The Great Depression

1. The Great Depression

2. Crash! • February 1928- Fall of 1929 generally a steady rise • October 21 and 23 major declines in stock market followed by temporary recoveries • 2nd recovery engineered by JP Morgan and Company and other big name bankers • Conspicuously (noticeably) bought up stocks to gain people’s confidence

3. “Black Tuesday” Walter Thornton Photograph Tuesday October 29, the market collapsed 4 years the market stayed depressed Took more than a decade to recover

4. Fact or Fiction? • “ The stock market crash of 1929 did not so much cause the Depression, then, as help trigger a chain of events that exposed longstanding weaknesses in the American economy.” (page 662) • Many people believe the Great Depression began with, or was caused by the stock market crash • Is this true?

5. Causes of the DepressionFirst Cause: Lack of diversification in American economy (1920’s) Construction fell from 11billion-9billion from early 20’s to late 20’s Automobiles fell more than 33% in 9 months (1929) Other industries emerging not big or strong enough yet

6. Causes of The DepressionSecond Cause: • 2nd major cause was maldistributionof wealth • What does this mean? • 1920’s decade of economic growth but more than 50 % of American families below minimum subsistence level • Industrial and agricultural production increased workers and farmers not getting enough • Not enough people could afford the numerous goods being produced

7. Causes of the DepressionSecond Cause continued: • As a result construction, auto, coal, and other industries found a decreased demand • People Laid off –even less purchasing power • In many expanding industries technology replaced need for workers • In 1929 difficult for these workers to find more jobs as economy was slowed

8. Causes of the DepressionThird Cause: • Credit structure of the economy • Farmers in debt • Crop prices too low to allow them to pay off mortgages • Small banks esp. those involved in this industry were struggling • Big banks • Some of or country’s biggest banks were investing recklessly: • Stock market • Unwise loans • When the market crashed in 1929 many banks had greater loss than they could afford

9. Causes of the DepressionFourth Cause: • Declining exports • Some European nation’s industries and agriculture were becoming more productive • Other European nations (ex: Germany) were struggling financially and could not afford overseas goods

10. Fifth and Final Cause • International debt structure resulting from World War I • When WWI ended (1918), U.S. allies in Europe owed American banks • These countries’ economies were shattered • Despite Woodrow Wilson’s pleas, European allies demanded reparations from Germany and Austria • Germany and Austria could not pay reparations

11. Fifth Cause Continued High U.S. tariffs made it difficult for Europe to export goods and repay loans owed to America This international credit structure collapsed as a result causing the Depression to spread to Europe while worsening the Depression in the U.S.

12. Five Causes of the Depression(Review) Lack of diversification Maldistribution of wealth Credit structure of the U.S. economy Declining exports The collapse of the international credit structure

13. The Banks • After stock market crashed, the banking system collapsed as well • More than 9,000 banks went bankrupt or closed • Depositors lost $ 2.5 billion • American gross national product shrunk from 104 billion to 76.4 billion in three years • Market value of all products and services produced in one year by labor and property supplied by the residents of a country

14. Unemployment • Cities of the Northeast and Midwest crippled by unemployment Ex: Ohio unemployment rate • Cleveland -50% • Akron-60% • Toledo 80% • Americans from this time grew up thinking everyone was responsible for their fate

15. Unemployment “Most Americans had been taught to believe that every individual was responsible for his or her own fate, that unemployment and poverty were signs of personal failure. Many men in particular felt deeply ashamed of their joblessness; the helplessness of unemployment was a challenge to traditional notion of masculinity (664).” The jobless walked the streets looking for nonexistent jobs

16. Public Relief Systems More families were in need of state and local public relief systems (for food alone) 1920’s much smaller number relied on relief Now in a large number of areas relief collapsed With the help of private charities, relief still could not reach a large number in need

17. State Governments State tax revenues declined so state government leaders hesitated to alter the already constricted budgets Other public officials thought a widespread welfare system would “undermine the moral fiber of its clients”

18. Widespread Desperation Breadlines stretched blocks 1000’s sifted through garbage or waited for restaurant scraps Nearly 2,000,0000 (mostly young men) lived as nomads travelling from city to city by car or riding freight trains

19. The Dust Bowl

20. The Dust Bowl • 1929 to 1932- 1/3 of farmers lost their land • Great Plains of the South and West • Catastrophic natural disaster (began 1930) • Large portion of the country became known as the “Dust Bowl” • Fertile land became desert

21. Black Blizzards • Invasions of Grasshoppers-devoured the few remaining crops, fenceposts, clothes (hanging to dry) • Major dust storms- known as black blizzards moved across plains • Hid the sun • Killed livestock & occasionally unlucky/unwise humans (suffocation) • Cows cut open sand in bellies "Black Blizzard"

23. Starvation • Despite dust storms farmers still produced more food than Americans could afford • Hospitals noticed alarming increases in deaths from starvation • People slept in shacks, subways, and unused sewers, parks, and freight cars

24. “Okies” Thousands of families migrated to California and other states (usually conditions not much better) -Called “Okies” because many came from Oklahoma

25. Herbert Hoover 31st president in 1928 Republican Inaugural address: “We in America are nearer to the final triumph over poverty than ever before.”

