The Great Depression

The Great Depression How did the working class Americans feel about the “hard times” they were facing in the 30’s? Soup line in Chicago 1933

The Great Depression the gov. had let them down they are forgotten now they did everything their country had asked of them cannot find a job “What did I do wrong?”

The Great Depression Why American were optimistic during the 1920’s highest standard of living medical advances increased life expectance males 59 / women 53 stock market continued to go up real wages had increased

The Great Depression women were going to college unemployment falls below 4% heroes of the day were business men they are saying everything is fine unusually high confidence in the business world welfare capitalism employers provided workers with raises and benefits

Contributing Factors that lead to the Great Depression

The Great Depression 1. Decline in Foreign Trade high tariffs wanted people to buy American goods built a tariff wall Fordney-McCumber Tariff - 39% Hawley-Smoot Tariff - 60% Added an additional 75 farm products and 925 industrial items to the list How would this lead to the Great Depression?

Answer… Hurt US sales over seas Other countries cannot sell their goods in US People in other countries cannot make money needed to buy American made goods being sold in their countries American businesses loss money because they have lost an overseas market

The Great Depression 2. Increase in Labor Saving Technology more goods being produced with fewer labor How would this lead to the Great Depression?

Answer… More and more people were being laid off from work Machines were doing the jobs that were once done by people

The Great Depression 3. Decline in Purchasing Power wages and salaries couldn’t keep up with the rising prices Real wages were rising more slowly than prices of goods How would this lead to the Great Depression?

Answer… People were making less money Had less money to spend Were not buying goods Businesses were not selling goods Businesses would lay workers off

The Great Depression 4. Uneven distribution of wealth mainly the rich getting richer Poverty line was <$2,000 60% of Am families were at or below that line in 1929 80% had no savings How would this lead to the Great Depression?

Answer… Had no money to spend on luxury goods Could only buy for their basic needs If they had more money they probably would have spent most of it Poor people spend a greater percent of their income than rich people Greater spending would have meant a boost in the economy

The Great Depression Bank Failures 1929 = 642 1930 =1352 1931 = 2294 Estimated 1 billion dollars had been w/drawn and placed in shoe boxes There was no insurance for depositors - How would this lead to the Great Depression?

Answer… When money was needed there was no money Banks had failed and could not loan money to people Depositors lose their money they had less to spend Fewer banks meant fewer businesses loans No banks were to be trusted even the healthy ones

The Great Depression 6. Overproduction in Agricultural and Industry farmers’ depression started in early 1920’s overproduced during WWI to feed Europe Farmers had borrowed money to buy more land and more machinery not needed now that war was over and Europe was feeding itself crop princes fell 50% How would this lead to the Great Depression?

Answer… Many lost their homes and farms because they could not pay back their mortgages Close to 50% of families in Am were farm families in the 1920

The Great Depression In Industry late 20’s warehouse had piled up with un-bought consumer goods overproduction caused some industries to slow auto industry slumps in 1925 housing fell in 1928 How would this lead to the Great Depression?

Answer… Many businesses laid off workers Expected the remaining workers to take on additional work

The Great Depression 7. Installment buying and Buying on Credit people buy items while paying from them (w/ interest) over many months people flocked to buy many new products whether or not they could afford them advertising made new goods irresistible increase in personal debt How would this lead to the Great Depression?

Answer… Done in moderation it can boost economy but a high level can hurt the economy Producers do not get signs that supply is outrunning demand Workers who have been laid off are unable to complete their installment purchases This further hurts businesses

The Great Depression 8. Buying on the Margin paying a small % of a stock’s price as a down payment and borrowing the rest 10% down borrowed 90% from broker who charged HIGH interest rate as stocks went up - sell - pay back the broker broker could demand payment at any time (call) How would this lead to the Great Depression?

Answer… If people started to sell due to a panic the price of stocks would drop This resulted in a loss for the broker and the bank who lent the broker money The bank loan had been made with the depositors’ money The depositors really lost

The Great Depression Stock Market Crash Black Tuesday on Oct 24, 1929 wave of selling as people who had brought on the margin were called 13 million shares changed hands banks and insurance companies bought in order to stabilize

The Great Depression 9. Black Tuesday Oct 29, 1929 people and corporations alike tried to sell stocks record # of stock sold - 16 million panic continues for two weeks total lost 30-40 million How did this lead to the Great Depression?

