The Extent to Which America Was Ripe for Revolution during the Great Depression - Research Paper Example

The Extent to which America was Ripe for Revolution during the Great Depression Introduction This research work deals with issues relating to the implications of the Great Depression. This work argues that “America was ripe for revolution during the great depression”. The following discussion shows that although the people had become desperate due to the Great Depression, the measures of New Deal by the then President Franklin D Roosevelt alleviated the situation. The Depression era of the 1930s was distinguished by the extreme deprivation experienced by a number of Americans, the overwhelming severity of the economic collapse, and the isolating conditions that became a part of American life. Various sections of American society, such as industrial workers, war veterans, agricultural representatives and farmers had been disappointed seriously during the Great Depression and had contemplated revolution. As such, warnings regarding the possibility of violent revolution emerged from several sections of the populace. Thus, in 1934, a major cotton textile strike transpired. This was the largest of its kind till that date in American labour history. It involved 400, 000 workers who marched to Georgia from Maine, and the National Guard had to be deployed in Alabama, Georgia, Mississippi and the Carolinas.1 This work analyses some of the important aspects of the Great Depression in the United States that prepared the ground for revolution, such as stock market crash, gaps between productive capacity of the nation and capacity of people to consume, contention by the agricultural representatives, protests by veterans, opposition by industrial workers, failure of financial systems, crises experienced by the private aid organisations, raise of unemployment and the effects of the New deal programme measures, by the then President Franklin D Roosevelt. As such, every economic setback since World War II has evoked comparisons with and persistent trepidations of, a return to the conditions that had abounded during the Great Depression. The 1930s, thus emerged as one of the primary criteria for evaluating security and wellbeing. Advertisements of the 1930s were replete with individuals beleaguered by dearth of sleep, confidence, financial means, foresight and planning.2 In addition, the 1920s were witness to an unprecedented proliferation of communist literature in the form of pamphlets, books, leaflets and foreign language federation newspapers, and communist magazines such as the Daily Worker, Little Red Library, Labor Unity, Labor Herald, Party Organizer and the Liberator. Several analyses were conducted upon this communist literature and its potential for disseminating and promoting communist activism. As a result, there was considerable focus upon the manner in which communists promoted the possibility of revolution, agitation and mass action. Thus, the functioning of the early communists in the US was understood to a considerable extent, especially with regard to the manner in which they had negotiated understandings regarding nation and class.3 The New Deal included programmes that paid farmers to change their land usage. Thus, agencies of the New Deal provided funds on loan to local and state governments, banks, farmers, homeowners and industry so as to provide the required liquidity. For instance, the Federal Housing Administration had insured mortgage and home improvement loans with a view to promoting the housing sector. Some of its major programmes were: relief and public works spending, and Agricultural Adjustment Administration spending. The latter had bestowed grants upon farmers to cease production, in order to reduce supply and thereby enhance farm prices and income of farmers.4 American values experienced a profound change due to the Great Depression and the New Deal programmes. The changing situation was moulded to a major extent by the initiatives of President Franklin Roosevelt. However, there was a strong clamour for effecting this change more stringently and swiftly.5 For example, industrial workers expressed significant discontent with the situation. Unionisation had been strongly opposed, prior to the Great Depression, and this situation was exacerbated with the advent of this catastrophe. In fact, union membership in 1933 was two million, whereas it had been five million in 1920. During the economic decline, the American Federation of Labor had ignored the increasingly automated nature of the changing technology. As such, the majority of the workers in mass production utilities were unskilled.6 The Great Depression commenced with the crash of the stock market in 1929.The American stock market crash, which transpired on 29 October 1929, termed Black Tuesday, has generally been acknowledged as the commencement of the Great Depression in the US. In the succeeding four years, there was a sevenfold increase in unemployment in the nation. Moreover, industrial output reached a very low level, and more than 3,000 banks collapsed.7 Galbraith has designated the economic condition that is apparently equated to capitalism universally, as high equilibrium. This situation has been obtaining in the US since 1945. It entails low unemployment, inflation problems, high use of resources, high levels of waste and increasing demand for most of the things.8 On the other hand, the low equilibrium stage of capitalism consists of slow activity. During low equilibrium periods, individuals save money and act overly cautious, leading to prolonged economic contraction with high unemployment, low resource and consumer demand, scarce credit and