Keynesian Economics and the U.S. Federal Government Response to the Great Depression

           The Great Depression is one of the most challenging periods in American economic history and had national and international influences and origins. In the years following the Great War (WWI) and into the 1920s, the “U.S. economy boomed.”[1] However, tranquility was not on the cards for long as the government interceded in 1928 when the U.S. Federal Reserve “raised interest rates” to “combat inflation.”[2] The timing could not have been worse; Europe was still in a period of rebuilding and establishing new governments for many countries. Ultimately, the burden of the tremendous amount of resources and money loaned by the U.S. to Europe became too much, and many countries began to default on those loans. The result was a slow down of the economy leading to stagnation and the “deflation” of the U.S. economy.

            To understand the causes of the Great Depression, we can look to noteworthy economists, like John Maynard Keynes, a British economist who theorized on governmental participation in the economy. Keynes introduced his theory, known as Keynesian Economics, in 1936 that theorized that an economy was healthiest when directed by increased consumer spending and that when markets took a downturn, it was up to the government to step in to buoy the economy. Keynes felt the government should act aggressively in times of trouble, whereby the government must step in and “inflate the money supply” to avoid further recession.[3] Keynes described the events of the Great Depression to be a “major turning point” in economic history.[4]

            As the Great Depression began to sweep around the world, many compounding factors began to grow to evaporate any chance of a quick remedy to the problem. Since the 1930s, scholars from around the world have “debated the cause and consequences of bank failures” of the Great Depression, some believing the cause to be “widespread withdrawals, financial contagion, and lack of liquidity,” or simply the “decline” in value of “assets,” default on loans, “agricultural and industrial” slumps that caused banks to fail.[5] The actual cause(s) of the Great Depression is too “numerous” to pinpoint one exact root cause of the economic decline.[6] One variable of the catastrophe was the United States’ “adherence to the gold standard.”[7]

            The Gold Standard is a “monetary system in which a nation’s currency is pegged into the value of gold,” which defines a monetary value of gold to a “given amount of paper money.”[8] At the time of the Great Depression, the sudden closure of banks, defaults on loans, and the devaluation of assets caused Americans to lose trust in the institutions, leading to runs on banks, where masses of clients would demand the withdrawal of all their money; which of course the bank was dependent upon to conduct their business. Subsequently, Americans across the U.S. began to essentially “hoard” as much gold as they could.[9]

            Thus in a very Keynesian effort, President of the United States, Franklin D. Roosevelt, issues an executive order on March 5^th, 1933, marking a “nationwide bank moratorium” to “prevent” subsequent bank runs “by consumers lacking confidence in the economy.”[10] Under the guidelines of FDR’s Executive Order 6102, all American citizens were required to surrender “all Gold coin, Gold Bullion, and Gold Certificates” to the Federal Reserve Bank, thereby outlawing the “hoarding of gold” worth more than $100.[11] Thus, citizens would bring their excess gold to the Federal Reserve bank, where they would be paid $20.67 per ounce of gold in paper currency.[12]

Figure 1: New York Times Article, March 6, 1933.

           The purpose of Executive Order 6102 was for the U.S. government to take direct action to improve the economy, as encouraged by Keynes’s economic theories. In a New York Times article, headlined: Roosevelt Orders 4-Day Bank Holiday, Puts Embargo on Gold, Calls Congress, it is reported that the purpose of the prohibition of excess gold stockpiling by citizens had in fact “resulted in severe drains on the nation’s stocks of gold,” creating what FDR described as a “national emergency,” and that as President he must act “in the best interest of all bank depositors” and “prevent” further harm (see figure 1).[13] Furthermore, the memorandum also prevented banks from complying with any further withdrawals of gold at that time, easing the tensions of insolvency and liquidation in banks across the U.S.