Answer… If the stock market falls business investment declines because confidence is shaken Banks are less likely to make loans Spending by the rich declines because they either have less money and/or are unsure about future earnings Spending by the poor declines because they have lost faith in the economy and/or they will have lost their job

The Great Depression Had Begun

Impact! By 1932, 5,761 banks had failed (22% of total) -- Many banks invested in stocks before the crash Thousands of businesses failed -- 20,000 in 1929; 30,000 in 1932 Unemployment reached 25% by 1932 (13 million people) excluding farmers.             a. As high as 33% including farmers; Chicago = 50%!             b. Low-skilled workers most susceptible (professionals and middle-class suffered less) By 1932, 25% of farmers lost their farms -- A major cause was the large drop in food prices Many families broke up; marriage rate and birth rate declined. -- Families doubled up in houses and apartments 3 million people became hobos and lived in makeshift shacks known as "Hoovervilles" Depression longest and most devastating in U.S. history and world history.

Rose Bowl “Scenario”

Rose Bowl “Scenario” –1931: 100,000 men at Rose Bowl –Announce: Everyone is out of work 62,000 = unemployed at least one year 44,000 = at least two years 24,000 = at least three years 11,000 = at least four years ––Repeated every Sat. for 130 Sat. –Accurate to the speed & volume of Depression

Depression longest and most devastating in U. S Depression longest and most devastating in U.S. history and world history. U.S. hit the hardest among industrialized nations. -- Nat’l product fell from $104 billion in 1929 to $56.1 billion in 1933.

CONDITIONS FOR MINORITIES Conditions for African Americans and Latinos were especially difficult Unemployment was the highest among minorities and their pay was the lowest Increased violence (24 lynchings in 1933 alone) marred the 1930s Many Mexicans were “encouraged” to return to their homeland As conditions deteriorated, violence against blacks increased

THE DUST BOWL A severe drought gripped the Great Plains in the early 1930s Wind scattered the topsoil, exposing sand and grit The resulting dust traveled hundreds of miles One storm in 1934 picked up millions of tons of dust from the Plains an carried it to the East Coast Kansas Farmer, 1933

Dust storm approaching Stratford, Texas - 1934

Storm approaching Elkhart, Kansas in 1937

Dust buried cars and wagons in South Dakota in 1936

HOOVER STRUGGLES WITH THE DEPRESSION After the stock market crash, President Hoover tried to reassure Americans He said, “Any lack of confidence in the economic future . . . Is foolish” He recommended business as usual Herbert Hoover

HOOVER’S PHILOSOPHY Hoover was not quick to react to the depression He believed in “rugged individualism” – the idea that people succeed through their own efforts People should take care of themselves, not depend on governmental hand-outs He said people should “pull themselves up by their bootstraps” Hoover believed it was the individuals job to take care of themselves, not the governments

HOOVER’S SUCCESSFUL DAM PROJECT Hoover successfully organized and authorized the construction of the Boulder Dam (Now called the Hoover Dam) The $700 million project was the world’s tallest dam (726 feet) and the second largest (1,244 feet long) The dam currently provides electricity, flood control and water for 7 western states

Any dam questions?

HOOVER TAKES ACTION: TOO LITTLE TOO LATE Hoover gradually softened his position on government intervention in the economy He created the Federal Farm Board to help farmers He also created the National Credit Organization that helped smaller banks His Federal Home Loan Bank Act and Reconstruction Finance Corp were two measures enacted to protect people’s homes and businesses Hoover’s flurry of activity came too late to save the economy or his job

BONUS ARMY A 1932 incident further damaged Hoover’s image That spring about 15,000 World War I vets arrived in Washington to support a proposed bill The Patman Bill would have authorized Congress to pay a bonus to WWI vets immediately The bonus was scheduled to be paid in 1945 --- The Army vets wanted it NOW

Thousands of Bonus Army soldiers protest – Spring 1932 BONUS ARMY TURNED DOWN Hoover called the Bonus marchers, “Communists and criminals” On June 17, 1932 the Senate voted down the Patman Bill Thousands of Bonus Army soldiers protest – Spring 1932

BONUS MARCHERS CLASH WITH SOLDIERS Hoover told the Bonus marchers to go home– most did 2,000 refused to leave Hoover sent a force of 1,000 soldiers under the command of General Douglas MacArthur and his aide Dwight Eisenhower

AMERICANS SHOCKED AT TREATMENT OF WWI VETS MacArthur’s 12th infantry gassed more than 1,000 marchers, including an 11-month old baby, who died Two vets were shot and scores injured Americans were outraged and once again, Hoover’s image suffered