The American Nation Chapter 26 The Great Depression, 1929–1941

The American NationThe American Nation

Chapter 26The Great Depression,

1929–1941

“The United States is nearer to the final triumph over poverty than ever before in the history of any land.”

Herbert Hoover, 1928

“If a man saves $15 a week, and invests in good common stocks, and allows the dividends and rights to accumulate, at the end of twenty years he will have at least $80,000 and an income of around $400 a month. He will be rich.”

-John J. Raskob, Democratic National Committee Chairman, 1929

The stock market became an attractive gamble!

dramatic difference between the return on a savings account and what could be made in the stock market

Everyone Can Be Rich!!!

Chapter 26, Section 1

Signs of Economic TroubleSigns of Economic Trouble

Seven months after Herbert Hoover’s inauguration in 1929, the stock market crashed. It was the beginning of the worst economic depression in United States history. How did it happen?

Early signs of trouble• Many Americans had not shared in the prosperity

of the 1920s—textile workers and coal miners, for example.

• Farmers faced hard times. Over-production kept farm prices low.

• In the mid-1920s, the economy began to slow down, but no one noticed because at that time the government did not keep detailed statistics.



The Crash• By August 1929, some investors worried

that the boom might end, so they began selling their stocks.

• Other investors noticed the sell-off and began to sell their stocks, too. Stock prices began to fall.

• Many investors had bought stocks on margin, that is, they had put down only part of the cost of the stock when they bought it and borrowed the rest from their stockbrokers. With prices falling, brokers asked investors to pay what they owed. Those who could not pay had to sell their stock to get money. Panic set in as desperate investors tried to sell millions of shares. Stock prices fell further.

• When the stock market opened on Tuesday, October 29, a wild stampede of selling took place.

• Stock prices plunged. Stocks that had been valuable were now suddenly worthless.

• The day came to be known as Black Tuesday.


The period of economic hard times that followed the crash is known as the Great Depression. It lasted from 1929 to 1941. The stock market crash did not cause the Great Depression, but it did shake people’s confidence in the economy. What had happened to the prosperity of the 1920s?

Overproduction Farms and factories produced vast amounts of goods in the 1920s, but wages did not keep up with prices. Thus, workers could not afford to buy many goods. As orders slowed, factories closed or laid off workers.

Weakness in the banking system

• In the 1920s, banks made unwise loans. For example, they lent money to people to buy stocks. When the stock market crashed, borrowers could not repay loans. Without money from the loans, banks could not give depositors their money back if they asked for it.

• Between 1929 and 1932, more than 5,000 banks closed.




Each economic disaster led to others

• The stock market crash ruined many investors. Without money from investors, businesses could not grow and expand.

• Businesses could not borrow from banks because banks were in trouble.

• As factories cut back on production, they cut wages and laid off workers. Unemployed workers had little money to spend, so demand for factory goods fell further. Many businesses went bankrupt—they were unable to pay their debts—so even more people lost jobs.

• The Great Depression led to worldwide economic crisis. American banks had loaned money worldwide. When they stopped making loans and demanded repayment of loans, banks in other countries began to fail


Hard TimesHard Times

Unemployment 1929–1941


Hard TimesHard Times

• In the 1930s, many Americans no longer lived on farms. Millions lived in cities and worked in factories. When factories closed, the jobless had no money for food and no land on which to grow it.

• As the depression spread, unemployment soared. By the early 1930s, one in every four workers was jobless. Others worked short hours or took pay cuts.

• On city streets, people sold apples and pencils, shined shoes, begged for money, and picked through garbage dumps.

• Marriage and birthrates dropped.• Some families split up. Fathers,

and even children as young as 13 or 14 years old, left home.

• Jobless men and women drifted from town to town looking for work. Some “rode the rails,” living in railroad cars.

• People shared what they had. Some families doubled up, taking in relatives.

• Jobless people suffered from the feeling that they had failed.


