STANDARD 11.6 • Students analyze the different explanations for the Great Depression and how the New Deal fundamentally changed the role of the federal government.
ECONOMIC ISSUES PART I
THE POSTWAR ECONOMIC BOOM • Prosperity of the 20’s- US had unlimited growth, opportunity and achievement. • Americans were earning more money. • People could afford radios, cars, and refrigerators. • People had money to invest in the stock market. • 1929- unemployment and poverty increased.
REPUBLICAN ECONOMIC POLICIES • Calvin Coolidge(1923-29) believed in pro-business & trickle-down economics. • Herbert Hoover(1929-33) believed that the trickle down economics would benefit the rich and the poor. • In the trickle down economics, big business would make the wealthy more rich and then profits would trickle down to the middle and lower classes. Herbert Hoover Calvin Coolidge
REPUBLICAN ECONOMIC POLICIES • Tax cuts would stimulate the economy because the rich would reinvest into the economy. • Instead, the corporations, kept the money for themselves. • The rich didn’t share the money with the poor. • The gap between the rich and poor increased.
REAL ESTATE AND STOCK SPECULATION • People wanted to make quick money and profit. • 1925, investors went from California to Florida to buy land. • In Florida, people bought cheap and unusable land and sold for profit. • People were buying and selling stocks at a profit.
REAL ESTATE AND STOCK SPECULATION • Some were borrowing money from banks to buy stocks. • Some inflated the stock and sold for a profit but it really was not valuable. • People speculated on the real value of the stock. • The value of the company wasn’t worth the value of the stock.
THE STOCK MARKET CRASH AND THE BANKING INDUSTRY COLLAPSE • The stock market crashed on Tuesday, October 29, 1929. • Also known as Black Tuesday. • People lost their fortunes and life savings. • About 16 billion dollars was lost.
THE STOCK MARKET CRASH AND THE BANKING INDUSTRY COLLAPSE • Banks had over extended loans for stocks. • The government didn’t regulate commerce or the banks. • Banks used stocks as collateral and the stocks were worthless. • Banks didn’t have any cash reserves and went bankrupt & 6, 000 banks closed.
AMERICAN CLIMATE IN THE 1930’s • This depression was worldwide. • 75,000 banks collapsed • 12 million or 25% of workers were unemployed
CAUSES FOR THE DEPRESSION • American Industry over expanded in its production facilities • Consumers were buying too much on credit. • Farmers were not making very much money. • New technology displaced many human workers • Banks were loaning too much money and loans were not being paid back. • Too much speculation on stocks and real estate • Europe was trying to recover from World War I.
THE EFFECTS OF THE DEPRESSION PART II
THE CITIES • People lost their jobs and homes. • They lived on the streets • People lived in shantytowns which shacks made of metal. • Soup Kitchens gave out food. • Most people received food from charities.
MINORITIES • African-Americans fought for jobs. • There was lots of racial violence because people were fighting over jobs. • Whites demanded that Latinos in the southwest be deported. • Many Mexicans went back to Mexico they either volunteered or were deported.
THE RURAL AREAS • Farmers could grow their food so their families weren’t starving. • The farmers couldn’t pay their mortgages.
THE RURAL AREAS • 400,000 farms were foreclosed. • Foreclosure is when the bank takes back the property.
THE DEPRESSION FAMILY • The family was united and kept their traditional values. • Their strength kept them together. • Movies and radio kept people entertained. • Many men became hoboes who traveled on the trains looking for work.
THE CHILDREN OF THE DEPRESSION • Family lacked money for health care for children. • Children died of malnourishment • Schools shortened the school year or closed the schools because of falling tax revenues. • “Wild Children” or “Hoover Tourists” traveled by train around the country.
THE ROLE OF WOMEN • Women sewed and canned goods to support their families. • Women who worked were viewed with resentment because they took jobs from the men.
THE DUST BOWL • The farmers over used the prairie land. • In the 1930’s, there was adrought. • There was dust everywhere.
STATES AFFECTED BY THE DUST BOWL • States hit hardest by the Dust Bowl: • Kansas • Oklahoma • Texas • Colorado • New Mexico
DUST BOWL MIGRANTS • Thousands of farmers left their farms • They took Route 66 to California looking for jobs and better farms. • Some of the migrants were known has Okies (a negative term for someone who comes from Oklahoma.
THE MORALE OF THE COUNTRY • People were demoralized by their poverty • People committed suicide at an alarming rate. • Many people were admitted to mental hospitals, • After the depression, people constantly saved their money • Their goal was to have financial security.
CULTURAL INFLUENCES • Famous Literature of the time • James Hilton-Lost Horizon • William Faulkner-The Sound and The Fury • Richard Wright-Native Son • Zora Neale Hurston-Their Eyes Were Watching • John Steinbeck -Grapes of Wrath • Lillian Hellman- Little Foxes • Thorton Wilder – Our Town
CULTURAL INFLUENCES • Movies with gangster themes, musicals and survival themes helped people to forget their problems. • Mickey Mouse and Donald Duck were created by Walt Disney in the 1930’s.
CULTURAL INFLUENCES • Marian Anderson wasn’t allowed to sing in Constitution Hall but later performed at the Lincoln Memorial. • Mahalia Jackson sang gospel songs that inspire the people. Marian Anderson Mahalia Jackson
PRESIDENTS HERBERT HOOVER’S POLICIES PART III
THE ROLE OF GOVERNMENT • The role of government is help big business in finding a solution to the economic problems • The government should cooperate with businesses and not control them • “Rugged Individualism”-people should succeed on their own and the government shouldn’t intervene.
HOOVER’S THOUGHTS ON THE ROLE OF GOVERNMENT • The charities and local organizations should take care of the poor and needy. • The government should direct relief measures, but not have a huge bureaucracy • The bureaucracy was too expensive and hurt liberties
HOOVER’S POLICIES • Federal money would help businesses • Federal Home Loan Bank Act- lowered mortgage rates and farmers could refinance their loans. They wouldn’t lose their farms.
HOOVER’S POLICIES • The Reconstruction Finance Corporation- Congress authorized 2 billion to help banks, life insurance companies, railroad companies and other companies. • The money would trickle down to the people. • It didn’t reach the poor and the needy.