Great Depression

Why?????

Objectives

Examine the economy of the late 1920s & define the “boom & bust” cycle

Identify the causes of the Great Depression

Assess the impact of the Great Depression on the US

1920’s in the U.S.

Consumer Economy: an economy that depends on a large amount of spending by consumersPeople began to buy on creditIndustries boomed because people were buying so much.

People began to invest in the Stock MarketPeople would borrow money to purchase stocks (buying on margin)Speculation: purchasing high risk stocks

Your turn

Why did the Great Depression happen?

Give me reasons… there are a bunch

Why Banks Why?

The financial crisis – banks made risky loans and investments in the 1920s.

Some banks had to shut down when the economy collapsed, and many depositor last their savings.

HOWEVER…

Uneven prosperity: not everyone was enjoying the economyFalling farm prices put farmers into trouble, they couldn’t pay debts.People over purchased on credit, couldn’t pay bills

Black Tuesday: The Great Crash

On October 29, 1929, the stock market crashed.Prices fell, stocks were worthlessBusinesses couldn’t pay their bank loans.Factories shut down, people lost jobsPeople couldn’t pay personal loans

The Stock Market Crash

This drop in stock prices costs investors millions of dollars and contributed to bank failures and industry bankruptcies

Under and OverUnderconsumption – when people lost their wages, they stopped buying and there for there was a surplus of goods

Over production – business produced more than what was needed – there was a surplus

Oh no another factor for the depression

Tight money supply

Federal reserve allowed money supply to shrink – as the amount fell, economic activity decreased…

made it more difficult for business to produce and consumers to buy …. Really another reason

In addition to tight…

Money supply – the government raised interest rates… oh no this is not good… you owe money – now you owe even more

Really another reason

Decline of international trade

Hawley-Smoot Tariff Act -High tariffs (taxes) and collapsing European economies restricted international trade and the…..

RESULT…

The Great Depression

Causes of the Great Depression

GREAT DEPRESSION

“Black Tuesday”

Unregulated ConsolidatedBusinesses

High Tariffs

Bank Failures/Panic

Unregulated Lending

Speculative Investments

Reactions to the Depression

What is a liberal?

Conservative?

Radical?

How did each group want to depression handled?

Herbert Hoover our clueless president

President Herbert Hoover (Republican) –Conservative–believed that the natural process

of the cycle would lead to correction.

–Asked businesses to voluntarily cooperate

Laizze Faire Economics

Happy Days are Here Again

1932: Franklin D. Roosevelt (Dem.) is elected President

FDR’s New Deal

FDR wanted more government relief

Government needed to be more involved

Relief, Recovery, and Reform

Reactions to the New Deal

1. Huey LongRADICALLouisiana populist“Share our wealth”Anyone w/ $5 mil. In bank

government should take it & distribute it

Now Back to the Depression

Bad things happening… and wait there is more… could mother nature be against the people too??????

And then to make things worse…

It stopped raining in the mid-west.Referred to as the “Dust Bowl”Nothing would growPrimarily affects: Kansas, Oklahoma, Nebraska

The Dust Bowl

• During the 1930’s, the Great Plains suffered from deadly dust storms.

Causes of the Dust Bowl:

• Overgrazing by cattle and plowing by farmers destroyed the grasses that once held down the soil.

Dust Storms: "Kodak view of a dust storm Baca Co., Colorado, Easter Sunday 1935

• The loose soil, a drought, and high winds helped to cause the Dust Bowl.

Dust Storms; "One of South Dakota's Black Blizzards, 1934"

Farmer and sons, dust storm, Cimarron County, Oklahoma, 1936.

Photographer: Arthur Rothstein.

Imogene Glover: The Roof Falls In

One night when I was sleeping in a little room, my mother and dad were in the big room with my baby sister in bed. And the ceiling started falling in with the dust so heavy on it. It literally covered up the bed, but when they -- they got out okay, 'cause Daddy yelled at Mother. He could hear it comin' down and he said, "Grab that kid, Mom." And he took her -- they all got outside as soon as they knew that the ceiling was fallin' in as a result of the dust sifting in. And I think I told someone the dust was just like face powder. It was so heavy and thick. It wasn't like sand. It was just real heavy, like face powder. Only it was real dark, almost black.

