Topics in the News
The Automobile Industry in the 1930s
In the 1920s the automobile industry overtook steel as the most important sector of the American economy. Approximately 10 percent of the annual income of Americans was taken up purchasing cars and trucks and in buying gas, oil, parts, repairs, and other auto-related items. The automobile industry, led by the "Big Three" companies of General Motors, Ford, and Chrysler, fueled the upswing in the economy in the last half of the 1920s. The increasing importance of the business, however, meant that if car and truck sales slipped the entire American economy would suffer. People soon discovered just how closely the auto industry was linked to the general healthiness of the economy following the stock-market crash in October 1929.
Effects of the Depression.
The automobile industry in 1929 set a record by selling more than 5 million vehicles. The next year, even after cutting prices in the wake of the market crash, sales dropped by 2 million. By 1932 the number of vehicles sold plummeted to a paltry 1.33 million, a drop of 4 million from the 1929 record. The Depression affected the entire economy and had a major impact on the car manufacturing areas in the Midwest. Unemployment in Detroit and Flint, Michigan, hit 13 percent in 1930, when the national average was only 6.6 percent. Later, in 1932, half the male population of...
(The entire section is 1267 words.)
The CIO and the Triumph of Unionization
The 1930s witnessed an incredible growth in union membership. Many factors came together at a crucial time to allow the phenomenal growth, including governmental support for unions and dynamic leadership within the labor movement. The most central issue was the creation of the Committee for Industrial Organizations (CIO), later renamed the Congress of Industrial Organizations, in 1935. Because of the success of the CIO nearly all the major industries in the United States were organized by the end of the decade.
The American Federation of Labor (AFL) failed to meet the needs of the unorganized workers in the mass-production industries in the early 1930s. The fundamental problem was that the AFL did not want to let unskilled workers into the organization, which was dominated by craft unions. The stubbornness of the AFL led United Mine Workers (UMW) leader John L. Lewis to split from the AFL and found the CIO. Lewis created
(The entire section is 1012 words.)
The Crash and the Great Depression
On 24 and 29 October 1929 prices on the New York Stock Exchange collapsed. The losses among 880 issues were estimated at between $8 billion and $9 billion. The "Great Crash" of 1929 ended a period of tremendous prosperity and inaugurated the Great Depression, but the crash and the Depression were not unprecedented. Since the Civil War, the American economy had suffered periods of depression every eight to twelve years. The last major depression, from 1893 to 1897, had been a period of enormous suffering and wide-spread political unrest; the economy had been through a smaller depression as recently as 1920-1921. Such depressions had been devastating, but often their impact varied by region, with the worst effects being localized. In the 1930s, however, the United States was financially unified as never before. Harvests in California affected markets in New York. Newspapers, magazines, radio, and cinema linked the nation from coast to coast. The dust bowl in Oklahoma was reported in Florida; hurricanes in Florida were reported in Oklahoma. A national media reinforced the perception that the Great Depression was unprecedented in its intensity and depth. Furthermore, after the prosperity and boosterism of the 1920s, the Depression seemed to many an unexpected and incredible calamity. Capitalism itself appeared to fail.
(The entire section is 2331 words.)
The Farm Crisis
In 1920 the census showed that for the first time in history more Americans lived in urban centers than on farms. The Great Depression, however, sparked an exodus of farmers to the city, irreversibly
(The entire section is 1910 words.)
Harlan County and Coal
"Bloody" Harlan County.
The battle between coal miners and operators in Harlan County, Kentucky, in the 1930s lasted the entire decade and became extremely bloody and violent. The struggle ripped through the nation's conscience, drawing more national attention than any other labor conflict in the period. Ultimately, after many long years of strife, the federal government intervened to successfully open the county to unionism. The story of the Harlan Country strike, however, is one of defiance: of the operators forcefully resisting the trend toward unionism sweeping the nation and of the workers no longer willing to accept a coal company controlling their destiny.
Image Pop-UpApproximately 6,000 to 7,000 people listen as the leaders of the United Mine Workers of America welcome the National Guardsmen that will supervise the reopening of the coal mines.
Harlan County sits just north of the Cumberland Gap near the intersection of Kentucky, Virginia, and Tennessee. Located in a narrow valley between the Black and Pine Mountains, the area remained uniquely isolated from the outside world. No railroad or highway was introduced until 1910, and the...
(The entire section is 2003 words.)
