THE GREAT DEPRESSIONAmerican Studies

THE GREAT DEPRESSION

1929-1940: The longest and most severe recession that our country has ever experienced

The Stock Market Crash of 1929 is the spark Most of Europe is also experiencing a major

depression after WWI Has a lasting effect on how Americans view

themselves and the role of the government http://www.youtube.com/watch?v=iLhDSdwo

b04 http://app.discoveryeducation.com/search?N

tt=great+depression

CAUSES OF THE GREAT DEPRESSION

Six Sick Segments of the Economy: 1. Overproduction and Under-

consumption Buying on credit causes inflation Interest rates are kept low so that it’s easier for

people to get loans and credit cards Demand for new goods decreases over time Many buy things they can’t afford = debt Companies borrow $ to expand and can’t pay

back

SIX SICK SEGMENTS OF THE ECONOMY 2. Uneven Distribution of Wealth

Top 10% had 80% of nation’s wealth Half of the nation lived below the poverty

line Rising prices, same stagnant wages Government helped big business not the

people Few unions = few rights for workers Huge gap between the rich and the poor

SIX SICK SEGMENTS OF THE ECONOMY 3. Loan Repayment and War Debt

(Reparations) “Roundtrip of the Dollar”: US invests in

Germany to help their depression, Germany uses money to pay back allies for war reparations, then they use the money to pay US back for WWI loans

All countries default on their loans Worldwide depression makes it difficult to sell

US goods 1923: a five million German mark worth less than a

penny

SIX SICK SEGMENTS OF THE ECONOMY 4. High Tariffs:

Hawley-Smoot Tariff:60% tax on imports from Europe so people buy goods from the US

European countries put tariffs on US so that foreigners don’t buy our goods

Government makes money, not businesses World Trade falls 40%

SIX SICK SEGMENTS OF THE ECONOMY 5. The Farmer’s Plight

Took loans to buy land and equipment during WWI

Plenty of profit during WWI feeding world armies

After war, prices drop by 40%, can’t pay debts

Surplus: Growing more than they can sell for profit

Coolidge refuses to pass McNairy-Haugen Bill for federal price-supports on key products

Many lose land and are forced to become sharecroppers

SIX SICK SEGMENTS OF THE ECONOMY 6. Over-speculation on the Stock

Market Bought based on speculation that economy

would keep growing Expected to hit it big, when demand drops,

stock prices drop People buy on credit, company seems to be

worth more than it really is Keeps stock prices artificially high, less money in

system than there appears to be Buying stock on the Margin (credit) causes

banks to lose money they loaned

PRACTICE QUESTION

The 1930’s were a time of pain and suffering for many Americans due to the Great Depression. Many blamed President Hoover for the depression but it was later discovered many of the problems were created during the 1920’s. Explain two reasons why the United States fell into depression. (2pts.)

AMERICA’S DARK AGES

Wages fall, businesses close, unemployment rates skyrocket Averages from 25-50% across the country throughout

the decade Many lose their homes to foreclosure No federal system of relief, no corporate bailouts,

no safety net Women lose jobs/wages so that some men can find

work: they search constantly Conditions for African Americans were the worst

Competition for jobs: First fired, last hired 24 lynched in 1933

-Unemployed were given apples to sell in order to make some money

-Men didn’t want to beg, wanted to earn money honestly

EFFECTS OF THE GREAT DEPRESSION Breadlines and soup kitchens form in an attempt to

feed families Suffer serious health problems from malnutrition and lack

of health care Many can’t pay rent and are forced to live in shacks

= shanty town or “Hooverville” Only time in history where more people are leaving

the US than coming here Divorce and suicide rates rapidly increase Many men and children leave their homes and roam

the country Riding the rails: Migrants or bums or “Hoover Tourists”

Popular Song “Brother, can you spare a dime?”

Schools eliminate dress code: People can’t afford new clothes or shoes

Sleeping under newspapers: Hoover blankets

Turned-out empty pockets: Hoover flags

THE RUN ON THE BANKS

Banks failed at record rates Those who didn’t lose $ in stock market, lost it

to the bank Didn’t have enough money in vaults due to

giving out loans People lose confidence in banks and want all

their money back Banks run out of money and are forced to close Many from this era lose their life savings and

never trust the banks again 9 million saving accounts gone

PRESIDENT HERBERT HOOVER (1929-1933)

Presidents of the 1920s believed in Laissez-Faire, Hoover didn’t believe in govt intervention Many believed it was a normal cycle of the economy

where others blamed Hoover for Depression Forced to provide some relief with worsening

conditions Hoover believed in “rugged individualism”:

Individuals should be able to help themselves Hoover Dam: Approved to create jobs and new

hydroelectric power source

THE BONUS ARMY

WWI Veterans were promised a bonus to be paid in 1945

Vets need money now and march/protest in Washington D.C. to demand it be paid

Hoover refuses and sends troops to get rid of them

Troops use tear gas and bayonets to force the veterans and their families to leave

Burn down their shantytown, many are injured Final blow to Hoover’s damaged image

-Troops turn against veterans

-Eisenhower and MacArthur were some of the troops who kicked out the Bonus Army

-One baby was killed, an 8 year old boy was blinded

-Hoover called the veterans “traitors and communists”

PRACTICE QUESTION

President Hoover was blamed for the Great Depression even though later historians discovered it was not entirely his fault. However there were many impacts on people’s lives due to depression. Which of the following was not an impact?