Melt White: Black Sunday - It's on a Sunday afternoon about six o'clock. And we was gittin' prepared to go to church and went to church in a team and wagon. And I'd gone

out to kinda tend the chickens and stuff and back in the north it was just a little bank, oh, like about eight or ten feet high. We had one of those headers out on each end, you know. And I did a few things there around the chickens and everything and went back in the house and I said, "Dad, we ain't goin' to be able to go to church tonight." And he said, "Why?" And that's how fast it's travelin'. And we was livin' in an old house that was 14 feet wide, 36 foot long, just one room, board and batten with a washed roof on it. It kept gittin' worse and worse and wind blowin' harder and harder and it kept gittin' darker and darker. And the old house was just a-vibratin' like it was gonna blow away. And I started

tryin' to see my hand. And I kept bringin' my hand up closer and closer and closer and closer and closer and I finally touched the end of my nose and I still couldn't see my hand. That's how black it was. And we burned kerosene lamps and Dad lit an old kerosene lamp, set it on the kitchen table and it was just across the room from me, about -- about 14 feet. And I could just barely see that lamp flame across the room. That's how dark it was and it was six o'clock in the afternoon. It was the 14th of April, 1935. The sun was still up, but it was totally black and that was blackest, worst dust storm, sand storm we had durin' the whole time. A lot of people died. A lot of children, especially, died of dust pneumonia. They'd take little kids and cover 'em with sheets and sprinkle water on the sheets to filter the dust out. But we had to haul water. We had a team and we had water barrels. We hauled stock water and household water both…

…And we didn't have the water to use for that, so we just had to suffer through it. And lots of mornin's we'd get up and strain our drinkin' water like people strain milk, through a cloth, to strain the debris out of it. But then, of course, a lotta grit went through and settled to the bottom of the bucket, but you had have drinkin' water. And when you got you a little dipper of water, you drink it. You didn't take a sip and throw it away, because it was a very precious thing to us because we had to haul it.

Farm foreclosure sale. (Circa 1933)

Effects of the Dust Bowl:

• Farmers could barely make a living, causing many to leave their homes for the west.

Farm foreclosure sale in Iowa. (Circa 1933)

Farm Security Administration: Families on the road with all their possessions packed into their trucks, migrating and looking for work. (Circa 1935)

• Many farmers became migrant farmers as they moved from region to region looking for work.

Farm Security Administration:

farmers whose topsoil blew away joined the sod caravans of "Okies" on Route 66 to California. (Circa 1935)

Migrant family looking for work in the pea fields of California. (Circa 1935)

Farm Security Administration: Arkansas squatter for three years near Bakefield, California. Photo by D. Lange. (Circa 1935)

• Migrant farmers from Arkansas became known as Arkies.

Young Oklahoma mother; age 18, penniless, stranded in Imperial Valley, California.

• Migrant farmers from Oklahoma became known as Okies.

Dorothea Lange's "Migrant Mother," destitute in a pea picker's camp, because of the failure of the early pea crop. These people had just sold their tent in order to buy food. Most of the 2,500 people in this camp were destitute. By the end of the decade there were still 4 million migrants on the road.

http://lcweb2.loc.gov/pnp/ppmsc/00200/00230r.jpg

Spring of 1932

Starvation

Evictions

~25% unemployment

Deporting Mexicans (1/2 mil.)

“Hoovervilles”

Veterans march– “Bonus Army”

Social reactions:

People left their homes, westward movementIncreased discrimination against minorities, many lost their jobsMen left families

Women lost jobs

Increased union membership and riots

Many thought FDR was a Communist

Others said he wasn’t doing enough

Help!!!! the people cried

Is the New Deal from FDR the answer?

Objectives

Examine FDR’s response to the Great Depression

Examine & assess the effectiveness of New Deal policies

We will assess the impact of the New Deal

New Deal

“Relief”–Help people now

“Recovery”–Jobs, econ…

“Reform–Change econ. policy, government,

role….

The New DealThe “Alphabet

Soup” Policies of Franklin

Roosevelt

New Deal

Expanded the role & power of the Federal GOVERNMENT

National Industrial Recovery Act

NIRA

Aimed at shoring up the free enterprise system by helping business, workers, and the needy

AAAAgricultural Adjustment Administration

Sought to boost agricultural prices by paying farmers to plant fewer crops, thus reducing supply and increasing demand

Wagner Act

This law strengthened the labor movement by supporting the right of workers to organize and join unions.

Works Progress Administration

WPA

organized and funded public works projects that provided jobs and wages to unemployed workers

FDICFederal Deposit Insurance Corporation

Insured bank deposits up to $5000

Today it is $250,000.

SECSecurities and Exchange Commission

Regulates the sale of stocks and curbs unfair stock market practices (inflated stock prices, monopolies, mergers, etc.)

PWAPublic Works Administration

Public works funded by the Federal government, such as schools, courthouses, bridges, dams, et.

WPAWorks Progress Administration

Federally funded program for building highways, streets, bridges, and parks.

Social Security ActProvided pensions for the aged and insurance for the unemployed

TVATennessee Valley Authority

Dam building project throughout the Tennessee Valley

Brought electricity to some of the rural parts of the south

Discuss

What impact did the New Deal have?–Positive, negative…?