             As a result, the confiscated gold increased Federal reserves substantially, allowing for more printing of money and deflation in the currency’s value overall.[14] Overall, the U.S. government “had taken in $300 million of gold coin and $470 million of gold certificates,” and new legislation had abolished any “public or private” bank policies forcing clients to “repay the creditor” in gold, thereby gaining further credibility to the U.S. Dollar or paper money; as a result, by 1934 the price of gold by the U.S. Federal Reserve had increased to $35 per ounce. [15]

While the resolution to embargo gold from the American public to stabilize U.S. currency was not a cure-all, it was a contributing factor to the rebounding of the U.S. economy leading up to the Second World War in the 1940s and certainly left a lasting impact on the psyche of citizens around the world. Ultimately, the failures of banks, industrial, agricultural, international, and export commerce contributed to the spiraling that led the world’s economies into default. The ability of the U.S. government to harness the powers they could, under executive action, indeed stabilized and garnered credibility for the dollar and thus created a foundation with which the U.S. economy could remake itself in the years ahead.

Amy M. White, M.A. 

Bibliography

Crafts, Nicholas and Peter Fearon. “Lessons from the 1930s Great Depression.” Oxford Review of Economic Policy, Vol. 26, no. 3, Autumn 2010: 285-317.

History.com Editors. FDR takes United States off Gold Standard. Jun 17, 2020. https://www.history.com/this-day-in-history/fdr-takes-united-states-off-gold-standard (accessed Apr 21, 2021).

Konkel, Lindsey. How Did the Gold Standard Contribute to the Great Depression? May 8, 2018. https://www.history.com/news/how-did-the-gold-standard-contribute-to-the-great-depression#:~:text=The%20government%20raised%20the%20price,depths%20of%20the%20Great%20Depression. (accessed Apr. 22, 2021).

Richardson, Gary. “Categories and Causes of Bank Distress During the Great Depression, 1929-1933: The Illiquidity versus Insolvency Debate Revisited.” Explorations in Economic History, 2007: 588-607.

The New York Times, Vol. LXXXII, No. 27435. “Roosevelt Orders 4-Day Bank Holiday, Puts Embargo on Gold, Calls Congress: The President’s Bank Proclamation.” Mar 6, 1933: 1.

U.S. Government Printing Office. Executive Order of President of the U.S., Franklin D. Roosevelt. The White House, Washington, D.C., Apr. 5, 1933.

United States Gold Bureau. Gold Confiscation of 1933. Aug 5, 2010. https://www.usgoldbureau.com/news/what-was-1933-gold-confiscation (accessed Apr 22, 2021).

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[1] Konkel, Lindsey. How Did the Gold Standard Contribute to the Great Depression? May 8, 2018. https://www.history.com/news/how-did-the-gold-standard-contribute-to-the-great-depression#:~:text=The%20government%20raised%20the%20price,depths%20of%20the%20Great%20Depression. (accessed Apr. 22, 2021).

[2] Konkel.

[3] History.com Editors. FDR takes United States off Gold Standard. Jun 17, 2020. https://www.history.com/this-day-in-history/fdr-takes-united-states-off-gold-standard (accessed Apr 21, 2021).

[4] Crafts, 285.

[5] Richardson, Gary. "Categories and Causes of Bank Distress During the Great Depression, 1929-1933: The Illiquidity versus Insolvency Debate Revisited." Explorations in Economic History, 2007: 605.

[6] Konkel.

[7] Konkel.

[8] Konkel.

[9] History.com Editors. FDR takes United States off Gold Standard.

[10] History.com Editors. FDR takes United States off Gold Standard.

[11] U.S. Government Printing Office. Executive Order of President of the U.S., Franklin D. Roosevelt. The White House, Washington, D.C., Apr. 5, 1933.

[12] United States Gold Bureau. Gold Confiscation of 1933. Aug 5, 2010. https://www.usgoldbureau.com/news/what-was-1933-gold-confiscation (accessed Apr 22, 2021).

[13] The New York Times, Vol. LXXXII, No. 27435. "Roosevelt Orders 4-Day Bank Holiday, Puts Embargo on Gold, Calls Congress: The President's Bank Proclamation." Mar 6, 1933: 1.

[14] United States Gold Bureau. Gold Confiscation of 1933.

[15] History.com Editors. FDR takes United States off Gold Standard.

The Economics of Early Immigrants of the Progressive Era: The Rieger Family

 

            The Progressive Era was a period of extreme progress and change within the United States. The 1890s and the upheaval of the financial depression of that decade had changed the course of American politics and policies that reverberates even more than a century later. During this time, there was a constant arrival of immigrants to the U.S. that transformed America’s identity and society. Immigrants’ flocked into urban cities throughout the country, swelling the city limits beyond capacity in places but filling important industrial and manufacturing positions, as well as other opportunities in services and communities in desperate need of labor.

