Nov 20, 2006

OUTLINE

Commerce and American Society 
 
Part I 
 
I.  Free Market vs Government Planning 
  A. Requirements for democratic society: 
    1. Narrow gap between rich and poor 
    2. adequate housing, food, health care for the poor  
    3. sense of equal opportunity to succeed for all   
  B. Necessary condition:  economic growth. 
 
II.  Testing the Market System:  The Great Depression 
  A.  Cause? 
  B.  Consequences: 
    1. Severe economic hardship 
    2. Political upheaval 
 
III. Seeking solutions

LECTURE NOTES

Announcements:
*Monday, November 20
*There will be no class on November 22 due to the Thanksgiving Holiday.
*There will also be NO LABS this week.
*The Review room will be closed November 20-24
*Students will be able to see their tests November 27-December 1 in the Review Room (173A SWKT).
*Paper #2 will be due Nov 30/Dec 1.
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Commerce and American Society
Part I

Free Market vs Government Planning: The Depression and new Deal as test cases
-requirements for democratic society:
--narrow gap between rich and poor
--adequate housing, food and health care for the poor
--a sense of equal opportunity for all
-necessary condition: economic growth

The Gilded Age
-Huge gap between rich and poor:
--0.1% of Americans earned as much total income as 42%

The American Dream: Ragged Dick by Horatio Alger
-Joe the Hotel Boy, or Winning Out By Pluck
--Raise by a hermit poor pennsylvania boy Joe Bodley goes out into world and finds work, first at a local hotel, then becomes and executive at a large Chicago hotel.

MEDIA CLIP: Megasuccessful guy
-chris gardner a guy living in a homeless shelter
-rev. cecil williams ran the homeless shelter
-chris went rags to riches, he bought the ferrari
-he had the ability to work hard and make it happen
-determination
-they are making a movie about him that just came out called The pursuit of happiness starring will smith

faced smarts, hard work, determination, enabled this man to live out the rags to riches dream
the depression brought that dream into question, could people rise beyond this incredible recession


Testing the Market System: The Great Depression
-Possible causes of recession: Shocks to the Market System
--overspending
--drought
--wealth gap
--burst of stock bubble (crash of 1929)

multiple factors caused the depression, its never just 1 thing (depression was nearly 1 decade long)

Consequence of the Great Depression
-Severe Economic Hardship

ECONOMIC IMPACT OF THE GREAT DEPRESSION
1. 5000 Banks Failed
-people demanded their money back from the banks
2. 25% Unemployment (50% for African Americans: "Last hired, first fired")
-extremely high unemployment
3. Stocks lost 75% of their value
4. Over 1 million people lost their homes

MEDIA CLIP: The Great Depression
-think of the experiences of your parents, grandparents
-something went wrong in the 1930s like a punishment or plague
-turn to families friends and kindness of strangers
-no idea when it would end
-many were being evicted
-private charity overwhelmed
-entire farm economy approached collapse
-800 banks failed in 1931
-no federal safety-net
-america was the only major country without a system of social security
-american communist party gained national recognition

-Is america doing enough?
-social security was instituted after the depression
-people became very frugal developing habits that would see them through
-many people had extremely frugal habits, some of your parents or grandparents were all in it
-today we live in a disposable era

Dorothy Lange photographs of the Great Depression
[see slides for artwork]
Maynard Dixon, "Keep Moving," 1934 BYU Museum of Art
Maynard Dixon, "Scab," 1934 BYU Museum of Art
Maynard Dixon, "Picket," 1934 BYU Museum of Art
Maynard Dixon, "Law and Disorder," 1934 BYU Museum of Art
Maynard Dixon, "Forgotten Man," 1934 BYU Museum of Art
Maynard Dixon, "No Place to Go," 1935 BYU Museum of Art
Maynard Dixon, "Roadside," 1938 BYU Museum of Art

There were a lot of issues that made it so the country could not just come out of the depression
One of the reason was severe Drought

Once people stopped farming, due to drought, the roots died and there was nothing to hold the soil down to the ground, so dirt blew everywhere

MEDIA CLIP: dust storms in 30s (dust bowl)
-the winds carried rain then dust that wiped out families, homes, farms
-some people became alcoholics
-hundreds of thousands fled
-there was very little help for people
-the federal government made several mistakes in the 30s
-they assumed the california could handle the immigration to california
-CA was overwhelmed by the introduction of 100s of thousands of poor people into these communities
-it setup longstanding hostilities between migrants and longterm residents
-it is like Texas (hurrican katrina) which was already overburdened

There were some soldiers that served in world war I

MEDIA CLIP:
-spring of 1932 an army of WWI veterans moved on Washington (capital)
-their goal was to claim a bonus for their military service (promised for 1945)
-the veterans kept coming
-the veterans planned to stay in the capital until their bonus became law
-they lived in washington in abandoned buildings, they moved them anacostia where they could close off
-jun 15th the house of representatives passed the bonus bill in the house
-then the senate voted to kill the bill
-the veterans were determined to force the senate to change
-there were 20,000 veterans by now, and 2 months
-the veterans mounted a final protest (a death march)
-congress adjourned without reconsidering the bill
-congress left through underground tunnels
-police ordered to evict the veterans
-then the police opened fire
-army troops in position to clear the area (force
-general macarthur decided to clear the entire city with his armies (instead of just the govt building areas)
-by midnight, anacostia was burning

There was a sense that the government was uncaring, that they didn't do enough

Drought and Dust Storms
-75% of country impacted by drought in 1934
-27 states severly affected
-dust storms widespread >"Dust bowl" - "Black Blizzard" of April 1935

[see slides for photographs]

Consequences of the Great Depression

Political Upheaval

hoover always kept saying: prosperity is just around the corner

Election of 1932: Roosevelt defeats Hoover
-roosevelt faced a daunting challenge, USA was in a disaster of unprecedented
-private charities overwhelmed
-what the government did to try to help didn't work
-he setup a number of agencies called the New Deal (we'll talk about it next lecture)

Political Impact of the Great Depression
1928          | Democrat |  Republican
Popular Vote  | 15 mill  |  21 million
Electoral Vote| 87 mill  |  444 million
Senate        | 39 mill  |  56 million
House         | 167mill  |  267 million

1937          | Democrat |  Republican
Popular Vote  | 23 mill  |  21 million
Electoral Vote| 472 mill |  59 million
Senate        | 60 mill  |  35 million
House         | 310 mill | 117 million

Seeking Solutions
The "New Deal"

Thanksgiving an American Tradition