general dissatisfaction.9 As such, the stock market crash destroyed 40% of the paper value of common stock. Nevertheless, leaders of industry and politicians did not desist from making optimistic predictions regarding the economy of the nation. However, the situation became worse, confidence in the economy was demolished and numerous individuals had to forego their life savings. The value of stock on the New York Stock Exchange in 1929, reduced to less than 20% by the year 1933. The situation was dismal, with business houses in liquidation, factories closed down and banks that had failed. Income from agriculture had reduced by 50%, and by the year 1932, 25% of the Americans were unemployed.10 Central to the issue was the tremendous hiatus between the productive capacity of the nation and the capacity of the people to consume. In the aftermath of the war, production techniques witnessed outstanding innovations. The latter increased industrial output much beyond the purchasing capacity of the wage earners and farmers of the nation. The middle class and the wealthy had made massive savings and these huge amounts had been lured into speculation in stocks or real estate.11 Thus, the stock market collapse constituted the first among a sequence of disasters, wherein the fragile edifice of speculation had been destroyed. Moreover, several expressions of desperation were forthcoming from the populace, during that epoch. For instance, war veterans in the possession of government bonus certificates demanded that Congress should liquidate their certificates. To this end, a large number of individuals and their families gathered around Washington. This motley group included miners, sheet metal workers, and unemployed Poles. A bill was presented for paying these certificates, which was defeated in the Senate.12 Thereafter, the then US President Hoover directed the army to evict the claimants. In addition, agricultural representatives opposed enhancements in the discount rates for securities. As such, enhancements to the discount rate were contested by the agricultural representatives who expressed a preference towards the open market sales of securities for restriction, and preferentially low interest rates on acceptance, in order to facilitate the movement of crops to the market. At that juncture, Strong and Harrison, Governors of the New York Federal Reserve Bank, recommended a greater active use of open market operations, so as to ensure general stabilisation and minimal concern regarding the stock market.13 Furthermore, the farmers of the Upper Midwest engaged in violence that had been described as the most serious instance of class violence during the initial stages of the Great Depression. On the other hand, such extreme violence had not been displayed by the unemployed industrial workers. For instance, the farmers in the National Farm Holiday Association attempted to increase farm prices by stringent means. These farmers, in the year 1932, prevented the transfer of food into cities until there had been an increase in prices.14 In 1933, the process of recovery commenced, which has been chiefly attributed to the New Deal of the then US President Franklin D Roosevelt. This constituted an assortment of relief measures that were aimed at assisting the impoverished farmers and the unemployed, reform of extant financial regulation and governmental promotion of recovery via programmes that provided support for prices and wages.15 During Great Depression, financial systems crashed resulting in bankruptcies. The financial system of the US underwent conditions, during 1930-1933, which were truly onerous and chaotic. By March 1933, innumerable banks failed with disturbing frequency, and this led to the shutdown of the entire banking system, other intermediaries and markets. Borrowers, without exception, were seriously affected by the outstanding default rates and bankruptcies, and the federal government proved to be the only unaffected entity.16 Consequently, several adverse developments took place in the macro economy and these coincided with the bank failures. For instance, an endeavour to effect recovery from the 1929-1930 recession failed during the first banking crisis of 1930; the budding recovery deteriorated into a novel decline during the 1931 unease; and the financial system and economy reached their nadir in March 1933. Strictly speaking, the rehabilitation of the financial system, brought about by the New Deal in 1933-1935, enabled the economy to commence its gradual emergence from the Great Depression.17 In addition, the reduction in donations produced a drastic increase in the number of individuals who were in dire need of financial help. For instance, in 1929, the Salvation Army of Memphis had provided 1,700 meals. After a year, the number of such meals had become four fold. Moreover, by March 1931, the Salvation Army was providing around 10,250 meals. Nevertheless, several fraternal orders, women’s clubs and other quasi-religious private organisations abandoned their activities, and this fate was shared by the churches.18 Moreover, the income of the salaried class had diminished by 40%. Donations from churches managed to remain at a steady proportion of the national income, until 1933. This represented a 50% loss at a juncture when the demands on church resources were at their zenith. Initially, churches discontinued benevolent spending.19 Banks failed due to erroneous policies. Bank failures and the resulting economic disaster have been attributed to the erroneous policies and contractionary monetary actions of the Federal Reserve. Despite the heavy losses caused by the stock market crash, it was not significant enough to have caused