A Holiday for the Banks
The Banker and His Image.Before the Depression, banks and bankers held an interesting place in the American imagination. On one hand, bankers had been among the most esteemed figures in the United States, especially during the boom of the 1920s. For many, bankers were synonymous with sobriety, thrift, and hardheaded realism. Banking was the institution that could lead right-thinking young men to wealth and a place among the
(The entire section is 1922 words.)
The New Deal and its Critics
An Evolutionary Force.
The New Deal was one of the most powerful economic forces of the twentieth century, incubating economic philosophies and techniques of financial management that dominated American business life from 1945 to 1980. It expressed a shift from infrastructure manufacturing to consumer production; it ushered in large-scale federal oversight of the economy; it forced the development of bureaucratic procedures in business administration; it revolutionized public finance; it pioneered a mixed economy; it erected the welfare state. A combination of businessmen, economists, politicians, and labor leaders managed these transformations, synthesizing often-disparate approaches to the economy. They were often opposed by other businessmen and politicians far more unified in their economic outlook. For all their criticism, however, they could not derail the New Deal. It represented an evolutionary step in modern capitalism that avoided the political dangers attending contemporary alternatives, such as fascist corporatism and Soviet collectivism.
The System of '96.
The New Deal's immediate predecessor as a national economic philosophy—and the source of most of the objections to the New Deal-—was what businessmen and politicians called "the system of '96." Originally articulated during the presidential election of 1896 by...
(The entire section is 4456 words.)
The Oil Boom
The oil industry exemplifies the problems plaguing most industries and businesses in the 1930s. The forces of an unregulated, laissez-faire market glutted the nation with oil, driving prices down to a point where the structure of the oil industry was in peril. In contrast to the laissez-faire ideology, oilmen pressured states and the federal government for regulation and control. It was a decade of tremendous oil strikes, plunging profits and panic, restructuring and regulation: in many ways the decade that created the modern oil industry.
The oil industry struggled to control the effects of several tremendous strikes during the decade. In 1930 wildcatters struck oil in east Texas, opening a reservoir that proved to be 140,000 acres large—the largest strike in the United States at that time. In 1932 wildcatter Robert Samuel Kerr struck oil within the Oklahoma City city limits; his find would eventually earn over $2 million. On 31 May 1932 Standard Oil of California struck oil in Bahrain; by 1936 production equaled 20,000 barrels per day. In 1938 an equally important reservoir was struck in Kuwait and Saudi Arabia. In 1935 Shell Oil hit oil in Kern County, California; the introduction of a new process for cracking oil into gasoline that same year promised to bring this oil to market cheaply.
(The entire section is 886 words.)
The Sit-Down Strike in the 1930s
The New Deal climate of the 1930s gave industrial workers an unprecedented chance to improve their conditions by organizing into unions. Led by powerful labor leader John L. Lewis, the Committee for Industrial Organizations (CIO) was created in 1935 to give the nation's thirty million nonskilled workers a chance to unionize. A major new weapon in organizing workers and fighting for better conditions was the sit-down strike. Prior to the sit-down strike, unions could only overcome the fears and suspicions of workers by mounting a success fill strike. Strikes, however, often erupted in violence and were rarely successful unless a majority of the workers supported the effort.
Sit-down strikes enabled a small number of workers to stop the production of an entire company by taking physical possession of the plant and its machines. By occupying a single strategic area of a plant, strikers could encourage others to join the strike and shut down the plant until the employer agreed to deal with the union. Sit-down strikes brought production to a total and immediate halt and eliminated the use of scab workers to break the strike. A benefit of the wave of sit-down strikes in the 1930s was that there were no casualties and little property damage as compared to normal strikes. The sit-down strike was a form of passive...
(The entire section is 983 words.)
Strikes Against Big Business in the 1930s
Reasons to Strike,
Throughout the 1930s blue-collar workers united against the harsh conditions imposed by the corporate giants and walked off their jobs. The common man, spurred on by increasingly powerful unions, believed that bringing production to a halt in the factories or on the docks was the only way he could effectively fight for a better working environment. Furthermore, workers struck even though they faced unemployment or blacklisting and risked injury at the hands of pro-company police officers and strikebreakers. Workers had much to lose by striking, and many paid the price with their lives or by spilling blood for the cause, However, in an overall sense, workers made tremendous gains by organizing and putting their newfound power to the test. Unions, with the assistance of the federal government, consistently won collective bargaining agreements with the giant corporations, which improved the standard of living for the workers.
Strikes and the Depression.
The Great Depression had a life-altering effect on...
(The entire section is 1654 words.)
