PFigure 28. The Great Depression. Section1. Timeline
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1 Section1 The Great Depression As you read, look for: what caused the Great Depression, how it affected South Carolina s economy, how it affected South Carolina s society, and vocabulary terms: business cycle, surplus, and scrip. PFigure 28 Timeline Many Americans thought the good times of the Roaring Twenties would last forever. They ignored the economic warning signs: businesses producing more goods than they could sell, consumers no longer buying products, profits not passed along to workers in the form of better wages, and investors who used their money to speculate Stock market crashed; Great Depression began 1933 New Deal began 1932 Franklin D. Roosevelt first elected president Clarence Birdseye developed first packaged frozen foods 1931 Star Spangled Banner became national anthem 1933 Prohibition repealed 1934 Textile strike 1941 Pearl Harbor attacked; U.S. entered war 1940 Roosevelt elected to third term 1939 World War II broke out in Europe 1936 Gone with the Wind released 1938 Orson Wells broadcast War of the Worlds 1941 Mount Rushmore National Monument completed 1945 Roosevelt died; Truman became president; WW II ended 1942 James F. Byrnes became Director of Economic Stabilization 1944 Going My Way released 1943 Pentagon building completed 474 Chapter 18 The Great Depression and World War II
2 The Depression Begins On October 24, 1929, the world came crashing down for many Americans. That day was Big Thursday in South Carolina as the Gamecocks played the Tigers; nationally the day became known as Black Thursday, not because the Tigers beat the Gamecocks that day, but because the stock market crashed. On that day, some 13 million shares of stock changed hands. Within five hours, the stock held by Americans lost over $9 billion of its value. By mid-november, the loss in stock value was some $30 billion. Many banks had loaned money to speculators. Some banks closed to stop bank runs. When they re-opened, long lines of people were waiting to retrieve their savings. In the United States, over 650 banks failed in By the end of 1930, 1,352 banks had failed; another 2,294 banks failed in One of those banks was the People s State Bank, with forty-four branches statewide. This South Carolina bank held the deposits for the city of Charleston, and when it closed, the city payroll was lost with it. Figure 29 The Business Cycle Causes of the Great Depression There have been other depressions in American history. The Panics of 1817 and 1837 severely hurt many South Carolinians and the Depression of 1893 struck the state as well. You learned in the last chapter that South Carolina entered a depression in 1921 because farm prices were so low. Throughout its history, the U.S. economy has experienced the ups and downs of the business cycle. The business cycle has four phases prosperity, recession, depression, and recovery. During the prosperity phase, the economy expands. More goods are produced, prices rise, more workers are hired, and they earn higher wages. Eventually, the economy begins to slow down, a recession. Too many goods on hand means there are surpluses, and prices begin to fall. Production decreases, and workers are laid off. Unemployment increases, and people have less money to spend. Some producers go out of business. The result is a depression. Before 1930, most depressions in the United States corrected themselves. When surpluses are reduced, demand begins to increase and factories begin to rehire workers, a recovery. As more workers are rehired, there is more money available to be spent. Over time, the economy enters into a period of prosperity again. A full business cycle can last anywhere from two to six years. What made the Great Depression so bad was that it lasted more than ten years. When surpluses were used up in the early 1930s, the economy did not improve. Pr Depression Did You Know??South Carolina, one of the country's 14 major cotton-producing states, had its peak in cotton production during the 1920s. Now the crop is on the rise again here. Nationally, it's a $50-billion industry. Cotton, which reportedly has the greatest economic impact of any crop in America, is king once more. Section 1 The Great Depression 475
3 Right: Herbert Hoover s opponents in Congress unfairly painted him as a callous and cruel President as shown in this caricature. What caused the Great Depression? One cause was that the people of the United States had borrowed more money than they could afford to repay. This hurt the banks that had loaned the money and the businesses waiting for their payments. Businesses that did not get paid had to lay off workers. Many factories had produced more goods than they could sell. When the demand for the goods fell, the businesses had to slow production until the surpluses were gone. Farmers were also guilty of overproduction. For several seasons, the farmers had produced surplus crops, causing prices to decline steadily. European farmers were able to return to raising crops and thus added to the worldwide overproduction. The decline in farm income meant farmers could not repay their debts or buy goods from suppliers. This was the primary problem in South Carolina and much of the South during the 1920s. After World War I, Americans wanted to trade with other nations. But the United States and other nations had created tariffs as barriers to goods from other countries. The high tariffs made it difficult for other countries to sell their goods in the United States to get money with which to repay wartime loans and buy American products. Speculation in the stock market also helped cause the Great Depression. During the 1920s, most people bought stock and paid only a portion of the cost of the stock at the time of the purchase. Even though the stock was not completely paid for, the investor had the right to sell it. If the stock price had gone up, the investor sold the stock and made enough to finish paying for the stock. This practice forced the price of stocks up, making them higher than what they were really worth. Many wealthy people were wealthy only on paper; they did not have the actual cash or assets. Many banks had purchased large amounts of stock. When the market crashed, the banks lost a lot of money. When depositors learned this, there were runs on the banks. When too many people withdraw their money from a bank, the bank collapses; everyone loses. One final cause was the laissez-faire attitude of the American people and of American government and business leaders. Almost every government official believed the economy itself, not the government, would work out any problems. President Hoover did what any other politician of the time would have done nothing. Hoover kept telling the American people that prosperity is just around the corner. South Carolina Governor Ibra Blackwood held the same attitude as Hoover. But prosperity was not just around the corner. By March 1933, one of every four men was unemployed. Men took pay cuts and worked fewer hours so as not to lose their jobs. 476 Chapter 18 The Great Depression and World War II The Depression in South Carolina The Great Depression began in South Carolina long before Throughout the 1920s, the state s farmers suffered because of low cotton prices and the boll weevil. Most rural residents did not have electricity or running water. Many lived in unpainted homes with few, if any, window-
