Causes and Issues of the Great Depression

In considering the causes of the Great Depression it is important to remember that the Great Depression was called “great” not because it was the only economic depression of the 20^th century. Rather it was the most significant of the economic depressions that emerged from the late 1800s into the 1900s, having the greatest impact on both the American and the international economy with the longest recovery time.

While general or popular histories of the Great Depression tend to focus on the United States, economic histories see it as a global event. It is necessary to understand the Great Depression as a global event for a contextual degree of comparison and contrast to better understand why certain countries moved out of the contraction more quickly than others.[1] There are a number of arguments for the causes of the Great Depression. One argument that scholars as well as those who lived through it have made is that the move away from the gold standard was a substantial cause of the Depression. From a common sense perspective, this make sense. It would seem that the dissolution of the gold standard led to “the break-up of international monetary unity” resulting in the absence of real support for the printed money. [2] In an oral history interview, Jane Ingraham, born in 1920, specifically mentions the Federal Reserve as a point of failure, blaming the dissolution of the gold standard for the Great Depression.[3] Friedman and Schwartz, in their seminal history, also note the failure of the Federal Reserve System in addition to the dissolution in the gold standard. However they argue “the failure of the Federal Reserve System to prevent the collapse reflected not the impotence of monetary policy but rather the particular policies followed by the monetary authorities… The contraction is in fact a tragic testimonial to the importance of monetary forces.”[4] So that Ingraham’s perception as a “regular” citizen (that is, not an economist or economic historian) saw an effect that would have felt like a cause.

Coming out of World War I was supposed to be a time of great prosperity for America. Men like Charles Schwab continued to urge an upbeat attitude in response to the contracting economy in the late 1920s banking, if you will, that America could pull itself back out of the hole it appeared to be heading for. However, at the same time, Schwab had taken steps to expand or diversity Bethlehem Steel. Robbins notes that the significant amount of production during World War I came to a sudden and significant halt. as he argues that the decrease in production at the end of World War I had a significant economic effect. [5] These changes “…first, they were discontinuous and…secondly, they were restrictive of free economic activity.”[6] To an extent, this lines up with what happened in 2008 around the use of sub-prime mortgages and the housing bubble.[7]

The discontinuity of production levels would have impact on employment. In regards to economic activity, Friedman and Schwartz argue, famously, “Everything depends on how much is taken as given…the monetary authorities could have prevented the decline in the stock of money…the same actions could have produced almost any desired increase in the money stock.”[8] To build economic activity the Federal Reserve could have released more cash into the economy. They build on this argument to argue that the consumers lost confidence in banks, not least due to the run on banks, and thus in the power of money. (See Ingraham’s comments above in regards to perception of the gold standard.) Stated another way “the loss of confidence in financial institutions, primarily commercial banks, and the widespread insolvency of debtors” pointed out both the amount of the debt held, the lack of holding less money as it was seen as less valuable.[9]

While economists do not all share the same approach they do tend to agree that the stock market crash along with the run of closing banks directly shaped how banks, businesses and other brokers did business with their money. Because money businesses, like banks or brokerage houses, sought to keep or add to their own bottom lines, as a matter of business, their own process of investing became very conservative, limiting the amount of funds for projects. This limiting of funds into the general marketplace had trickle-down effects into other areas such as employment. The generalized language of the economic historians who are describing the impact of the Great Depression should not detract from the significant real-life impact on the lives of people around the globe; “…in 1933, in the world at large, something like 30 million persons were out of work.”[10] This significantly impacted the recovery from the Great Depression.

Information shared through oral histories by men and women who lived through this time as children, share their recollections on the impression of Great Depression on their daily lives. Kathryn Shakespeare, born in 1920, recalled that “…the Great Depression was very, very sad. Didn’t have any clothes to wear, anything, hand me downs. I had lived through wonderful times, and then all at once my grandparents– it was just a different year, different kind of time.”[11] Another oral history interview from Wendell Thrasher born in 1924 into a sharecropper family, in response to a question about buying food “We growed our own vegetables. We had our own beef, our own pork…we had it rough. But we always had plenty to eat. Always had a big garden. My mother always canned.”[12] Jane Ingraham, recalled “I remember the scarceness of everything from food to gas to being able to bake a cake. Could not get sugar. You could not get butter. Gas was very scarce and hard to get….everyone I knew was very poor. And very little extra clothing, very little of any extra things at all.”[13] Finally, Edward Gillespie, born in 1912, was at Tufts in 1933, graduated in 1934, and found work as a chemical engineer.[14] Gillespie mentions that the Great Depression was a financial drain on the family but that he managed to finish college during that time speaks to the degree of monetary resources that the family had at the time. Ingraham also mentions that her years of high school were spent in the Great Depression but that she was able to go to college. The last two oral histories point to the fact that families with monetary resources were able to preserve some degree of access to resources. Engaging the oral histories alongside the scholarly discussions it is clear that there are multiple ways to understand the reasons, impact and recovery from the Great Depression.

