Fisher continued to believe that the U.S.
economy would recover. Thus, Fisher’s theories were largely discredited
due to his inaccurate pronouncement that stock prices had reached
their plateau just before the crash.
was highly regarded. His mistaken predictions surrounding

the market’s performance during the days preceding the crash,
however, seriously damaged his reputation.
By early October 1929, many utility companies were com-
ing under scrutiny for some of their stock pricing practices. One
of these companies, Edison Electric of Boston (which had been
cofounded by Samuel Insull before he moved to Chicago), had
applied for a stock split, which was denied by the Massachusetts
Public Utility Commission. (In a stock split, shareholders are
given two shares for every one they presently hold, although the
value of the two shares remains the same as the value of the for-
mer share.) The New York Times reported on October 12 that the
Irving clark fisher

(1867–1947)
Notable Economist
Irving Fisher was one of the country’s leading economists who made
his fortune by inventing the Rolodex, known then as the Visible Index
Card System. He invested a large amount of his money in stock, and
even months into the crash, he continued to reassure investors that
the market was secure. Unfortunately, he lost most of his fortune and
reputation before the market began to recover in 1932. In 1930, he
wrote The Stock Market Crash and After, discussing real growth in the
manufacturing sector of the country. This may explain his continued
investment in stocks and his optimism over the performance of the
market. According to one source, what Fisher considered an increase
in manufacturing was actually an increase in manufacturing efficiency
(how much each worker could produce), due to improvements in
technology manufacturing practices.
reason for the denial involved high electricity rates and the need
for the company to drop those rates before raising dividends to
investors. This decision caused a drop in Boston Electric’s stock
price and an investigation by the governor of the commonwealth
into the company’s operating practices. Massachusetts was not
the only state experiencing utility company investigations. The
governor of New York at the time, Franklin D. Roosevelt, also
instituted an investigation into practices among the utility com-
panies of his state. The stock sell-off the following week began in
the public utility sector.
For at least five years prior to the crash, the increase in
trading on the stock market was also due in part to the habit
of buying stocks with borrowed money. Investors were con-
vinced that prices would continue to go up and they would
be able to repay their loans with the sale of the inflated stocks.
When stock prices began to fall, speculators became worried,
selling off as much stock as they could, causing prices to fall
even lower. The ripple effect grew stronger with the passing
days, weeks, and months. By the millions, people discovered
they were less well-off than they had thought. Their wealth had
existed only on paper.
The New York Stock Exchange

The New York Stock Exchange (NYSE), the largest stock exchange
in the world, was founded in 1792 in the area of Lower Manhattan
that is now Wall Street, when a group of 24 brokers (people who
buy and sell shares of stock) agreed to deal only with each other.
The exchange was formally established in 1817. By the 1920s,
the inner sanctum of the NYSE was like another world. Trading
began at 10 a.m. and ended at 3 p.m., both times signaled by
the banging of a loud gong. Within the massive, 15,000-square-
foot room, floors were padded to reduce noise. Seventeen semi
circular trading posts were set up, each handling a different type
of stock. Ticker-tape machines recorded current stock prices on
huge ribbons of paper as the price reports came in from around
the country. The machines were kept under glass and were
connected via telegraph to thousands of other stock exchanges
and brokers’ offices nationwide. For every 100 million shares
traded, 500 miles of tape swirled through the machines.
Stock transactions, including sale prices, were tracked tele-
graphically through these machines. Today, giant digital readouts
announce the latest prices as quickly as transactions are made.
In the 1920s, the tickers spewed out printed numbers that were
then transcribed onto chalkboards. These tickers were relatively
slow, and if transactions took place too rapidly, the tracking
mechanisms would fall behind. On Monday, October 21, 1929,
the week before the big crash, the ticker ran a full 100 minutes
behind actual sales by the end of the day. That delay worsened
during the following week. When the ticker fell behind, people
were not aware of the actual price of any given stock, and they
were not aware of just how much they had lost. Those who tried
to get information by phone were equally frustrated, because
phone lines were continuously jammed. Lack of adequate com-
munication likely played a large role in the severity of the panic.
The Stock Market Craze

Most experts and investors alike believed that rising stock prices
reflected a healthy economy. The government had no policies
in place to regulate the market, although the Federal Reserve
Board did try to keep investments in balance by occasionally
raising interest rates to discourage rampant borrowing. People
would think twice before borrowing money, because higher
interest rates meant that the borrower would have to pay back
much more money than he/she borrowed. In fact, that Febru-
ary, the Federal Bank of New York raised interest rates by one
point, from 5 to 6 percent, to discourage “reckless behavior” by
speculators who continued to borrow.
The following month, the Federal Reserve Board met
secretly, leading to rumors that interest rates would be raised
again; consequently, investors began to sell. Rising interest rates
Although the New York Stock Exchange traces its roots back to 1792, its
current name was not adopted until 1863. The current home of the New
York Stock Exchange, which is pictured here in 1921, opened in 1903
and was designed by American architect George B. Post.
are often believed to have a braking effect on the economy.

Stock values are tracked each day by the industrial average—
the average value of the price of the top 30 companies trading
in the stock exchange. This average is a good indicator of the
market’s overall performance. One point equals $1.
Charles E. Mitchell, president of the country’s largest
bank, National City Bank, promised to keep interest rates low
and to continue to lend money. The Federal Reserve Board
and some of the more influential bankers could have requested
congressional approval to set limits on buying on margin, but
none of these men wanted to be associated with having ended

the boom.
By 1929, it seemed as though everyone, in all walks of life,
and not just businessmen, was interested in the stock market. Peo
ple took out second mortgages on their homes and housewives
sneaked money from household expenses to play the market.
charles E. mitchell
(1877–1955)
Chairman of the
National City Organization
Charles Mitchell served as president of the National City Bank, the
nation’s largest bank, from 1921 until the market crashed in 1929.
He was called a hero during the “mini crash” of March 26, 1929,
when he vowed to keep interest rates low, no matter what, and to
continue to lend money. Before joining National City, he was an
assistant to the president of Western Electric in Chicago and then
held the same position at the Trust Company of America in New York
City. He was elected president of National City in 1921 but resigned
in 1929 to become chairman of the National City Organization, a
position he held until 1933. Under his leadership, the bank became
a global corporation with 100 offices in 23 countries. He introduced
the personal consumer loan in 1928.
Just before the crash, he had borrowed millions of dollars to
buy more stock in his own company, trying to stabilize the price of
its shares, which had fallen from $500 to $200. He admitted specu-
lating with the bank’s stock and was subsequently investigated by
federal authorities. He resigned in 1933 and the investigation into
his illicit actions led Congress to pass the Securities Act of 1933
and the Banking Acts of 1933 and 1935, which ultimately ended
commercial bank ownership of investment firms.
Some people invested everything they had in the market in the

belief that there was no way they could not become rich.
Investment trusts, which were relatively new at the time,
raised investors’ confidence even more. These trusts combined
stocks of many companies in one grouping, so buying shares in
an investment trust actually meant purchasing stock in many
different companies. Because these funds were managed by
professional financial advisors and were diversified (made up
of a variety of companies), people felt more secure buying stock
this way. Using a professional took the guesswork out of invest-
ing. High levels of speculation in some stocks pushed prices well
above what companies were actually worth. Most investors did
not worry about these inflated prices, however, believing that they
represented the future worth of the companies—the companies’
potential, not the present reality. Unfortunately, diversification of
stocks within a trust or fund did not help investors at the time of
the crash because of the universal drop in prices in all categories.
Heading Toward A Crash

Stock prices reached their high point on September 3, 1929.
Two days later, economist Roger Babson said in a speech to the
National Business Conference, “Sooner or later a crash is com-
ing and it may be terrific. Factories will shut down and men
will be thrown out of work. The vicious circle will get in full
swing and the result will be a serious business depression.” The
industrial average dropped as the market responded to his pre-
diction, but it recovered the next day. This dip became known
as the Babson Break.3 He was one of the few who accurately
predicted the coming crash publicly.
Fewer new homes were constructed during the fall, adding
to lower production across all industries, which caused the reces-
sion to deepen. On October 19, more than 3 million shares were
traded and the industrial average fell yet again. Five days later, on
October 24 (often called Black Thursday), the industrial average
fell to that previous June’s level, erasing any profits stockholders
On October 24, 1929, in an effort to stem the tide of dropping stock

prices, then-NYSE vice president Richard Whitney was asked by several
prominent Wall Street bankers to purchase stock shares of major U.S.
corporations at higher prices. Unfortunately, Whitney’s efforts only served
to delay the crash, which would occur five days later on October 29.
had made in the four months in between. The heavy trading and
fall of the industrial average caused the day to begin on a sour
note at the New York Stock Exchange, with General Motors’ com-
pany stock selling well below its previous market price.
Throughout that day, Richard Whitney, vice president of the
NYSE, placed buy orders at each trading station on the floor of
the exchange. And at noon, top bankers set up a $50 million fund
in the hope of bolstering falling stock prices. These measures
helped restore some calm and order, and the market closed 12
points down from the day before. In total, 12,894,650 shares were
traded on Black Thursday, a new record. The previous record
for trading activity had been set about 18 months before, on
March 12, 1928, when 3,875,910 shares were traded. On the day
after Black Thursday, a New York Times headline stated, “Worst
Stock Crash Stemmed by Banks: 12,894,650-share Day Swamps
Market: Leaders Confer, Find Conditions Sound.”4
That Friday and Saturday, October 25 and 26, trading
remained heavy, but prices were fairly steady. In 1929, the
stock market was open for trading six days a week. But Sunday,
October 27, 1929, was no normal day off for those who worked
there. From bankers and brokers to clerks, offices were full of
people trying to recover from the never-before experienced
highs and lows of the week before. It seemed that all of New
York was reacting to the unprecedented events of that day.
Restaurants normally closed on Sundays opened their doors for
tourists who flocked to the district to see for themselves where
all the excitement had taken place; perhaps some wanted to
take home souvenirs of the ticker tape that littered the streets.
Monday’s opening gong started a selling frenzy and the indus-
trial average fell 38 points that day, representing the largest drop
in prices ever. The bankers did not rescue investors this time. In
fact, that evening, they released a statement saying their goal was
to maintain order within the market, not to protect anyone’s profit
or keep prices at a certain level. Everyone was preparing for what
might happen the next day.
4
The Day
of the Crash
I n New York City, Black Tuesday, October 29, 1929, dawned
cloudy, as if nature had anticipated the coming events. With
trading expected to be heavy, extra brokers, switchboard
operators, and clerks were brought in. Every type of business
that traded on the market was privy to the rampant selling of
stocks. In the first half hour, 3.5 million shares traded hands.
This was the day the large investors—the millionaires—sold
in a panic; small investors had already lost everything the
previous week. Huge losses were experienced by nearly every-
one. For example, RCA shares were selling for $26, down
from a high of $114 (adjusted to the 5 to 1 stock split earlier
that year). The ticker quickly fell behind and it soon became
impossible to tell how the market was really doing or to find
out the latest sale price. News and rumors spread quickly.
33
Sell, Sell, Sell

By early afternoon, five top bankers decided to set up a meeting.
They were Charles Mitchell, chairman of National City Bank;
Albert Wiggin, chairman of Chase National Bank; William
Potter, president of Guaranty Trust Company; Seward Prosser,
chairman of Bankers Trust Company; and Thomas W. Lamont,
senior partner of J.P. Morgan & Company. After the meeting,
Lamont made the following statement to reporters: “There has
been a little distress selling on the Stock Exchange, and we have
held a meeting of the heads of several financial institutions to
discuss the situation. We have found that there are no houses
in difficulty and reports from brokers indicate that margins are
being maintained satisfactorily. . . . It is the consensus of the
group that many of the quotations on the Stock Exchange did
not fairly represent the situation.”5
His statement was not totally true, because brokers struggled
to keep up with the flood of sell orders. The volume was unprec-
edented and the floor of the exchange was in chaos. Adding to
the confusion were the customers who had been unable to get
through on the telephone and came to the exchange in person
to try to get information. Their presence did little to help the
growing pandemonium, and it was nearly impossible for them
to get any additional accurate and up-to-date information any-
way. Everyone was operating more or less in the dark.
Word spread that prominent financiers such as William C.
Durant and the Rockefeller family were stepping in, and people
stopped telling brokers to sell, hoping the market would once
again bounce back. The strategy worked for a little while, but
sell orders continued coming in from other parts of the coun-
try that were not aware of the financiers’ strategy. Panic began
to build again. Telegrams from brokers to speculators (who had
bought on margin) overwhelmed the Western Union system
with terse messages: Cover your margin now, or your shares
will be sold when the market reopens. Investors and their bro-
kers were reduced to tears.
The Day of the Crash 35
Richard whitney
(1888–1974)
President of the
New York Stock Exchange
Richard Whitney came from a wealthy Boston, Massachusetts, family
and attended Harvard University. When he moved to New York City
in 1910, he opened a bond brokerage firm—Richard Whitney and
Company—with his brother. Two years later, the company bought a
seat on the New York Stock Exchange (NYSE). Whitney moved among
the powerful socialites of the city and gained power and prestige. In
1919, he was elected to the board of governors of the stock exchange
and shortly thereafter, he became vice president of NYSE. On Black
Thursday, October 24, 1929, several prominent Wall Street bank-
ers met in an attempt to stop the market slide. They jointly agreed
to have Whitney attempt to end the slide by having him purchase
large amounts of stock shares in prominent U.S. corporations, such
as U.S. Steel, at rates much higher than market value. Unfortunately,
Whitney’s actions only stemmed the tide of the impending crash,
and by the following Tuesday, the market bottomed out. During this
tumultuous period, Whitney served as acting head of NYSE, but was
elevated to president by the exchange’s board of governors in 1930
and soon thereafter began advising President Herbert Hoover.
Unfortunately for Whitney, his popularity would not last much
longer. Although many thought he was a brilliant financier, in real-
ity, he had borrowed a lot of money before and after the crash from
his brother and his wealthy friends. After he could no longer obtain
loans, he resorted to embezzling funds from the NYSE Gratuity Fund
and the New York Yacht Club, where he was treasurer. He also stole
$800,000 in bonds from his father-in-law’s estate. On March 10,
1938, he was charged with embezzlement, and served three years
in prison.
Once the stock market crash began on October 29, many stockholders
crowded the streets outside the New York Stock Exchange when they
were unable to contact their brokers. As rumors of the crash began to
spread, mounted policemen were brought in to control the crowd.
Thousands gathered on Wall Street that afternoon, as

