Causes of the Great Depression Great Depression Unit – Part I.
The Great Depression
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Transcript of The Great Depression
The Great Depression1929-1940
Looming Economic Troubles• Troubled Industry
▫ Railroads, textiles, coal mining, auto industry, and consumer goods were weakening or struggling
▫ The number of houses being built declined • Farmers in debt
Decline in crop prices lead to debt, foreclosures on farms and defaults on loans.
Congress tried to pass federal price-supports to buy surplus wheat, corn, cotton and tobacco to sell on the world market.
Hawley-Smoot Tariff 1930 Highest protective tariff in peace-time
history Made trade from Europe extremely
difficult
• Consumer debt▫ Prices were rising, wages weren’t▫ Credit allowed consumers to spend outside
their means plunging them into debt▫ Businesses encouraged spending on credit,
but consumers cut back spending to counteract debt
“Rich got richer, poor got poorer”0.1% of population with incomes more
than $100,000; had 34% of nation’s savings
71% of population with incomes less than $2,500, the minimum to provide a decent standard of living
80% of population had no savingsLarge portion of population was in debt
because of using credit to purchase new consumer goods
Only 1/ 10 city homes owned an electric fridge
The Election of 1928 Republican candidate
Herbert Hoover against Democrat Alfred E. Smith
Smith was more personable, but he was a Catholic , pro-alcohol, and from NYC
“We in America are nearer to the final triumph over property than ever before.”
Hoover wins an overwhelming victory
The Stock Market• Most visible symbol of a
prosperous American economy
• The Dow Jones Industrial Average gauged the market’s health▫ The Dow is a measure
based on the stock prices of 30 representative large firms that trade on the New York Stock Exchange
• Through the 20’s, stock prices rose. Dow reached a high of 381 points, an increase of 300 points in 5 years
A Bull Market Widespread speculation where people bought
stocks and bonds to make a quick profit Buying on margin where they would pay a
small % of a stock’s price as a down payment and borrow the restMore people began to invest in the stock
market, not just the wealthy If the value of stocks decline, people have
no way to pay off loansGov. didn’t try to regulate the market
Black Thursday• September 1929 – stock prices reached an all-
time high Wed, October 23, 1929 – stock prices declined
What would you do?• Thurs, October 24, 1929 – Nervous investors
began selling stocks• Banks joined together to buy stock to prop up
stock prices and the stock market. This worked, but for just a few days.
• Mon, October 28, 1929 – stock prices started falling again
Black Tuesday Tues, October 29, 1929
Everyone rushed to sell their stock (get their money out of the stock market)
Wide spread panic led to the dumping of 16.4 million shares of stock
Stock market dropped in value by $16 Billion 211,942,040,062 today
The stock market actually collapsed = The Great Crash
Total loss of the Great Crash = $30 billion 397,391,325,116 today
People who used credit to buy stocks faced huge debts and others lost their savings.
Financial Collapse• The Stock Market Crash signaled the beginning of
the Great Depression• Banks Fail
▫ People rush to withdraw $ from banks, but some couldn’t because banks had invested their $ instocks
▫ 1929: 600 banks closed▫ 1933: 11,000 banks had failed▫ Millions lost savings because gov. didn’t protect or
insure bank accounts• Businesses Fail
▫ Between 1929-1932, GNP was cut from $104 billion to $59 billion
▫ 90,000 businesses went bankrupt including auto and railroad
▫ Unemployment in 1929 was 3% compared to 25% in 1933 (that’s 1 in 4 people w/o a job)
Effects overseas Many countries still trying to recover from WWI
devastated European economy
Made it hard to export Am. Goods
United States passed high tariffs to protect Am. Farmers from competition
Causes of the Great Depression
Tariffs and war debt policies cut down the foreign market for Am. Goods
Overproduction (surplus) of farm goods The availability of easy credit An unequal distribution of income
The Depression Hits Home In cities, people lost their
jobs and were evicted from their homes
Built shantytowns, little towns made of shacks Used car bodies, orange
crates, piano boxes Poor dug through
garbage cans, begged, or waited in soup kitchens or bread lines to get cheap or free food