the economic failure. The actual problem commenced in 1928, when the Federal Reserve made monetary policies stringent. This was aimed at curbing credit expansion that was being used for speculative purposes. Thus, between January 1928 and May 1929, the Federal Reserve sold government securities worth $405 million and enhanced the discount rate from 3.5% to 5%. This reduced the reserves of the banks and as a consequence the monetary base of the nation. Furthermore, the enhanced discount rate made it very difficult for banks to borrow money and overcome their financial difficulties.20 This situation proved to be detrimental to banks that were undergoing financial pressure due to the 1929 stock market crash. Several individuals, after witnessing their investment in stocks being totally destroyed, withdrew their deposits with the banks. This resulted in a cascade of withdrawal of deposits from the banks. The latter were unable to borrow from the Federal Reserve, due to its exorbitant discount rate. Thus, 11,000 banks had to be closed, and this caused a $2.5 billion loss to the individuals and businesses that had already been seriously affected by the stock market crash.21 As a result, investment and consumer spending reduced dramatically. Considering the above events, the Hoover administration, significant sections of the American elites, and several local and state governments entertained apprehensions regarding the possibility of a revolution. This was a major fear generated by the Great Depression.22 As such, the politics of the 1920s could be properly comprehended only upon referring to the anxiety regarding violent revolution. In response to this situation, protest activity was labelled the work of communists, and innumerable appeals were made to the populace to maintain law and order.23 Unemployment increased during great depression. In the aftermath of the crash of 1929, unemployment increased swiftly. The increase was from 3.2% in 1929 to 9.7% in 1930. This trend continued and reached around 25% by the year 1933, when Franklin D Roosevelt became the President of the US. This situation continued until 1941, when the economy was rejuvenated on account of the impending World War II, when the unemployment rate reduced to 14%.24 The Great Depression had a profound effect upon the international economy. It caused a 20% reduction in the combined output of the seven largest economies of the world, between 1929 and 1932. The unemployment rate in Germany and the US reached 33% and world trade reduced by 67%.25 Furthermore, between 1929 and 1932, national income had reduced by more than 50%, and the income of Americans had reduced by 28%.26 Conclusion This work claims that America was ripe for revolution during the era of the Great Depression. Disappointment and opposition had emerged in several quarters of the society, including war veterans, industrial workers, farmers, and cotton textile entities. The rate of unemployment increased swiftly during this period. Due to the inefficient policies of the Federal Reserve economic disaster transpired, and the financial systems failed. The majority of the Americans were affected by this development. According to the above discussion it can be surmised that America was ripe for revolution during the Great Depression. Bibliography Bernanke, BS, Essays on the Great Depression, Princeton University Press, Princeton, New Jersey, USA, 2009. Brooks, K, 'Calming the Panics of the Great Depression', Region, vol. 15, no. 2, 2001, pp.36-39. Ferguson, N, 'The End of Prosperity?', Time International, vol. 172, no.15, 2008, pp.18-21. Goldstein, RJ, Political Repression in Modern America, Schenkman Publishing Co Inc, Cambridge, UK, 1987. Greene, AC, 'The real Depression', Christian Century, vol. 133, no. 5, 2010, pp.26-31. Green, GD, 'The Ideological Origins of the Financial Revolution in American Financial Policies' in K Brunner (ed.), The Great Depression Revisited, Springer Science & Business Media, 2012, pp. 220-252. Hayes, N, 'Firing, Not Hiring.', Cobblestone, vol. 29, no. 3, 2008, p.6. Horn, A, ' The `antique' value of prudence and the psychology of...', Countryside & Small Stock Journal, vol. 82, no. 3, 1998, pp. 78-82. Kantor, S, PV Fishback & JJ Wallis, ' Did the New Deal solidify the 1932 Democratic realignment?', Explorations in Economic History, vol. 50, no. 4, 2013, pp.620-633. Kocher, WS, 'The Great Contraction', Economic Affairs, vol. 26, no. 3, 2006, pp.70-73. Levine, LW, The Unpredictable Past: Explorations in American Cultural History, Oxford University Press, Oxon, UK, 1993. Lord, L & T Geier, ‘The rise of the common man', U.S. News & World Report, vol. 115, no. 16, 1993, pp. 10-15. Maher, NM, '‘Work for others but none for us’: the economic and environmental inequalities of New Deal relief', Social History, vol. 40, no. 3, 2015, pp.312-334. McElvaine, RS, The Great Depression America, 1929-1941, Broadway Books, St. Portland, 1993. Nelson, C, The Depression in the United States-An Overview, University of Illinois, 2008, retrieved 6 May 2016, . Palmer, BD, ' American Communism in the 1920s: Striving for a Panoramic View', American Communist History, vol. 6, no. 2, 2007, pp.139-149. Schaffner, GG, 'Where are Today’s Mass Movements?', Dollars & Sense, no.316, 2015, pp.10-17. Shannon, DA, The Great Depression, Prentice-Hall, Inc, Upper Saddle River, New Jersey, USA, 1960. Stuckler, D, C Meissner, P Fishback, S Basu & M McKee, ' Banking crises and mortality during the Great Depression: evidence from US urban populations, 1929-1937', Journal of Epidemiology & Community Health, vol. 66, no. 5, 2010, pp.410-419. Zinn, H, The Twentieth Century, Harper & Row, Publishers, New York, USA, 1987. Read More