[1] See Bernake, Ben S. “Nonmonetary Effects of the Financial Crisis in the Propagation of the Great Depression.” The American Economic Review, June 1983, Vol 73, 3.

[2] Robbins, Lionel. The Great Depression. New York City: New York. The Macmillan Company. 1934, 5.

[3] 2000. Oral History: [[Jane Ingraham]]. [Oral History]. OH.1284. Available through: Adam Matthew, Marlborough, America in World War Two: Oral Histories and Personal Accounts, http://www.americainworldwartwo.amdigital.co.uk/Documents/Details/OH_1284_AM [Accessed November 24, 2021].

[4] Friedman, Milton and Anna (Jacobson) Schwartz. A Monetary History of the United States, 1867-1960. Vol. no. 12.; Princeton: NJ. Princeton University Press, 1963.322

[5] Bethlehem would suffer the “…smallest decline in net earnings between 1920 and 1921” across steel companies in the US. See Hessen, Robert. Steel Titan: The Life of Charles M. Schwab. Pittsburgh, PA: University of Pittsburgh Press, 1975. 266.

[6] Robbins, Lionel. The Great Depression. New York City: New York. The Macmillan Company. 1934, 4.

[7] My understanding of the sub-prime mortgage has benefited enormously from This American Life discussing the housing bubble in their episode Giant Pool of Money which also mentions the Great Depression. See Freakonomics on this topic as well.

[8] Friedman, Milton and Anna Schwartz. A Monetary History of the United States, 1867-1960. Vol. no. 12, Princeton: NJ. Princeton University Press, 1963. 323.

[9] Bernake, Ben S. “Nonmonetary Effects of the Financial Crisis in the Propagation of the Great Depression.” The American Economic Review, June 1983, Vol 73, 3. 258.

[10] Robbins, Lionel. The Great Depression. New York City: New York. The Macmillan Company. 1934, 11.

[11] 7 Jan 2010. Oral History: Kathryn Shakespeare. [Oral History]. OH.2303. Available through: Adam Matthew, Marlborough, America in World War Two: Oral Histories and Personal Accounts, http://www.americainworldwartwo.amdigital.co.uk.ezproxy.liberty.edu/Documents/Details/OH_2303_AM

[12] 5 Jun 2009. Oral History: Wendell Thrasher. [Oral History]. OH.2778. Available through: Adam Matthew, Marlborough, America in World War Two: Oral Histories and Personal Accounts, http://www.americainworldwartwo.amdigital.co.uk.ezproxy.liberty.edu/Documents/Details/OH_2778_AM 

[13] 2000. Oral History: Jane Ingraham. [Oral History].

[14] 1 Oct 2009. Oral History: Edward Gillespie. [Oral History]. OH.0879. Available through: Adam Matthew, Marlborough, America in World War Two: Oral Histories and Personal Accounts, http://www.americainworldwartwo.amdigital.co.uk.ezproxy.liberty.edu/Documents/Details/OH_0879_AM

Charles M. Schwab
Feb. 18, 1862 —
Sept. 18, 1939

Introduction
Charles M. Schwab may be presently best-known for its association with the investment company of the same name was born in Williamsburg, Pennsylvania on February 18, 1862 and died in New York City on September 18, 1939. Schwab began his carer in steel in the late 1800s, working for Andrew CArnegie. However, it was with the dawn of the new century that Schwab realized his first significant milestone and made a name for himself in the steel industry

