The Great Depression

Many found being broke humiliating. 1929-1939 Stock market crash Didn’t realize the effect it would have No money to replenish what was borrowed Many found being broke humiliating.

The Stock Market People bought stocks on margins Stocks fall If a stock is $100 you can pay $10 now and the rest later when the stock rose Stocks fall Now the person has less than $100 and no money to pay back

With people panicking about their money investors tried to sell their stocks This leads to a huge decline in stocks Stocks were worthless now People who bought on “margins” now could not pay Investors were average people that were now broke JP Morgan steps in and buys millions of stocks temporarily saves stock market And then….

What about the people? Farmers were already feeling the effects Prices of crops went down Many farms foreclosed People could not afford luxuries Factories shut down Businesses went out Banks could not pay out money  Banks runs People could not pay their taxes Schools shut down due to lack of funds Many families became homeless and had to live in shanties

Many waited in unemployment lines hoping for a job.

People in cities would wait in line for bread to bring to their family.

Some families were forced to relocate because they had no money.

“Hooverville” Some families were forced to live in shanty towns A grouping of shacks and tents in vacant lots They were referred to as “Hooverville” because of President Hoover’s lack of help during the depression.

Hooverville

Out of the Dust: The South and the Dust Bowl

1934, 1936, 1939 A drought in the South lead to dust storms that destroyed crops. “The Dust Bowl”

The South Was Buried Crops turned to dust=No food to be sent out Homes buried Fields blown away South in state of emergency Dust Bowl the #1 weather crisis of the 20th century

The Dust Bowl Economic and environmental disaster Overproduction, monocrops Plowed up grasses for farms to meet the needs of a booming wheat market Soil exhaustion, soil erosion Drought and winds 1935: Blew winds from CO and NE, blackened the sky across the plains, into the East and Atlantic Ocean

Responses Killed millions of animals, burned millions of tons of food Taylor Grazing Act Federal control of grazing

Two Families During the Depression

A Farm Foreclosure

Some families tried to make money by selling useful crafts like baskets.

*FDR* When he was inaugurated unemployment had increased by 7 million. Poor sections (like Harlem) had 50% of the pop. unemployed Instated the “New Deal” People became more optimistic

People everywhere were effected by the depression It wasn’t till President Roosevelt took over and tried to put the economy back together that people even saw a glimmer of hope

Origins and Causes of the Great Depression Extreme wealth inequalities – Why is this bad in a Capitalist Economy? Ballooning stock market – Boom & Bust Cycles Over reliance on unprotected loans - International loans included! Too much speculation & borrowing – “Buying on margin” Overproduction and uneven distribution capabilities Stock Market crash was a symptom (NOT THE CAUSE) Banks lacked money, people lost savings, debts were called in, no cash Bank Runs Production stopped, workers fired, no $, consumption declined, no profits, more workers fired – DO YOU SEE A CYCLE HERE???

President Hoover Herbert Hoover Progressive War Reconstruction Opposed direct federal aid Self-help & volunteerism Self-help cooperatives

The Bonus Army/March World War One veterans Gov’t denied their pensions Marched on Washington, 1932 Congregated around White House Gen. Douglas MacArthur Military evicted them from D.C. Deep anger at gov’t Deep class divisions http://www.youtube.com/watch?v=xqevdBZCbcQ

Roosevelt and the New Deal Frederick Delano Roosevelt (FDR) Programs to address the Depression “Relief, Recovery, Reform” Debt spending Consume our way out of the depression Role of government

Immediate Responses, 1933 Federal Emergency Relief Act Federal funds for relief National Industrial Recovery Act Fair work and competition codes Administration to enforce codes Guaranteed labor’s right to organize

New Deal Programs Civilian Conservation Corps (CCC) Soil Conservation Service Soil Erosion Planting trees Irrigation and range management http://www.youtube.com/watch?v=qolPqXNGW3I

Works Progress Administration WPA Biggest agency 1935 employed 8 million and $2 billion fund Bridges, reservoirs, irrigation, sewage, schools, playgrounds, education, training Work Programs paid minimum wages, pulled them off charity and soup lines “We Work Again” http://www.youtube.com/watch?v=Gk0SpTOi9Aw

1935 Social Security Act Safety net for all Americans Percentage of paycheck Based on shorter life-span Intended to supplement (not replace) income Less inclined to “retire”

Financial System Federal Deposit Insurance Corporation (FDIC) Insured individual bank deposits Securities and Exchange Commission (SEC) Regulated trading practices in stocks and bonds

Problems with New Deal Relief based on race: Tucson scaled payments based on race Favored large industries and business Hurt some small farmers Local agencies administered relief and ran programs

“Share the Wealth” Huey Long: Senator & Presidential Candidate Populist Gov. in LA Use of radio and sensational claims Rhetoric of poverty / class tensions Share the Wealth (of the Rich) Higher Taxes on the wealthy classes Social Justice http://www.youtube.com/watch?v=mdzAbxsjPRA&NR=1

End of the Depression Federal spending on an unprecedented level failed to stop it The largest entrance of the federal government into the American economy Made the federal government into a “broker state” between labor and capital Social programs and “safety net” Brought fed gov’t into the lives of nearly all Westerners WWII ended the Depression

Comparisons with the Present? Wealth inequalities Deregulation Bad Home mortgages Massive individual debt Inflated costs & uncontrolled speculative investments in commodities Collapse of investment-debt-loan system A Vicious Cycle: Retraction of loans, increase in job losses, fall in investments, layoffs, decline in consumption, reduced production, layoffs, no consumption…

Opponents of the New Deal (Against) C. Supreme Court Reacts 1. 11 New Deal Plans Ruled Unconstitutional 2. Roosevelt Reacts: ‘Court Packing Scheme’ a. Wants Court raised from 9 to 15 -President chooses new judges -New judges would favor New Deal 3. Friends & Enemies Very Upset!!! a. FDR wants TOOO much POWER b. Congress with all friends won’t pass law for FDR 4. FDR Wins Anyway- By 1938 New Judges a. 1 Justice switches, 1 Justice retires