CAPATALISM AND THE

NOT SO GREAT
DEPRESSION
Tanner Bell

Ever since the industrial revolution, America has been running on the idea of capitalism.
The idea that a man can build his wealth, according to how much work he is willing to put out. In
turn, that same man can turn his wealth into even more wealth with more work. However, this
system became corrupted as the rich got richer and the poor were getting poorer. Social
inequalities made this corruption all the more complicated. The wealth of America had become
unevenly distributed between the classes that existed in America. This uneven distribution
eventually led to the dissolve of the middle class. As the middle class grew smaller, poverty grew
which led to a series of events which spiraled into the biggest economic crisis America has ever
seen. The Great Depression.
Author Alan Brinkley breaks down the great depression in his book The Tocqueville
Review.i The Great Depression was the biggest economic crisis in America, and according to
Brinkley is a big factor that contributed to World War 2. At the end of the 1920s Americas
system collapsed on itself, and unemployment rose from 2% to 25% by 1932. With hardly any
government assistance and scarce jobs, everyday American people became fearful for their
livelihoods. Another contributing factor was that other countries that America often traded with
were in economic crises of their own, so they could not afford to purchase American goods. Big
banks began to fail and file for bankruptcy. This in turn caused smaller banks that depended on
the bigger banks to fail. New investors were buying into stocks, stocks were going up in price,
and many people were taking out loans for stocks because they were promised profit. Many
investors were unable to pay back their loans which made the pressure fall back onto the banks.
By 1929 the stock market crashed. Herbert Hoover believed in a smaller government, so he was
reluctant to install government institutions that would help the individual American. The middle
class started to dissolve, while the poverty in America sky rocketed. Big companies and
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executives were firing employees because they couldnt afford them anymore. People were also
quitting because wages were not livable wages and workers rights were almost nonexistent.
Eventually people began to doubt the government. The California commission was following the
depression with studies.ii More and more ambitious, able young men who wanted to work were
unable to find jobs that paid reasonable wages. The commission called for government action
against those who were responsible for creating wages and workers rights. Journals from young
men of the era have turned up, with entries of leaving home because they cant contribute to their
families and are a burden.iii In order for capitalism to work there has to be wage labor, but if
the wages are too low for people to live on then how can capitalism work?
In 1932 Franklin D. Roosevelt was elected as president. He came into office noting the
responsibilities he was accepting.iv America was in turmoil and had to do something about it
quick. Huey Long presented his share our wealth plan in a radio addressv which proposed a
personal finance cap of $50 million a person, which he later reduced to $8 million. This would
happen through a progressive federal tax code the remaining revenue would then be distributed
through the government to fund government benefits and public works. Huey advocated for
many government works and benefits as well as created many. Franklin D. Roosevelt ended up
using many of Hueys ideologies and created the second new deal of 1935. This lightened the
severity of the great depression but did not end it. People were demanding that taxes be lowered.
Farmers were feeling the full effect of the great depression. The counties office received
thousands of phone calls a day, mostly which were farmers.vi More and more farmers were being
forced to sell their farms and move. Food was becoming scarce. Yet Huey Long still recognized
that there needed to be a financial cap on individuals because there were people in 1934 who had
made $8 million or more. An average car in 1934 cost about $500, you could buy a new house
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for $6000. So how were people making so much money in 1934? Up until 1938 wages were not
controlled by the government. There was no minimum wage, it was all up to the employer to
decide. Even when minimum wages were finally enforced in 1938, it was only 25 cents an hour.
So while the middle class was being used for labor, some executives were getting filthy rich.
I personally had the chance to interview a resident Fern Gerrard, at Alta Ridge Assisted
living where I work who was born in 1926.vii She said that when she was six years old her father
lost his job while living in Colorado. Her and her family started to move state to state in order to
find work. They settled in Idaho for a summer while her dad worked cutting trees. They lived in
a tent that entire spring, summer and a little bit in the fall. She told me that they would have
beans, and bread, and soup mostly. She said that many families were in the same boat and were
all glad to help each other whenever they could. When they were finally able to move back to her
grandfathers farm, she said that she felt rich because of all the food that they had. She also
told me that most employers offered very little wages if you were even able to find a place to
work.
So had capitalism failed America? It wasnt until the Second World War started that the economy