26. Hoover’s Response to the Depression • Hoover met with the Business, agriculture, and labor leaders and urged them to adopt the policy of Voluntary Cooperation • Business- urged not to cut labor/production • Labor- not to ask for higher wages, better hours (conditions) • By mid-1931 economic conditions worsened • Voluntarism collapsed

27. Hoover’s Response • Tried using government spending ($ 423 million) • In federal works programs • Pressed state and local governments to fund public construction • Economic conditions worsened he reversed the trend of spending • Wanted now balanced budget • 1932 (depth of the Depression) proposed a tax hike to avoid a deficit

28. Agricultural Impact (or lack there of) • April 1929 Agricultural Marketing Act • Est. first major government program to help farmers maintain prices • Est. corporations to buy surpluses of crops –this would raise prices Why would buying surplus crops raise crop prices? Hint: surplus is when there is a greater supply than demand

29. Agricultural Impact (continued) • Hawley-Smoot Tariff • 1930 • Increased protection of 75 farm products • Neither act helped American farmers significantly

30. “Hoovervilles” • 1931 Hoover’s popularity deteriorated • Democrats won control of the House • Democrats gained some ground in the Senate • Promised increased government assistance in the economy • Americans blamed Hoover for crisis • “Hoovervilles”-name given to shantytowns established by unemployed Americans on city outskirts

31. Hooverville

33. Troubles Worsen • Spring 1931- international financial panic • 1920’s European nations relied on U.S. banks for loans • After 1929 they could not receive these loans • “financial fabric of several European nations began to unravel (667)” • One of the Largest banks in Austria collapsed • U.S. economy quickly plummeted to new lows

34. Congress met December 1931 • Conditions were desperately bad, causing Hoover to support a series of measures that would keep endangered banks afloat and protect homeowners from being foreclosure

35. Reconstruction Finance Corporation Bill passed January 1932 Formed the RFC-a government agency provided federal loans to troubled banks, railroads, etc. Made $ available to local governments allowing them to support public works projects and relief efforts

36. RFC and Hoover • Early Hoover programs small scale • RFC-Large scale • 1932 budget-$1.5 billion dollars

37. Shortcomings of the RFC • Only lent to businesses with sufficient collateral • A lot of money went to Big corporations and banks • Only funded public works projects that would ultimately pay for themselves (ex: toll bridges) What is collateral? a borrower's pledge of specific property to a lender, to secure repayment of a loan

38. RFC • Did not have enough money to make a significant impact on the Depression • Did not spend all the money it had either • $300 million available for local relief efforts • RFC only lent out $30 million of that • $1.5 billion budget only lent out 20%

39. Protest (notes) At first, Americans too stunned, confused, etc. to really protest 1932-people began to organize Famers formed: the Farmers’ Holiday Association-kept farm products from market (A farmer’s strike) Ended in failure did block some markets

40. Bonus Army • 1924, congress approved a $1,000 bonus for all who served in WWI • These veterans would be paid starting in 1945 • 1932 (bad economy) –many veterans began demanding their bonuses immediately • Hoover refused (wanted to balance the budget) • June (1932) 20,000 veterans marched into Washington D.C. • Built camps around the city and refused to leave until congress passed legislation to pay the veterans bonuses immediately

41. Bonus Army • These men called themselves the Bonus Expeditionary Force (“Bonus Army”) • Hoover embarrassed by the Bonus Army • Ordered police • Troops threw rocks and one police officer fired killing two • Hoover then ordered the military to assist in clearing out these men and camps

42. End for the Bonus Army General Douglass MacArthur led the mission himself (with the aid of Dwight D. Eisenhower) MacArthur’s action would exceed the president’s orders MacArthur led the third Calvary under George S. Patton’s command

43. General Douglas MacArthur (left) George S. Patton (Right)

44. Veterans fled in fear 100 + marchers injured “the incident served as perhaps the final blow to Hoover’s already battered political standing”

45. The Election of 1932 Republicans “dutifully renominated” Hoover Democrats nominated New York Governor Franklin Delano Roosevelt Broke tradition- addressed the convention in Chicago in person “I pledge you, I pledge myself, to a new deal for the American people” His future plan as president would be called the New Deal

46. Results of the Election of 1932 Roosevelt won easily Democrats won the majority in both houses of congress

47. FDR • Distant cousin Teddy Roosevelt • Secretary of the Navy in WWI • Stricken with polio (1920)* • Never could truly walk again • Appeared to be able to through crutches and braces