Mr. Burdick’s Definition of Economic Recession

A recession is a decline in economic activity, such as investing in the stock market and overall consumer purchasing, over a period of at least a few months. During a recession, unemployment rates soar, personal income and business profits sink, and the real estate market suffers. A recession is bad news.

Depression: An extremely severe recession that lasts for years.

The Great Depression

• Republican President Herbert Hoover says: “We in America today are nearer to the final triumph over poverty than ever before in the history of any land.”

stock market: system for buying and selling shares of company

People were buying on the margin (buying stocks on credit with a loan from a bank).

People hoped for fortune overnight!

Uh oh… What led to the Great Depression?

• 1) Stock Market Crash (1929)– Investors sense

danger, panic, sell stocks

– Market plummets– “Black Tuesday”– Investors lose all

money, but still owe banks

Uh oh, again…• 2) Banks fail

– Banks had loaned and invested

– Over 9,000 banks close in 30s

– $$ not insured, people lose all savings

– Surviving banks stop loaning $$

• 3) People stop buying– Less $$ and spending– Hoard money– Overproduction of

goods– Unemployment: 25%– Cannot pay off credit

Roots of the Great Depression

• 4) Tariff on foreign goods– 50% tax, raised prices– “to protect US

companies”– Less trade– Other countries stop

buying US goods

Roots of the Great Depression

Recession!economic slowdown

- Free food at soup kitchens and bread lines

- Hoovervilles: homeless put shacks on public lands

- Hobos: wander, sneak onto trains - look for work

The self-described “hobo writer,” Leon Ray Livingston, arguably the most famous hobo in American history (note: “hobo” by definition is not simply a homeless person, but a “migrant worker” who travels from place to place, commonly by freight train, working whatever job he or she can find), known by historians as King of the Hobos for his writing of various books on the hobo lifestyle and perfecting the “hobo symbols system.” He spent his life traveling the U.S. for thirty years due to an irrepressible urge despite his wealth and he’d write about his journeys and life in an attempt to convince young people not to follow the same path that he had – but his plan backfired, romanticizing the hobo lifestyle and making him a folk hero, of sorts.

Much of his time was spent in Cambridge Springs, which he called his “headquarters.” I’ve been asked about him a dozen or so times while working at the Riverside, because legend has it that he is buried in Cambridge Springs. He is actually buried in Millcreek Township, right outside of Erie. Strangely though, in 1894, he did purchase a tombstone in a Cambridge Springs cemetery with money he won, although I’m not clear on why he did this or where exactly this is located. He did once say of the tombstone purchase (of which he himself etched “A-No.1 at Rest at Last”): “Do you know the call to wander is so irresistible that often on a dark and rainy night I find myself walking about a railroad yard looking for a chance to move on? You would not believe me, yet it is a fact that I realize that my end will be the same as that of 90 percent of all tramps – an accident. This is why I have at least provided for a decent burial."

- 1932: Great Plains drought- “Dust Bowl”: soil turns to

dust- Many go to CA for work

- “Okies”

Hollywood grows.

• Americans “escape” with entertainment such as movies.

• 60 - 90 million people a week go to the movies.

• "During the Depression, when the spirit of the people is lower than at any other time, it is a splendid thing that for just 15 cents an American can go to a movie and look at the smiling face of a baby and forget his troubles." -President Franklin Roosevelt

Radio• News, comedy,

sports, adventures– Lone Ranger– Zorro – Superman– Sherlock Holmes – Soap Operas

Arts• Grant Wood:

“American Gothic”

• John Steinbeck writes The Grapes of Wrath about Okies

• “If you’re in trouble or hurt or need – go to poor people. They’re the only ones that’ll help.”– The Grapes of

Wrath

Hoover thought Depression wouldn’t last long.• public works: projects to

create jobs – build hospitals, roads, and schools• Hoover wouldn’t raise taxes to

fund.

• Gov’t loaned $$ to banks (but not enough)

• Hoover opposed direct federal relief: signed bill anyway (but it was too late)

Franklin Delano Roosevelt

“FDR• Wealthy family• Harvard• Charming,

confident, “fatherly”

• NY Senator and Governor

• FDR had polio: paralyzing disease

• 1933: Unlike Hoover, FDR promises to use power of gov’t to help American ppl

• New Deal: Franklin D. Roosevelt’s policies for ending the Depression

• The Hundred Days: FDR sends bill after bill to Congress – 15 major economic acts passed

• Experimental: “Above all, try something.”

The New Deal• Fireside chats: FDR’s

direct talks to American people - optimistic

• Emergency Banking Relief Act: gov’t lets banks that are safe open– Up to $5,000 insured

“The only thing we have to fear… is fear itself.”

• Bank holidays: governors close banks to stop bank runs

The Second New Deal

• Social Security Act: Provide help for elderly and unemployed– Monthly aid after age 65– Disabled– Temporary income to

unemployed

• Civilian Conservation Corps (CCC) – employed young men on public works projects

• Farm Credit Administration (FCA) – Gave loans to farmers to prevent them from losing land

• Tennessee Valley Authority (TVA) – built dams in 7 states – controlled flooding, reduced soil erosion, and created cheap electricity

• Rural Electrification Administration (REA) – Electricity in rural areas (12% to 40% of farms)

• Fair Labor Standards Act – created minimum wage and 40 hour work week

• Public Works Administration (PWA) – created public works programs to battle unemployment

• Civil Works Administration (CWA) – provided federal jobs to unemployed

• National Youth Relations Act – provided job training for students

• Republican Nominee Alfred Landon: “Free the spirit of American enterprise! … [The New Deal] violates the basic ideals of the American System. If we are to preserve our American form of government, this administration must be defeated!”

So…

• The New Deal:– Limited success– Greatly expanded federal gov’t– Safety net for avg Americans against economic

disaster– Changed public attitude on the government’s role