“…the inflation was there, and growing all the time. Prices and wages should have fallen, the first much faster than the second.” (Johnson 1998 730). The prosperity was high as the Twenties raced toward their disastrous end with the stock market crash. Ever since, there has been finger pointing, but the fact remains there is no single cause of the severe depression. It was a number of things that came together at the wrong time. One of them was the fact that stock prices had soared, far out-distancing the actual worth of the various companies. “By 1929 some stock were selling at fifty times earnings. As one expert put it: ‘The Market was discounting not merely the future but the hereafter.'” (Johnson 1998 733)
To put it as succinctly as possible, the causes of the Great Depression was a loose control by government, and the consequences (aka The New Deal) was a centralist federalist approach, where the federal government took over many of the responsibilities that the Constitution once allotted to the states.
One of the causes of the depression’s depth and length also can be ascribed to poor planning. “There were millions of tons of food around, but it was not profitable to transport it, to sell it. Warehouses were full of clothing, but people could not afford it. There were lots of houses, but they stayed empty because people couldn’t pay the rent…” (Zinn 1995 378)
During the rise of stocks, the wealth of many (at least on paper) it seems that no one was concerned about saving their money. In addition, banks were easily led into putting the depositors’ money into high-flying stocks. And these funds had no protection,. No guarantee or insurance that the depositors would not lose their money. When stocks collapse, so did the banks. And when banks went, so did the money of their depositors. No wonder people were evicted, farmers lost their land, and hundreds of thousands were now homeless and jobless. There were temporary shelters, called “Hoovervilles” even in New York’s Central Park (as seen on Tindall 1999 1226) It is unfortunate that, even today, the blame for the Depression is laid on Hoover’s shoulders. The impending crash’s beginnings occurred long before Hoover became President, but what he did was simply too little and too late. Franklin Roosevelt got credit for many of the measures that Hoover tried to implement. Still, the Depression did not really end until war production in the end of the Thirties brought people work, and had factories humming and salaries being deposited in now Government-regulated banks. If Hoover had only pleaded “‘dire necessity’ and taken the leadership of the relief movement (as developed by Congress) and salvaged his reputation” (Tindall 1999 1227)
“Theodore Roosevelt’s emergence as a national leader coincided with what historians call the Progressive Era.” (Tindall 1999 1072) This era was really the result of the 1890s depression and social unrest in America. It had been a time of major immigration of Irish and Germans and Italians. And, when the recession hit, there were jobless and homeless (not quite as bad as in the Great Depression). But, it was also a time when social reformers, and unions began to worry more about the so-called “common man:, the workers and laborers, than about the capitalist barons who still made enormous profits off the backs of those workers. If this sounds somewhat like a typical Karl Marx scenario, it came rather close. Progressivism really pitted the growing urban centers- with bad housing, crowded conditions and the pendulum of full employment and then unemployment- with the slowly eroding agricultural areas.
Who was the leadership of the so-called Progressives? It has been argued that Progressivism was the hostile reaction of the educated middle class to the overwhelming power of Big Business, whose wealth and scale had elbowed them out of the political-economic picture entirely, or so they feared.” (Johnson 1998 607) If Populism- the movement in favor of farmers against city-dwellers was the movement of the 1890s, then Progressivism took over from 1900 until the First World War. Actually, Progressives were, for the most part, conservatives, including business leaders who felt that Big Business was squeezing out the smaller businessman. This, of course, is a feeling that continues to this very day- the threat of bigness, monopoly-like conditions bringing anti-competitive actions into play. No better example of Progressivism today than can be seen than in the government’s suits against Microsoft.
One of the cornerstone of Progressivism was the Sherman Anti Trust Act (even though it came earlier). Theodore Roosevelt founded much of his economic policy on it, and it ended the domination of Standard Oil, for one. After his reelection in 1906, Roosevelt “approached his second term with confidence and a stronger commitment to progressive reform.” (Tindall 1999 1089)Progressivism was, however, giving the federal government power it had never used before. For example, the fact that the ICC could now set railroad rates. This was the sort of monopolistic, competition-ending big business the Progressives felt was damaging to American business. Progressives did have some clout in Congress. While many of those laws have now fallen by the wayside, the Progressivism of tighter federal control over business remains today, even as the Republicans are attempting to impose “less government is better government” actions. Today, in the 21st century, here are still conservative “Progressives” who monitor the dangers of too-big business.
CITATIONS:
Johnson, Paul: (1998) A History of the American People
New York: HarperCollins Books
Tindall, George Brown and Shi, David E. (1999): America: A Narrative History New York: W.W. Norton Co.
Zinn, Howard (1995): A People’s History of the United States New York: HarperPerennial Books