started to finally look up. Military supplies, ammunition, and military weapons were being
manufactured and sold to European countries long before America got involved in the war. When
America finally did join the war, the economy began turning around. Woman were starting to fill
in for the men who were leaving for service. People were buying war bonds, money the
government borrows from an individual or group for 10 years that they promise to pay back with
interest. After the war, many people had a little wealth in their pockets from the economic spike
that the war caused. With more money, people could buy more goods, more jobs were becoming
available, and America finally seemed like it was functioning properly again. Im curious to
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know how Americas economy would have turned out if it were not for the Second World War.
Either way, capitalism was seemingly back on track.
So did the money fall back into the hands of the people? Well not necessarily. People
were able to gain a little wealth back which in turn boosted capitalism back up to speed. But the
top 1% still held most of the money in America. Even today financial inequality is still a huge
issue in America. There is a direct relationship between actual income inequality and the
public's views about the need to address the issue in most developed countries, but not in the
U.S., where income inequality is worse but the concern is lower.[31] The U.S. was ranked the
6th worst among 173 countries (4th percentile) on income equality measured by the Gini index.
[32]1 Inequality is there and most Americans just dont see it or are ok with it. 1% of America
owns 40% of American wealth. The top 10% of the richest people own 75% of Americas wealth.
These numbers are pretty disturbing considering there are people in America who are starving,
homeless, etc. It is no surprise that greed and corruption has made its way into our capitalist
system. Some people would rather spoil themselves in riches rather than concern themselves
with people in need. Some people are willing to ignore depleting natural resources and the
damages they do to the environment for the sake of profit even though there are efficient
environmentally friendly alternatives. Some people are willing to sell unhealthy products that
only poison the body (cigarettes, fast food, candy, alcohol, etc.) order to make a profit. It is the
heart and dirty truth behind our corrupted capitalist system. The middle class is exploited and
used for labor while the upper class reaps all the benefits at the expense of everyone else. I am
not saying all capitalists are bad or greedy, In fact there are many capitalists that are true
philanthropists. There are companies that treat their employees very well with good benefits and
1 https://en.wikipedia.org/wiki/Income_inequality_in_the_United_States
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reasonable wages. However, there are enough capitalists and companies corrupting the system to
the point that the wealth in this country is extremely disproportionate.
In 2008 America saw its second worst economic crisis, the great recession. People were losing
jobs, the housing market crashed, and the American economy was the worst it has been since the
great depression. In less than one hundred years capitalism has already had another close call to
imploding in America. Not just in America either, many other countries experienced the same
close call. America didnt bounce back quite as well after 2008 compared to the great depression
either. The American economy bounced back but only marginally, and since then the American
economy has been unsteady.
Its apparent that capitalism is a shaky system that has many flaws. Capitalism cannot
exist as a reliable system as long as there are selfish and greedy people. Americas government
was forced to tighten its grip in order to maintain order between companies and consumers. In
other words the government had to get bigger which is the opposite of what most forefathers
wanted for this country. But until we can find a better method of living amongst each other, we
will continue to destroy the environment and deplete our natural resources. Advertisements of
beauty will continue to tell young men and women how they should look. Pharmacies will
continue prescribing pharmaceuticals that often times are unnecessary. Wars for oil, or other
materialistic goods will continue to take place, people will lose their lives to fill someone elses
pocket. Corrupt capitalism does not work, as long as there is uneven distribution of wealth in the
country, there will always be instability in the economy, as well as unnecessary suffering.

Bibliography

iSecondary Sources
Brinkley, Alan. The Great Depression The Tocqueville Review/La revue Tocqueville, Volume 30,
November 2, 2009, pp 105-121 (Article)

iiPrimary

Sources
Report of the California unemployment commission, impact of the great
depression, 1932
Img.docstoccdn.com/thumb/orig/125624274.png

High school grad from Duluth, Minnesota. 1933 journal

entryImg.docstoccdn.com/thumb/orig/125624274.png
iii

Roosevelt, Franklin D. First inaugural Address declaring war on the Great

depression. March 4, 1933WWW.Archives.gov
iv

Long, Huey. Share our Wealth. Louisiana, February 23, 1934National Radio
Address
www.hueylong.com/programs/share-our-wealth.php
v

Adams county agent annual reports excerpts

1931www.Digitalhorizonsonline.org
vi

Gerrard, Fern. Personal interview. Alta Ridge Assisted Living, Sandy Utah.
December 3rd 2016
vii