African Americans and Latinos Higher unemployment rates and they
received the lowest pay Faced increased racial violence from
whites competing for jobs 1933: 24 African Americans died by
lynching Mexicans and Mexican Americans faced
deportation
The Dust Bowl• Between 1929 and 1932, about 400,000 farms were
lost to foreclosure• Not only economic damages, but environmental
▫ Land was overworked• Drought and dust storms in the Midwest for much of
the 1930s▫ “Black Sunday” – worst dust storm – April 14, 1935▫ Dust would get into everything…kitchens, bedrooms,
hair, nails, mouths▫ Wrapped faces in damp rags to filter out the grit▫ Nostrils with Vaseline to keep noses from clogging and
bleeding▫ “dust pneumonia”▫ Many packed up families and headed west to California
along Route 66
Searching for Jobs HOBOS No federal system of
direct relief
Women and Children Canned food, sewed clothes, managed budget Many worked outside the home for less wages,
but resented for taking jobs away from men
By 1933, 2,600 schools had closed leaving thousands of children to work in sweatshops
“Wild boys” hopped freight trains travelling the country for jobs, adventure, and to escape poverty
Social and Psychological Effects
• Between1928 and 1932, the suicide rate rose by 30%
• Health declined because couldn’t afford the doctor
• Couldn’t afford college, others put off marriage and raising large families or having kids at all
• People gave food, clothing, and shelter to the needy
• Strengthened communities and family ties• Developed habits of saving and thriftness
President Herbert Hoover After the crash, he tried to convince public that
the economy was on sound footing and to remain optimistic
Opposed any form of federal welfare, or direct relief to the needy, because it would weaken their self-respect
He asked employers not to cut wages or lay off works, he asked labor leaders not to demand higher wages or strike
Hoovervilles and Shantytowns
What did Hoover Do? He finally decided he had to do
something… He got Congress to approve $2.25 billion
for public works projects
Hoover Dam on the Colorado River in Arizona
Reconstruction Finance Corporation 1932 – under Hoover Government lending bank to help
smaller, rural banks
Bonus Army of 1932 Veterans marched on
Washington DC to demand their bonus from services during WWI
Hoover sent Douglas MacArthur in to remove the veterans who would not leave using tear gas and bayonets
ELECTION OF 1932 Herbert Hoover
(Republican) “Prosperity is Just
Around the Corner”
Franklin D. Roosevelt (Democrat)
Roosevelt’s theme song was “Happy Days are Here Again”
He used his “Brain Trust” of trusted aides to help write speeches, etc.
March 4, 1933 FDR was inaugurated President, 4
months after the election Worked with the Brain Trust to provide a
“New Deal for the American people” during this time
NEW DEAL His first Hundred Days were filled with
legislation, over 15 pieces of major legislation
Expanded the role of the federal government
March 6-10 Nationwide Bank Holiday Closed all banks to prevent withdrawls Passed the Emergency Banking Relief Act to
inspect the country’s banks Banks that couldn’t pay debts remained closed,
restored confidence
3 Rs – Relief, Recovery, and Reform Relief – short range goals
Recovery – long range goals
Reform – deal with current abuses
CONGRESS worked with the President and gave him “blank check” powers
Emergency Banking Relief Act of 1933 Power to regulate the banking system Close and reopen banks
Safer to keep money in a reopened bank than in the back yard!
Fireside Chats Roosevelt used the
radio to talk to Americans
Focused on Priming the Pump
Click picture for his first fireside chat during the bank holiday
Glass-Steagall Banking Reform Act FDIC – Federal Deposit Insurance
Corporation Insures individuals up to $5,000
Nation taken off the Gold Standard
Civilian Conservation Corps (CCC) Most popular of all the New Deal
alphabet agencies…
Employment in fresh air government camps for about 3 million uniformed young men
Reforestation, firefighting, flood control, swamp drainage
Paid $30 a month, sent $25 home to their families
Federal Emergency Relief Act (May 1933) Harry L. Hopkins $3 billion to states for work projects
Agricultural Adjustment Act (AAA)– help farmers meet mortgages & paid farmers to grow less
Home Owners’ Loan Corporation (HOLC) – to refinance mortgages on non-farm homes
Tennessee Valley Authority (TVA)—renovated five damns and constructed 20 new ones.