rumors of a crash began to spread. Police on horseback were
brought in to keep the crowd under control. By 3 p.m., the
industrial average had dropped to 230, down an additional 43
points from the day before. This represented a loss of about 12
percent for the day—a total of nearly 40 percent from its high
of September 3, less than two months before. It was now at the
same level as it had been in November 1928. More than $14
billion was lost in the 16,410,030 shares that had been traded—
a new record. The entire budget of the U.S. federal government

in 1929 was just $3 billion.
The next day, investors sold 16 million shares even though
it meant losing money. The atmosphere on Black Tuesday and
the days immediately following was one of panic. Investors,
brokers, bankers—everyone was panicked. This was worse than
the selling frenzies that had happened in the past. This was a
sustained, prolonged period of such frenzy that panic gripped
all those involved.
A Downward Spiral
The next few days of trading created a mess of the trad-
ers’ records. By the following Wednesday, the NYSE Board
of Governors voted to close the exchange for two days to
give everyone a chance to catch up. This was the first time
the stock exchange had been closed since the start of World
War I in 1914. Records were straightened out, but the sell-off
continued when the market reopened the following Monday,
and trading was subsequently limited to three hours a day.
There were some who tried to maintain an optimistic outlook,
and in spite of the obvious problems, some financial writers
wrote that the economy was still strong. President Hoover
even stated that “the fundamental business of the country, that
is, production and distribution of commodities, is on a sound
and prosperous basis.”6
But no matter how strong the reassurances, the market
continued its gradual downward spiral throughout the next two
months. By mid-November, activity on Wall Street had slowed.
People found it nearly impossible to believe that $30 billion in
paper value was gone. Wall Street’s credibility had declined and
the U.S. credit system had been badly damaged. It wasn’t long
before unemployment began to rise. The market finally hit bot-
tom in July 1932, when the industrial average was down slightly
more than 89 percent from its high in mid-1929.
Even the savviest financial experts could not have predicted

the depths to which the U.S. economy would fall, and the dras-
tic, tragic effects it would have on the country’s social fabric.
By the height of the Great Depression, the national income was
cut in half and 75 percent of all stock market values had disap-
peared. By the time Franklin Roosevelt took office in 1933, 25
percent of all workers were out of work. Today, unemployment
is considered “unacceptable” when it reaches about 5 percent.
The Effect of the Crash

With the loss of employment, families quickly found them-
selves in financial trouble. They had trouble feeding them-
selves and paying rent and utilities. For the most part, savings
were nonexistent. Much of the country’s savings had been
spent on stock speculation over the course of the past decade.
Families sold furniture, jewelry, and anything else of value.
For those in the cities who rented apartments, missing a rent
payment often meant immediate eviction. Homelessness,
especially in the cities, very quickly became a major problem.
Social service agencies that had always been around to provide
for the poor were quickly overwhelmed by requests for aid.
Those who owned their homes were sometimes able to work
out deals with their banks, because the banks had nothing to
gain by seizing the home. After all, whom would they get to
buy it? In some cases, families would send children to live with
various relatives so the parents would be free to move around
in search of work.
Some companies tried to reinvigorate failing business by
cutting prices. The Ford Motor Company, for example, dropped
prices on all its car models, which came out to be about
$500 for the standard car—still an astronomical sum for most.
Comedians found dark humor in the situation and joked that
people should carry open umbrellas when walking around New
York City to protect themselves from the rain of investors jump-
ing from rooftops and windows in despair over lost fortunes.
Certain segments of the population had always had a dif-

ficult time getting by, but the middle class really felt the losses
this time. There was no sense of security for these shopkeepers,
managers, lawyers, accountants, and other professionals. Many
teachers lost their jobs, causing schools to close; but those
teachers who kept their jobs often went unpaid or were paid
just a portion of their former salary. Still, some teachers helped
provide food for their hungry students, knowing that whatever
they ate at school might be their only meal of the day.
All told, about 3 million Americans were directly affected
by the events of October 29, 1929, and the aftermath. Those
who had borrowed money to buy stock, furniture, jewelry,
homes, and cars had their belongings repossessed. Many people
went bankrupt. Lives were unalterably changed. Some people
even took their own lives when they realized the enormity of
what had happened to them.
Hoover’s Solution
Early in the Great Depression, the federal government, led by
President Hoover and other conservatives, believed that the
best solution was for Americans to continue to rely on them-
selves. It was believed that a continued effort at self-reliance
would help the people “pull themselves up by their bootstraps.”
The prevailing belief was that the marketplace would adjust
itself eventually and the government should not intervene. This
method of “laissez-faire” governing was all Americans had ever
known, and at first, most people did try to care for themselves
and their families without reaching out to social service agen-
cies for help.
By the time some families did ask for help, they had lost
almost everything they owned, including the roof over their
heads. State and local relief agencies, originally established to
help widows and orphans, were overwhelmed with requests for
money and food. The timing of the crash was especially dif-
ficult, because winter was right around the corner. Furniture
During the early part of the Great Depression, many Republicans believed
that the government should refrain from getting involved in people’s lives.
Instead, they believed that American citizens, such as these New York
City street vendors, should “pull themselves up by their bootstraps.”
was burned for heat and two meals a day became standard for
many.
Hoover felt that government aid would ultimately weaken
Americans’ character and would undermine one of the guiding
principles of the country. A statement made by the president in
February 1931 underscored his philosophy:
This is not an issue as to whether people shall go hungry or

cold in the United States. It is solely a question of the best
method by which hunger and cold shall be prevented. It is a
question of whether the American people . . . will maintain

the spirit of charity and mutual self-help. If we break down
this sense of responsibility and individual generosity in
times of national difficulty and if we start appropriations of
this character, we have impaired something infinitely valu-
able in the life of the American people. I am confident that
our people have the resources, the initiative, the courage, the
stamina, and the kindliness of spirit to meet this situation in
the way they have met their problems over generations.7
Hoover’s administration was not immune to the peoples’

suffering. But its beliefs were so ingrained, it could see no other
way to move out of the depression while maintaining America’s
hallmark reliance on self. Hoover did not just sit by and do noth-
ing. Efforts were made to slow the effects of the crash. In 1932,
Hoover established the Reconstruction Finance Corporation
(RFC) to loan money to state and local governments, which
would use it to start public works projects, and to failing busi-
nesses, including banks, railroads, insurance companies, and
farm mortgage organizations. He felt that if these businesses
were able to remain solvent, they would continue to employ
workers. The RFC eventually loaned out about $2 billion.
One of the most well-known projects the RFC helped fund
was the building of Hayden Planetarium in New York City’s
Central Park, with a $650,000 loan from the RFC and a $150,000
donation from philanthropist Charles Hayden. The planetarium
opened in 1935. Other high-profile projects included the build-
ing of Jones Beach in New York, the Bay Bridge in San Francisco,
and the Pennsylvania Turnpike. But as the only program set
up to help deal with the crisis on a national level, the RFC was
not enough.
To bolster Hoover’s attempts, some private individuals
tried their own tactics to reinvigorate the economy. Philip H.
Gadsden, president of the Philadelphia Chamber of Commerce,
started a “Buy Now” campaign, urging everyone who had a job
to go out and spend just 15 cents a day. He claimed that if every

wage earner in the country would do this every day, it would free
up enough money to create jobs for millions of the unemployed
and pay them $6.25 per day. He said this contribution would put
more than $2 million back into circulation each year. Launched
in November 1930, it initially seemed like a success, with copycat
campaigns springing up throughout the country. However, it
fizzled out almost as quickly, because people did not really have
that much money to spend every day. It seems odd today that 15
cents would put a strain on a family’s budget, but it did.
Other fund-raising efforts were undertaken to fill the coffers
of social service organizations. One effort was to take the money
received during certain shows at movie theaters and donate it to
specific agencies. In addition, President Hoover set up a group
known as the Committee on Mobilization of Relief Resources of
the President’s Organization for Unemployment Relief. Headed
by Owen D. Young, chairman of General Electric, this group used
billboards and magazine and newspaper ads to remind Americans
they were in the middle of a depression (as if they needed remind-
ing), and that millions of fellow citizens needed assistance.
New York City held various fund-raising events, including
dinner dances for the wealthy, basketball games, carnivals, con-
certs, and movies, and even a door-to-door fund drive that asked
for donations of a onetime minimum payment of $2 or a dime a
week. More than $1 million was raised through these efforts, but
private organizations eventually ran out of money, too. Although
these various campaigns were admirable, and people did reach
out to help their neighbors, what was needed was massive relief
on a scale the country had never known. But people needed
more than charity. They wanted to earn real wages, and that was
an issue that was not addressed in Hoover’s approach to ending
the Great Depression. As the depression deepened, and people’s
support of the federal government’s approach lessened, the time
was ripe for a change in leadership.
5
The Early Years

of the Great
Depression
A common Great Depression-era image is of men standing
on street corners selling apples. These small businesses
were made possible by the International Apple Shippers Asso-
ciation, which came up with the following slogan to sell its sur-
plus fruit: “Buy an apple a day and send the Depression away!”
Apples were selling for a nickel each, and at the program’s
height, there were about 20,000 apple stands operating in New
York City alone. Another novel business tactic was tandem
shoe shiners. One would stand on the sidewalk and call atten-
tion to a man’s scuffed shoes, while his helper waited nearby
with a rag and shoeshine kit. Other ventures were attempted,
including a real long shot: In Colorado in 1932, thousands took
an eight-day course offered by the state Vocational Training
Board in panning for gold!
43
Unemployment Becomes Rampant

As unemployment rates climbed, wages dropped. Sales clerks
in stores might earn $5 a week. Factory workers made 25 cents
an hour. Secretaries worked for $10 a week and house servants
only $10 a month. In cities, hundreds would line up for jobs
in factories or on the docks, where only a handful of workers
were needed.
As men lost their jobs and days of unemployment stretched
into months, the prevailing view of men as heads of their
households, provider and protector, was damaged. The men
who could no longer provide for their families were often
frustrated and confused about what to do and how to conduct
themselves. Women, as a result, often took on more leadership
roles. This role reversal played havoc with the traditional fam-
ily. As more men lost their jobs, working women, especially
married working women, were often thought to be taking work
away from men.
In reality, the jobs that women held were for the most part
jobs men would not want anyway. Women’s work was gener-
ally domestic or as teachers and office workers and nurses.
They rarely worked in industry or semiskilled labor such as the
jobs men tended to have. Women also made substantially less
money than men. There were those who called for all working
women to be fired and replaced by unemployed men. Some
said there were about the same number of employed women
as unemployed men, so they could easily replace each other.
This argument was strenuously objected to by women’s orga-
nizations, including the National Federation of Business and
Professional Women’s Clubs, which called this attack on work-
ing women the most serious problem since women fought for
the right to vote.
Others made the argument that a woman’s place was in the
home, where she was responsible to take care of her husband,
children, and running the household. They claimed that there
was a direct relationship between the increase in women in the
The Early Years of the Great Depression 45
workplace and the falling birthrate. However, during the Great

Depression, these arguments were unsupportable, because
most women worked to provide for their families, not out
of a desire for a career, according to the Women’s Bureau of
the Department of Labor. The bureau went on to state that
eleanor roosevelt
(1884–1962)
Advocate for Social Change

On October 11, 1884, Eleanor Roosevelt was born into New York’s
prominent and wealthy Roosevelt family. Eleanor was the niece of
Theodore Roosevelt, the twenty-sixth president of the United States,
and would later marry her fifth cousin, Franklin. Eleanor had a rough
childhood; she was shy and withdrawn and had a mother who openly
rejected her. Her mother died when she was eight, and at age 10,
she lost her father, with whom she was very close. She and Franklin
married on March 17, 1905, and within 11 years, she had six chil-
dren. (One son died as a baby.)
From the beginning, Eleanor helped Franklin in the political
realm. She was a unique First Lady, taking an active role in the
country’s affairs, and acting almost as an assistant president. She
traveled around the country investigating results of New Deal poli-
cies and speaking on behalf of the poor and unemployed, while also
denigrating racial inequality. She spoke often on radio and wrote
a newspaper column titled “My Day.” Her willingness to speak her
mind openly earned her friends as well as enemies. For example,
her support of women’s rights was one cause that earned her both.
She openly advocated for an increased role for women in society.
After Franklin’s death in 1945, she served as a spokeswoman
for the United Nations until her death in 1962.
competition in the workplace was not usually between men

and women, because few jobs held by women could be trans-
ferred to men.
Eleanor Roosevelt wrote in the September 1939 issue of
Current History and Forum:
Many women, after marriage, find plenty of work in the home.