Schwab and U.S. Steel
“From 1900 to 1903, Schwab gained national recognition from putting together and heading the United States Steel Corporation.”[1] Schwab’s dealing with unions and his ability to bring about significant mergers was noted and appreciated by Carnegie. Schwab’s work in consolidating multiple steel companies came right up to the edge of monopolization. This included not including Bethlehem Steel in the United States Steel Corporation so that Schwab could by it and then re-sold it JP Morgan. Schwab claims in his diary that he left Bethlehem Steel out of this deal as “they would have provided nothing but duplication and an ideal corporation would have no duplication of any sort in it.”[2] Schwab had presented the idea of a consolidated enterprise at a dinner that Carnegie had hosted for him to help Schwab become better known outside of the steel industry. Schwab presented his idea for United Steel at this point and this particularly caught the attention of Morgan who was competing with Carnegie and was looking to stop Carnegie’s near-constant expansion. Schwab acted as the go-between for Morgan and Schwab, brokering the sale of Carnegie Steel into U.S. Steel for four million dollars.[3]

“US Steel controlled nearly 50 per cent of America’s steel-making U.S. Steel was not an operating company, but a holding company. It controlled 213 steel mills and transportation companies, including 78 blast furnaces; 41 iron ore mines and a fleet of 112 ore barges; as well as 57,000 acres of coal and coke properties in the Connellsville region of Pennsylvania, with nearly 1000 miles of railroad tracks to service the region.”[4]

Schwab would later repurchase Bethlehem Steel and sell it once again to the United States Shipbuilding Company which would go bankrupt in 1903 forcing Schwab to resign as president of U.S. Steel. In a contemporary account from 1916, Cotter writes that this resignation was due to Schwab, as beholden to the other members of the corporation, “restricted and, to a man of his nature there was only one thing to do, resign, which he did.”[5]

Schwab and Bethlehem Steel
Schwab reorganized the United States Shipbuilding Company into the Bethlehem Steel Corporation. Schwab moved to Loretto, PA and proceeded to turn Bethlehem Steel an innovative and world-known supplier of steel. Schwab’s “winning manner, backed up by great ability and genuine honesty of purpose, compels admiration and confidence” was key to convincing banks to invest in Bethlehem Steel in the early years.[6] Schwab was known to say that he purchased Bethlehem Steel when it was poor shape: “He found the Bethlehem Steel Co. in a run down condition and he poured his personal wealth and all the money he could borrow into it.”[7] This was certainly true prior to 1904. However in “1904 to 1916, the company’s sales rose from $10 million to $230 million.”[8] A brief summation of some key company metrics as reported in 1918 follow below.

Bethlehem Steel Corporation business data, 1913–1918 [15]	Steel products shipped (thousand net tons)	Orders on hand ($thousands)	Net earnings ($thousands)	Average number of employees
1913	605.9	24,865	8,753	15,052
1914	460.5	46,513	9,650	15,586
1915	579.9	175,433	24,821	22,064
1916	1,300.8	193,374	61,717	47,013
1917	1,900.0	453,809	53,979	64,782
1918	1,816.7	328,946	57,189	93,964

Schwab was documented as saying that he purchased Bethlehem Steel in a run-down condition; “He found the Bethlehem Steel Co. in a run down condition and he poured his personal wealth and all the money he could borrow into it.”[7] This was certainly true prior to 1904. However in “1904 to 1916, the company’s sales rose from $10 million to $230 million.”[8] The primary reason behind this meteoric rise was World War I. “Lord Kitchener, the British minister of war, asked Bethlehem Steel to supply a million shells in the course of a year.”[9] Schwab accepted the order and it was completed in ten months, even though up to that point the entire US steel market had only produced 100,000 shells per year. Between April, 1916 and December, 1918 Bethlehem had produced 22 percent of the entire country’s output of merchant shipping.[10] There was significant money to be made in steel during wartime and Bethlehem took full advantage of it. While the war produced significant opportunity Schwab, and the other Bethlehem Steel executive were also planning for the post-war era where they expected a significant down-turn in demand. “To meet the challenge they had planned a well-rounded, thoroughly integrated steel operation, producing a full line of commercial products.”[11] Because of this planning Bethlehem would suffer the “…smallest decline in net earnings between 1920 and 1921” across steel companies in the US.[12]

Schwab and the Great Depression

Ten year later Schwab’s own fortunes would be in an entirely different state. In the midst of the Great Depression Schwab continued investing and would provide monetary help to those who asked. Schwab, having lived through previous economic depressions, publicly stated on multiple occasions that this would pass and an era of prosperity was just around the corner. Thus as the Depression worsened, Schwab lost considerable amounts of money as he “…made the mistake of judging all businesses by the standards he used in the steel industry. He believed that he could make any business yield a profit solely by reducing production costs.”[13] Instead the weight of the Great Depression caused what would have been successful business to close, taking Schwab’s investments with them.