Created jobs, provided flood control, hydroelectric power
Civil Works Administration (CWA) Provided 4 million temporary jobs during
cruel winter months Built 40,000 schools and half a million
roads
Some people hated the New Deal Didn’t go far enough to help the poor and reform
the economic system FDR spent too much on direct relief and used New
Deal to control business and socialize economy Huey Long—Share-Our-Wealth promised “Every
Man a King” Had 7.5 million members until he was assassinated
Father Charles Coughlin – Catholic priest who became anti Semitic Broadcasted on radio economic, political, and
religious ideas
The Supreme Court Struck down two New Deal acts because
federal government overstepped their roles FDR tried to pass a court-reform bill in 1937
reorganizing the federal judiciary and appoint new justices
Criticized it upset judicial independence and checks and balances
Over next four years, FDR appointed 7 new justices from resignations
Second Hundred Days (or Second New Deal) Spring 1935 More relief for farmers and workers Eleanor Roosevelt travelled the country
to remind her husband of the suffering
1936 election FDR wins overwhelmingly 1st time African Americans voted solidly
Democratic and labor unions supported a candidate
Works Progress Administration (WPA) 1935 Employment on useful projects $11 billion spent to give jobs to over 8
million workers
WKU’s Cherry Hall was a recipient of the WPA money and workers
Federal Art Project was also started
Chronicling the Depression
Artists, Painters, Filmmakers, Photographers showed a new interest in social problems and activism.
Dorothea Lange – Photographic chronicler of the Great Depression
Wagner Act 1935 Protected right of workers to join unions and
collective bargain Prohibited unfair labor practices like
threatening workers, firing union members, and interfering with union organizing
1938 Fair Labor Standards Act Set maximum hours at 44 and minimum wage
at $0.25 Set rules for 16 and under, and banned
dangerous work for under 18
Social Securities Act 1935 Old-age insurance for retirees 65 or
older and their spouses Unemployment compensation system
$15-$18 a week Aid to families with dependent children
and the disabled
Rural Electrification Administration 1935 Brought electricity to isolated areas In 1935, only 12.6% of American farms
had electricity 48% in 1945, 90% in 1949
New Roles for Women More women working outside of
home Frances Perkins
Secretary of labor– First woman to head an executive department
Helped create the Social Security system
Mary McLeod Bethune Leader of the Black Cabinet and director
of Negro Affairs in the National Youth Administration
Advised FDR on racial issues and made provided job training and benefits to minority students
Culture Movies—65% of population attending 1x a week
“Mr. Smith Goes to Washington” Disney – “Snow White” “Gone with the Wind” “The Wizard of Oz”
Radio—90% of homes had a radio New Type of Music Emerging - “Swing” Radio programs such as The Lone Ranger
& Orson Welles “War of the Worlds” Literature
John Steinbeck’s The Grapes of Wrath Zora Neale Hurston’s Their Eyes Were
Watching God Sports
Boxing was hugely popular—Joe Louis
Why would radio and movies increase in popularity?
American Gothic by Grant Wood
1937 A Troubled Year Moving Forward
Supreme court upheld many New Deal programs March 1937 upheld a Washington law that granted
Minimum Wage Ruled both, a key part of the Wagner Act and Social
Security constitutional. Farm Tenancy Act - 1937
Gave tenant farmers and Sharecroppers a chance to buy land of their own
Recovery in Doubt FDR scaled back federal deficit spending 1937 - A bad year for recovery. Massive drop in
stocks and by the end of the year another 2 million American unemployed.
Impact of the New Deal Relief, Recovery, Reform
Which area was the New Deal most successful?
Changing relationships Changed the link between the American
people and the Government New Role for Government meant a much
larger Government. As a result many more people now looked
to the Government for help
End of the New Deal Weakened support – 1937
What happened in 1937 to cause loss of support? The 1938 Election
Republicans and Southern Democrats gained seats in the House and the Senate
Why did this happen? After the New Deal
After 1938 FDR lacked the support to pass New Deal Styled programs.
Problems in Europe now held the attention of the American Public.
In 1939 and 1940 international conflict will ultimately do what FDR’s programs could not.