They have no time, no inclination or no ability for any other
kind of work. The records show that very few married women
work from choice, that they are working only because a hus-
band is ill or had deserted them, or there are special expenses
caused by illness or educational requirements in the home.
There may even be fathers, mothers, sisters, or brothers to be
supported. It seems to me that it is far more important for us to
think about creating more jobs than it is for us to worry about
how we are going to keep any groups from seeking work.8
striking out on their own

Men who could not find work and could no longer support
their families sometimes left their loved ones behind to search
for a job. A large subculture grew around the country, con-
sisting of just such men. They would follow the routes of the
railroads, hopping freight cars to get from one town to the
next. Jumping on trains was dangerous, and more than one
man ended up dead under the wheels of a train. Also, food and
jobs were scarce everywhere, so no matter where he hopped
off, a man was unlikely to be much better off than he had been
before. Families routinely had many children, and it became
nearly impossible to feed and clothe them all, so sometimes
the eldest son was sent out to fend for himself. Decisions were
made to allow the teen boys in the family to head out on their
own, just as their fathers were doing.
These men and boys—and only occasionally women and
girls, who might disguise themselves as men to avoid be-
ing harassed—formed little communities of “hobos” around
Throughout the United States, food and jobs were scarce during the
Great Depression. Here, a group of jobless and homeless men wait in
line to get a free meal at New York City’s Municipal Lodging House dur-
ing the winter of 1932–33.
railroad yards and on the outskirts of towns. They shared a

common fire to cook whatever food they had scavenged or
begged for and shared a common desire to find a job and
return to a life of normalcy. Sometimes they formed a kind of

family and worked together to earn what money they could,
and shared what they were able to buy with it. Sometimes these
travelers were welcomed by kind strangers who ran soup kitch-
ens or missions like the Salvation Army; but more often, they
were chased off the trains by conductors and out of the towns
by the local police.
Soon, slums called shantytowns sprang up on the fringes
of cities. Huts and shacks were built from whatever materials
were available: scraps of wood, boxes, crates, tin, and card-
board. These ramshackle villages were dubbed “Hoovervilles”
after the president whose policies many grew to hate. Herbert
Hoover’s popularity began to wane within months after the
crash, because he failed to establish massive relief programs
to aid the unemployed. He was steadfast in his belief in the
individual’s ability to recover from any disaster, but his seeming
indifference caused mass resentment.
Life was difficult in the hobo communities and Hoovervilles.
Sanitation was poor, and fresh water was difficult to obtain.
Disease was prevalent, and despair often led to violence,
making these men even less welcome in the areas they lived.
They found what work they could, laboring as migrant work-
ers or doing construction jobs or other manual tasks. The
Hoovervilles often were built near city dumps. Men and boys
routinely scavenged for food, usable clothing, or other objects
that other people had thrown away.
In some cases, families were literally starving. It was dif-
ficult to get fresh vegetables, proteins, or milk. Parents went
without food so their children could eat. The meager meals
often consisted of coffee, bread with or without butter, some-
times potatoes or rice, and leftovers received from local mar-
kets. People in the country lived off the land, picking berries
and wild vegetables. Many people survived by receiving mea-
ger relief checks that might be as little as $4 to $5 per week
for a whole family. Sometimes families were given vouchers
The Great Depression affected some Americans more than others. For
instance, some unemployed people were forced to sell their houses and
move to “Hoovervilles,” where they had to live in squalid conditions.
Pictured here is a Hooverville in Seattle, Washington, where unemploy-
ment reached 26 percent by January 1935.
with a list of what foods they were allowed to “purchase” and

in what quantities.
Different Experiences
Although the Great Depression affected everyone, it affected
everyone differently. Class differences and ethnic and cultural
differences equated to different experiences. Many ethnic
groups had always experienced suffering from lack of material
goods, food, and money. They often were the last hired and the
first fired, and they were often the first blamed when some-
thing went wrong. Immigrants tended to cluster in groups
when arriving in the United States. Often they remained

within a short distance of the port where they first landed.
Others pushed inland to join already-established enclaves of
their countrymen. Their populations were often dispropor-
tionately affected by the Great Depression. For example, dur-
ing the 1930s, blacks made up 17 percent of the population in
Baltimore, Maryland, but 32 percent of the unemployed.
Among the various ethnicities populating the United States
during the Great Depression, the Native American popula-
tion was the poorest. In 1934, the U.S. government passed the
Wheeler-Howard Act, which gave to all tribes the right to decide
if they would accept new privileges in education, self-govern-
ment, and economic independence. Part of Roosevelt’s Works
Progress Administration (WPA) encouraged a renewed inter-
est in folk culture, including that of Native Americans. These
encouragements helped save some of the traditional ways of the
tribes, whose members had previously endured efforts by the
government to eradicate the old ways in favor of white ways.
Filipinos were another group deeply affected by the Great
Depression. When the United States took the Philippines from
Spain after the Spanish–American War in 1898, Filipinos
became “naturalized,” but did not become American citizens.
They were allowed to enter the United States freely, and by
the time of the crash, nearly 45,000 had settled in the country,
mostly in California. They worked mainly on the farms there,
harvesting spinach, strawberries, and other crops. Some moved
north to pick beets in Montana, potatoes in Idaho, and apples
in Washington.
At the beginning of the Great Depression, 3 million
Mexicans called the United States home. Many had migrated
north as laborers, lured with the promise of making more
money. Eventually, about half of them returned to their home-
land when the depression worsened and the promises did not
come true. And although many chose to return to Mexico,
hundreds of thousands were “repatriated” by the U.S. govern-

ment in order to open up jobs for “real” Americans.
In the South, small inroads were made against segregation,
as blacks and whites often joined to help impoverished fami-
lies, friends, and neighbors. As groups protested unfair hiring
practices in the early 1930s, a popular slogan became “Black
and white, unite and fight!”9 Unions were also formed to help
southern farmworkers. The Share Croppers Union was one
that began in 1931 and by 1934 had 8,000 members, including
some whites. But farmwork became increasingly mechanized;
there was less of a need for workers to pick crops by hand, and
unions became less useful and eventually disbanded.
World War I veterans of all ethnicities joined in 1932 in a
march on Washington, D.C., to demand payment of a bonus
that had been promised by the government but never received.
Immigrants and descendants of slaves joined white veterans
appealing for their money. The tent city that sprang up in
Washington housed men of all colors; the men worked, ate, and
slept side by side. President Hoover, however, had no patience
for the vets and authorized the U.S. Army to drive them from
the capital, which they did using tear gas and bayonets.
A Change in Leadership
The American people’s support for President Hoover did
not last through the presidential election of 1932. When
the Great Depression began, he approached various busi-
nesses and tried to talk them into taking lower profits, and
asked them not to cut pay or lay people off. But he avoided
direct orders to get business owners to comply with his
requests. He wanted everyone—business owners, unions,
and workers—to volunteer in making sacrifices. He believed
in a trickle-down theory: If he could help revive the banks
and businesses, then the benefits would trickle down to
the workers.
Although he urged Congress to create public works programs and

attempted to convince state and local governments to help private chari-
ties care for destitute Americans, President Herbert Hoover refrained from
directly involving the U.S. government in the affairs of its citizens. Hoover
is pictured here shortly before the presidential election of 1932, when he
was defeated by Franklin D. Roosevelt.
But Americans were ready for a more drastic change.

That change came in the form of a former state governor
and Democrat, Franklin Delano Roosevelt. He was elected
governor of New York in 1928, serving when Hoover was the
president. Roosevelt campaigned for president in 1932 on
the platform that the depth of the crisis facing the country
demanded that the government should help solve the prob-
lem. He said in a campaign speech, “I pledge you, I pledge
myself, to a new deal for the American people.” The phrase
“new deal” was picked up by a reporter, reprinted, and came
to represent all the programs proposed by Roosevelt while in

office. His supporters and fellow advocates of these programs
became known as “New Dealers.”
During the campaign, conservative Republicans wanted
to follow the country’s current course, which was to keep
Franklin Delano roosevelt

(1882–1945)
Leader of a Nation in Distress

Franklin Delano Roosevelt was born into a wealthy family in 1882
in Hyde Park, New York. He graduated from Harvard University and
Columbia Law School. He entered politics and was determined to fol-
low in the footsteps of his distant cousin Theodore “Teddy” Roosevelt,
the twenty-sixth president of the United States. He married another of
his cousins, Eleanor, in 1905. She was independent and outspoken and
encouraged her husband’s support of the workingman and minorities.
In 1910, Roosevelt began to serve the first of two terms in the U.S.
Senate, and in 1913, President Woodrow Wilson appointed Roosevelt
assistant secretary of the U.S. Navy. (Interestingly, this was a position
his cousin Teddy had also held prior to being elected president.)
In 1921, at the age of 39, Roosevelt was stricken with polio and
lost the use of his legs. Determined to walk again, he began a rigorous
regimen of physical therapy, especially swimming. Despite his hard
work, he never fully recovered. Polio left him unable to walk on his
own and he spent most of his time in a wheelchair. Much of the public
never knew he was paralyzed, though, even after he became president.
He avoided being photographed in his wheelchair in order to maintain
an image of strength in an era when those with handicaps were seen
as weak. His later compassion and understanding for the unfortunate
may have been instilled in him during his struggle with polio.
the government from interfering in people’s lives. The liberal

Democrats, on the other hand, wanted the U.S. government to
nationalize many industries—such as steel, oil, banking, and
the railroads—and take over their management. Roosevelt
took the middle ground. He proposed a three-pronged solu-
tion to the depression: relief, recovery, and reform. Relief was
simply immediate aid to those who had been affected the
most. Recovery measures were meant to strengthen the econ-
omy, and reform programs were intended to be permanent
measures in both government and social services.
Roosevelt seemed to have the right ideas at the right time.
When he entered office, stock prices were at 11 percent of
precrash rates. The suicide rate had risen. Three-quarters of
the states had closed banks. More than 9,000 banks had failed.
Because this was before the government provided insurance
on bank deposits, many Americans lost all their savings. Some
schools had closed, and businesses were failing every day. The
nation collectively pinned their hopes on one man: Franklin
Roosevelt. His enthusiasm, optimism, and charm had endeared
him to millions of voters and they came out in droves to sup-
port him.
6
Roosevelt’s First
100 Days
P resident Franklin Roosevelt and his proposals for ending the
Great Depression had grown so popular by election day that
he won by an overwhelming margin—42 out of 48 states. In a
nutshell, Herbert Hoover was viewed as being inflexible and rigid
in his beliefs, and Roosevelt was seen as willing to experiment
with fresh ideas that might turn the tide of the depression. The
crisis had nearly reached its worst point by the time Roosevelt
took office in 1933. He wasted no time instituting his policies,
and within his first three months in office, known as the First
100 Days, an unprecedented amount of legislation was passed.
fireside chats
Roosevelt was the first president to take full opportunity of the
newest mass medium: radio. Like John F. Kennedy, 30 years later,
whose magnetism transfixed millions on television, Roosevelt
55
exuded confidence that inspired just about everyone who heard

him. In his inaugural address given on March 4, 1933, he spoke
in his characteristic, straightforward style, getting to the core of
the country’s problems: “This is a day of national consecration,
and I am certain that my fellow Americans expect that . . . I will
address them with a candor which the present situation of our
nation impels. This is pre-eminently the time to speak the truth,
the whole truth, frankly, and boldly.” And then he spoke the line
that has become famous: “The only thing we have to fear is fear
itself—nameless, unreasoning, unjustified terror which paralyzes
needed efforts to convert retreat into advance.”
He continued:
We must act, and act quickly . . . if we are to go forward, we

must move as a trained and loyal army willing to sacrifice
for the good of a common discipline, because without such
discipline, no progress is made, no leadership becomes effec-
tive. I am prepared under my constitutional duty to recom-
mend the measures that a stricken nation in the midst of a
stricken world may require. I shall wage a war against the
emergency as great as the power that would be given to me
if we were in fact invaded by a foreign foe.10
He added that the nation would endure, revive, and prosper,

and he promised to demand broad executive powers to meet his
goals if Congress did not do the job. He planned to attack on
several fronts, using direct government intervention to create
jobs, rebuild business, provide relief, and institute wide-ranging
reforms. Because government involvement in Americans’ private
lives had been virtually nonexistent up until this time, some per-
suasion was necessary for the people to accept what Roosevelt
was proposing. But his timing was perfect. After more than three
years of a strangling depression, the people were ready for a
change. Roosevelt knew his first three months in office were the
crucial time to put actions behind his words. This First 100 Days
Roosevelt’s First 100 Days 57
After he was elected president, Franklin D. Roosevelt wasted

little time in reaching out to the American people. Roosevelt
is pictured here during his first radio address at his New York
City townhouse on November 9, 1932, with his mother, Sara
Delano Roosevelt (seated at left), his son James, and his
daughter Anna Roosevelt Dall.
became famous for the sheer volume of legislation he was able

to put in place. The support he received in Congress was almost
universal, and bills were passed at an unprecedented pace.
Just as he had used radio to campaign for office and to
broadcast his inaugural address, he now used the medium to
become a part of Americans’ lives on an ongoing basis. His

weekly radio addresses became known as “fireside chats,” and
people tuned in eagerly to listen to their president. He used
radio to encourage (or, his opponents claimed, to brainwash)
fireside chats
President Franklin D. Roosevelt fully understood the importance of

reaching out to Americans in a manner of a friend or kindly uncle.
He adopted the practice of weekly radio addresses that made listen-
ers feel so comfortable with their president, as if he were actually
sitting with them in their living rooms. His words were directed at
each listener, without the filter of a newspaper reporter. These talks
came to be called “fireside chats.” The first such address was given
on March 12, 1933, in which the president explained why he had
closed the banks and what he hoped to accomplish by doing so:
I want to talk for a few minutes with the people of the United States
about banking—with the comparatively few who understand the
mechanics of banking but more particularly with the overwhelming
majority who use banks for the making of deposits and the draw-
ing of checks. I want to tell you what has been done in the last few
days, why it was done, and what the next steps are going to be. I
recognize that the many proclamations from state capitols and from
Washington, the legislation, the treasury regulations, etc., couched
for the most part in banking and legal terms, should be explained
for the benefit of the average citizen. I owe this in particular
because of the fortitude and good temper with which everybody has
accepted the inconvenience and hardships of the banking holiday. I
know that when you understand what we in Washington have been
about, I shall continue to have your cooperation as fully as I have
had your sympathy and help during the past week.
and enlighten all Americans. He became a familiar part of their

lives, so familiar that people felt they knew him intimately. It
often seemed as if Roosevelt was sitting across the parlor dis-
cussing world affairs face-to-face.
Roosevelt went on to explain how banks invest their custom-

ers’ deposits; that the money does not just sit in a vault waiting to
be withdrawn. He told listeners that banks put their money to work,
investing it in various forms of bonds and loans, and that only a
small fraction of all deposits are actually available for withdrawal
as cash at any given time. He repeated that people should not hoard
their money once the banks reopened and reminded them that it was
safer to keep their money in the bank than under their mattresses.
According to historian Robert S. McElvaine, Roosevelt’s expla-
nations were so successful that “many of the same people who had
rushed to withdraw their funds from banks in the closing days of the
Hoover Administration went back as the banks reopened and depos-
ited their money once more.”* Due to his honesty, Roosevelt gained
the trust of the American public. He closed his first chat by saying:
There is an element in the readjustment of our financial system

more important than currency, more important than gold, and that
is the confidence of the people. Confidence and courage are the
essentials of success in carrying out our plan. You people must
have faith; you must not be stampeded by rumors or guesses. Let us
unite in banishing fear. We have provided the machinery to restore
our financial system; it is up to you to support and make it work. It
is your problem no less than it is mine. Together we cannot fail.
* Robert S. McElvaine, The Depression and New Deal: A History in