            Labor wages in the early 1900s had been in a “slow ascent,” wages ranging from $4-7 a week at the turn of the century, which resulted in insufficient “nutritional levels” of workers owing to the “abominable housing available in the industrial centers.”[1] Ultimately these conditions would lead to public health concerns and disease outbreaks, including: “cholera, typhoid, smallpox and tuberculosis.”[2] Otis L. Graham describes the urban setting for many immigrants in 1900, stating that “two-thirds of Chicago’s streets in 1900 were mud; cities like Rochester and Pittsburg were at best half sewer and half privy, and Baltimore and New Orleans had no sewers at all. Water, both in quantity and quality, was everywhere a problem.”[3] Thanks to journalists and public outcry, housing regulations began to be levied on state and city governments across the country. The effects were slow to implement and enforcement even bleaker, but slowly housing quality and quantities began to increase in the urban centers around the country.

Present Day 97 Orchard Street, NY

            Nevertheless, immigrants continued to swell into the United States, seeking a future for their families, a life that, despite the deplorable conditions, America offered a future and freedom that immigrants had not enjoyed in their countries of birth, which brings us to the Lower East Side of Manhattan, where the Tenement Museum is housed in New York City. The former tenement at 97 Orchard Street is a “five-story” building that had “22 apartments, each about 326-square-feet” of living space with three separate rooms in each, and on this site between 1863-1935, “an estimated 7,000 people” lived.[4]

From the 1900 census data, 97 Orchard Street was occupied by the Rieger’s family, who came to live in their early years in the United States. In 1891, Samuel Joseph Reiger, his wife Ida, and their eldest son Mathew immigrated to the United States from Russia. Samuel worked as an upholsterer and feather dealer while his wife was a homemaker.[5] The Reiger family lived and worked in the U.S. for about two years before their three younger children made it to America in 1893. Together they lived at 97 Orchard Street. Samuel and Ida had four children, Matthew, Abraham, Fanny (Frances), and Mollie. From the 1900 census, we can again see how opportunistic life in the U.S. was for Immigrants. Samuel worked as an upholster, his wife Ida a homemaker, the oldest son, Matthew, was now 24 years old and working as a life insurance agent while the younger three were in school. In today’s standards, education is not typically viewed as a luxury, but for young women to also be in school attendance during this time was a significant step forward for this small family from Russia.

Further inquiry led to the New York State Census of 1905, which revealed the Rieger family had moved away from the infamous tenement and into a new apartment at 302 Madison Street, New York City, roughly a 15-minute walk from Orchard Street. It appears that Mathew, who was now twenty-nine years old, had moved out of the family home. The three younger children remained home with their parents, Abraham had completed school and was now a doctor, and the two young daughters were still attending school, and all family members had by 1905 obtained American citizenship.

From the exciting information gained from the census data, further curiosity fed into further investigation of the Rieger family to uncover what happened to Samuel and Ida and their children. From the family genealogy website Geni, we learn more about the Rieger family later in life. Samuel Joseph lived to 77 years old, passing away in New York, NY, in 1934. Samuel and Ida’s children continued in school, with the three eldest seeking professional degrees. The oldest son, Matthew Rieger, became a pharmacist and lived to the age of 87, passing away in April of 1964. The second son, Dr. Abraham Rieger, became a Physician and lived to be 91 years old, passing away in 1973. The oldest daughter, Dr. Franceses (Fanny) R. Lischner, also became a Physician and moved out to California with her husband, as validated by proof of her medical license in California, and she passed on in 1970. Beyond the 1900 and 1905 Census data, no other information was found regarding the youngest daughter, Mollie Rieger.

            From the information gathered, it is safe to estimate that the Rieger family lived the American dream. As Jewish Russians immigrating during a precarious time in world history to the United States, living in a small tenement apartment, earning wages in a skilled craft, allowed Samuel and Ida to move forward to better living arrangements over time and allowed all four children to seek education and college degrees. For many immigrants, that kind of prosperity and independence would not have been possible in their home countries, especially for Russian Jews during that time, and certainly in the rise of nationalistic values that swept through Europe over the next two decades. The Rieger family is undoubtedly an impressive and an admirable example of how essential immigrants were to building a modern American society through hard work and education.

