Chapter 22: The Great Depression Begins 1929-1932

1. Chapter 22: The Great Depression Begins 1929-1932 Section 1: Causes of the Depression

2. The Election of 1928 • The Republican candidate is Herbert Hoover • Hoover was former head of the Food Administration and Secretary of Commerce. • The Democratic candidate is Alfred E. Smith • Smith was the four- time governor of New York and the first Roman Catholic to be nominated for president. • Religious difference between the two candidates had a major effect on the campaign. The Catholic issue led to a smear campaign against Smith. • The Republicans took full credit for the prosperity of the 1920s. • Hoover won the election in a landside.

3. The Long Bull Market: • The Stock Market- • The stock market was established as a system for buying and selling shares of companies. • Bull Market- • A long period of rising stock prices.

4. Prosperous times during the 1920s caused many Americans to invest heavily in the stock market. • As the bull market continued to go up, many investors bought stocks on margin or making a small cash down payment. • This was considered safe as long as stock prices continue to rise. • If the stock began to fall, the broker could issue a margin call where he demands that the investors repay the loan immediately. • In the late 1920s, new investors bid prices up without looking at a company’s earnings and profits. • Speculation occurred when investors bet on the market climbing and sold whatever stock they could in an effort to make a quick profit.

5. The Great Crash: • By late 1929, a lack of new investors in the stock market caused stock prices to drop and the bull market to end. • As stockbrokers advised their customers of margin calls, customers responded by placing their stocks up for sale, causing the stock market to plummet further.

7. Black Tuesday • October 29, 1929- Black Tuesday • The stock market crashed resulting in $10 to $15 billion loss in value. • Although this did not cause the Great Depression, it did undermine the economy’s ability to hold out against its other weaknesses. • The crash weakened the nation’s banks. • Banks lost money on their investments and speculators defaulted on loans. • Because the government did not insure bank deposits, customers would lose their money if the bank closed. • Bank runs resulted when many bank customers withdrew their money at the same time, causing the bank to collapse.

10. The Roots of the Great Depression: • Efficient machinery led to overproduction, and Americans could not afford to buy all the goods produced. • The uneven distribution of wealth in the United States added to the country’s economic problems. • In 1929 the top 5% of American households earned 30% of the country’s income. • More than 2/3 of the nation’s families earned less than $2,500 a year.

11. Low consumption added to the economic problems. • Worker’s wages did not increase fast enough to keep up with the quick production of goods. • As sales decreased, workers were laid off, resulting in a chain reaction that further hurt the economy. • Many Americans bought on the installment plan. • Installment plan was making a down payment and paying the rest in monthly installments. • Paying off installment debts left little money to purchase other goods.

12. The Hawley- Smoot Tariff • Intensified the Depression by raising the tax on imports. • Americans purchased less from abroad because of the high cost. • In return, foreign countries raised their tariffs on American products, causing fewer to be sold overseas. • Instead of raising interest rates to stop speculation, the Federal Reserve Board made the mistake of lowering the rates. • This encouraged banks to make risky loans and misled business owners into thinking the economy was still expanding.

13. Section 2: Life During the Depression Chapter 22

14. The Depression Worsens: • By 1933 thousands of banks had closed and millions of Americans workers were unemployed. • Unemployed workers and the poor received food from 2 places. • Bread lines- workers often stood in these lines to receive free food. • Soup kitchens- are private charities who gave a free meal to the pour. • Americans who were unable to pay their mortgage or rent lost their homes. • Those unable or unwilling to move had a court- ordered eviction notice delivered by a bailiff who forced nonpaying tenants out onto the streets.

17. Many of the homeless built shacks in shantytowns, which were referred to as “Hoovervilles” because they blamed the President for their financial trouble. • Hobos- homeless Americans who wandered around hitching rides on railroad cars. • They searched for work and a better life. • As crop prices dropped in the 1920s, many American farmers left their fields uncultivated. • A terrible drought in the Great Plains, beginning in 1932, caused the region to become a “Dust Bowl.” • Many Midwestern farmers and Great Plains farmers lost their farms. • Many families moved west to California hoping to find a better life. • Most still faced poverty and homelessness.

20. Escaping the Depression: • Americans escaped hardships of the Depression by going to the movies and listening to radio broadcasts. • Stories tended to be about overcoming hardships and achieving success. • Walt Disney produced the first feature- length animated film, Snow White and the Seven Dwarfs. • Films contained stories of triumph over adversity and visions of a better life. • Families gathered around the radio daily to hear news or listened to comedy shows. • Soap operas became very popular with housewives. • Soap operas received their name because makers of laundry soaps often sponsored them.

21. The Depression in Art: • Homeless and unemployed Americans were the subjects of art and literature during the 1930s. • Artists and writers tried to capture the real life drama of the Depression. • Thomas Hart Benton and Grant Wood emphasized traditional American values in their art.

24. John Steinbeck’s 1939 novel The Grapes of Wrath • Told the story of an Oklahoma family fleeing the Dust Bowl to find a new life in California. • Steinbeck and many writers of the time wrote about poverty, misfortune, and social injustice. • William Faulkner and Stream of Consciousness • Literary technique that revealed character’s thoughts and feelings before they spoke. • Thoughts they dared not reveal. • His novels exposed hidden attitudes of Southern whites and African Americans if a fictional Mississippi County.

25. Section 3: Hoover Responds Chapter 22

26. Promoting Recovery: • In an effort to promote economic recovery, President Hoover held a series of conferences bringing together : • The heads of banks • Railroads • Big business • Labor • Government • Hoover received a pledge from industry to keep factories open and stop cutting wages.

27. The pledge failed and Hoover increased public works- • Public works is government- financed building projects. • Hoover asked the nation’s governors and mayors to increase public works spending. • At the same time, Hoover refused to increase government spending or taxes. • He feared that deficit spending would actually delay an economic recovery. • Americans will blame the Republican Party for the Depression. • As a result, in the midterm congressional elections of 1930, the Republicans lost 49 seats and their majority in the House.

28. Pumping Money Into the Economy: • President Hoover tried to persuade the Federal Reserve Board to put more currency into circulation, but the board refused. • Hoover set up the National Credit Corporation (NCC) which created a pool of money to rescue banks, but it was not enough to help.

29. By 1932 Hoover felt the government had to provide funding for borrowers. • The Reconstruction Finance Corporation (RFC) – made loans to banks, railroads, and agricultural institutes. • The economy continued to decline when the RFC was too cautious in its loan amounts. • Hoover opposed the federal government’s participation in relief. He felt that relief was the responsibility of state and local governments. • In July 1932, Congress passed the Emergency Relief and Construction Act to get money for public works and for loans to the states for direct relief.

30. In an Angry Mood: • By 1931 discontentment over the economy led to violence. • Looting, rallies, and hunger marches began. • Between 1930 and 1934, creditors foreclosed almost a million farms. • Some farmers destroyed their crops, hoping the reduction in supply would cause the prices to go up.

31. In 1924 Congress enacted a $1,000 bonus to be paid to veterans in 1945. • In 1931 a bill was introduced in the House that authorized early payments of the bonus. • In 1932 the Bonus Army marched to Washington, D.C. • Hoover refused to meet with the Bonus Army and the Senate voted the new bonus bill down, some marchers left and some stayed. • When Hoover ordered the buildings cleared, disputes between the remaining people and the police resulted in several deaths.