President Hoover ResponsesPresident Hoover Responses

• President Hoover was concerned about the suffering, but he believed that the government should not become directly involved in ending the crisis, or it might become too powerful. He thought it was up to businesses to end the downslide. • At first, Hoover opposed

government relief programs—programs to help the needy. He called on business leaders to provide jobs, instead.

• Hoover also called on private charities to help. Churches set up soup kitchens, places where the hungry could get a free meal.

As conditions grew worse, Hoover set up public works programs to provide jobs. (no direct relief)

Public works are projects built by the government for public use, such as schools, dams, and highways.

Hoover asked Congress to approve the Reconstruction Finance Corporation (RFC), which loaned money to banks, railroads, and insurance companies. Hoover hoped that saving these businesses would save jobs. (no direct relief)


President Hoovers RespondsPresident Hoovers Responds

• Hoover did more to reverse hard times than any previous President, still his efforts were too little too late.

• Many people blamed the President for doing too little. They gave the name Hoovervilles to the shacks of the homeless.

Some World War I veterans took action to help themselves.

After the war, Congress had voted to give veterans a bonus, or sum of money on top of their wages, to be paid in 1945.

In 1932, more than 20,000 jobless veterans marched to Washington to demand the bonus right away. This Bonus Army camped in a tent city along the Potomac River.

After the Senate rejected a bill that called for paying the bonuses immediately, local police tried to force the veterans to leave. Four people were killed. Finally the army moved into the camp and burned it to the ground. After the attack on the Bonus Army, Hoover lost what little public support he had left.

Section2Section2

The Hundred Days


Franklin Delanor RooseveltFranklin Delanor Roosevelt

Who was Franklin D. Roosevelt?• Franklin Roosevelt, known as FDR,

came from a wealthy family. In 1905, he married Anna Eleanor Roosevelt.

• During World War I, FDR had served as assistant secretary of the navy. He later became governor of New York.

• In 1921, Roosevelt was stricken with a severe case of polio, a disease caused by a virus. His legs were totally paralyzed.

• In 1932, the Democrats made him their presidential candidate.

.

What did Roosevelt say he would do as President?Roosevelt declared: “I pledge myself to a new deal for the American people.” He did not spell out what he meant, but he struck a hopeful note.

In campaign speeches, he promised to help the jobless, poor farmers, and the elderly.

Voters responded to his confident manner and personal charm.

Election of 1932Routing of the Bonus Army wasthe last nail in Hoover’s politicalcoffin

When Hoover tried to campaignhe was often booed

On his way to vote on ElectionDay people threw stink bombs at his car

Franklin Delano Roosevelt wonthe election in a landslide

On his inauguration day, Roosevelt spoke with optimism. Then, he issued a call to action. People welcomed his energetic approach.

newsreel

https://www.youtube.com/watch?v=Z_Ovo1arA-o


The Hundred DaysThe Hundred Days

The new President moved forward on many fronts:

He urged his staff to “take a method and try it. If it fails, admit it and try another. But above all try something.”

The President sent many bills to Congress during his first three months in office.

Between March 9 and June 16, 1933, Congress passed 15 major new laws. This period is called the Hundred Days.

Roosevelt’s first challenge was the nation’s crumbling banking system.On his second day in office, he

declared a bank holiday. He closed every bank in the country for four days.

He then asked Congress to pass the Emergency Banking Relief Act. Under this act, only banks with enough funds to meet depositors’ demands could reopen. The others had to stay closed.


The Hundred DaysThe Hundred Days

• Roosevelt spoke to Americans by radio. The President told the people, “it is safer to keep your money in a reopened bank than under your mattress.” People began to return their money to banks.

•Altogether, Roosevelt made 30 radio speeches while in office. He called them fireside chats because he spoke from a chair near a fireplace in the White House.

https://www.youtube.com/watch?v=z9CBpbuV3ok

https://www.youtube.com/watch?v=z9CBpbuV3ok

Roosevelt’s program for economicrecovery was called the New Deal. NewDeal programs had three main goals: relieffor the jobless, plans for economicrecovery, and reforms to prevent anotherdepression.