Amy M. White, M.A.

 --------------------------- 

Bibliography

Graham, Otis L., Jr. The Great Campaigns: Reform and War in America (1900-1928). Malabar, Florida: Robert E. Krieger Publishing Company, 1987.

Immigrants in 1900’s New York: Living Conditions in New York City. n.d. https://immigrants1900.weebly.com/living-conditions.html (accessed Apr 14, 2021).

New York, U.S., State Census: 1905. Ancestry.com. n.d. https://www.ancestry.com/imageviewer/collections/7364/images/004518301_00592?treeid=&personid=&hintid=&queryId=816bb42c9a3c7c255586739535da6a7f&usePUB=true&_phsrc=ErK68&_phstart=successSource&usePUBJs=true&_ga=2.183688422.1193188545.1618410404-644453095.1 (accessed Apr 14, 2021).

Schoeburn, Benjamin. Samuel Joseph Rieger. Jan 31, 2021. https://www.geni.com/people/Samuel-Rieger/6000000171925583910 (accessed Apr 13, 2021).

Tenement Museum. 2021. https://www.tenement.org/explore/97-orchard-street/ (accessed 14 2021, Apr).

U.S. Census Bureau. “1900 Census Orchard Street .” n.d. https://www.archives.gov/files/education/lessons/images/1900-census-orchard-st.pdf (accessed Apr 11, 2021).

 

 

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[1] Graham, Otis L., Jr., The Great Campaigns: Reform and War in America (1900-1928), Malabar, Florida: Robert E. Krieger Publishing Company, 1987, 6.

[2] Immigrants in 1900's New York: Living Conditions in New York City, n.d., https://immigrants1900.weebly.com/living-conditions.html (accessed Apr 14, 2021).

[3] Graham, 6.

[4] Tenement Museum, 2021, https://www.tenement.org/explore/97-orchard-street/ (accessed 14 2021, Apr).

[5] Schoeburn, Benjamin. Samuel Joseph Rieger. January 31, 2021. https://www.geni.com/people/Samuel-Rieger/6000000171925583910 (accessed Apr 13, 2021), and Immigrants in 1900's New York: Living Conditions in New York City. n.d. https://immigrants1900.weebly.com/living-conditions.html (accessed Apr 14, 2021).

Telling the Story of Postbellum America -- Single Female Homesteaders on the Great Plains: Mina Westbye

Amy M. White, M.A.

 

            Homesteading in the best of times was a challenging prospect on the American Plains, but the “attraction” for settlers was the prospect of carving out a life and farm from nothing.[1] To turn the arid frontier grasslands into a home, working farm, and business was a long process. It is said that homesteader women “suffered” the most on the plains, often living their lives under immense pressure and isolation.[2] Without the communities, families, and socialization women had known in their homelands or back east, moving to the plains brought loneliness and difficulties unknown to them before. Men typically left their wives on the homestead while going to town, usually at a considerable distance, to buy supplies and enjoy saloons and shopping. Women remained on the homestead to care for the children, farm animals, gardening, and household.

            For married homestead women, a great deal of responsibility was placed on them, and they were “expected to make homes, bear and raise children, cook, clean, construct, and care for clothing and contribute to the economic success of the farm.”[3] However, women indeed became the backbone of the rural communities on the great plains. The outlying “neighborhood and kinship networks” were forged and “sustained” by the women, who often arranged, prepared, and facilitated gatherings on the plains.[4] On the plains, facilities like “churches and schools were the most visible” example of community members’ connection and they too were sustained by women.[5]  

Nevertheless, many homesteader women found “optimism, enthusiasm, and pride in creating homes and farms” on the Great Plains.[6] Even single women took to the “adventure” that was the opportunity of homesteading. The Homestead Act had opened the opportunity of homesteading to Men, widows, and single women. If they lived up to the guidelines laid out, they could acquire up to 160 acres of land at a minimum fee. For Single women they were breaking away from the “stereotypes” of women of their day; as homesteaders, they were able to make their own decisions, including the choice to pursue homesteading, which made all the difference in their psychological state, versus blindly following the choices of one’s husband.[7]

