The Great Depression Begins

1. CHAPTER The Great Depression Begins 22 Overview Time Lines 1 The Nation’s Sick Economy SECTION 2 Hardship and Suffering During the Depression SECTION 3 Hoover Struggles with the Depression SECTION Chapter Assessment Transparencies

2. THEMES IN CHAPTER 22 Economic Opportunity Immigration and Migration The American Dream CHAPTER The Great Depression Begins 22 HOME “The illusory prosperity and feverish optimism which marked preceding years have given way to fearful economic insecurity and to widespread despair.” Senator Robert M. La Follette, Jr., 1931

3. What do you know? • • What do you already know about the Great Depression? • Have you ever discussed the Depression with a relative who lived through it? If so, what did he or she say? • Read the quote above and answer the following: • • What does La Follette suggest about the prosperity and optimism of the years preceding the Depression? CHAPTER The Great Depression Begins 22 HOME “The illusory prosperity and feverish optimism which marked preceding years have given way to fearful economic insecurity and to widespread despair.” Senator Robert M. La Follette, Jr., 1931

4. October 1929 The stock market crashes. June 1930 The Hawley-Smoot Tariff Act becomes law. July 1930 Congress creates the Veterans Administration. 1931 Hoover proposes a one-year delay in repayment of war debts and reparations. Between 4 million and 5 million Americans are unemployed. 1932The Reconstruction Finance Corporation is established. 1933More than 13 million Americans are unemployed. Average annual income drops to $1,500 per family. CHAPTER Time Line 22 HOME The United States

5. 1930Army officers led by José Uriburu seize control of the government in Argentina. 1931Austria suffers economic collapse. September 1931Japan occupies Manchuria. 1932Ibn Saud becomes king of Saudi Arabia. September 1932From prison, Mohandas K. Gandhi leads a protest against British policies in India. 1933Adolf Hitler comes to power. Japan withdraws from the League of Nations. CHAPTER Time Line 22 HOME The World

6. Learn About economic problems affecting industries, farmers, and consumers at home and abroad. To Understand the causes of the Great Depression. SECTION 1 The Nation’s Sick Economy HOME

7. SECTION 1 The Nation’s Sick Economy HOME Key Idea Economic problems affecting industries, farmers, and consumers lead to the Great Depression.

8. Section 1: The Nation’s Sick Economy • Economic troubles on the Horizon • Industries in trouble • Railroad, Steel, and Textile • Farmers • WWI prices and demand was high world wide • Prices dropped after the war (1919-1921) so farmers boosted production in hopes of selling more crops…just made prices decline more • Farmers defaulted on loans…banks began to fail • Congress tried to help with the McNary-Haugen bill • Price-Supports: government would buy surplus crops at guaranteed prices and sell them on the world market • President Coolidge vetoed the bill twice

10. Economic Troubles on the Horizon cont… • Consumers have less money to spend • Farmers bought fewer goods • Rising Prices, stagnant wages, unbalanced distribution of income, and overbuying on credit in previous years • Living on Credit • Credit: an arrangement in which consumers agreed to buy now and pay later for purchases…usually in installment plans • Uneven Distribution of Income: rich get richer • Between 1920 and 1929 the income of the wealthiest 1% rose by 75% compared with a 9% increase for Americans as a whole

11. Hoover Takes the Nation • 1928 Election: Herbert Hoover Republican vs Alfred E. Smith Democrat • Hoover had little political experience while Smith had been the Governor of New York for four terms • Hoover’s main advantage was he was Republican and people believed in the Republican party b/c of the successful past 8 years…Hoover won big

13. The Stock Market • Dow Jones Industrial Average • The most widely used barometer of the stock market’s health • The Dow is measured based on the stock prices of 30 representative large firms trading on the New York Stock Exchange • Speculation: buying stocks and bonds on the chance of a quick profit, while ignoring the risks • Buying on Margin: paying a small percentage of a stock’s price as a down payment and borrowing the rest • Stock goes down and the buyer has no way to repay his debt • The Unrestricting buying and selling fueled the market’s crash

15. The Stock Market Crash • Black Tuesday • October 29, 1929 • Shareholders frantically tried to sell their stock • Number of shares sold that day reached 16.4 million • Additional millions of shares could not find buyers…people who had bought stock on credit were stuck with huge debts

