Chapter 22: The Great Depression Begins Finals Terms

The Nation’s Sick Economy 22.1 Economic Troubles on the Horizon – Industries in Trouble: New inventions in transportation and discovery of new energy sources cause a reduction in need for Rail road, mining, lumbering, etc. – Farmers need a lift: farmers over produce crops leading to a 40% reduction in pricing. – Consumers have less money to spend: farmers buy less, other citizens buy less due to rising prices, stagnant wages, etc. – Living on Credit: Americans spent time buying many products on credit, which they now can’t make payments on. – Uneven Distribution of income: The wealthiest 1% increase their numbers while stagnant wages and cost of living increases negatively impact the majority of Americans widening the gap between Rich and Poor.

The Nation’s Sick Economy 22.1 Hoover Takes the Nation – The Election of 1928: Hoover wins not on political reputation but on societies approval and confidence in the Republican parties history of rule. – Dreams of Riches in the stock market: Dow Jones Industrial Average: Dow is a measure based on the stock prices of 30 representative large firms trading on the New York Stock Exchange. Speculation: people buying stocks and bonds on the chance of a quick profit and ignoring the risks. Buying on Margin: paying for a portion of the stock and getting a loan to buy the rest – buying stocks on credit. The stock Market Crashes – Black Tuesday: October 29, stock prices plummet, share holders try to sell stocks b/4 loosing there $ those left “holding the bag” lost $, Savings, have huge amounts of debt to pay for stocks bought on credit.

The Nation’s Sick Economy 22.1 Financial Collapse: Great Depression – Bank and Business Failures: People panic and “make a run” on the bank withdrawing all of their available cash, but banks do not have that much cash in vault to pay out to every person. – Worldwide Shock Waves: Europe still recovering from WWI and Germany not able to pay reparations to Allies for damages caused by Germany during the war. Hawley Smoot Tariff: protected Am. Farmers from having to compete with imported goods but also limited Am. Goods being shipped to Europe compounding the Great Depression. – Causes of the Depression: 1.Tariffs and war debt policies. 2.Over production of agriculture and dropping crop prices. 3.Everyone “living on Credit” instead of what they can afford. 4.Widening gap between rich and poor (uneven distribution of income).

Hardship and Suffering During the Depression 22.2 The Depression Devastates People’s Lives – Cities: Shantytowns – little towns consisting of shacks sprang up. (Hoover Ville's) Soup Kitchen’s – offering free or low-cost meals. Bread Lines – food provided by charitable organizations or public agencies. – Rural Areas: falling prices and rising debt lead to 400,000 farmers loosing their lands. – Dust Bowl (Kansas, Oklahoma, Texas, New Mexico, & Colorado): plagued by storms and evictions as share croppers are forced to leave lands behind.

Hardship and Suffering During the Depression 22.2 Effects on the family – Men: walk the streets daily looking for jobs, some abandon their families b/c can’t watch them suffer any more. – Women: return to canning food, sewing clothes, managing house budget while working outside the home. (working married women resented for taking jobs away from men) – Children: malnutrition, increase of diseases, teenagers leave home “one less mouth to feed”. – Social and Psychological Effects: Negative: Adults stop going to doc/dent. Can’t afford it, young adults give up college dreams and focus on “never being poor again”, people don’t marry or have children. Positive: increased kindness to strangers, families share resources and bonds which strengthen communities, people develop habits of saving and thriftiness.

Hoover Struggles with the Depression 22.3 Hoover tries to reassure the Nation – Hoover’s Philosophy: Governments role was to encourage and facilitate cooperation (business and labor), not control it. – Hoover takes cautious steps: urged businesses to not cut labor or wages, urged unions to not demand more money/strike, created organizations to help private charities generate contributions for the poor. – Boulder Dam (later called Hoover Dam): 726’ high 1,244’ long worlds second largest dam. Public works bill construction started 1 year after Hoover took office. – Democrats Win in the 1930’s congressional elections: people frustrated by their continued circumstances turn to Democrats for change.

Hoover Struggles with the Depression 22.3 Hoover takes Action: – Hoover Backs Cooperatives – Federal Farm Board: bought crops and held them from market temporarily until prices rose. National Credit Corporation: loaned money to smaller banks to hold off bankruptsy. – Direct Intervention Federal Home Loan Bank Act – lowered mortgage rates and allowed farmers to refinance farm loans to keep their land Reconstruction Finance Corporation (RFC) – authorized $2 billion emergency financing for banks, life insurance, companies, railroads, and other large businesses. Gassing the Bonus Army – The Patman Bill Denied: Bill was to pay money to WWI vets for their time of service $500/soldier. Bonus Army (WWI vets) wanted immediate payout of cash not to wait until 1945 when scheduled payout was to take place in the form of life insurance policy and cash. – Hoover Disbands the Bonus Army: After bill is denied Hoover asks the Bonus Army (living in a shanty town) to leave, all but 2,000 go.