High gross national product (GNP) – total value of goods and services produced in a given period Low unemployment – satisfied workers Stock market values went steadily up - quadrupled between

The growth of the GNP This led to reckless spending by the American people – cars, vacuums, refrigerators, etc. – usually on credit

Welfare capitalism – various benefits companies provide (like health insurance) to improve worker satisfaction and loyalty As a result, union membership dropped; worker loyalty and satisfaction grew

People buy stocks, which gives them a share in the ownership of a corporation If a corporation does well, values of stock typically go up, making stock holders a profit But, if stock prices go down, shareholders lose money

Basically, that government should support, not interfere, with business practices They believed in giving businesses the maximum freedom to profit and succeed laissez-faire – to let alone

As stock prices rose, more and more Americans began to invest in the stock market Number of shares being traded in the U.S. went from 318 million in 1920 to more than 1 billion in 1929 It seemed to good to be true – some believed that everyone could get rich investing in the stock market

Very uneven distribution of wealth – 5% of the workers made 70% of the countrys income; conversely the other 95% made 30% of the countrys income Easy credit – too easy Too easy to buy stock on margin

It was a blessing in that it allowed more Americans to buy more products, which brought on more economic growth It was a curse when consumers could not pay off their debts, purchases slowed Warehouses started to be filled with un-purchased goods

buying on margin – borrowing money to invest in the stock market; a borrower assumed he would pay back the loan with money made from stock prices going up A margin call was a demand for payment of a margin loan if a stocks value fell below a certain point

Sale of consumer goods declined Rumors of a crash spread Fears grew Investors began to sell off stock This began a snowball effect where stock prices plunged because there were no buyers

Some investors were nervous and began to sell off stocks Others soon joined in With no buyers, stock prices plunged

Banks failed – many had invested stocks themselves, or given loans to stockbrokers to lend investors Investors lost money Consumers stopped buying Nearly three million Americans lost their jobs Such an impact on the American economy affected the world economy

Almost all suffered Couldnt pay off debts – lost all savings

Depositors panicked and withdrew money – bank runs Many banks lost money from stocks and also from loans made to stockbrokers

Banks failed Many people lost their saving and their jobs – no insurance on deposits Many farmers lost their farms

When banks failed, depositors lost their savings Bank deposit insurance did not exist In December 1929 alone almost 350 banks closed

People lost jobs and homes Many ended up in shantytowns (Hoovervilles) Others became hoboes People took pride in having jobs and providing for their families When they couldnt do that, filled them with shame or anger

NOT the federal government in the early 1930s – there were no federal government programs to help the needy or poor Local charities, city and state governments provided the aide to the poor, but it wasnt enough

Many felt that they were failures – that they had failed as individuals There was also a widespread feeling that America had let its citizens down, and that the government had let them down

Long period of drought Farmland was destroyed Farmers that only knew how to farm were forced to relocate Farming families were completely uprooted from their way of life

The parts of Oklahoma, Kansas, Colorado, New Mexico, and Texas that were the hardest hit by drought and soil erosion

The Great Plowup – throughout the 1920s wheat prices fell; to make up for lost income farmers started to look for more and more land to plow up and raise wheat Much of the land should not have been plowed – drought of the land that had been plowed caused soil erosion

They were competing for jobs; migrant Okies cost native Californians jobs – they would work for next to nothing To discourage others from coming

Steinbeck was an author; most known for his novel The Grapes of Wrath, which tells the story of the Joads, a family in Oklahoma who lost everything and migrated to California Stereotyped Oklahoma for years Guthrie was a singer-songwriter who wrote songs about the Dust Bowl and described the disasters effects on the people it touched

The Great Plains California Californians

Hoover believed businesses should form voluntary associations to make the economy more fair and efficient Government specialists would work with them for the betterment of the economy and the public good

It would take more cooperation between the government and independent companies than had ever been asked before Such a task had never been face before by a president

A person should rely on himself, not the government, to succeed A person should take personal responsibility for his success, or failure – to fend for oneself

Pushed for loans for farm cooperatives Urged Congress to establish the Reconstruction Finance Corporation Authorized up to $2 billion in direct govt. loans to banks, insurance companies, and other institutions Asked Congress to create the Federal Home Loan Bank Encouraged home building and reduced the number of home foreclosures Smoot-Hawley Tariff Act – tariff on imported goods, which was a disaster – Europeans responded; trade plunged

Cooperatives are organizations that are owned and controlled by its members who work together for a common goal Idea was that large groups of farmers could buy materials cheaper than an individual farmer could

In hard times, individuals made decisions based on what was good for them individually People did not rally to the idea of cooperations

He came under attack – people believed that he was not compassionate to their problems Democrats won seats in Congress in 1930 and took over the House of Representatives

He continued to make optimistic claims about the economy even as the country slid deeper and deeper into the depression More and more Americans came to believe that he was out of touch with the American people

Early in the crisis, he talked about the basic economic foundation of the country being sound Spoke glowingly about the efforts being made to deal with the depression even as things got worse Questioned his compassion – why was he willing to give billions of dollars to banks and insurance companies, but nothing to individuals?