Documents (New York: Oxford University Press, 2003).
Addressing the Bank Issue

Roosevelt’s first move was to impose a national “bank holi-
day,” from March 6 to 13, at which time all banks closed so
government inspectors could review their books. Trading on
the NYSE and Chicago Board of Trade also was suspended.
This was the first time such a move had been made in the
United States. Bank failures had become a common occur-
rence. They generally went out of business when too many
loans were not repaid; when they were mismanaged (either
on purpose by unscrupulous managers or unintentionally);
and when many depositors swarmed to the bank in a panic to
withdraw all their funds, an event called a “run.”
As Roosevelt explained in an educational fireside chat when
announcing that the bank holiday would come to an end on
March 13, banks do not keep all of the depositors’ cash in their
vaults. At any given time, some of it is invested in mortgage
loans and other businesses. He promised that certain banks
would open the next day and that every day thereafter he would
authorize the opening of more banks. He acknowledged that
individuals might lose some money, but promised that he would
do his best to avoid any unnecessary losses. He told the people
that if he did not take this step, there would be more and greater
loss of personal wealth. Roosevelt spoke in a calm, rational, and
fatherly tone, reassuring his listeners that he had the situation
under control. Apparently his message had the desired effect,
and when the Philadelphia National Bank reopened—one of
the first to do so—its president reported that customers had
been receptive and were again making deposits.
Financial assistance was given to those banks that needed
it, and those with solid finances were reopened. As the banks
again opened their doors, some allowed depositors to withdraw
a certain percentage of the money in their accounts. Some banks
required the depositor to submit a letter that stated why he or she
wanted to withdraw the funds. Roosevelt’s decisive action and
no-nonsense, truthful approach had restored public confidence.
a new direction
Roosevelt’s other programs were sold together as a package—as a
“new deal” providing a system to lessen the impact of any future
depressions. The first bill passed was the Agricultural Adjustment
Act (AAA), which called for the reduction of farm production on
certain crops in order to increase demand, thus realizing a higher
profit for farmers. The Civilian Conservation Corps (CCC) was
established to put unmarried young men between the ages of 18
and 25 to work, mainly planting trees and building dams and
other projects. The Civil Works Administration (CWA) was set
up to pay workers for manual, unskilled labor. The Public Works
Administration (PWA) worked with private businesses to build
public works projects, including schools, hospitals, roads, bridges,
and sewage systems. The Tennessee Valley Authority (TVA) built
15 large dams in the Tennessee River Valley, providing cheap elec-
tricity for millions and controlling floods in that area.
Roosevelt felt that his variety of programs would empower
discouraged Americans by putting them back to work. He believed
that, by and large, people did not want to be simply taken care
of; they did not want to take handouts. He believed, instead,
that unemployed Americans wanted one thing—jobs. In other
words, he also realized that he needed to stir the cultural melting
pot that was America. He needed to unify everyone, and gather
their support, for his ideas to work. He and his wife, Eleanor, a
smart, strong, and independent woman, reached out to different
ethnic groups in various ways, always denouncing any form of
racism along the way. During a speech he gave to the conserva-
tive organization Daughters of the American Revolution, he said,
“Remember, remember always, that all of us, and you and I espe-
cially, are descended from immigrants and revolutionists.”11
Once in office, he also helped break down ethnic barriers by
appointing Thomas Walsh of Montana as attorney general and
James Farley as postmaster general. The two men were of Irish
descent, and at the time the Irish were considered second-class
citizens. He appointed Henry Morgenthau Jr., a Jewish man, as
In 1933, Frances Perkins became the first female presidential cabinet

member when she was named U.S. secretary of labor by President Franklin
Roosevelt. Perkins was responsible for the implementation of many pro-
grams and legislation, including the Civilian Conservation Corps and the
Social Security Act.
secretary of the treasury, a position Morgenthau held through

all four of Roosevelt’s terms. Matthew T. Abruzzo of New York
City was the first appointed federal judge of Italian descent,
and Miecislaus Szuymcak was the first Polish man appointed to
the board of governors of the Federal Reserve Bank. Perhaps it
was his wife’s influence, but Roosevelt also appointed the first
woman to the presidential cabinet, Frances Perkins. She was a
social worker who advocated a five-day workweek (six days was
standard at the time), minimum wage for everyone (it did not
exist at the time), and abolition of child labor (even preteens put
in long days in factories and mills). And although they were not
an official part of the government, Roosevelt gathered a group of
black men and one woman to advise him on racial issues. This
“black cabinet” included Mary McLeod Bethune, a teacher who
acted as an adviser to both the president and Mrs. Roosevelt.
Of course, not everyone agreed that Roosevelt’s approach
was the right one. He was accused of creating a huge bureau-
cracy that increased the national debt and failed to balance the
federal budget. Detractors called it an “ineffective, expensive
experiment.” Words and phrases such as, “self-determination,”
“individual responsibility,” and “self-reliance” were used by
the New Deal’s opponents. They claimed that these American
attributes were being destroyed by the ever-increasing reach of
the federal government. They believed that government’s role
should remain very limited and that businesses should be left to
rise and fall with the marketplace. They believed that the Great
Depression would end on its own, and that a “natural selection”
would take place, whereby those businesses and individuals
unable to survive would be culled out, leaving the strong and
moral to carry on. They stressed increased self-responsibility
and encouraged neighbors to help each other.
Yet, as the New Dealers pointed out, there simply was no
other way to pull the country out of this depression. Private relief
organizations had proven no match for the scope of the disaster,
and only the federal government had the resources to save the
country. Roosevelt’s supporters said the New Deal helped to
nearly double national income in seven years, employed mil-
lions, and restored the country’s morale. These Democrats also
attacked the Republican ideals of “rugged individualism” as a
“smoke screen” to hide the true Republican agenda of allowing
the rich to become richer while forcing the poor to fend for
themselves. It will never be known for certain how much worse
the Great Depression may have been for the country as a whole
if the New Deal had never been implemented. What is known

is that these programs put millions to work and restored a mea-
sure of self-esteem to the struggling country.
Roosevelt proved to be one of the most popular presidents
ever, serving an unprecedented four terms. He was tireless in
pursuit of his goals and unwavering in his ideals. His spirit and
unflagging energy, in turn, energized a demoralized nation,
an intangible asset of the New Deal. His programs not only
impacted those living through the Great Depression; many
of them continued on and would impact future generations
Keynesian Economics
Keynesianism is the theory of economics in which both the govern-

ment and private sector are involved. It advocates using government
spending and taxation to affect economic behavior, impacting the
overall health of the economy. Franklin D. Roosevelt based many of
his proposals on Keynesian economics, and the theory rose in popu-
larity as laissez-faire beliefs were, in turn, rejected.
British economist John Maynard Keynes (1883–1946) is the
man for whom the theory is named. Perhaps the leading economist
in the world at the time, Keynes advocated government interven-
tion, especially to counteract the negative effects of recessions and
depressions. He published the work for which he is most widely
known, General Theory of Employment, Interest, and Money, in
1936. The book challenged most economic theories of the day, but
his ideas became widely accepted as time passed.
Keynes wrote in the New York Evening Post on October 25, 1929,
“The extraordinary speculation on Wall Street in past months has driven
up the rate of interest to an unprecedented level.” This statement
reflects Keynes’s belief that overspeculation and inflated stock prices
of Americans. Minimum wage, standard working hours, and

improved child labor laws made working conditions safer and
better. The country has Roosevelt and the New Deal to thank for
improved housing, bank deposit insurance, stock market regu-
lation, aid to families with young children, the federal school
lunch program, and Social Security—all social safety nets that
citizens did not have before. Undoubtedly mistakes were made,
but in any experiment—and the New Deal was indeed called the
“great experiment”—mistakes are made on the road to success.
in the months preceding the crash of October 29, 1929, were the prime
reasons behind it. (Interestingly, Keynes also lost heavily in the crash.)
John Kenneth Galbraith (1908–2006), a Canadian-American
economist, also forecasted the crash. Galbraith agreed with Keynes’s
theories, was a liberal and progressive, and wrote prolifically about
economics for much of his life. He was a professor at Harvard
University and served under several presidents, including Franklin D.
Roosevelt, Harry S. Truman, John F. Kennedy, and Lyndon B. Johnson.
He also received the Presidential Medal of Freedom twice. Galbraith
believed that the crash could have been predicted, saying the loss
of nearly 90 percent of the market’s value between 1929 and 1932
indicated that it was overvalued in 1929. He wrote in 1961, “Early in
1928, the nature of the boom changed. The mass escape into make-
believe, so much a part of the true speculative orgy, started in earnest.
. . . On the first of January of 1929, as a matter of probability, it was
most likely that the boom would end before the year was out.”*
* Available online at www.eh.net/encyclopedia/article/bierman.crash

7
Putting the
Program to Work
T he social and work programs Franklin Roosevelt established
in the early days of his presidency were diverse and all-
encompassing, and required Americans to reevaluate the role
of government in their lives. President Hoover had believed in
giving money to businesses to continue production, but Roo-
sevelt realized that if the people had no money to buy goods,
it did not make any sense for businesses to produce. So Roose-
velt’s goal was twofold: to put people back to work, so, in turn,
they could go out and once again begin spending money.
The ideas behind these programs were not complex, but
they were daring and bold in the sense that they required
people to turn their perceptions of government upside
down. It was not easy for proud, independent people to put
out their hands and ask for help. Many Americans would
rather live on the streets than ask for handouts. Roosevelt
66
Putting the Program to Work 67
recognized and admired these qualities of pride and self-

reliance, which is why his proposals did not involve handouts.
New Deal Programs

Within weeks of President Roosevelt’s inauguration on March
4, 1933, Congress passed the Civilian Conservation Corps
Reforestation Relief Act, forming the Civilian Conservation
Corps (CCC), one of the most popular programs in the New
Deal. The CCC, run by the U.S. Army, took applications from
unmarried young men between the ages of 18 and 25 whose
families were on relief. An initial grant of $300,000 was used to
hire the men, who were sent into remote areas of the country
to plant new trees in forests that had been logged, construct-
ing new parks and repairing old ones, building reservoirs, and
partaking in other projects in rural and wilderness areas.
Those who were accepted were paid $30 per month, of which
$25 was sent home to their families. The men were provided
shelter, living in barracks or dormitories, and meals, eating in a
common mess hall. An added bonus of working with the CCC
was social interaction and camaraderie among peers. Artists
working for the Works Progress Administration (WPA) created
posters showing a smiling young man wielding an ax and speak-
ing of the CCC as “a young man’s opportunity for work, play,
study, and health.” By the end of that summer, 300,000 men were
employed in more than 1,000 camps around the country. By the
time the program ended in July 1942, 3 million young men had
participated in the CCC. Although the program had its detrac-
tors, who claimed the camps were too militaristic, its popularity
and success were undeniable.
The Federal Emergency Relief Act (FERA) also was passed,
creating the Federal Emergency Relief Administration, which
handed out $500 million in grants to the states to provide
relief to the unemployed through networks of private agen-
cies. The money would pay for work done, as well as provide
clothing and food in some cases. The Reconstruction Finance
One of President Franklin D. Roosevelt’s earliest New Deal programs was

the Civilian Conservation Corps, which was implemented in 1933 and
employed 3 million men during its existence. The CCC provided work for
young men through conservation programs such as planting trees, fighting
forest fires, and maintaining forest roads and trails. Here, 1,800 recruits
line up for lunch at a CCC camp at Fort Slocum, New York.
Corporation (RFC), which President Hoover had established

in January 1932, provided the funds. Harry Hopkins, a former
social worker who believed in work relief rather than direct
cash handouts, was appointed administrator of FERA. His
organization instituted the Civil Works Administration (CWA)
in late 1933 as a temporary measure to get people working dur-
ing the winter. FERA’s responsibilities were taken over by the
WPA and the Social Security Administration in 1935.
The CWA never quite realized its potential. It was a huge

proposition, costing the government nearly $1 billion during
the winter of 1934. Only those men who had registered as
unemployed were supposed to be eligible to work under this
program, but it was such a huge bureaucracy and so poorly
managed, that it became corrupt. The projects usually involved
work that was marginally important to begin with, including
repairing playgrounds or digging ditches. Often the men who
were hired to work on these projects would arrive at the work
site to find no tools, or tools that were inappropriate for the job
at hand. This program was not as focused and well structured
as Roosevelt’s other programs, and it was plagued by scandals
and accusations of waste. Roosevelt quickly realized that the
CWA was not working, and he also realized that he might have
inadvertently set the stage for the creation of a perpetual class
of people who were willing to do next to nothing and collect
relief payments. If this program had been better managed, it
may have lasted longer, but Roosevelt discontinued it after
about six months.
The Agricultural Adjustment Act was also passed dur-
ing Roosevelt’s first three months in office. It created the
Agricultural Adjustment Administration (AAA) within the
Department of Agriculture, which gave the government broad
reach in reducing crop surplus. Farmers were given financial
support, called a subsidy, to ensure that some of their fields
were not used. This lowered the supply of certain crops, such
as grains and cotton, and thus raised their prices. In addition,
nearly 6 million hogs were killed for the similar aim of tilting
the balance of supply and demand. It was seen as distasteful
and controversial that food was going to waste while thousands
starved around the country, and yet Roosevelt felt that it was
necessary as a short-term emergency measure.
The Emergency Farm Mortgage Act was passed at the same
time. It provided money for the refinancing of farm mortgages
through federal land banks and gave farmers additional time
to pay their loans at reduced interest rates. Farmers were also

given the opportunity to repurchase their former property,
which their bank had seized. Congress authorized the sale of
$2 million in tax-exempt government bonds to provide the
needed funds. The Farm Credit Act helped fledgling farming
cooperatives and set up credit unions for farmers through the
establishment of a central bank.
During this time, the Tennessee Valley Authority (TVA)
was also established; it developed the Tennessee River region,
providing flood control, soil conservation, and reforestation.
It also brought electricity to the impoverished residents of the
Appalachian Mountains and became one of the lasting New
Deal programs. In 1933, the Appalachian region was one of
the poorest areas in the country. It covered most of Tennessee,
parts of Alabama and Mississippi, Georgia, Kentucky, North
Carolina, and Virginia. The public eagerly greeted the TVA.
During the 1920s, most water and power companies were pri-
vately owned, and corruption and high prices were common.
People felt that if such utilities were controlled by the govern-
ment, there would be regulation needed to provide power at
reasonable rates. Today, the TVA provides power to about 8.5
million customers.
The Securities Act was also passed in May 1933. It stated
that any firms selling stocks and bonds had to file annual
financial statements with the Federal Trade Commission
(FTC). If they did not, they were open to criminal charges.
The act required full disclosure of information about stocks
being traded. The Securities Act of 1934 regulated the second-
ary trading of securities and established the Securities and
Exchange Commission (SEC), which regulated the stock mar-
ket. Joseph Kennedy (President John F. Kennedy’s father) was
the first chairman of the SEC. He was tasked with identifying
and preventing practices that had led to the market’s collapse,
including speculation by bankers in their own bank’s stocks.
The SEC put an end to many of the competitive practices that
had led to rampant speculation in the stock market. Today, it

protects the interests of individual investors by maintaining
order in the market and has established regulations to sustain
economic stability and growth.
The Public Works Administration (PWA) had a $3.3 bil-
lion budget when President Roosevelt signed the National
Industrial Recovery Act. Through the PWA, Roosevelt intended
to put people back to work so they would once again have
money to spend, thus stimulating the economy. He wanted to
get as many unemployed men and women back to work as pos-
sible before the winter of 1934. He allocated the money to pri-
vate businesses to work with the states in building public works
projects, including schools, hospitals, apartment complexes,
roads, bridges, and sewage systems. He also gave millions to the
U.S. Navy to build ships. These projects put engineers, office
workers, architects, and construction workers back to work. As
manufacturing increased, factory workers also went back to the
assembly line.
Continuing the New Deal