      Mina Westbye stands as a unique but essential example of single women homesteaders on the Great Plains at the turn of the twentieth century. Mina Westbye was born in 1879 in Trysil, Norway, a “mountainous and forested region near the Swedish border,” growing up with “seven siblings.”[8] Mina’s mother had decided to take in “boarders” to generate and income with her father’s absence. Mina’s father encouraged her older sister to come to America, but Mina made the leap to immigrate. At the time, thousands of Norwegian immigrants headed to North America seeking a new life and adventure.[9] Westbye’s father had been a “military officer of lower rank, who deserted his family in 1888 to emigrate to the United States” while still maintaining communication with his family through letter writing, but also remarrying and starting a new family in America.[10] When Mina was twenty-one years old, she emigrated to the US, moving in with her mother’s sister, her husband, Reverend Erick Jensen, and their five children in Minneapolis, Minnesota. Mina seemed to establish a strong bond with her two female cousins, Marie and Olive. At the time, Olive was working as a dressmaker and Olive “attended school.”[11]

After just three years in the U.S., Mina, Olive, and Marie decided to become homesteaders. It seems the decision was made rather quickly, as in late August 1903, Mina “filed her first naturalization papers, which was a necessary step before an immigrant could claim land under the Homestead Act.”[12] Together with her cousins, Mina made the journey from Minneapolis by train to Minot, North Dakota and on August 27^th, 1903, “all three women claimed land in Blooming Valley Township,” in present Divide County, North Dakota.[13]

The Homestead Act of 1862 permitted Americans and immigrants with intent to become citizens the right to “claim land in the public domain.”[14] With just $10 each, the single female cousins claimed 160 acres of land a piece.  The regulations of the Homestead Act required claimants to live on the claim for a set amount of time, make improvements to the land, and finally seek proof by the General Land Office (GLO), whereby an inspector would inspect the claim and with the payment of fees, a title would be provided to the homesteader of the property. This “dream” of procuring nearly “free land” and the promise of railroad accessibility brought thousands of people to the northern plains.[15]

Like Mina and her cousins, some of these homesteaders were single or widowed women. In fact, “North Dakota had a relatively high rate of women homesteaders in the early 1900s,” making up between “5-18%” of all homestead claimants.[16] The typical homesteader pursued the opportunity of claiming the land for one of two reasons, to obtain cheap land for their families and to farm or to procure land as an economic and financial investment. Mina made it no secret that she was a part of the latter bracket, solely seeking the land to gain capital and the independence that investment would provide.  

Once the filing was complete, the cousins traveled to their land and began the “process of meeting the legal requirements to acquire the title.”[17] Olive and Marie had claimed adjoining parcels of land, while Mina’s was a bit further away but still close enough to afford “frequent visits.”[18] To ready the land and make improvements, building a shelter took precedence above all else. Mina had a typical plains Tar Shack built on her property, to which she affectionally called her “villa” and described it as practical and “cozy.”[19] Mina then resided on the land from August 1903 to “early December, when she returned to Minneapolis” to secure wages to further her investments on her land.[20] In Minneapolis, Mina worked as a domestic and seamstress, then returned to North Dakota in mid-March of 1904. By the fall of 1904, Mina had met the then “six-month residency requirement” and began filling out “the paperwork for final proof” seeking the title to the land.[21] As a homesteader, Westbye had “transformed the prairie into agricultural cropland” and established residency.[22] Mina’s land had been transformed from a rolling expanse of prairie, with “no shade trees,” to a farm with “ten acres of wheat and flax, a garden, and a well in 1905.”[23] Mina undoubtedly “hired” people to work the land for her, and during her time on the plains she read avidly, walked everywhere, visiting the cousins, and gardening.