Dubinsky, David 1892-1982
PRESIDENT OF THE INTERNATIONAL LADIES GARMENT WORKERS UNION
In the early months of 1933 the International Ladies Garment Workers Union (ILGWU) stood virtually in ruins. Internal factionalism had ripped the union apart. By the end of the year, however, the ILGWU had become one of the most powerful unions in the United States. The man responsible for the dramatic turnaround was a short, squat, feisty leader named David Dubinsky. Dubinsky personally carried the union to the forefront. His deep commitment to industrial democracy and unionism placed Dubinsky among the great leaders of the 1930s.
Dubinsky may have the most interesting background of any union leader from the period. He was born David Dobnievski in Brest Litovsk, Russian Poland, on 22 February 1892. His family moved to Lodz, Poland, the industrial center of the country, where his father owned a small bakery. Dubinsky went to work in his family's bakery at age eleven, and by fifteen he had advanced to master baker. He joined a local bakers' union and became deeply involved in unionism and underground rebellion. Dubinsky...
(The entire section is 1402 words.)
Hammer, Armand 1898-199O
Armand Hammer was a millionaire for seven of his nine decades, and a most unusual one at that. Physician, pharmacist, mine operator, grain merchant, tractor manufacturer, pencil maker, trader of fine arts and furs, distiller, cattle rancher, oil tycoon—Hammer did many things in his life, all of them with a remarkably deft capacity for negotiation, all of them with unflagging energy, all of them to enormous profit. He was an opportunist, in every dimension, both negative and positive, of that term. He had the capacity to see profits where others saw only loss; he prided himself on doing the impossible; he created a wide network of associates from which to angle every possible gain. He was also ruthless, perhaps unprincipled, constantly fending off lawsuits and indictments. His friends included some of the most important figures of the twentieth century: V. I. Lenin, Eleanor Roosevelt, King Farouk of Egypt, King Faisal of Saudi Arabia, Prince Charles of England, Nikita Khrushchev, Jonas Salk, Leonid Brezhnev, Jimmy Carter, Deng Xiaoping, Margaret Thatcher, Mikhail Gorbachev. He moved among the circle of...
(The entire section is 1104 words.)
Hughes, Howard 19O5-1975
ADVENTURER, AVIATOR, CELEBRITY
Howard Hughes led a remarkable and bizarre life. There is as much legend to his life as there is reality, which leads to his larger-than-life image. From Hughes's compulsive worries about germs to his links to Richard Nixon and the Watergate scandal, he has been idolized, trivialized, and despised all at one point or another. Obviously there is going to be much mystique surrounding a man who purportedly was seeing Ginger Rogers and Cary Grant while living with Katharine Hepburn and dating Bette Davis. In the 1930s, however, Hughes truly was an American hero and an innovator in the aviation field. In this decade Hughes's internal demons did not prevent him from achieving many remarkable feats.
Hughes was born in Humble, Texas, on 24 September 1905. His father was the outlaw oil wildcatter Howard Robard Hughes and his mother was a neurotic heiress, Allene Gano. The elder Hughes built up a large fortune by making oil drill bits and founding the Hughes Tool Company. Hughes's parents were extremely overprotective and knew how to manipulate the boy. Hughes spent his childhood being shuffled from one private school to another. He often engaged in strenuous physical activity as a boy and excelled in mathematics, physics, and golf. Tragedy struck Hughes early when both his...
(The entire section is 1086 words.)
Hunt, Haroldson Lafayette, Jr. 1889-1974
The Richest Man in America.
By 1942 H. L. Hunt was the richest man In the United States, earning roughly a million dollars per week for the oil produced by his east Texas wells. Professional gambler, bigamist, wildcatter, right-wing activist, and health-food fanatic, Hunt took chances, won big, and reveled in his accomplishments. From the 1930s, when he first surfaced as a known national figure, to the end of his life, he embellished his own history with exaggerated stories of his adventures, He was a self-made man who created his own reputation.
Son of a southern farmer and Confederate veteran who moved north during Reconstruction, Hunt was born near Vandalia, Illinois, on 17 February 1889. His father was somewhat prosperous, accounting for his success by embracing a militant social Darwinian philosophy that asserted his genetic superiority to the common man. He passed this ethos on to his son, who articulated it many times during his life. The youngest of eight children, Hunt was doted upon as a boy, evidencing a remarkable talent for mental arithmetic, an independent streak, and a taste for adventure. At age sixteen he struck out on his own, heading west to make his fortune, He took jobs as a dishwasher, a beet topper, a sheep-herder, a mule-team driver, a semipro baseball...
(The entire section is 1504 words.)