In his 1935 State of the Union Address, President Roose-
velt outlined his three major goals: job security, security for
the old and sick, and improved housing. Soon thereafter,
he launched another set of reforms that became known as the
Second New Deal. These included the Social Security Act, the
Works Progress Administration (WPA), the National Indus-
trial Recovery Act, and the National Labor Relations Act, also
known as the Wagner Act, named for its author, New York
senator Robert F. Wagner.
The Social Security Act was an innovative piece of legisla-
tion. For the first time, Americans had some measure of finan-
cial security during their old age. An insurance program, Social
Security is funded through taxes on a person’s salary—taxes
paid equally by the employer and employee. Passed in 1935,
(continues on page 74)
the social security act
In a 1935 radio address, U.S. Secretary of Labor Frances Perkins

explained the Social Security Act to the American people:
People who work for a living in the United States of America

can join with all other good citizens on this 48th anniversary of
Labor Day in satisfaction that the Congress has passed the Social
Security Act. This act established unemployment insurance as a
substitute for haphazard methods of assistance in periods when
men and women willing and able to work are without jobs. It pro-
vides for old-age pensions, which mark great progress over the
measures upon which we have hitherto depended in caring for
those who have been unable to provide for the years when they
can no longer work. It also provides security for dependent and
crippled children, mothers, the indigent disabled, and the blind.
Old-age benefits in the form of monthly payments are to
be paid to individuals who have worked and contributed to the
insurance fund in direct proportion to the total wages earned by
such individuals in the course of their employment subsequent to
1936. The minimum monthly payment is to be $10, the maximum
$85. These payments will begin in the year 1942 and will be to
those who have worked and contributed.
Because of difficulty of administration not all employments
are covered in this plan at this time so that the law is not entirely
complete in coverage, but it is sufficiently broad to cover all nor-
mally employed industrial workers.
This vast system of old-age benefits requires contributions
both by employer and employee, each to contribute 3 percent of
the total wage paid to the employee. This tax, collected by the
Bureau of Internal Revenue, will be graduated, ranging from 1
percent in 1937 to the maximum 3 percent in 1939 and thereafter.
That is, on this man’s average income of $100 a month, he will

pay to the usual fund three dollars a month and his employer will
also pay the same amount over his working years.
In conjunction with the system of old-age benefits, the Act
recognizes that unemployment insurance is an integral part
of any plan for the economic security of millions of gainfully
employed workers. It provides for a plan of cooperative Federal-
State action by which a State may enact an insurance system,
compatible with Federal requirements and best suited to its indi-
vidual needs.
It has been necessary, at the present time, to eliminate
essentially the same groups from participation under the unem-
ployment insurance plan as in the old-age benefit plan, though
it is possible that at some future time a more complete coverage
will be formulated.
While it is not anticipated as a complete remedy for the
abnormal conditions confronting us at the present time, it is
designed to afford protection for the individual against future
major economic vicissitudes. It is a sound and reasonable plan
and framed with due regard for the present state of economic
recovery. It does not represent a complete solution of the prob-
lems of economic security, but it does represent a substantial,
necessary beginning. It has been developed after careful and
intelligent consideration of all the facts and all of the programs
that have been suggested or applied anywhere.
This is truly legislation in the interest of the national wel-
fare. We must recognize that if we are to maintain a healthy
economy and thriving production, we need to maintain the stan-
dard of living of the lower income groups of our population who
(Continues)
(Continued)
constitute 90 percent of our purchasing power. The President’s
Committee on Economic Security, of which I had the honor to be
chairman, in drawing up the plan, was convinced that its enact-
ment into law would not only carry us a long way toward the
goal of economic security for the individual, but also a long way
toward the promotion and stabilization of mass purchasing power
without which the present economic system cannon endure.
Our social security program will be a vital force working
against the recurrence of severe depressions in the future. We
can, as the principle of sustained purchasing power in hard
times, makes itself felt in every shop, store and mill, grow old
without being haunted by the specter of poverty ridden old age or
of being a burden on our children.
The passage of this act with so few dissenting votes and
with so much intelligent public support is deeply significant of
the progress which the American people have made in thought in
the social field and awareness of methods of using cooperation
through government to overcome social hazards against which
the individual alone is inadequate.*
* Robert S. McElvaine, The Depression and New Deal: A History in

Documents (New York: Oxford University Press, 2003), 55–56.
(continued from page 71)
the act originally was intended to also serve as unemploy-

ment insurance. Called the Old Age, Survivors and Disability
Insurance program, it covered income for retirement, widows,
orphans, and the disabled. Unfortunately, it excluded domestic
The Works Progress Administration was another New Deal program

instituted in 1935 by President Roosevelt. More than 8.5 million people
worked for the WPA during its eight-year existence in such endeavors as
building roads and bridges. Another project was the attempted eradica-
tion of the white-fringed beetle, which does significant damage to crops
in the south.
workers (such as housekeepers) and farmworkers, including

migrants, from collecting benefits. This exclusion eliminated
many working women and nonwhites.
The WPA was Roosevelt’s attempt to get money back into
the pockets of the people without putting them on welfare.
He firmly believed that handing money to people without
requiring work in return damaged their initiative and self-

respect. The WPA, sometimes called a “work relief ” program,
involved a diversity of projects for all kinds of workers. From
seamstresses to road engineers to artists and writers to edu
cators, the WPA had them all. Thousands learned to read
and write, and immigrants were encouraged to research their
histories through WPA teachers. This program did a lot to
advance the economic status of women during the 1930s.
Mostly widows, single women, and women whose husbands
could not find work found jobs with the WPA, which helped
increase not only their income, but also their sense of self-
esteem and confidence in their ability to care for themselves.
More than 3 million Americans worked within the WPA at
its height, and a total of 8.5 million people worked in the
program over its life span. The majority of the public agreed
with Roosevelt that it was better to put people to work, even
if they worked at tasks that were solely created for them, than
to hand out cash. In fact, 74 percent favored jobs rather than
direct relief payments. Lasting for eight years, the WPA pro-
vided a psychological lift, not to mention a steady income, for
men and women who had been jobless for years.
The National Recovery Administration (NRA) was formed
around a sweeping set of legislation—the National Industrial
Recovery Act—that required cooperation among business and
industry, the government, and the public. At the time, it seemed
to be the most innovative program of all of Roosevelt’s initia-
tives because of that cooperative spirit. In some respects it was
also a program that involved both political parties, because it
drew on some of Herbert Hoover’s concepts.
At the NRA’s core was a need for economic balance that
required planning and the already-mentioned cooperation.
One of the first initiatives created under the NRA was to have
businesses within each industry write a joint code setting
rules regulating wages, hours, child labor, quality of materials,
and more. Some felt it was too restrictive. Some argued it was
unconstitutional. The automobile and coal mining industries

were two groups that resisted compliance with the laws, although
both finally gave in during the summer of 1933. Henry Ford was
the only business owner in these two industries to remain outside
the code, because he chose not to cooperate with the program.
Led by General Hugh Johnson, the NRA used patriotism
and symbolism to encourage businessmen to join. A blue eagle
served as its logo, and signs stating “We Do Our Part” were
posted prominently by businesses that cooperated with the
NRA. Parades and songs were two other ways Johnson sold his
program to the public. These strategies were initially successful,
as production and employment rose throughout the summer.
Unfortunately, the higher prices of goods—due to lack of com-
petition—discouraged consumers, and conditions returned to
their former state by late fall.
By the spring of 1934, the NRA was under attack from
several quarters. Politicians felt the program was like a dictator-
ship; industry resented the government’s interference in their
business; unions had not fared as well as they had expected,
because private businesses had formed company unions as
a way of subverting the unions’ efforts for recruitment; and
finally, consumers balked at higher prices.
The act was overturned and the administration closed when
the U.S. Supreme Court found that it infringed on states’ author-
ity and gave legislative powers to the executive branch of the
government. The National Labor Relations Act was signed into
law in early July 1935. It gave workers the right to organize, form-
ing unions that would bargain with employers for better wages,
hours, and working conditions. It also prohibited employers
from interfering with the unionization of workers and estab-
lished the National Labor Relations Board as an independent
agency to oversee union elections and prevent unfair labor prac-
tices. As mentioned previously, it was also known as the Wagner
Act, named for its primary supporter, Senator Robert Wagner of
New York. The act gave unions plenty of room to organize and
lobby for better working conditions for their members, without

fear of retaliation by angry employers.
Roosevelt’s programs touched on every sector of American
life, from social support networks, to business and industry.
He was widely supported and respected by the common man;
although he met with some opposition from businessmen and
politicians. In spite of some who would have gladly replaced
him, he continued to lead the country into the second half of
the 1930s, broadening his programs, staying true to his ideals,
and leading his country out of the Great Depression.
8
America at Odds
P resident Roosevelt’s New Deal programs and the continuing
initiatives of the Second New Deal gained him friends and
foes alike. Given the fact that he was reelected three times, Roo-
sevelt obviously had plenty of backers who believed, as he did,
that the New Deal would actually save capitalism rather than
destroy it. But he had detractors as well, including many wealthy
businessmen who felt the unemployed were simply lazy, and they
were quite vocal in their dislike of Roosevelt and his ideas.
But there were industrialists who agreed with him, too,
including those in the emerging fields of filmmaking and
business machinery. They understood that the New Deal pro-
grams were a work in progress, that success was not expected
to happen overnight. They also believed that the programs
were not meant to address problems of the past, but to address
those faced in the present, and those to come in the future. As
79
the country moved from an agricultural-based society to one

whose economy was based on industrialization and mechani-
zation, different problems arose and a new approach had to be
adopted. In addition to these liberal-minded leaders of indus-
try, Roosevelt could count on the majority of workingmen,
middle class, and poor to stand behind him.
Opposition to Roosevelt’s Programs

Still, some opposition to government economic intervention
was growing within a group of industrialists, bankers, and
corporations. In 1934, a group called the American Liberty
League was formed by conservative Democrats to challenge
Roosevelt’s ideas. These men included Al Smith, one of Roo-
sevelt’s rivals for the Democratic presidential nomination in
1932; Representative Jouett Shouse of Kansas; and John Jakob
Raskob, former Democratic National Committee chairman.
They joined many industrialists in arguing that the Roosevelt
administration was leading the country down a road toward
socialism, bankruptcy, and dictatorship. They claimed that
people were losing their sense of individual accountability.
The league raised and spent millions of dollars promoting
their ideas. Funding came from wealthy, successful corpora-
tions, such as DuPont, U.S. Steel, General Motors, Standard
Oil, and Goodyear Tire and Rubber Company. They and their
supporters campaigned for the Republican Party in the presi-
dential election of 1936.
The league’s mission stated that it was a nonpartisan orga-
nization aiming to
defend and uphold the Constitution and to disseminate

information that would teach the necessity of respect for
the rights of persons and property as fundamental to every
successful form of government, and will teach the duty of
government to encourage and protect individual and group
initiative and enterprise, to foster the right to work, earn,
America at Odds 81
Big corporations, such as U.S. Steel and General Motors, opposed the
Wagner Act, which eliminated employer interference in labor unions. Here,
miners and steelworkers march down a street in Farrell, Pennsylvania, on
May 1, 1937, to celebrate the upholding of the Wagner Act by the U.S.
Supreme Court.
save and acquire property, and to preserve the ownership

and lawful use of property when acquired.12
The league claimed that Social Security would “mark the

end of democracy,” and that the Agricultural Adjustment
Administration would lead to government control of agricul-
ture. They even brought a court challenge claiming the Wagner
Act was unconstitutional. The Supreme Court upheld the

validity of the act in 1937, and the league disbanded in 1940.
As the Great Depression continued, European-born
political concepts, including Communism and Fascism,
began to gain a foothold among the American people.
Desperate people will believe in ideas and do things they
might never consider otherwise. The Great Experiment
was working for many, but not for all, and the promise of
renewed economic and social stability looked promising to
some. Although few Americans wanted to embrace the tenets
of either Communism or Fascism, their promises of order
and discipline did appeal to some common men desperate
to find solutions to the poverty and hopelessness that sur-
rounded them. In Europe, these movements were more suc-
cessful, perhaps in part because, in the years leading up to
World War II, the poverty and hopelessness there were even
greater than in the United States.
Roosevelt was also attacked by others for not doing
enough. Three of his most notable detractors were a Catholic
priest, Charles Coughlin of Michigan, Senator Huey Long of
Louisiana, and Francis Townsend, a retired medical doctor
from California. Each man proposed simple plans to solve the
complex problems facing the country, and it was their very
simplicity that appealed to the masses.
Father Coughlin, known as the Radio Priest, used his
program to call for radical changes that included having the
government take over control of all banks. He appealed to a
large and diverse audience by supporting Roosevelt’s programs,
while at the same time preaching that they did not go far
enough. His proposals only partially veiled his anti-Semitism
and pro-Fascist leanings. In 1942, the Catholic Church ordered
him to end his radio program, and he returned to being a par-
ish priest.
Senator Long wanted the government to give every family
$2,500 per year, nearly $1,000 more than the average annual
America at Odds 83
salary at the time. His slogan “Every man, a king” inspired