During the fall of 1904, Mina began corresponding with Mr. Alfred Gunderson, whom she met in Minneapolis, a fellow “Norwegian immigrant and [a] graduate of Stanford University,” studying botany.[24] Through these letters, Mina and Alfred became more than acquaintances, while Mina continued to provide “rich” documentation of her life on the plains as a single woman through letters and amateur photography.[25] Mina’s photography stands as an essential representation of the numerous photographs that Norwegian immigrants sent back to their families in Norway, depicting life in the new country and depicting the lives of “ordinary people,” which their ancestors commonly refer to as “America-photographs.”[26]

Mina’s life was unique from other settlers of the plains because her life on the plains required her to spend time away from that land to earn wages to procure work and materials to invest into the land itself, which the railroad allowed her important accessibility to travel and return at different times of the year. Mina’s work away from the homestead points to a necessity of a single woman obtaining an income outside agriculture, to pay others to break the land, plant the fields, and dig the well.[27] Some women did do the work themselves, but Mina chose to do it differently. Once Mina had met the legal requirements of “improving the land,” she began the process of making “final proof” of the land in November of 1904.[28]

Obtaining proof of the land by the GLO for a single woman was not quickly done, as demonstrated by Mina’s elongated experience. It seems that due to Mina’s long absences from the claim, the GLO was hindered in expediting the processing of her claim. She waited more than a year and heard nothing back from the GLO. In the end, Mina used “gendered arguments, including [her] marital status, to explain why” she was away from the land for such periods, and eventually more than a year later, the GLO inspector stated that Mina was in fact “acting in good faith,” and she secured her title to the land in 1906.[29] Upon receiving her title, Mina attempted to sell he
r land while studying photography after a falling out with her beau and then sold her land in 1908; Mina then decided to move back to Norway. Upon her return to Norway, Mina “studied photography in Oslo and eventually opened a photography studio,” all done through the capital she acquired through her land sale. Eventually, she rekindled the relationship with her beau Mr. Gunderson and Mina then returned to the United States where they married, “built a home in the Catskill Mountains and raised a family.”[30] Through it all, Mina Westbye’s experiences stand as an important example of single women homesteaders at the beginning of the twentieth century and the greater extent of Norwegian immigrants’ experiences in the northern plains.

 

 

Bibliography

Danbom, David B. Sod Busting: How Families Made Farms on the Nineteenth-Century Plains. Baltimore: Johns Hopkins University Press, 2014.

Lahlum, Lori Ann. "Mina Westbye: Norwegian Immigrant, North Dakota Homesteader, Studio Photographer, "New Woman"." Montana The Magazine of Western History, Vol. 60, No. 4, Winter 2010: 3-15.

Lien, Sigrid. "The 21-Year-Old Norweigian Immigrant Who Started Life Over by Homesteading Alone on America's Prairie." What it Means to be American, Hosted by the Smithsonian and Arizona State University, Dec. 15, 2019: https://www.whatitmeanstobeamerican.org/journeys/the-21-year-old-norwegian-immigrant-who-started-life-over-by-homesteading-alone-on-americas-prairie/.

 

 

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[1] Danbom, David B., Sod Busting: How Families Made Farms on the Nineteenth-Century Plains, Baltimore: Johns Hopkins University Press, 2014, 33.

[2] Ibid.

[3] Ibid, 45.

[4] Ibid, 74.

[5] Ibid, 81.

[6] Ibid, 44.

[7] Ibid.

[8] Lahlum, Lori Ann, "Mina Westbye: Norwegian Immigrant, North Dakota Homesteader, Studio Photographer, "New Woman"," Montana The Magazine of Western History, Vol. 60, No. 4, Winter 2010, 4.

[9] Between 1836 and 1915 no fewer than 750,000 Norwegians emigrated to North America as part of a broader wave of European migration that has been called history’s largest population relocation.” (Lien)

[10] Lien, Sigrid. "The 21-Year-Old Norweigian Immigrant Who Started Life Over by Homesteading Alone on America's Prairie." What it Means to be American, Hosted by the Smithsonian and Arizona State University, Dec. 15, 2019: https://www.whatitmeanstobeamerican.org/journeys/the-21-year-old-norwegian-immigrant-who-started-life-over-by-homesteading-alone-on-americas-prairie/.

[11] Lahlum, 5.

[12] Ibid.

[13] Ibid.

[14] Ibid, 6.

[15] Ibid, 7.

[16] Ibid.

[17] Ibid, 8.

[18] Ibid, 9.

[19] Ibid, 8-9.

[20] Ibid, 8.

[21] Ibid.

[22] Ibid.

[23] Ibid, 9.

[24] Ibid, 8.

[25] Ibid, 9.

[26] Lien.

[27] Lahlum, 10.

[28] Ibid, 11.

[29] Ibid.

[30] Ibid, 14-15.