A. Race Riots B. Hoovervilles C. Bonus Army D. Unemployment

THE DUST BOWL Environmental disaster: Drought, high winds and

poor farming practices cause huge dust storms Great Plains blow away, people and homes covered in

dust “Black Blizzards” cause the “Brown Plague”

Farmers: Losing money, can’t grow food, lose the family farm, failing health

Many move west to California for fertile land to become migrant workers picking fruit, etc. “Okies and Arkies” follow Route 66 to the Promised

Land Many can’t find enough work when they arrive

http://www.youtube.com/watch?v=iLhDSdwob04

PRACTICE QUESTION

What affect did the Dust Bowl have on farmers?

a. It created better soil for the farmer’s crops. b. It destroyed their crops and forced them to

move to the East coast c. Made them use more tractors to plant more

crops. d. It destroyed their crops and forced them to

move to the west coast

ELECTION OF 1932

Hoover is re-nominated by Republicans Most people want him gone, widespread hatred

Democrats nominate Franklin Delano Roosevelt Governor of NY: Providing aid to his people “My plan will do the greatest good for the greatest

number” Wants to correct issues that caused the Depression

FDR wins a landslide victory Congress is Democratic Lame Duck Period: worst of the depression http://www.youtube.com/watch?v=1aXpty_1xo4&sa

fe=active

-Calls his advisors the Brain Trust

-Has Polio which impedes his mobility

-Graduated from Harvard

Teddy Roosevelt’s Nephew

THE NEW DEAL

Plan to “shuffle the cards, give people a new hand in life”, provide aid and relief

RRR: Relief for the needy, Recovery for the economy, Reform finances Greatly expands the role of the government in the

economy Try new things, admit if they don’t work Wife Eleanor Roosevelt is highly active first lady

1st 100 Days: Highly eventful period of FDR’s president, enacts emergency measures Create stability: 15 major pieces of legislation Needs to build trust with the people

THE NEW DEAL: FIRST 100 DAYS

Bank Holiday: Close them for examination and to prevent withdrawals Emergency Banking Relief Act: Provides loans

to banks so they can stabilize and reopen Needs people to put money back in Builds trust with Fireside Chats: President

explains issues in plain terms to the people Successful: Billions re-deposited, ends

banking crisis http://www.youtube.com/watch?v=z9CBpbuV

3ok&safe=active

FDR’S NEW DEAL

1933: Glass-Steagall Banking Reform Act Banks can’t use people’s $ to speculate on the stock

market Federal Deposit Insurance Corporation (FDIC)

Insures your $ in the bank so that you will always get it back

Federal Securities Act: Corporations must provide complete and honest information to their stock holders

Securities and Exchange Commission (SEC) Regulates the Stock Market to prevent unfair deals and

reduce buying on the margin

ROOSEVELT’S NEW DEAL

National Housing Relief Act: Help pay mortgage to avoid foreclosures

Public Works Programs: Provide jobs through government funded projects Plants trees, create park trails and lodges Painting murals, interviewing surviving

former slaves and Civil War vets to record history

Built airports, bridges, schools, roads, etc.

PRACTICE QUESTION

FDR became president because of his ideas for getting the United States out of depression. FDR created many government programs that tried to improve different aspects of people’s lives. Which of the following was the name of FDR’s ideas?

A. Rugged Individualism B. Neutrality C. New Deal D. Normalcy

“Migrant Mother”

Photograph by Dorothea Lange who was paid by a public works program to document the Depression

1933: TENNESSEE VALLEY AUTHORITY TVA: Public work program that helped the

poor rural areas of the Tennessee River Valley Economic Planning and Development Bring hydropower electricity and teach better

use of the land for farming Build or repair 20 dams to use for flood control

and electricity (90% were without it) Build low cost housing, provide clean running

water Plant trees and control forest fires

FRANKLIN ROOSEVELT'S NEW DEAL

FDR is re-elected in 1936, 1940 and 1944 Social Security Act: 1935

Old Age and Disability Pension: safety net for those who can’t work

Half paid by employee, half by employer, over lifetime

Fair Labor Standards Act: 1938 Sets minimum wage (25 cents) 40 hour week Employers and work programs still often

discriminated against African Americans

IMPACT OF THE NEW DEAL

Successful in providing relief with some reform and recovery There is economic improvement but the

nation still has a deficit Government has more control and

provides more social programs/aid to the people

It takes the massive employment and spending during WWII to pull us completely out of the Depression

PRACTICE QUESTION

How did the U.S. government’s role in the economy change as a result of the Great Depression?

A. The federal government had a diminished role in regulating economic activity.

B. The federal government maintained the role it had in economic matters before the Great Depression.

C. The federal government expanded its role in regulating economic activities and promoting economic growth.

D. The federal government transferred its role in economic affairs over to the state governments.