many poor people to support him. Long was governor of his
state from 1928 to 1932 and a U.S. senator from 1932 to 1935.
He was known as a “benevolent dictator”—a dictator for the
near absolute control he wielded while in office and benevolent
for his attention to the poor among his constituents. He was
widely admired for his advocacy of redistributing the state’s
wealth among the poor. He founded the Share the Wealth
Society in 1934, and his popularity grew to such heights that he
represented a credible threat to Roosevelt’s bid for reelection in
1936. But before that could happen, he was assassinated in 1935
by one of his own constituents who disagreed with his views.
Dr. Francis Townsend believed that the government should
pay $200 per month to anyone over age 60. He set up a national
organization called Old Age Revolving Pensions, Ltd., to sup-
port his plan and collected 20 million signatures on petitions
endorsing it. This movement began with a simple letter to the
editor of the Long Beach Press-Telegram in September 1933, in
which he advocated forced retirement at age 60, with the new
retirees receiving the $200 bonus, which they were required to
spend to invigorate the economy and limit the size of the work-
force. In the days before Social Security, a person was either
lucky enough to work for one of the few companies offering
pensions, had saved enough money while working to pay for
expenses during retirement, or had worked until he could not
work any longer and often counted on family for care in old age.
Farmers and laborers, for example, rarely had enough money
to retire. They worked as long as they could and then had to
depend on their children or other relatives to care for them.
Labor Unions
Labor unions experienced big changes throughout the 1930s.
At the beginning of the Great Depression, unions were no lon-
ger popular. They had been losing members throughout the
1920s because, although the country was prosperous as a whole,
unemployment remained high. The unemployed could not risk

drawing attention to themselves by organizing and striking,
because they had no boss against whom to protest. And when
there were 100 men ready to work for every available position,
the employed could not risk losing their jobs. In addition, wages
were so low that it was difficult to pay union dues. But as the
positive effects of the New Deal programs began to be felt, unions
expanded, adding more members throughout the mid-1930s
than at any other time. Men had renewed initiative, because they
were once again working. With raised spirits and recognition of
class divisions, they were more supportive of the unions’ attempts
to work as a group to ensure improved working conditions.
As the Great Depression wore on, hunger riots and marches
became common. A famous protest was held in 1932, when
thousands marched to the Ford Motor Company offices out-
side Detroit, Michigan, to ask Henry Ford to hire back the men
he had laid off. The protest turned into a deadly riot when
police were called in and four men were killed. This event
turned into an opportunity for union organizers, who used
the men’s funerals as a chance to preach union ideals. Labor
unions turned militant in 1934, calling for strikes to increase
membership and force employers to comply with sections of
the National Labor Relations Act. Well over one million work-
ers went on strike in 1934, with some strikes turning violent.
One such episode of violence was a strike in Minneapolis,
Minnesota, by the local organization of the Brotherhood of
Teamsters. That union led a strike to shut down the transporta-
tion system to end the practice of an “open shop.” This practice
meant that workers were not allowed to form unions, which
was in direct opposition to NLRA regulations. Two men were
killed during this strike. Similarly, a dockworkers’ strike that
summer in San Francisco ended in bloodshed.
In addition to the National Labor Relations Act, the American
Federation of Labor (AFL), which formerly encompassed unions
representing various craft workers, changed its structure to also
America at Odds 85
During the four-day West Coast Longshore Strike of 1934, San Francisco
police killed Howard F. Sperry and Nicholas Bordoise, both of whom
were picketing in support of the strike. Here, mourners march down San
Francisco’s Market Street during the slain men’s funeral procession.
represent industrial workers. One of its branches, the Congress

of Industrial Organizations (CIO), had recently been created to
represent the steel, automobile, and rubber industries. The two
organizations merged in 1955, forming the AFL-CIO, which
today represents 9 million American workingmen and women
within 53 individual unions, in occupations as diverse as teach-
ers, miners, engineers, and doctors.
Even the agriculture industry organized—with mixed
results. Farmers had endured a one-third loss in income in the
three years following the stock market crash. This loss added
insult to the injury they had suffered throughout the entire
1920s. By 1933, a group of Midwest farmers called the Farmers’
Holiday Association had organized and found some interest-
ing ways to make themselves heard. They often blocked trucks
carrying livestock and produce from getting to market. By
declaring a “farmer’s holiday,” similar to a “bank holiday,” this
group attempted to drive up prices by withholding goods, so
prices would go up as supply decreased and demand increased.
Sometimes farmers would hold “penny auctions.” When the
farm mortgage company came to auction the land of a farmer
who could not repay his loan, his neighbors would show
up, armed, to intimidate anyone who would bid a legitimate
amount for the property. Sometimes they would hang nooses
as further proof that a high bid would be met with a higher
price. A penny or two would be bid for the farm, which was
then turned over to the original farmer.
Farmers initially endorsed the actions of the Agricultural
Adjustment Administration, but did not always agree with
how they were carried out. In September 1933, Secretary of
Agriculture Henry Wallace ordered that 10 million acres of
cotton be plowed under and that more than 200,000 pigs be
slaughtered because overproduction was driving prices so
low that farmers could not survive on what money they were
making. Destroying this food source and valuable crop when
people were starving was a moral sticking point, even though
Wallace formed an organization—the Federal Surplus Relief
Corporation—to distribute the meat.
The decade of the Great Depression was a strange and des-
perate time that called for bold and drastic measures. President
Roosevelt was brave enough to take the necessary steps, with
the support of the majority of his countrymen.
9
Popular Culture
A ll Americans suffered to some degree during the Great
Depression. Their suffering and coping mechanisms, as
well as traditional American values such as self-determina-
tion, self-reliance, and optimism, were reflected in the popular
culture of the 1930s. Movies came into their own during the
depression, and some believe it was the Golden Age of Holly-
wood. At the start of the depression, “talkies” were a novelty.
By the time the depression was coming to an end, Americans
were entranced by lavish musicals and epics in color.
In the earliest days of the Great Depression, theaters had
to drastically reduce prices to keep people coming. But movies
came to be an inexpensive way to escape reality, and whoever
could save on the cost of admission would welcome a couple
hours away from reality. By the end of the decade, an average
of 80 million tickets were sold every week.
87
Dorothea Lange’s famous 1936 photograph of Florence

Thompson and her children, entitled Migrant Mother, repre-
sents the contrast between grinding poverty and the strength
of the human spirit. Thompson, who died in 1983 at the age
of 80, was just 32 at the time this photo was taken.
Blockbuster musicals reflected renewed hope and dramatic

epics reminded viewers they weren’t struggling alone. Nearly all
the films produced at this time reflected the country’s chang-
ing value system. Some of the biggest movies of the 1930s were
Popular Culture 89
Little Caesar (1930); Dracula (1931); Duck Soup (1933); Mr.

Smith Goes to Washington (1939); The Wizard of Oz (1939);
Gone with the Wind (1939); and, perhaps the most timely and
realistic movie of the era, The Grapes of Wrath (1940), based on
the classic John Steinbeck novel.
Two board games that are still popular today were invented
during the Great Depression. One was Monopoly. It seems con-
tradictory that a game about earning money and bankrupting
your competitor would become so popular during an economic
depression. Perhaps it was an escape from reality, or maybe the
possibility of getting rich, even using fake money, was its allure.
Another game invented during the depression was Scrabble. This
famous and well-loved word game was invented by an unem-
ployed architect who wanted to create a game requiring good
vocabulary skills with the element of chance. The legions of
Scrabble fans have grown over the years, and tournaments, special
dictionaries, and clubs can be found throughout the country.
Art, Music, Literature, and Sports

The exuberant music and behavior of the 1920s was reflected
in the artistic movements of that decade, with abstract and
modern paintings in vogue. In just such a way, the gritty truth
of day-to-day American life during the Great Depression was
reflected in its art, known as “The American Scene.” Paintings
and sculptures were realistic, with a touch of idealism. Painters,
sculptors, and photographers had a wealth of subject matter,
and their work remains popular today as a visual record of the
era. Two of the most prolific photographers were Dorothea
Lange and Walker Evans, whose stark photographs revealed a
grinding poverty balanced by the strength of the human spirit.
Reading, as always, remained a convenient way to escape from
reality. During the 1930s, several notable new writers emerged
on the scene. One, Theodor Seuss Geisel (Dr. Seuss), became
one of the most beloved children’s authors. His first book, And
to Think I Saw It on Mulberry Street, was published in 1936. It
In 1939, author John Steinbeck wrote his third novel, the

Pulitzer Prize–winning Grapes of Wrath. Set during the Great
Depression, the novel portrays the dire conditions experi-
enced by a family of sharecroppers as they are forced to leave
the dust bowl of Oklahoma and move to California.
was about a young boy who uses his imagination to change a

horse and wagon into an extraordinary beast. John Steinbeck is
perhaps the best-known adult novelist to write about the Great
Depression. His books, although works of fiction, used his keen
eye for observation and detail to reflect the experiences of those
around him. His 1936 novel, In Dubious Battle, was about a fruit
Popular Culture 91
pickers’ strike in California. Of Mice and Men was published the

following year and detailed the experiences of two men whose
dreams were destroyed by the drought in the Midwest. His third
novel, The Grapes of Wrath (1939), clearly transmitted how hope
for the future and love of family could hold a family together as
they migrated westward in search of a better life.
Many other authors who remain popular today published
during the depression era. Margaret Mitchell’s 1936 novel, Gone
with the Wind, although set during the Civil War, spoke of the
same type of deprivation and survival skills that depression era
families were forced to use. Some of Ernest Hemingway’s most
popular works were also published in the 1930s; they include
Death in the Afternoon, Green Hills of Africa, and To Have and
Have Not. Pearl S. Buck’s Pulitzer Prize–winning novel, The
Good Earth, was published in 1931. Aldous Huxley, best known
for his 1932 novel, Brave New World, speculated on the down-
fall of civilization several centuries in the future.
In the world of comics, two well-loved superheroes were
also “born” during the Great Depression, and one little red-
haired girl moved into the nation’s hearts. Superman was
dreamed up by two teens from Cleveland. He debuted in 1938
as a champion of the oppressed. His character has spawned
TV shows, movies, and all types of toys, without losing any
of his original appeal. Batman came out a year later. Both
he and Superman reflect the New Deal liberalism of the day,
with Batman reflecting President Roosevelt as a wealthy man
who adopts a different persona to fight injustice. Finally, Little
Orphan Annie demonstrated that the super rich could still be
“good guys,” as Daddy Warbucks, her benefactor, rescued her
from a life as a poor orphan and helped her fight villains.
The decade’s music also reflected both the highs and lows of
the Great Depression, as hope again appeared on the horizon.
It ran the gamut from soulful blues and spirituals to bouncy
tunes meant to keep one humming while one worked. The song
“Blue Skies,” released in 1927, was all about the shining days of
the optimistic 1920s; “Stormy Weather” (1933) was the exact

opposite: “Don’t know why there’s no sun up in the sky . . . Life
is bare, gloom and misery everywhere . . . .” And then there was
the classic theme song from 1939’s Wizard of Oz. Sung by Judy
Garland, “Over the Rainbow” promised that better days lay
ahead if one could only believe.
The most popular sports of the depression era were boxing,
baseball, and football. Household names from back then are still
recognizable today: Lou Gehrig, Babe Ruth, Joe DiMaggio, and
Joe Louis. Two black sports stars of the decade proved that racist
attitudes were still very much a part of society. The first was Jesse
Owens, who won four gold medals at the 1936 Berlin Olympics.
As Hitler and his racist policies were growing, Owens forced the
world to recognize his talent. The second was Joe Louis, who
fought German boxer Max Schmeling in the late 1930s. Backing
the black American over the white German, Americans began a
subtle shift in attitude toward African Americans.
10
Lessons Learned
E ven the most highly trained financial minds of the time did
not forecast the stock market crash of October 29, 1929. If
these economists did not see it coming, how could the common,
small investor? And more importantly, how might an economic
disaster on this scale be predicted and prevented in the future?
By September 1929, the stock buying frenzy that had character-
ized the previous several years had reached its peak. Several small
events occurred during that month that left a few savvy investors
and President Herbert Hoover warning against rampant buying. But
very few heeded the warnings. No one wanted the party to end.
As flappers danced away the night during the Jazz Age, boot-
leggers manufactured bathtub gin, speculators borrowed money
to buy stocks, and consumerism rose to new heights. Every house-
wife had to have the newest vacuum cleaner, refrigerator, toaster,
and other modern conveniences that would make her life easier.
93
The introduction of electricity to most urban areas by the 1920s

also allowed for radios to become a common fixture in most living
rooms and parlors. The former American practice of frugality and
saving for a rainy day gave way to a new mind-set: buy what you
want, when you want it, using borrowed money. The idea of buy-
ing on credit entered the stock market, as brokers extended credit
to investors who were willing to buy on margin, figuring that stock
values would continue to rise, and they could then sell their stocks
at a profit and pay off their loans. The glittery, fun, prosperous
1920s lulled the populace into a false sense of security.
But under the surface, trouble was brewing on several quar-
ters. During the 1920s, the agricultural industry began to struggle,
due in part to the return of European farmers to their fields fol-
lowing World War I. After losing the European market, American
farm surpluses grew until their profits barely allowed them to
survive—and often did not even provide for that. In addition,
the weather was not cooperative during this period. A series of
droughts, followed by floods, left farmers with ruined produce,
that is if crops would even grow at all. Farming methods at the
time ripped away the top layers of soil from the earth, paving the
way for the sandstorms that caused the area to become known as
the Dust Bowl by the mid-1930s.
The American economy of the 1920s grew weaker as
production continued, even as demand for consumer goods
slowed. As a result, job layoffs were just around the corner for
these industries that would soon see their warehouses full of
merchandise they could barely give away.
During this period, there were few regulations concerning
banking practices and stock trading. Bankers would often use
depositors’ money to speculate in the market, hoping to strike
it rich. They would then replace the money, and no one would
be the wiser. Near the beginning of his first administration,
President Franklin Roosevelt quickly established laws govern-
ing banking and stocks. His laws are the kind that should help
prevent another massive crash of the market.
Lessons Learned 95
During the early 1930s, much of the Great Plains became a dust bowl due
to years of overcultivation of crops, poor land management, and severe
drought. Huge dust storms, like the one pictured here near Spearman,
Texas, became the norm, because the soil was no longer anchored by
the long grass native to the region.
The stock market has always been unpredictable and will

always contain a measure of volatility. The year 1929 was not
the first time the market crashed, nor would it be the last. On
October 19, 1987, the stock market lost 25 percent of its value
in one day, with the industrial average dropping 508 points.
This drop ended a five-year bull market in which the industrial
average had risen to a high of 2,722 in August of that year.
When the market took a dive in 1987, the Federal Reserve
(continues on page 98)
One Man’s Experience