The President’s New Deal programschanged the relationship betweengovernment and the economy. From thenon the federal government took an activerole in managing the American Economy.


The New Deal aimed to prevent another depression by reforming the economic system.

Truth-in-Securities Act

This act was designed to end the risky buying and selling of stocks in hopes of making a quick profit.

Federal Deposit Insurance Corporation (FDIC)

The FDIC insured savings accounts in banks approved by the government. If a bank insured by the FDIC failed, the government would make sure depositors received their money.

New Deal Reforms to Prevent Another DepressionNew Deal Reforms to Prevent Another Depression

Section 3Section 3

New Deal Programs


The New DealThe New Deal

Civilian Conservation Corps

Program Initials Begun Purpose

CCC 1933 Provided jobs for young men to plant trees, build bridges and parks, and set up flood-control projects

Tennessee Valley Authority TVA 1933 Built dams to provide cheap electric power to seven southern states; set up schools and health centers

Federal Emergency Relief Administration

FERA 1933 Gave relief to unemployed and needy

Agricultural Adjustment Administration

AAA 1933 Paid farmers not to grow certain crops

National Recovery Administration

NRA 1933 Enforced codes that regulated wages, prices, and working conditions

Public Works Administration

PWA 1933 Built ports, schools, and aircraft carriers


The New Deal, continuedThe New Deal, continued

Federal Deposit Insurance Corporation

Program Initials Begun Purpose

FDIC 1933 Insured savings accounts in banks approved by the government

Rural Electrification Administration

REA 1935 Loaned money to extend electricity to rural areas

Works Progress Administraion

WPA 1935 Employed men and women to build hospitals, schools, parks, and airports; employed artists, writers, and musicians

Social Security Act SSA 1935 Set up a system of pensions for the elderly, unemployed, and people with disabilities


By 1934, New Deal programs had restored hope, but they had not brought back prosperity. Some people believed that government was doing too much. Others believed that it was doing too little.

Senator Huey Long of Louisiana

• Long believed that the New Deal had not gone far enough to help the poor. He called for heavy taxes on the rich to provide every American family with a house, a car, and a decent annual income.

• People cheered. They overlooked the fact that he had used bribery and threats to win political power.

Dr. Francis Townsend

• Townsend’s plan was to give everyone over age 60 a pension of $200 a month. A pension is a sum of money paid to people on a regular basis after they retire.

• People receiving the pension would be required to retire to free up a job for someone else and spend the pension money at once to boost the economy.

Critics of the New DealCritics of the New Deal


Dr FDR and the Supreme CourtDr FDR and the Supreme Court

• In 1935, the Supreme Court ruled that the National Industrial Recovery Act was unconstitutional.

• The Court said it gave too much power to the President. A year later, the Court struck down the Agricultural Adjustment Act. Then, the Court overturned eight other New Deal laws.

Roosevelt’s plan for the Court:

After his inauguration in January 1937, Roosevelt put forth a plan to enlarge the federal courts.

He called for raising the number of Supreme Court Justices from 9 to 15.

This would make it possible for him to appoint six new Justices who supported his programs.

Reaction to Roosevelt’s plan:

Both supporters and critics of the New Deal accused him of trying to “pack” the Court with Justices who supported his views.

They said his move threatened the principle of separation of powers.Roosevelt fought for his plan for six months. Finally, he withdrew his proposal.


The New Deal Balance SheetThe New Deal Balance Sheet

Arguments Against the New Deal• The federal government grew in size and power. Many people

complained that the government was intruding in people’s lives, threatening individual freedoms and private property. These critics called for a return to the policy of laissez faire—the idea that government should play as small a role as possible in the economy.

• Critics were alarmed because the government was spending more than it took in. This practice of deficit spending was creating a huge increase in the national debt, or the total sum of money the government owes.

• Other critics said that the New Deal had not achieved its major goal of ending the depression. Full recovery did not come until 1941, when the United States was about to fight World War II.