At Schwab’s death, he owed debts of $1,727,858 against the $1,389, 509 in assets, leave a net deficit of $338, 349.[14] While Schwab was not a wise investor there are multiple accounts of his supporting small business as well as providing employment at generous wages throughout the 1920s and 1930s on his estate to the men and women living in the area. Schwab was a shrewd businessman who profited significantly from the first World War and learned much from working with Carnegie. However he also was generous to friends, family and those in need, serving to complicate the work and legacy of Charles M. Schwab.

[1] Yates, W. Ross. “Schwab, Charles Michael (1862-1939), steel executive.” American National Biography. 1 Feb. 2000; Accessed 17 Nov. 2021

[2] Hessen, Robert. Steel Titan: The Life of Charles M. Schwab. Pittsburgh, PA: University of Pittsburgh Press, 1975. 117.

[3] Yates. “Schwab, Charles Michael.”

[4] Yates. “Schwab, Charles Michael.”

[5] Cotter, Arundel. The Authentic History of the United States Steel Corporation. Moody Magazine and Book Co. 1916. 91.

[6] Cotter, Arundel. The Authentic History. 87

[7] Cotter, Arundel. The Authentic History. 92.

[8] Yates, W. Ross. “Schwab, Charles Michael (1862-1939), steel executive.”

[9] Kenneth Warren. Bethlehem Steel: Builder and Arsenal of America. University of Pittsburgh Press, 2008. 104

[10] Kenneth Warren. Bethlehem Steel. 106.

[11] Kenneth Warren. Bethlehem Steel. 110.

[12] Hessen. Steel Titan. 266.

[13] Hessen. Steel Titan, 288.

[14] Hessen. Steel Titan, 303.

[15] Source: Bethlehem Steel Corp. annual report for 1918. Reproduced from Kenneth Warren. Bethlehem Steel: Builder and Arsenal of America. University of Pittsburgh Press, 2008. 106.

Stoves

Introduction
Buying an appliance is always a big decision. While buyers in the 21^st century pick from a range of options, having to decide if an appliance should be “smart” or not. Historians such as Cowan and Gallman have looked at one particular appliance, the stove, as a means of tracing other economic and social conditions. The stove is a useful vehicle for examining how household technologies were often made possible due to innovations in other industries. Stoves are particularly old technologies with histories across a wide variety of cultures. Brick ovens particularly have a long history for bread baking.[1] While it would be pretty much unthinkable to have a kitchen without a stove now, America in the 1800s saw a shift from hearth fires toward stoves. Stoves became preferred over hearth fires or fireplaces as they offered an enhanced cooking experience, better heat distribution and better use of fuel. Stoves’ efficiency improved due to the availability of coal, the increased understanding of working with iron and the networks of industry that delivered these to the household. The industrialization of the post-bellum American economy marked by an increased rate of production of iron alongside an increased rate of shipping via the railroads. Versions of the metal or iron stove had existed since the mid-1700s with even Benjamin Franklin having tried unsuccessfully to produce a stove; his version smoked badly.

Research Methodology and Comparison
Stoves are in the category that Gallman references as “consumer durables”. In fact the stove would itself be a consumer both of fuel while providing a means of preparing food to be consumed. Stoves were also serving double-duty as both a source of warmth as well as food preparation. The increasingly efficient stoves in the post-bellum era were made possible by the confluence of several factors. While it is difficult to locate precise statistical data for fuel costs in the post-bellum economy, there are means of understanding the shift in fuel from firewood to coal. Coal was cheaper to procure than firewood. Coal required less labor to split as firewood for the stove required specific lengths.[2] Even though the stove would burn that wood more efficiently than a fireplace, the work of cutting measured pieces was more intense. It is worth pointing out that in the historical data, the amount of BTUS of consumption was measured comparing fuel wood and anthracite coal. 1850 is the first year that compares both where coal produced 110 BUTs nationally and firewood produced 2,138. By 1900 coal rose to 1,457 with firewood leading 2,015. Firewood saw its use peak in 1870 while coal saw a fairly steady increase into the 1950s.[3]