4 panes. Roofs leaked, and many floors were made of dirt. Diseases such as hookworm, lice, and tuberculosis were common. Bank failures occurred in the state throughout the 1920s. In 1928, David R. Coker, one of the founders of Sonoco Products in Hartsville, reported that in one month fifteen banks failed in Darlington County and the two adjoining counties. By 1932, the depression had a firm grip on South Carolina and the nation. In South Carolina, farmers incomes were only 39 percent of what they had been just three years earlier. Textile mills those that were still in business were operating at a loss. Many closed, never to reopen. The Seaboard Railroad, which ran through the state between Norfolk and Atlanta, went bankrupt. Banks continued to fail. Many state and other public employees lost their jobs. Those who did have jobs were often paid in scrip, which was paper IOUs from the state or local governments. There was almost no new construction, and salesmen stayed home because the people they normally called on had no money to spend. In South Carolina s cities, charities worked to provide meals for those who had nothing to eat. One historian wrote that Columbia charities alone sponsored almost 500,000 free meals in 1931 and over 715,000 meals in In Columbia, The State newspaper organized a wood yard where those in need could get wood to keep them warm. The wood came mainly from farmers who were clearing ground for planting. Those who were unemployed cut and stacked the wood for others to take. Above: These men a white farmer and a black plowhand are preparing to plant cotton during the Great Depression. Section 1 The Great Depression 477
5 As the Great Depression continued, church organizations and private charities like the Salvation Army and Traveler s Aid could no longer meet the needs of the people. One in four people was unemployed in South Carolina; almost half of the people in Richland County were unemployed. Seventeen counties had unemployment rates over 30 percent. Per capita income dropped from $261 in 1929 to $151 in People were literally starving to death throughout the state. Above: This photograph of a sharecropper s wife mother of 14, grandmother of 56 was taken near Chesnee in The Depression s Effects on Society Everyone was affected by the depression. For the few who had been extremely wealthy, the depression might have meant giving up vacations, domestic help, or luxury items. For those who had been barely getting by, the depression was the blow that took away property and a chance to make it. Perhaps one of the strongest reminders of the Depression era was the practice of making do. During the depression, people began saving broken dishes, string, old rags anything that might come in handy some day. They learned to reline coats with old blankets. Old sheets were split down the middle, turned, and resewn in order to use the outer edges. Adult clothing was cut down to make clothes for children. Major food companies sponsored radio programs that gave out recipes for inexpensive meals and ideas for cutting food costs. Women learned about buying day-old bread and cheaper cuts of meat. For those who had money for groceries, a family of six could eat on as little as $5 a week. A loaf of bread sold for 7 cents, coffee for less than 20 cents a pound, milk averaged 10 cents a quart, butter 23 cents a pound, and ground beef 25 cents for two pounds. The number of marriages, divorces, and births all fell dramatically during the depression. It was too expensive to get married, too expensive to get a divorce, and certainly too expensive to add another member to the family. The South, however, was an exception to the declining birth rate. On a farm, a large family provided extra hands for chores. Some blacks who lived during the depression said that there was little difference for them before and during the depression. It was when farm prices 478 Chapter 18 The Great Depression and World War II
6 dropped dramatically and there was no demand for domestic help that the blacks found that the depression did not discriminate. Population patterns were altered during the depression. Sometimes families moved from town to town in search of work. Some moved from the farms to the cities. Blacks had begun leaving the state during World War I in search of jobs. During the 1920s and 1930s, over 200,000 blacks moved north. Whites moved out of the state as well, so that by the beginning of World War II, nearly one-fourth of the 2.35 million people born in South Carolina lived elsewhere. For those who could afford them, movies helped people escape the reality of the depression. Most movies of the era reinforced traditional ideals. Also popular were gangster movies, comedies, and Walt Disney cartoons. For those who could not afford the movies, there was radio. The first radio station in South Carolina appeared in 1930 in Charleston. Edgar Bergen and Charlie McCarthy, Ma Perkins, and The Lone Ranger were popular radio programs. Monopoly became a popular board game. Brother, Can You Spare a Dime? was one of the most popular songs. Another timely song was Who s Afraid of the Big Bad Wolf? from the Walt Disney cartoon Three Little Pigs. Church attendance rose during the depression. Many people s religious beliefs gave them hope for better times. The churches also started soup kitchens and collected used clothing to help the poor. Those who were still working and who had food and goods were often more compassionate than government programs. But the extent of the depression was so widespread that by 1933 many charities were having trouble meeting the demand for help. Above: This young sharecropper lived near Chesnee. During the depression, farm incomes were about one-third what they had been ten years earlier. It s Your Turn 1. What took place on Black Thursday? 2. What are the four phases of the business cycle? 3. During the first few years of the Great Depression, what groups were responsible for providing help for the needy? Section 1 The Great Depression 479
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