During the Great depression
The following was excerpted from a story by Kenneth Bruckart,

which appeared in the March/April 2006 issue of Reminisce maga-
zine. In the story, Bruckart tells how his father’s honesty during the
Great Depression was ultimately rewarded:
I was born in Washington, D.C., in 1925. My dad, William L. Bruckart,

was a newspaper reporter for the now-defunct United States Daily,
which subsequently became U.S. News and World Report magazine.
In the spring of 1933, Dad was also a syndicated columnist for
the Western Newspaper Union, and an accredited member of the
White House Correspondents group of reporters. The group was initi-
ated by President Franklin Delano Roosevelt to provide a means of
communicating with the public when he had something special to say.
One morning the reporters were called to the Oval Office. The
President told them that he had something to say that was strictly
confidential, and that each person there was on his personal honor
not to use or disclose the information until the banks of the nation
had a chance to bring their business to an orderly close.
This was to preempt any more panic than was already fairly
widespread regarding the number of banks failing across the
country. Roosevelt announced to the newsmen early in the day so
they could get their stories in print in time for the evening edi-
tions of their papers.
He said that all banks would be closed until emergency
actions could be taken to secure them. This was a critical time.
Many banks had made too many loans to too many financially
risky people, and the banks did not have enough cash on hand to
pay depositors their money back on demand.
Time was needed for the federal government to arrange for
sound banks to take over defaulted banks and for the government
Lessons Learned 97
to get more cash dollars into the hands of remaining banks to

stop the panicky withdrawals.
All my family’s worldly goods rested in the Riggs National Bank,
directly across the street from the White House. All Dad would have
had to do was cross the street, withdraw our money and go home.
However, Dad went to a pay phone near the White House and
called Mother. He told her what had just transpired and asked
her what he should do, adding he had given the President his
word of honor not to use or disclose the information.
Mother was silent for a minute before she said, “Bill, you
must do what you think is best for all concerned, and whatever
you decide, I’m with you all the way.”
Dad replied, “Well, I guess I’d better get the story in, and
then I’ll be coming on home.”
And that is how we lost all we had.
But that’s not the end of the story. Two weeks later, Dad
was told by the syndicate that he would have to go without a
salary for a while—it turned out to be a whole year—but that
if he continued his weekly column, he would eventually be
reimbursed.
When Mr. Mudd, our local vegetable man (and friend) came
around in his pickup truck the next week, Mother told him we
wouldn’t be buying any vegetables for a while because we had
no money. He drew a roll of bills out of his pocket and handed
Mother $500! He told her that he didn’t trust banks, and so he
had all his money safe and sound.
We did take the money and we did repay it eventually. It kept us
alive until Dad could find other work. We did a lot of things to survive
during the Depression, as did many others, but we all helped each
other, and survive we did.
(continued from page 95)

Board acted immediately, loaning money, and buying stock, so
banks and businesses would not go bankrupt.
Another dip in the market came in the fall of 2000, when
stocks within the technology sector lost more than $3 million
in value. This drop was caused by rampant buying of “dot-com”
stocks—the name for companies that did business solely on the
Internet. The slowdown led to a worldwide recession in the spring
of 2001. On September 11, 2001, the day of the terrorist attacks
on New York City and Washington, D.C., the industrial average
fell by 684 points and the market was closed for six days.
Still, the United States had never experienced such a pro-
longed period of economic downturn as the Great Depression,
and hasn’t since. By the time President Roosevelt took the
oath of office on March 4, 1933, 25 percent of the American
workforce was unemployed. That was more than 13 million
men and women. The former middle class of merchants and
professionals felt the pinch the most. The Great Depression
hit everyone hard, although some quarters of the population
had previously been poor and disenfranchised, namely, blacks,
immigrants, Native Americans, Mexicans, and Filipinos.
Those who had bet everything on the continued success of
the stock market, believing that stock values would continue to
rise at an astronomical pace, found themselves and their families
penniless. Furniture and family belongings were sold to repay
brokers, pay rent, and put food on the table. Once everything was
gone, if the man of the house was still lucky enough to have his
job, the family struggled by from paycheck to paycheck. If he was
among the Americans who were out of work, he might have made
the difficult choice to send one or more of his children to live with
relatives while he and his wife searched for work or begged.
Americans had always taken care of their own. Government
interference in private lives had never occurred. Private relief
agencies existed to supplement the extended family, which often
included several generations under one roof, but these agencies could
Lessons Learned 99
not keep up with the influx of the needy through their doors. The
day after Roosevelt took office, he instituted a series of programs,
laws, and agencies designed to counteract the poverty, jobless-
ness, and hopelessness running rampant throughout the country.
During his so-called First 100 Days, he passed an unprecedented
number of laws, some of which are still with us today.
Probably the most popular program was the Civilian
Conservation Corps (CCC), which provided work for young
men between the ages of 18 and 25 in construction and refor-
estation projects in rural and wilderness areas of the country.
The men lived and worked in military-like conditions, shar-
ing barracks and a mess hall. Of the $30 they were paid each
month, $25 was sent home to their families, who were on
government relief.
The Federal Emergency Relief Act was passed, which pro-
vided $500 million in grants to states to provide relief to the
needy through networks of private agencies. FERA started
the Civil Works Administration in late 1933 as a temporary
measure to get people to work that winter. The CWA lasted
only about six months because of mismanagement and inef-
ficient use of funds and manpower. The Works Progress
Administration (WPA) was another of Roosevelt’s attempts at
a work relief program that provided jobs for people. The WPA
employed people in all occupations throughout the country
and was much more successful than the CWA. WPA workers
included artists, photographers, teachers, engineers, and others.
It was a program that has provided a legacy of photographs and
books from that era; it taught thousands to learn to write; and
helped women gain a stronger economic foothold.
The Agricultural Adjustment Act also was passed, establish-
ing the Agricultural Adjustment Administration (AAA) within
the Department of Agriculture. Farmers were given subsidies to
let fields lay unused or to plow under crops, as well as to slaughter
millions of pigs. Although these acts—wasting food when mil-
lions were starving—were criticized, they were seen as necessary
short-term measures to equalize farm production with demand.

(The meat was distributed to the poor through an affiliated
agency.) Like some aspects of AAA policies, not all of Roosevelt’s
programs and theories were met with enthusiasm by everyone.
He had his detractors, especially after the economy began to
show some signs of recovery by the middle of the decade. Perhaps
his political opponents felt threatened when the programs they
attacked turned out to be working. But he appealed to the com-
mon man, especially through his weekly series of radio addresses,
known as “fireside chats.” He had a talent for appearing to know
each person like a true friend, and spoke through the radio as
a trusted confidant. His wife, Eleanor, helped in his efforts by
moving around the country, making speeches, investigating the
success of various New Deal initiatives, and encouraging a more
equal approach to treatment for minorities and women.
Lasting New Deal Programs

Many of Roosevelt’s New Deal programs were designed to pro-
vide quick relief to individuals and businesses and to get people
back to work. But, as has been stated, some of his measures
were meant to permanently reform how business was done and
to create long-term safety nets to help the less fortunate.
The Securities Act of 1933 established rules to regulate the
buying and selling of stocks. Brokerage houses had to file annual
financial statements and provide full disclosure about any stocks
being traded. The Securities Act of 1934 regulated the secondary
trading of securities and established the Securities and Exchange
Commission (SEC), which to this day regulates the stock market.
The SEC ended many of the competitive practices that had con-
tributed to the rampant speculation of the 1920s.
The Tennessee Valley Authority (TVA) is another New Deal
program still in existence. It developed the Tennessee River
region, providing flood control, soil conservation, and refor-
estation to a wide swath of land covering seven states. It also
provided inexpensive electricity to this area.
Lessons Learned 101
Under the New Deal, the U.S. government established the Tennessee Valley
Authority in 1933. The program was created to control floods along the
Tennessee River and also bring electricity to the region. Here, deliverymen
bring an electric stove and washing machine to a rural farm in Tennessee
in the 1940s.
Finally, the Social Security Act was originally intended as

an old-age and unemployment insurance program. It covered
income for retirees, widows, orphans, and the disabled. It was
funded through taxes on a person’s paycheck, shared by the
employer and the employee.
The Great Depression finally ended when the United States
entered World War II in 1941. Production geared up to build arms
and other wartime provisions, people went back to work, and the
economy began to thrive again. The carefree days of the 1920s
were gone forever, but in their place was a more mature country
with social safety nets and banking and stock trading safety nets
that would protect the country over the coming years.
Chronology
1928 O ctober During presidential campaign, Herbert

Hoover gives his “rugged individualism” speech in
New York City.
1928 N ovember Hoover is elected president, defeating Alfred
E. Smith by a wide margin.
1929 O ctober The stock market crashes, followed by a
severe depression.
1930 D ecember Many banks have failed, including the
Bank of the United States (62 branches and 400,000
Timeline December 1930 January 1932

4.5 million are Reconstruction
1928 unemployed Finance
Herbert Hoover elect- Corporation
ed president, defeat- signed into
May–June
ing Alfred E. Smith by law
1933
a wide margin New Deal
implemented
1928 1933
October 1929 April 1931 November 1932
Stock market Ford lays off Franklin D.
crashes 75,000 workers Roosevelt defeats
Herbert Hoover
in presidential
election
102
Chronology 103
depositors in New York City); 4.5 million are

unemployed; severe drought hits Midwest and South;
Hoover asks Congress for $150 million to help
the unemployed.
1931 A pril Carmaker Henry Ford lays off 75,000 workers
from his factories; “Brother Can You Spare a Dime?”
is a popular song as unemployment rises; drought
worsens; bank closings continue; social service
agencies run out of money.
1932 J anuary Reconstruction Finance Corporation signed
into law to lend money to banks, businesses, cities,
and states to stimulate business activity.
June 1934
The Securities June 1938
Exchange Act November 1936 Fair Labor
signed into law Roosevelt reelected Standards Act
passed
1934 1941–1945
1945
April 1937
U.S. economy American war
August 1935 production April 1945
reaches its pre-
Second New helps end Roosevelt dies
depression level
Deal initiated depression at age 63 in
middle of his
fourth term
104 Chronology
1932 S pring Thousands of WWI veterans march to

Washington, D.C., demanding promised monetary
bonuses for their war service.
1932 J uly Franklin Delano Roosevelt receives Democratic
nomination for president.
1932 S eptember Roosevelt gives a speech in which he says
that all citizens are owed a right to life and a measure
of security and happiness by the federal government.
1932 N ovember Roosevelt defeats Hoover in a landslide,
winning the electoral vote by 472 to 59.
1933 M
arch Unemployment is at 15 million when Roosevelt
is inaugurated as thirty-second president on March 4;
closes banks for one week, and orders an examination
of their record books; gives his first fireside chat;
Agricultural Adjustment Act (AAA) and Civilian
Conservation Corps (CCC) are proposed, marking
the beginning of the New Deal.
1933 M
ay—June New Deal implemented; business gradually
picks up as government programs give jobs to many
who had been unemployed.
1933 D ecember The Twenty-First Amendment is ratified,
repealing Prohibition.
1934 J une The Securities Exchange Act is signed into law,
initiating federal regulation of trading practices.
1934 J uly Federal Communications Commission is created,
regulating radio, telegraph and cable businesses;
National Housing Act is passed.
1935 A ugust The second New Deal is initiated, including the
Social Security Act and the Wagner Act.
Chronology 105
1935 S eptember Louisiana senator Huey Long is assassinated

in Baton Rouge.
1936 F ebruary Agricultural Adjustment Act is declared
unconstitutional by the Supreme Court.
1936 N ovember Roosevelt is reelected, defeating Alf Landon
by an electoral margin of 523 to 8.
1937 A pril The strength of the U.S. economy reaches its pre-
depression level.
1937 M
ay The Social Security Act and the Wagner Act are
upheld by the Supreme Court.
1938 J une New public works projects implemented to fight
recession; Fair Labor Standards Act is passed; second
Agricultural Adjustment Act is passed.
1939 S eptember Former Roosevelt adviser Raymond Moley
publishes After Seven Years, criticizing president and
New Deal; Germany invades Poland.
1941—1945 U
nited States enters WWII; American war production
helps to end Great Depression.
1945 A pril President Franklin Roosevelt dies at age 63
in middle of his fourth term; succeeded by
Harry Truman.
Digitally signed by M01
M01 DN: cn=M01, c=US

Date: 2008.06.22 02:55:16
-04'00'
Notes
Chapter 2 Chapter 5
1. Adrian A. Paradis, The Hungry 8. Robert S. McElvaine, The De-
Years: The Story of the Great pression and New Deal: A
American Depression History in Documents (New
(Philadelphia: Chilton York: Oxford University Press,
Book Co., 1967), 11. 2003), 45.
9. William Loren Katz, A History
Chapter 3 of Multicultural America: The
2. Don Nardo, The Great Depres- New Freedom to the New Deal
sion (San Diego, Calif.: Green (Austin, Tex.: Steck-Vaughn,
Haven Press, 1997), 8. 1993), 60.
3. Alex Woolf, The Wall Street
Crash (New York: Raintree/ Chapter 6
Steck-Vaughn Publishers, 10. Nardo, 17.
2003), 20. 11. Katz, 65.
4. Ibid., 24.
Chapter 8
Chapter 4 12. McElvaine, 60.
5. Paradis, 26–27.
6. Ibid., 30.
7. Nardo, 15.
106
Bibliography
Collier, Christopher, and James Lincoln Collier. Progressivism,

The Great Depression, and The New Deal 1901–1941. New
York: Benchmark Books/Marshall Cavendish, 2001.
Katz, William Loren. A History of Multicultural America: The
New Freedom to the New Deal. Austin, Tex.: Steck-Vaughn
Publishers, 1993.
Nardo, Don. The Great Depression. San Diego, Calif.: Green-
haven Press, 1997.
Paradis, Adrian A. The Hungry Years: The Story of the Great
American Depression. Philadelphia: Chilton Book Co., 1967.
Woolf, Alex. The Wall Street Crash. New York: Raintree/Steck-
Vaughn, 2003.
107
Further Reading
Galbraith, John Kenneth. The Great Crash, 1929. Boston:

Houghton Mifflin, 1997.
Hiebert, Ray Eldon. The Stock Market Crash of 1929: Panic on
Wall Street Ends the Jazz Age. New York: F. Watts, 1970.
Klein, Maury. Rainbow’s End: The Crash of 1929. New York:
Oxford University Press, 2001.
Kyvig, David E. Daily Life in the United States, 1920–1940:
How Americans Lived during the Roaring Twenties and the
Great Depression. Chicago: Ivan R. Dee, 2004.
McElvaine, Robert S. The Great Depression: America 1929–
1941. New York: Three Rivers Press, 1993.
Rife, Douglas M. 1929 Stock Market Crash: History in Head-
lines. Torrance, Calif.: Good Apple, 2000.
Web sites
The Crash of 1929
http://www.btinternet.com/~dreklind/thecrash.htm
Herbert Hoover Presidential Library and Museum

http://hoover.archives.gov/exhibits/Hooverstory/gallery06/
gallery06.html
Looking Back at the Crash of 1929

http://www.nytimes.com/library/financial/index-1929-crash.html
Crash of 1929 Gallery

http://www.pbs.org/wgbh/amex/crash/gallery/index.html
Seeds of the 1929 Crash

http://wsjclassroom.com/archive/02nov/ECON3.htm
108
Picture Credits
Page
5: © Snark/Art Resource, NY 47: Associated Press, AP
8: Associated Press, AP 49: Associated Press, AP
14: Courtesy of the 52: Associated Press, AP
Library of Congress, 57: Associated Press, AP
LC-USZC2-1232574 62: Associated Press, AP
19: © Hulton Archive/ 68: Associated Press, AP
Getty Images 75: Associated Press, WPA
Library of Congress, 85: Associated Press, AP
LC-USZC2-101514 88: Associated Press, AP
Library of Congress, 95: Associated Press,
LC-USZC2-124934 NOAA Historic
31: © Bettman/CORBIS NWS Collection
36: © Bettman/CORBIS 101: Associated Press, Tennessee
40: Associated Press, AP Valley Authority
COVER
BE065248: ©Bettman/CORBIS
109
Index
Abruzzo, Matthew T., 62 Civilian Conservation Corps
Agricultural Adjustment Act (CCC), 9, 61, 62, 67–68, 99
(AAA), 61, 69, 86, 99–100 comics, 91
agricultural depression, 4–5, 6, Commonwealth Edison, 19–20
16–17, 94 Communism, 82
agriculture, 15, 16–17, 85–86 Congress of Industrial
alcohol, 13–14 Organizations (CIO), 85
American Federation of Labor Coolidge, Calvin, 7, 17
(AFL), 84–85 Coughlin, Charles, 82
American Liberty League, 80 credit, 1–3, 15, 18–21, 26, 94
art, 89–92 culture, 87–92
Babson Break, 30 depressions, multiple, 17–18

Bankers Trust Company, 34 DiMaggio, Joe, 92
Banking Acts of 1933 and diversification, 30
1935, 29 drought, 6, 17
banks. See also individual banks DuPont, 18, 80
borrowing by, 23–24 Durant, William C., 34
holding companies and, 18–19 Dust Bowl, 6, 94, 95
regulation of, 29, 60, 94–97,
100 Edison, Thomas, 19
role of in stock crash, 2–3 Edison Electric of Boston,
Bay Bridge, 41 25–26
Bethune, Mary McLeod, 63 efficiency, manufacturing
Black Thursday, 30–32 and, 25
Black Tuesday, 1–4, 23–26, electricity
33–38, 93–95, 98 introduction of, 12, 15, 94
bonuses, veterans and, 51 TVA and, 9, 69
Bordoise, Nicholas, 85 utility companies and, 19–20
Bruckart, Kenneth, 96–97 embezzlement, 35
Buck, Pearl S., 91 Emergency Farm Mortgage Act,
“Buy Now” campaign, 41–42 69–70
buying on margin, 2–3,
18–21, 26 family structure, impact on, 6,
44–46
Chase National Bank, 34 Farley, James, 61
cities, 4, 20 Farm Credit Act, 68–69
Civil Works Administration farming, 15, 16–17, 85–86
(CWA), 61, 68–69, 99 fascism, 82
110
Index 111
Federal Emergency Relief Act rugged individualism

(FERA), 67–68, 99 and, 9
Federal Reserve Bank, 23, 62 as scapegoat, 10–11
Federal Reserve Board, 23, 27–28 study commissioned by, 20
Federal Surplus Relief warnings of, 22–23
Corporation, 86 Hoovervilles, 5, 48–49
Federal Trade Commission Hopkins, Harry, 68
(FTC), 69–70 Huxley, Aldous, 91
Filipinos, 50
fireside chats, 8, 55–59 immigrants, effect on, 49–51
Fisher, Irving Clark, 23–25 inaugural addresses, 56–57
Fitzgerald, F. Scott, 13 industrialists, 79, 80–81
flappers, 13 inflation, 30
Ford Motor Company, 15, 38, infrastructure, 9, 61
77, 84 Insull, Samuel, 19–20
fundraisers, 42 interest rates, 27–28
investment trusts, 30
Gadsden, Philip H., 41–42
Galbraith, John Kenneth, 65 Jazz Age, 4, 11, 12–16
Garland, Judy, 92 Jazz music, 13
Gehrig, Lou, 15, 92 Johnson, Hugh, 77
Geisel, Theodore Seuss, 89–90 Jones Beach, 41
General Electric, 42 J.P. Morgan & Company, 34
General Motors, 18, 32, 80
Gone with the Wind (Mitchell), 91 Kennedy, Joseph, 69–70
government, 7, 13. See also Keynes, John Maynard, 64–65
laissez-faire government Keynesian Economics, 64–65
Grapes of Wrath (Steinbeck), 6,
90, 91 labor unions, 51, 77, 83–86
Gratuity Fund, 35 laissez-faire government, 9, 11,
Great Depression era, 4, 43, 44–46 17, 39–40
Guaranty Trust Company, 34 Lamont, Thomas W., 34
Lange, Dorothea, 88
Hayden, Charles, 41 Leach, John A., 14
Hayden Planetarium, 41 literature, 89–92
Hemingway, Ernest, 91 Long, Huey, 82–83
Henry, Lou, 10 Louis, Joe, 15, 92
hobos, 6, 46–47
holding companies, 18–19 manufacturing efficiency, 25
homelessness, 38 margins, buying on, 2–3,
Hoover, Herbert 18–21, 26
fault of, 5–6 market economy, 15
response of, 39–42, 51–52 Massachusetts Public Utility
Richard Whitney and, 35 Commission, 25
112 Index
Mexicans, 50–51 paper wealth, 26

migrations, 6, 46–49 Pennsylvania Turnpike, 41
minimum wage, 63 penny auctions, 86
minorities, effect on, 49–51, Perkins, Frances, 62–63, 72–74
97–98 Philadelphia National Bank, 60
Mitchell, Charles E., 28, 29, 34 polio, 53
Mitchell, Margaret, 91 Potter, William, 34
Model T, 15 Prohibition, 13–14
Monopoly, 89 Prosperity Decade, 4, 11, 12–16
Morgenthau, Henry, 61–62 Prosser, Seward, 34
mortgages, 68–69 protests, 84
movies, 87–89 Public Works Administration
Municipal Lodging House, 47 (PWA), 61, 70
music, 13, 91–92
musicals, 88–89 Radio Priest (Father Charles
Coughlin), 82
National City Bank, 28–29, 34 radios, 15, 58–59
National Federation of railroads, 46–47
Business, 44 Raskob, John Jakob, 80
National Industrial Recovery RCA, 18, 19, 33
Act, 70, 71, 76 recessions, 22
National Labor Relations Act, Reconstruction Finance Corpo-
71, 80–81, 84 ration (RFC), 11, 41
National Recovery Administra- recovery of, 54
tion (NRA), 76–77 Reforestation Relief Act, 67. See
nationalization, 54 also Civilian Conservation
Native Americans, 50 Corps (CCC)
New Deal repossession, 39
continuation of, 71, 74–78 Richard Whitney and
lasting programs of, 100–101 Company, 35
overview of, 7–11, 53–54, Riggs National Bank, 97
61–65 Roaring Twenties, 4, 11, 12–16
programs of, 67–71, 72–73 Rockefeller Family, 34
New Era, 4, 11, 12–16 Rolodex, 25
New York Stock Exchange, Roosevelt, Eleanor, 45, 46, 53,
26–27, 28, 35, 60 61, 100
New York Yacht Club, 35 Roosevelt, Franklin D. See also
New Deal
Old Age Revolving Pensions, election of, 52–54
Ltd., 83 fireside chats of, 8, 55–59
Old Age, Survivors, and Disabil- Keynesian Economics and, 64
ity Insurance Program, 74–75 opposition to programs of,
open shops, 84 80–83
Owens, Jesse, 92 programs of, 99–100
Index 113
utility companies in New strikes, 84, 85

York and, 26 subsidies, farming and, 68
Roosevelt, James, 57 suicides, 54
Roosevelt, Sara Delano, 57 Superman, 91
Roosevelt, Theodore, 16–17, surpluses, 16–17, 86
45, 53 Szuymcak, Miecislaus, 62
rugged individualism, 9, 63
rural areas, 4–5, 20 Teamsters, 84
Ruth, Babe, 92 Temperance Movement, 13–14
Tennessee Valley Authority
salaries, 4–5, 16, 44, 63 (TVA), 9, 61, 69, 100–101
Scrabble, 89 Townsend, Francis, 82, 83
Second New Deal, 71, 74–78 trickle-down theory, 51
Securities Act of 1933, 29, Trust Company of America, 29
69–70, 100 trusts, 30
Securities and Exchange Com-
mission (SEC), 69–70, 100 unemployment, 21, 37–38,
segregation, 51 44–46, 61, 67–69
Seuss, Dr., 89–90 unions, 51, 77, 83–86
shantytowns, 5, 48–49 United Nations, 45
Share Croppers Union, 51 urban areas, 4, 20
Share the Wealth Society, 83 utility companies, 19–20, 25–26
Shouse, Jouett, 80 veterans, bonuses for, 51
Smith, Al, 80 Visible Index Card System, 25
Social Security Act, 62, 71–74, 101
Social Security Administration, wages, 4–5, 16, 44, 63
creation of, 7 Wagner, Robert F., 71, 77
speculation, 30 Wagner Act, 71, 80–81, 84
Sperry, Howard, 85 Wallace, Henry, 86
splitting stocks, 25 Walsh, Thomas, 61
sports, 92 warning signs, 21, 22–23
starvation, 48 wealth, concentration of, 16
Steinbeck, John, 90–91 Western Electric, 29
Stock Exchange, 26–27, 28, 35, 60 Wheeler-Howard Act, 50
stock manipulators, 18–19 Whitney, Richard, 31, 32, 34–35
stocks Wiggin, Albert, 34
buying on margin and, 2–3, Wilson, Woodrow, 53
18–21, 26 women, 44–46, 76
defined, 2 Works Progress Administration
market craze and, 27–30 (WPA), 9, 50, 71, 75–76, 99
NYSE and, 26–27 World War I, effect of, 1–2
regulation of, 94–95, 100 World War II, 10–11, 101
regulation of trading of, 69–70
splitting of, 25 Young, Owen D., 42
About the Author
Brenda Lange has been a journalist, author, and public relations

professional for 20 years. During that time, she has written
for newspapers, magazines, trade publications, and performed
public relations functions for a diverse clientele. She has writ-
ten or revised six books for Chelsea House. Brenda is a member
of the American Society of Journalists and Authors and lives
and works in Doylestown, Pennsylvania. Her Web site is www.
brendalange.com.
114

Brenda Lange - The Stock Market Crash of 1929 The End of Prosperity by Brenda Lange

Uploaded by

Copyright:

Available Formats

Brenda Lange - The Stock Market Crash of 1929 The End of Prosperity by Brenda Lange

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Brenda Lange - The Stock Market Crash of 1929 The End of Prosperity by Brenda Lange

Uploaded by

Copyright:

Available Formats

Milestonesin

The Stock Market

The Treaty of Paris

The Monroe Doctrine

The Transcontinental Railroad

The Electric Light

The Wright Brothers

The Stock Market Crash of 1929

The Civil Rights Act of 1964

The Stock Market

The End of Prosperity

The Stock Market Crash of 1929: The End of Prosperity

Copyright © 2007 by Infobase Publishing

isbn 10: 0-7910-9354-9

Library of Congress Cataloging-in-Publication Data

HB37171929 L23 2007

Series design by Erik Lindstrom

Printed in the United States of America

This book is printed on acid-free paper.

1 The End of an Era 1

2 Life before the Crash 12

3 The Buildup to Black Tuesday 22

4 The Day of the Crash 33

5 The Early Years of the Great Depression 43

6 Roosevelt’s First 100 Days 55

7 Putting the Program to Work 66

Groups of men, with here and there a woman, stood about

* “ Stocks Collapse in 16,410,030-Share Day, but Rally at Close Cheers

eventual crash. There was, however, an underlying weakness

loans. Thousands of families found themselves in this situ-

thought to be indifferent to the suffering and unwilling (or

encompassing effect on mass feelings and thoughts—the ways

The U.S. Government’s Reaction

The new deal

In 1932, Franklin Roosevelt was overwhelmingly elected the thirty-

The American people had supported Roosevelt in 1932 in

Herbert Clark Hoover

The Scapegoat for

provide supplies for troops overseas. This created millions of

collect unemployment insurance, which did not exist in 1930. If

The temperance movement, which promoted abstaining from drinking

bathtubs, earning this home-brewed alcohol the name “bath-

Moving into the 1920s

increasingly industrialized, Americans began to purchase

The state of the economy

the gold rush in California, investors raced to buy up gold,

The Allure of Money

In 1929, Radio Corporation of America (RCA) was the most heavily

control it. Whenever the promoters needed cash, they created

“the world’s safest investment.” He became a millionaire by

rise of prices made others nervous. Some signs of danger that

boards in the government to do what they could to slow it

What Caused the Crash?

was highly regarded. His mistaken predictions surrounding

Irving clark fisher

The New York Stock Exchange

The Stock Market Craze

are often believed to have a braking effect on the economy.

none of these men wanted to be associated with having ended

* “ Stocks Collapse in 16,410,030-Share Day, but Rally at Close Cheers