16. Financial Collapse • Great Depression: the period from 1929-1940 in which the economy plummeted and unemployment skyrocketed • The Stock Market crash alone did not cause the Great Depression but it did signify the collapse of the economy and made the depression even more severe • Banks Fail • Many people withdrew their money from banks after the crash but some couldn’t get their money b/c banks had invested their money in the stock market • The government did not protect or insure bank accounts • In 1929, 600 banks closed…By 1933, 11,000 of the nations 25,000 banks had failed • Business Failures • Between 1929-1932 the Gross National Product (the nation’s total output of goods and services) was cut nearly in half from 104 billion to 59 billion • Unemployment went from 3% in 1929 to 25% in 1933

18. Worldwide Shock Waves • The Great Depression affected the world economy • World trade dropped • Hawley-Smoot Tariff: Passed by Congress in 1933 which established the highest protective tariff in US history • Designed to help protect American farmers and manufacturers from foreign competition • Opposite effect…reduced the flow of goods into the US, prevented other countries from earning American currency to buy American goods, made unemployment worse in industries that could no longer export goods to Europe, many countries retaliated by raising their own tariffs • World Trade had fallen more than 40%

19. Causes of the Great Depression • 1. Tariffs and war debt policies that cut down the foreign market for American goods • 2. A crisis in the farm sector • 3. The availability of easy credit • 4. An unequal distribution of income • http://www.firstladies.org/curriculum/curriculum.aspx?Curriculum=1829

20. loss of confidence falling stock prices speculation buying on margin bankrupt businesses high unemployment bank failures loss of savings worldwide depression SECTION 1 The Nation’s Sick Economy HOME 1 Section Assessment SUMMARIZING What were some of the causes and effects of the 1929 stock market crash? Stock MarketCrash

21. ANALYZING CAUSES How did the economic trends of the 1920s help cause the Great Depression? THINK ABOUT • what happened in industry • what happened in agriculture • what happened with consumers SECTION 1 The Nation’s Sick Economy HOME 1 Section Assessment

22. DRAWING CONCLUSIONS Judging from the events of the late 1920s and early 1930s, how important do you think public confidence is to the health of the economy? THINK ABOUT • what happened when overconfidence in the stock market led people to speculate and buy on margin • what happened when lack of confidence caused people to sell stocks and close out bank accounts SECTION 1 The Nation’s Sick Economy HOME 1 Section Assessment

23. Learn About living conditions during the Great Depression. To Understand how people coped with hard times. SECTION 2 Hardship and Suffering During the Depression HOME

24. SECTION 2 Hardship and Suffering During the Depression HOME Key Idea The Great Depression brings suffering of many kinds and degrees to people from all walks of life.

25. Section 2: Hardship and Suffering During the Depression • The Depression Devastates People’s Lives • Depression in the cities • Shantytowns: little towns consisting of shacks • Soup kitchens: offering free or low-cost food • Bread lines: lines of people waiting to receive food provided by charitable organizations or public agencies • Depression affects minorities • African Americans and Latinos suffered from unemployment, low pay, and racial violence

28. The Depression in Rural Areas • Between 1929 and 1932, 400,000 farms were lost through foreclosure: the process by which a mortgage holder takes back property if an occupant has not made payments • The Dust Bowl: the region (including Texas, Oklahoma, Kansas, Colorado, New Mexico, and the Dakotas) that was made worthless for farming by drought and dust storms during the 1930’s • Previous farming had exhausted the land through overproduction of crops • Plowing had removed the thick protective layer of prairie grasses • When the drought and winds began little grass and few trees were left to hold the soil down • Okies: a negative term used for people who migrated • Most migrated West along Route 66 to California

32. Effects on the American Family • Some families broke apart • Others were able to make ends meet • Many men left their homes and wandered the countryside • Hoboes: men who wandered the country hitching rides on railroad boxcars and sleeping under bridges • Left b/c they were disheartened by their inability to support their families and so abandoned them…others hoped to find work and send money home to their families • Direct Relieve: cash payments or food provided by the government to the poor

33. Effects on the American Family cont… • Women struggle to survive • Hard to keep jobs…men resented them • Very good at saving • Often times more reluctant than men to take a handout • Children suffer hardships • Many suffered from poor diets and inadequate health care • Rickets: caused by a vitamin D deficiency and results in defective bone growth • Many child welfare programs and even schools were shut down • “Hoover tourists”: teenage boys and some girls jumped aboard America’s freight trains to zigzag the country in search of work, adventure and an escape from poverty • Very dangerous…From 1929-1939 24,000 trespassers were killed