Insull, Samuel 1859-1938
In the 1930s Samuel Insull was the symbol of the unprincipled, greedy businessman. His gigantic electricity-generating empire, a series of more than seventy shaky firms piled one on top of the other, had collapsed during the Depression, losing a million investors $2 billion to $3 billion. Indicted for fraud, Insull fled to Europe, from where he was extradited to stand trial. The sensational proceedings occupied the public for months. The writer John Dos Passos described him as "a stiffly arrogant redfaced man with a closecropped mustache," who was "the deposed monarch of superpower." During the 1932 presidential campaign Franklin Roosevelt attacked him repeatedly, denouncing industrialists like "the Insulls, whose hand is against every man's." By most accounts of the day he was shameless and ruthless. But he was also Thomas Edison's personal secretary, a poor boy made good, a business genius, and the builder of the greatest public utilities industry in the United States.
Insull was able to weather the investigations and trials of the 1930s with a...
(The entire section is 1772 words.)
Johnson, Howard 1885-1977
FOUNDER OF NATIONAL RESTAURANT CHAIN
Howard Johnson entered the food-service business in 1924 in Wollaston, Massachusetts, when he bought a debt-ridden soda fountain that also sold newspapers, cigars, and candy. He decided to focus on ice cream and invested $300 in the recipe of an elderly German immigrant whose ice cream had a reputation for high quality. The essence of the recipe was its near-doubling of the butterfat content commonly found in commercial ice cream and its use of natural rather than artificial flavors. By 1928 the gross income from the ice cream sold at the store and on nearby beaches amounted to $240,000.
Opening His First Restaurant.
Encouraged by his success, Johnson decided to expand into restaurants. He opened his first restaurant in Quincy, Massachusetts, in 1928 and did a booming business until the stock-market crash in 1929. His restaurant closed. However, Johnson's ice cream business continued to flourish throughout the Depression. He soon had more than a dozen stands in the Boston area that specialized in hot dogs and ice cream. He continued to expand the variety of ice cream flavors he offered, arriving eventually at twenty-eight, a figure that became a trademark for Howard Johnson establishments.
(The entire section is 492 words.)
Lewis, John L. 188O-1969
John L. Lewis dominated the labor movement in the 1930s, To the millions of blue-collar workers whose lives he improved, Lewis was a saint. His enemies, however, viewed the labor leader as an egomaniac and demagogue. Lewis's enigmatic nature baffled his peers and fueled a mythical, larger-than-life image. Although he had an intense desire for power and wealth, Lewis championed industrial democracy and unionism. He embodied the spirit of the workingmen and workingwomen of the 1930s and devoted his life to helping the industrial worker.
Lewis was born in Cleveland, Iowa, in 1880. His father held a variety of jobs, including coal miner, and moved his family often. One relocation in particular, to the state capital Des Moines, had a major impact on Lewis's life. While his father worked as a police officer, young John was able to complete three and a half years of high school. The basic education he received served as a foundation for his jump into labor politics. Lewis developed a strong ambition after several years of wandering throughout the West and Midwest and many stints working in the mines. He wanted to rise above his coal-mining roots. A move by the entire Lewis clan, including new wife Myrta, to Illinois triggered a meteoric rise by John in the local United Mine Workers...
(The entire section is 1185 words.)
Pesotta, Rose 1896-1965
Women in the Depression.
The Great Depression had a tremendous impact on workers in the United States. While all suffered from the devastating loss of jobs and economic deterioration, women especially were adversely affected. By 1933 almost two million women were unemployed. Married women were discriminated against more than married or single men and single women. Wages for women plummeted, and some women did not even make five dollars for a week's work. Work-place conditions worsened as the Depression increased. In the garment industry, where many women were employed, work standards deteriorated and the sweatshops were revived.
Franklin D. Roosevelt took immediate steps to rectify the economic problems facing the country after he was elected president. The prolabor stance taken by the administration helped unions gain tremendous power in the 1930s. One of the most powerful was the International Ladies Garment Workers Union (ILGWU), led by David Dubinsky, aided by a young anarchist named Rose Pesotta, who was often sent to the fiercest antiunion factories to organize workers. As the only paid woman organizer in a male-dominated union? Pesotta had to fight to get her voice heard within the union. Her anarchism and commitment to women made her an outsider and were issues that she had to...
(The entire section is 955 words.)
People in the News
In 1937 and 1938 New York patent-law student Chester Floyd Carlson developed the xerography process, revolutionizing the process of duplicating business documents. His patent to the process netted him a fortune.
In May 1930 Ellen Church became the first airline stewardess. United Airlines hired her and seven other women, all aged twenty-five; single; shorter than five feet, four inches; and lighter than 115 pounds. The airline argued that such women would help allay passenger fears of flying.
