The Great Depression Begins

DRQ 11.1 BRIEFLY DESCRIBE HOW THE 1920’S AFFECTED THE FOLLOWING GROUPS OF PEOPLE: WOMEN FARMERS CONSUMERS Lecture 11.1 “The Great Crash”

A. An Appearance of Prosperity o 1920's - U.S. economy grew o GNP rose by 30% o in 5 people owned a car o low 3% unemployment rate o labor union membership down o Stock Market Expansion o People invested in stock market o Trading increased dramatically o Business and Government o Harding/Coolidge – pro-business o Public confident in government o The Election of 1928 o Republicans - Herbert Hoover o Democrats - Al Smith

B. Economic Weaknesses o Wealth Distribution o wealth unevenly distributed o people reached limits of credit o many goods went unsold o Credit and the Stock Market o Investors began “buying on margin” o Brokers could call in the loans o The Federal Reserve o the nation's central bank o Federal Reserve Board made loans to buy stock difficult to get

C. The Stock Market Crashes o stock market gained o rumors caused investors to sell o caused chain reaction of panic o Black Tuesday = Oct. 29, 1929 o bottom fell out of market o prices plummeted o 16 million shares traded o $16 billion lost - half of market's value

D. The Effects of the Crash o Pres. Hoover offered reassurance o The Impact on Individuals o investors lost huge sums of money o buying on margin was very costly o Effects on Banks o banks were forced to close o Effects on Business o consumers cut spending o companies laid off workers o caused a cycle of unemployment o Effects Overseas o American banks called in loans o Europe nations passed high tariffs o caused a worldwide drop in trade

DRQ 11.2 LIST THREE WAYS IN WHICH THE GREAT DEPRESSION AFFECTED THE AMERICAN ECONOMY. Lecture 11.2 “Americans Face Hard Times”

E. The Development of the Great Depression o Bank Failures o Banks closed - people lost savings o Panicked depositors caused “runs” o Farm Failures o people could not buy food o caused oversupply and lower prices o farms went bankrupt or foreclosed o Unemployment o 1933 – GNP dropped more than 40% o Unemployment reached a staggering 25%

F. The Human Impact of the Great Depression o Hoovervilles and Hoboes o fierce job competition o Families begged for food, relied on breadlines or soup kitchens, or simply starved o no government relief programs o people lived in shacks in parks o Hoovervilles = shantytowns o people sold apples on streets o Hoboes rode the rails in search of work o The Emotional Toll o many people had to swallow pride o many accepted handouts o some committed suicide.

G. Devastation in the Dust Bowl o drought hits Great Plains o The Great Dust Storms o Overgrazing/over planting o wind carried topsoil across nation o dust destroyed crops, ruined machines, and filled homes. o “Dust Bowl” = hardest hit area o Fleeing the Plains o Many farmers fled the plains o traveled on route 66 to California o migrants nicknamed “Okies” o Author John Steinbeck wrote about migrants in “The Grapes of Wrath” o Singer/songwriter Woody Guthrie wrote songs about hardships

DRQ 11.3 PROVIDE THREE BRIEF DESCRIPTIONS OF HARDSHIPS PEOPLE WERE FORCED TO DEAL WITH DURING THE GREAT DEPRESSION Lecture 11.3 “Hoover as President”

H. Herbert Hoover’s Philosophy o Hoover believed government should stay out of business o pushed “rugged individualism” o believed in the associative state o partnership between government and business o tested in successful building of Hoover Dam

I. Hoover’s Response to the Great Depression o believed government should not provide direct aid o used loans to assist farm cooperatives o urged business leaders to not lay workers off or cut wages o urged passage of the Reconstruction Finance Corporation o gave $2 billion in aid to banks and insurance companies o signed Smoot-Hawley Tariff Act o backfired - caused drop in world trade

J. The Nation Responds to Hoover Hoover criticized for lack of action lost credibility with jobless Americans people questioned giving money to banks (RFC), but not people. lost more favor when he dispersed the “Bonus Army” passed a tax increase in 1932 even as people suffered unpopularity made 1932 election unwinnable