Goal 9 Part 4

The Nation’s Sick Economy

Stock Market Crash - 1929

Great Depression – 1930s

Economic troubles

Causes of problems

(1) “SUPERFICIAL PROSPERITY” of the 1920s (easy credit / installment plan)

(2) Farming : “OVERPRODUCTION”

(3) Major Businesses / Railroads lost profit to new forms of technology

Farmers need a “LIFT”

The ONE business that suffered the most – AGRICULTURE / FARMING

During WWI – demand for crops = high! After WWI – demand for crops = low!Problem - overproduction!Congressional reaction:

McNary – Haugen Bill - “PRICE SUPPORTS” – the federal government would buy the

“surplus / overproduction” at a guaranteed price!

Herbert Hoover (1928-1932)

America = “remain optimistic” Believed in “RUGGED INDIVIDUALISM”

People should rely on themselves and NOT the government! (no bailouts)

Bailouts would weaken the self-respect of people and businesses*Hoover’s Rugged Ind. helped him act cautiously*America BLAMED Hoover forthe Depression (too little too late)Ex. Hoovervilles

Dreams of riches in the Stock Market Economists sent warnings!• Dow Jones Industrial Average – barometer for the Stock

Market

2 REASONS / CAUSES for the Stock Market Crash in 1929

(1) ****** SPECULATION ****** - buying stocks in order to “MAKE QUICK MONEY” while “IGNORING THE RISKS!”

(leads to)(2) ****** BUYING ON MARGIN ******

- paying a small percentage of a stock’s price and “Borrowing” the rest from the bank (easy money)

PROBLEM:______________

Stock Market Crash (1929)

Stocks PEAKED….then FELL People freaked out, some investors quickly sold their shares (Y2K)Black Tuesday – October 29, 1929VERY IMPORTANT: What signaled the

beginning of the Great Depression?THE STOCK MARKET CRASH 1929

The Great Depression 1929 -1940 600 banks closed 11,000 banks failed Federal government never protected people’s money…

so…1,000s of people lost all of their savings! Worldwide shockwaves: The Depression affected

Europe as well (postwar –inflation at an all time high!) ****Leads to the rise of Dictators

Racism during the Depression: African Americans were fired before any other culture

Notable Result: American confidence in Economy went DOWN!!!!

Hawley-Smoot Tariff (1930)

How are we going to fix it???????Hawley-Smoot Tariff (1930)

- established a very high “protective tariff” to boost American economy / designed to protect from foreign competition

Major Problem: cutting the flow of foreign goods to America made it WORSE!

Then, foreign countries raised their own protective tariffs

Same result as the Embargo Act of 1807

Hardships and Suffering During the Depression Relief DOES NOT come from the government –

Relief comes from charitable organizations Depression in Cities:

(1) Shantytowns (HOOVERVILLES)–

little towns consisting of shacks

(2) Soup Kitchens – offered free to low-cost food

(3) Bread Lines – waiting in lines for food provided by charitable organizations

(4) Hoover Soup

Depression in Rural Areas:

Main Advantage: Farmers can grow their food!

***** Minorities experience an increase in discrimination because of “job competition”

THE DUST BOWL

Problem: Drought and dust storms struck the GREAT PLAINS (Caused by poor farming

techniques (no crop rotation)OKIES: farmers that moved from the Dust Bowl to

CALIFORNIA

John Steinbeck: The Grapes of Wrath Explains the difficulties of Okies

during the Depressionand their move to

California

Effects on American families

Men: difficulty with coping with unemploymentHOBOES – wondered the country looking for jobsWomen: canned foods and sewed clothing to

make money (to help family)Targets of enormous resentment: unfortunately,

30’s culture = why should women have a job over a man?

Children: poor diets, malnutrition, child-welfare programs were closed, quit school = jobs!

“Wild Boys” and “Hoover Tourists”

DIRECT RELIEF

During the early years of the Depression,

NO federal relief for American people and business

Direct Relief: cash payments or food provided by the federal government

Ex. New York City: $2.39 / family / week

Hoover’s 2 Intervention Programs/ Recovery Measures(1) Federal Home Loan Bank Act: (direct)

lowered mortgage rates for homeowners and allowed farmers to refinance their farms (PEOPLE)

(2) Reconstruction Finance Corporation: (indirect) $2 billion of “emergency money” for banks, businesses, railroads (BUSINESSES)

Ex: TRICKLE DOWN ECONOMICS

Go through business and

THEN into people’s pockets (Too little …too late) MORE GOVERNMENT

The Bonus Army

Bonus Expeditionary Force Story: WWI vets support the “Patman Bill” – would grant $500 to each soldierProblem: $ comes in 1945, not now!WWI vets want MONEY NOW!Hoover’s Reaction: WWI vets were “communists”

*Hoover “disbanded” the Bonus Army by “gassing” the soldiersResult: Hoover’s image sufferedMAIN EFFECT: Tarnished the relationship between the Federal

government the American Citizens (credibility is shot)

The Great Depression (1929-1940)Causes:

Superficial prosperityEasy credit / installment planOverproduction (*farming sector)***** Stock Market Crash (1929) *****

Effects:Shantytowns / Hoovervilles / Breadlines / soup

kitchens (charitable help)Unemployment*Worldwide economy suffersBanks fail / Businesses collapse

Which of Hoover’s recovery measures provided DIRECT help to the American people?A. The Federal Home Loan Bank Act

B. The National Credit Corporation

C. The Reconstruction Finance Corporation

D. The Patman Bill

Cinderella Man Eulogy AssignmentAssignment: You have been given the proud task of

delivering Jim Braddock’s eulogy. Take the position of his sons, Jay or Howard or his daughter, Rosie.

Format of Eulogy:1.The hard times your father lived through2.The nature and personality of the man.3.The obstacles in life he overcame and his

outstanding achievements4.How and why he should be rememberedLength: 2-3 pages – Due tomorrow or the Monday after Thanksgiving