Particularly in urban areas, firewood became scarce and as such, a contested, and expensive commodity. Stoves which provided a more efficient means of heating a house would save money on the amount of firewood and as coal prices decreased below the cost of firewood, households would be able to save money using coal to be able to save on other needed elements. Wood was not counted as a commodity but in 1900 a ton of coal cost $3.92.[4] Thus, for the stove to be both fully beneficial and adopted other networks needed to be in place in order to support stove adoption. Coal wagons provided door -to-door deliveries which “…signified the shift from chopping and burning wood to the reliance on distant mines to supply heat.”[5] While marketing played a role, certainly, “…advertising and marketing did not always drive the growth of energy consumption.”[6]

What Cowan and lecturers in the late 1800s observe was that the ability of the stove to regulate heat enabled the production of different types of food. It is much easier to bake a pie in an oven or on a stove than over an open flame. The food produced or cooked were shaped by the types of technology available. In some cases when buying a stove the purchasers would also need pots and pans that would be included.[7] Statistical data for stove production does not begin to be tracked until 1942 but the purchase of heating and cooking apparatuses were recorded beginning in 1869. There is a lack of context as to specifics but a heating/cooking apparatus in 1869 was recorded as costing $26.40. In 1900 the cost rose to $61.90.

There were certainly naysayers regarding the stove. Even in the late 19^th century nostalgia and arguments for fireplaces over stoves were present. Stoves could be considered both unhealthy and unaesthetic. Iron stoves were accused of being the “…cause of the development of a determinate but very variable amount of carbonic oxide, a very poisonous gas.”[8] Fireplaces were in the late 1880s already being discussed with tones of nostalgia. Writers described the fireplace possessing a “…ruddy glow…and cheery aspect” in contrast with the “hideous iron stove…the depressing, comfortless stove…[which] heat strikes about mid-air, keeping the head warm and the feet cold.”[9] While extolling the various decorations and benefits of the fireplace however, this same article neglects to discuss how and where firewood could be procured to produce the necessary heat and ruddy glow. The nostalgia for this aspect ignores certain factors of economy and fuel as nostalgia is wont to do.

Conclusion
Ruth Schwartz Cowan , in her foundational work More Work for Mother: The Ironies of Household Technology from the Open Hearth to the Microwave, describes the growth and adoption of household technologies in the 20^th century American household. This post helps to lay the groundwork using a brief example, the stove, as other scholars have similarly done. The rise of household appliances were meant to save labor and time. What Cowan and other scholars have argued is that rise of these appliances shifted the vast bulk of the household labor onto the wife and mother. In addition to their use these appliances required maintenance and care. I am interested in discussing and exploring how companies like Westinghouse and General Electric marketed these projects and conducted market research, building upon the foundation Cowan lays in her book More Work for Mother.

Bibliography

Cowan, Ruth Schwartz. More Work for Mother: The Ironies of Household Technology from the Open Hearth to the Microwave.
New York: NY. Basic Books, 2008.

Gallman, Robert E., and Rhode, Paul W. Capital in the Nineteenth Century. Chicago: IL. University of Chicago Press, 2020.Nye,

David E. “Consumption of Energy”. in The Oxford Handbook of the History ofConsumption, edited by Frank Trentmann. Oxford: Oxford Publishing, 2012.

“The Open Fireplace in All Ages.” The Art Amateur 4, no. 2 (January 1881): 34-37.

“The Philosophy Of The Oven.” Scientific American 20, no. 4 (January 1869): 58-59.

“Unhealthfulness of Iron Stoves.” Scientific American 22, no. 14 (April 2, 1870): 219.

U.S. Bureau of the Census. Historical Statistics of the United States, Colonial Times to 1970, Bicentennial Edition. vols 1-2. Washington, DC, 1975.

[1] Philosophy of the Oven

[2] Gallman, Rhode and Goldin 281

[3] The BTUs are measured in the trillions. Historical Statistics of the United States, 587-588.

[4] Historical Statistics of the United States, 208.

[5] Nye 5

[6] Nye 12.

[7] Cowan 61.

[8] Unhealthfulness of Iron Stoves

[9] The open fireplace in all ages

Welcome!

Jeremy McGinniss is the Coordinator of Research and Instruction at Liberty University, Virginia. He received his MLIS from the University of Pittsburgh and is currently pursuing a MA in Humanities at Salve Regina University. He is an associate editor for the Journal of Radical Librarianship

Jeremy has published and presented on the topics of student staff development, critical pedagogy, solo librarianship, philosophy of maintenance, and the ACRL Framework.

View CV or Presentations page for updates on projects and presentations.