For the paper assignment select one of the primary source documents from Reading the American Past and construct an essay where you examine the authorâ€™s thesis and then put the document in its historical context. This will require that you successfully integrate the primary source you select with material from the main course text, lectures notes and class discussions. Finally at the end of your paper you should critique the argument raised in the document you selected. While your paper should focus on only one of the primary source readings you should feel free to use evidence from other readings as support for your conclusions. You should also feel free to write on any of the documents which were not assigned but that you found interesting.
To give you an example of how you might think about the assignment. If you selected Charles Nordhoff s The Cotton States, 1875 you might want to begin by providing Nordhoff s background. Who was he? What was his position on Reconstruction? What was his thesis (in this case the solution to the lingering problem over reconstruction)? What evidence does he give to support his conclusions? Once you have provided an overview of Nordhoff s argument you need to place his statements in context. What is the state of Reconstruction in 1875? What factors might be playing into the position Nordhoff is taking on the process? Why is it significant that he describes himself as a Republican? The paper should end with a discussion of Nordhoff s argument. Is he correct that now that African Americans have the right to vote they will have the same chance as any other American to improve their lives? Does history bear out Nordhoff s claims?
In a few cases, such as that of the textile laborer Thomas O Donnell s testimony before the Senate, individuals are not advancing an argument of their own but are providing a testimonial about general conditions and quality of life issues. If you select one of these documents you will need to fit it into the arguments of the day. How would Carnegie and Gould respond to O Donnell s statements as opposed to union organizers like Samuel Gompers or social reformers?
No matter which document you choose to write on you need to carefully organize your material, proofread your final draft and above all include citations for any sources you use. You are welcome to look at outside sources for assistance in analyzing the document however; the essay should not be a report on the person or group who created the document, or the period in which it was created, or even on the document itself. Instead, it should be a close reading and analysis of what the document says, and how it makes its argument.
The American Economy in the late 1920 s and the Great Crash
The 1928 election (Herbert Hoover vs. Alfred Smith)
The Republican candidate for the 1928 election was Herbert Hoover the engineer and the platform looked all but unbeatable as the party took credit for the economy, prosperity debt and tax reduction and maintaining the tariff which was supposedly beneficial to both industry and agriculture. The Democrats ran former NY Governor Al Smith on a platform virtually identical to that of the Republicans. Both parties promised to continue Prohibition.
Hoover won the election easily with 21 million votes to Smith s 15 and an even wider majority in the Electoral College (444 to 87).
The end of prosperity
Many workers in light manufacturing did not enjoy the booming economy of the mid to late 1920 s. Farm prices also fell at the start of the decade rebounding by 1925 and then fell again in late 1920 s. Overproduction was a huge problem in both agriculture and manufacturing.
Business saw much of the 1920 s as a golden age and manufacturing and industry reached goals they had sought for 50 years. They crushed organized labor. By 1929 most union members are craft workers and the unions are becoming increasingly conservative. The use of machinery and new systems of management increased resulting in increased production for heavy industries. Politically Republicans controlled both the presidency and congress and competition between big businesses was limited. The spread of mass cultural concepts via radio and the movies produced increased domestic markets and consumer demand for goods.
During the 1920 s, the American economic system depended on maintaining the status quo. While precursors to the Crash were certainly present in 1927-28, elected officials, businessmen and investors/speculators refused to acknowledge problems. Many of the signs of an approaching downturn were ignored. In 1928 housing construction fell as did consumer spending. As a result business layoffs increased and many industries cut production. Public sector spending was also down and farmers were also hurting.
Banking and the crash
Banking was also in trouble by 1928-29. Banks were overextended because of loans made to stock brokers, which were used to purchase stocks on speculation. Banks also had loaned large amounts of money for mortgages and for business expansion dash; loans which could not be paid off after the crash in 1929. The major trigger for the crash was the collapse of the stock market speculation bubble which had grown out of control during the 1920 s.
Adding to the impending crash were Federal Reserve Bank policies. The Fed. attempted to manipulate the demand for loans by changing the interest rates charged. This fluctuation was done partly to bolster foreign currency and markets. The Fed pleaded with private banks to stop excessive speculation and loans but too little effect. In 1928 some stocks had tripled in price despite corporate earnings statements which showed mounting financial problems. The market continued to rise and then it took off going from 200 in January 1928 to 381.17 in September 1929 when selling started. Major problems developed. Stocks bought with borrowed money were pledged for collateral for additional loans. There was not enough real money present to pay off all debts. Prices began to fall on the London Stock Exchange and nervous investors began to sell off on the NY stock exchange as well.
The selloff grew and by October 15, 1929 was going full force. On October 24, 1929 the House of Morgan (founded by J. P. Morgan) and other financiers tried to organize a banker s pool to buy low price stocks and stabilize the market. This worked for several days but not enough to reverse panic selling and on October 29, 1929 (Black Tuesday ) the bottom fell out of the market. 16 million shares were traded (3 times normal amount). Leading industrials dropped 40 points in one day. This was about 12% drop in one day. By October 31st stocks that had been worth a total of $87 billion were now worth $55 billion. The market fell to 200 in November then rebounded to 300 in April 1930 when the real nosedive started.