The New Deal Balance SheetThe New Deal Balance Sheet

Arguments for the New Deal• Supporters noted that FDR had steered the nation through the

worst days of the depression. New Deal legislation had ended the banking crisis, protected farmers, and found work for the jobless.

• Supporters also argued that the government had a responsibility to use its power to help all of its citizens, not just businesses and the wealthy.

• Most important, supporters argued that the New Deal had saved the nation’s democratic system. Elsewhere in the world, people turned to dictators to lead them out of hard times. Roosevelt restored the nation’s economic health while preserving its liberties.

Section 4Section 4

The Nation in Hard Times


The Dust BowlThe Dust Bowl


The Dust BowlThe Dust Bowl

• During the 1930s, states from Texas to the Dakotas suffered a severe drought. Topsoil dried out. High winds carried the soil away in blinding dust storms. The area became known as the Dust Bowl.

• What caused the Dust Bowl?• Years of overgrazing by cattle

and plowing by farmers destroyed the grasses that once held the soil in place.

• The drought dried out the soil, and high winds blew it away.

Who was affected by the dust storms?• Hardest hit were poor farmers in

Oklahoma and other Great Plains states. Hundreds packed their belongings into cars and trucks and headed west.

• They became migrant workers—people who move from one region to another in search of work. “Okies”

• Once the migrants reached the West Coast, they faced a new hardship—they were not wanted. Sometimes, angry crowds blocked the way and sent the migrants away.


Women in the DepressionWomen in the Depression

• Traditional roles took on added importance during the depression. Some women took in laundry or boarders to help pay the rent.

• Working women faced special problems. If jobs were available, employers hired men before they would hire women. The federal government refused to hire a woman if her husband had a job.

• Millions of women worked to support themselves and their families.

• The number of married women in the work force increased by 52 percent.

• Some women workers went on strike for better pay when employers lowered their wages.

• Eleanor Roosevelt created a new role for the First Lady. She toured the nation as the President’s “eyes and ears.”

• She used her position to speak out for women’s rights, and as an advocate for the poor.


African Americans Face the DepressionAfrican Americans Face the Depression

• When hard times hit, African American workers were often the first to lose their jobs. They were often denied public works jobs, too. Some charities even refused to serve blacks.

• Eleanor Roosevelt and others close to the President urged him to improve the situation of African Americans.

• FDR invited black leaders to the White House. These unofficial advisers became known as the Black Cabinet. The President appointed Mary McLeod Bethune to head the National Youth Administration’s Division of Negro Affairs. She was the first African American to head a government agency.


Painting and photography

• Thomas Hart Benton painted huge murals of frontier life.• In American Gothic, Grant Wood painted an Iowa farmer and

his daughter who express the will to survive.• The government sent out photographers, including

Dorothea Lange and Margaret Bourke-White, to create a lasting record of American life during the Great Depression.

Radio • Comedians George Burns and Gracie Allen made people forget their troubles.

• Daytime radio shows—soap operas—which told stories of families, became popular.

The Arts During the DepressionThe Arts During the Depression

Artists portrayed the hardships of depression life. In his 1939 novel The Grapes of Wrath, John Steinbeck told the story of the Okies streaming over the mountains trying to find new homes in California.


The Arts During the DepressionThe Arts During the Depression

Radio • The most famous radio broadcast took place in 1938. On Halloween night, Orson Wells presented a “newscast” based on a science-fiction novel, The War of the Worlds. Many people mistook the program for real newscast and frantically sought ways to escape the Martian invasion.

Movies • To help escape the depression, movies told optimistic stories of love and success.

• Child star Shirley Temple became hugely popular.• A popular movie was Walt Disney’s Snow White and the

Seven Dwarfs, the first full-length animated film.• In 1939, Judy Garland won American hearts in The Wizard of

Oz.• The most expensively made and most popular movie of the

1930s was Gone With the Wind. It showed the Civil War in a romantic light. It made people feel that Americans had survived hard times before. They could do it again.

Documents

The American Nation Chapter 26 The Great Depression, 1929–1941