Michael S. Cullen, 46, opened the first true supermarket in Jamaica, Long Island, New York, in August 1930. Established in an abandoned garage, the market met with virtually instant success.
In 1932 San Antonio candy maker C. Elmer Doolin introduced mass-produced corn chips, Fritos, to the public. Doolin got the recipe from local Mexican cafe owner Gustave Olgin and produced the chips using a modified potato ricer to cut the tortilla dough.
In 1934 Federal Bureau of the Budget director Lewis Douglas resigned in protest of mounting government deficits.
On 4 June 1937 a supermarket in Oklahoma City introduced a supermarket shopping cart, designed by grocer Sylvan N. Goldman. The carts were a combination of wicker basket and folding chair and revolutionized American grocery...
(The entire section is 539 words.)
Warren Bechtel, 60, railroad builder and construction magnate, helped build the San Francisco-Oakland Bay Bridge and Boulder Dam, 28 August 1933.
Hernand Behn, 53, capitalist, founder of International Telephone and Telegraph Corporation, 7 October 1933.
Robert Somers Brookings, 71, Saint Louis woodenware merchant and philanthropist, generous contributor to Washington University, founder of the Brookings Institution, 15 November 1932.
James A. Campbell, 79, steel manufacturer, president of Youngstown Sheet and Tube Company, third largest in the United States, 20 September 1933.
Howard Earle Coffin, 64, automobile engineer and industrialist, organized the Hudson Motor Car Company, chairman of the Aircraft Board during World War I, 21 November 1937.
William Sloane Coffin, 54, New York furniture maker and real estate magnate, 16 December 1933.
Gilbert Colgate, 74, president of Colgate-Palmolive-Peet Company, grandson of the founder of Colgate Soap Manufacturing, 5 January 1933.
William Ellis Corey, 68, steel manufacturer, former president of U.S. Steel, 11 May 1934.
Robert Dollar, 87, West Coast shipping magnate and lumberman, president of the Dollar steamship company, 16 May...
(The entire section is 755 words.)
Thurman Arnold, The Folklore of Capitalism (New Haven: Yale University Press, 1937);
Benjamin Graham, Security Analysis (New York: Whittlesey House, 1934);
Armand Hammer, The Quest of the Romanoff Treasure (New York: Payson, 1932);
Alvin Hansen, Economic Stabilization in an Unbalanced World (New York: Harcourt, Brace, 1932);
H. V. Hodson, Economics of a Changing World (London: Faber&Faber, 1933);
Herbert Hoover, The Challenge to Liberty (New York: Scribners, 1934);
Arthur Kallet and F. J. Schlink, 100,000,000 Guinea Pigs (New York: Vanguard, 1932);
John Maynard Keynes, The General Theory of Employment, Interest and Money (New York: Harcourt, Brace & World, 1935);
H. R. Knickerbocker, The Red Trade Menace (New York: Dodd, Mead, 1931);
J, K. Lasser, Your Income Tax (New York: Simon & Schuster, 1936—), published annually;
Lewis Mumford, Technics and Civilization (New York: Harcourt, Brace, 1934);
Ferdinand Pecora, Wall Street under Oath, the Story of Our Modern Money Changers (New York: Simon & Schuster, 1939);
F. J. Schlink, Eat, Drink...
(The entire section is 164 words.)
Important Events in Business and the Economy, 1930–1939
- Continental Baking introduces the world's first commercial sliced bread loaf, Wonder Bread.
- In January, the National Economic League, a group of business leaders, lists unemployment as only the eighth most serious problem in the United States. This belief underscores business leaders' lack of sympathy for workers during the Great Depression.
- On March 6, General Foods introduces Birds Eye Frosted Foods to stores in Springfield, Massachusetts. Frozen vegetables, fruits, and meats soon become a staple of grocery stores, despite high prices.
- On June 17, despite a petition signed by 1,028 economists, President Herbert Hoover signs the Smoot-Hawley Tariff—the highest in American history—into law. Other countries will retaliate by raising tariffs against the United States.
- In July, McGraw-Electric of Elgin, Illinois, introduces the first automatic toaster.
- On October 3, in Rusk County, eastern Texas, wildcatter Columbus M. Joiner opens a new oil field that will produce 3.6 billion barrels of oil.
- In November, 236 banks close.
- In December, an additional 328 banks close.
- On December 11, the Bank of the United States, with sixty branches and four hundred thousand depositors, closes, losing more than 200 million...
(The entire section is 2157 words.)