The crash created liquidity problems and many bonds proved worthless as the selling progressed. Many companies laid off workers then tried to dump their inventories. Unfortunately, companies that were suppliers to other companies found orders cancelled or there were no future orders. Laid off workers had no income left to buy dash; even at cut rate prices. Result was the collapse of the commodities market as investors sold off futures in order to raise cash. Bad as all this was the factor that affected most Americans was the failure of the banking system. Many banks did not have cash on hand to answer call for deposits, especially when speculative loans fell through.
Early government response
The economic reality was that from October 1929 to October 1930 investments declined 35%, the GNP declined 8% and unemployment tripled from 3-9%. During this first year of financial problems, when direct intervention might have stemmed the slide Hoover stood on his non-interference principles of individual and local responsibility. He advocated voluntary cooperation and asked business leaders to keep prices and wages at pre October 1929 levels. The Chamber of Commerce backed this request but most business leaders refused.
In 1930 Hoover s Government mounted a variety of responses to the crisis.
â€¢ Hoover set up voluntary compliance agencies and also increased the amount of money given to states which they could use for public building projects.
â€¢ Hawley-Smoot Tariff bill passed. The tariff raised duties which resulted in international retaliation against US companies and products.
â€¢ Congress (both houses controlled by Republicans and conservative Democrats) passed temporary tax cuts.
â€¢ Congress than adds $400million in Federal spending.
â€¢ Hoover gets the AFL to agree to no strike plan.
A brief recovery occurred in spring of 1930. Hoover tells the Chamber of Commerce that recovery was on the way. By summer downturn had resumed. Bank failures continued.
Drought begins in the South and Hoover set up the National Drought Committee and President s Emergency Committee for Employment. Once again he calls for private business cooperation. The president continues to claim that federal intervention will hurt private/individual action. Many voters see this as rejecting humanitarian aid to fellow Americans in order to uphold theoretical principles and the Democrats win control of the House.
â€¢ In 1931 Hoover vetoes bills that would put federal dollars into the economy.
â€¢ In September/October England goes off the gold standard. Many Americans fear US will follow and pull their money out of banks then buy and hoard gold. From January dash; October 1931, 827 more banks fail.
â€¢ December 1931 Hoover asks for the establishment of an emergency reconstruction finance corporation. This institution would lend money to banks, insurance companies, and large financial institutions which could then loan money to businesses. The president also continues to give speeches stressing moral fiber and social principles while millions of Americans are out of work.
â€¢ By 1931 desperation was setting in across many parts of the country. The Communist Party begins to draw increasing crowds at events and many fear the country is becoming ripe for revolution.
â€¢ In January 1932 Hoover signed a bill establishing the Reconstruction Finance Corporation. This body was funded with $500 million and authority to borrow $2 billion by issuing tax exempt bonds. Hoover is still worried over this approach. Business leaders and conservative politicians are against the measure arguing that business cycles have built-in self-correcting mechanisms that would turn the economy around.
â€¢ The Chamber of Commerce says the way out is to end anti-trust enforcement and return to World War One type governmental direction of business planning. They advocate codes of fair competition and for the federal government to allocate market shares, fix prices and set minimum wages. Hoover rejects this plan.
â€¢ Hoover signs a new banking act (Glass-Stengall) in February which lets the Federal Reserve Board expand credit and lets the Fed release some government gold to business in an attempt to increase the money supply. The measure fails.
â€¢ By early 1932 most relief agencies are overwhelmed and out of money. Only 25% of the jobless are receiving aid. 13 million unemployed and total wages earned equal 40% of the 1929 level.
â€¢ By the end of 1932 5,000 banks failed.
â€¢ By the end of 1932 relief is a joke. In New York the average family grant is now $2.39 a week and fewer than 50% of the eligible families were receiving aid.
â€¢ In the spring of 1932 the government faced another highly public appeal for relief when 15,000 destitute World War One veterans, many accompanied by their families, marched on the capital. The Bonus Marchers as they were called demanded payment of a bonus Congress had promised to veterans in 1924. Hoover refused to meet with the marchers and in late July when many of them had constructed a shanty town and showed no sign of returning home he ordered the Washington police department, supported by the army to disperse them.
â€¢ In 1932 Hoover tried to save himself politically. He signs the Relief and Reconstruction Act (July 1932), puts another $1 billion into Reconstruction Finance Corporation and also releases some funds to local and state relief agencies.
â€¢ The Controller of Currency declares a moratorium on foreclosures on first mortgages. While this saves many peopleâ€™s homes it hurts savings and loans.
â€¢ Hoover was exhausted by the effort of fighting the depression but also acknowledged his personal limitations admitting to aids. This sense of depression and desperation was not alleviated by Americans making grim jokes at the president s expense.
â€¢ November 8, 1932 Hoover gets destroyed in the presidential election losing to Franklin Delano Roosevelt. The popular vote is 22, 809,638 to 15,758,901 (Electoral College 472-59). The socialists (Norman Thomas) get 882,000 votes and the communists (William Foster) get 103,000.
â€¢ Democrats gained control of Congress. (Senate 59 Democrats vs. 37 Republicans and house 312 Democrats vs. 123 Republicans).