35. Social and Psychological Effects • Between 1928 and 1932 the suicide rate rose more than 30% • 3x as many people were admitted to state mental hospitals • Adults stopped going to the doctor or dentist • Young people gave up dreams of college, put off getting married, had smaller families • Fears of broken life and ill health were handed down from parents to children • Many peoples primary concern for the rest of their lives was to never be broke again • Great Depression also showed a generation who banded together with millions of acts of kindness • Families helped other families and strangers as they shared their resources and strengthened the bonds within their communities

36. GROUP EFFECTS OF DEPRESSION African Americans Latino Americans farmers unemployed men SECTION 2 Hardship and Suffering During the Depression HOME 2 Section Assessment SUMMARIZING What groups of people were affected by the Great Depression? How were they affected? urban poor lived in shantytowns, ate in soup kitchens or bread lines experienced increased discrimination experienced increased discrimination lost land and headed west wandered country looking for work

37. COMPARING AND CONTRASTING Compare what happened to city dwellers and to farmers during the Great Depression. How was it similar and different? THINK ABOUT • what happened to their livelihoods • what happened to their homes • what help was available to them SECTION 2 Hardship and Suffering During the Depression HOME 2 Section Assessment

38. RECOGNZING EFFECTS How did the Dust Bowl affect the entire country? THINK ABOUT • the effect on farmers on the plains • the effect on California and other states where the Okies resettled • the effect on the East SECTION 2 Hardship and Suffering During the Depression HOME 2 Section Assessment

39. Learn About President Hoover’s response to the Great Depression. To Understand why the Hoover administration lost public support. SECTION 3 Hoover Struggles with the Depression HOME

40. SECTION 3 Hoover Struggles with the Depression HOME Key Idea President Hoover tries to restore confidence and halt the Depression, but his actions are ineffective.

41. Section 3: Hoover Struggles with the Depression • Herbert Hoover: elected President in 1928 • Hoover Tried to Reassure the Nation that the economy was on a sound footing • He believed that Government should play a limited role in helping to solve problems • American’s valued rugged individualism • Hoover did not support any form of federal welfare • Believed it would weaken people’s self-respect • Hoover believed that individuals, charities, and local organizations should pitch in to help care for the less fortunate

42. Boulder Dam • Before President Hoover served as Secretary of Commerce…proposed the construction of the Boulder Dam • Would be the world’s tallest dam and the second largest • Built on the Colorado River • $700 million public works program that would pay for itself from the profits of sales of the electric power that the dam would generate • The dam provides electricity, helps with flood control, and provides a regular water supply • Enabled the growth of California’s massive agricultural economy • Provides water for cities such as Los Angeles and Las Vegas • Construction started in 1929 while Hoover was in office • http://www.history.com/photos/new-deal-programs/photo12

43. American’s Blame Hoover • Farmers burned their corn and wheat and dumped their milk on highways rather than sell it at a loss • Famers declared a “farm holiday” and refused to work their fields…others blocked roads to prevent food from getting to the market hoping that food shortages would raise prices • Shantytowns became known as “Hoovervilles” homeless wrapped themselves in newspapers known as “Hoover blankets”, empty pockets turned inside out were “Hoover flags”

45. Hoover Takes Action • Hoover finally softened his position on government intervention in the economy and takes a more active approach • Federal Farm Board: intended to raise crop prices by helping members to buy crops and keep them off the market temporarily until prices rose • National Credit Corporation: large banks loaned money to smaller banks, which helped them stave off bankruptcy

46. Hoover Finally Takes Direct Action • Federal Home Loan Bank Act: lowered mortgage rates for homeowners and allowed farmers to refinance their farm loans and avoid foreclosure • Reconstruction Financial Corporation: authorized up to $2 billion for emergency financing for banks, life insurance companies, railroads, and other large businesses • Americans did not want to wait…this was too little to late in their eyes

47. Gassing the Bonus Army • Patman Bill: authorized the government to pay a bonus to World War I veterans who had not been compensated adequately for their wartime service • Marchers and protesters still camped outside of white house…Hoover decides to disband the Bonus Army: WWI veterans trying to get their bonus money • Hoover has General Douglas MacArthur and Major Dwight Eisenhower carry out the operation • Gassed more than 1,000 people…killing an 11 month old babe, blinding an 8 year old boy, two people were shot • Hoover’s imaged suffered once again…Franklin Roosevelt benefits from Hoover’s bad decisions