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)

http://youtu.be/Q-kdxn134gY

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

Click below for a video!

^ Click for a song

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.