Unit 9 – Chapter 9 The Great Depression

The Great Depression “The End of Prosperity”

Prosperity of the 1920s The 1920s witnessed a time of change for America. Flappers and African-Americans began to change social norms. Hollywood and movies became popular. Prosperity reigned for most of the 20s and people did not See the economic disaster on the horizon.

What were the signs of economic trouble? 1) Troubled Industries Textiles - Faced competition from foreign producers in Japan, India, China and Latin America. SOUND FAMILIAR???? What are some modern examples of this? What are the emotions that workers in the U.S. have that face this issue? (Outsourcing/Globalization)

What were the signs of economic trouble? 2) Railroads - Lost business to new modes of transportation.

What were the signs of economic trouble? 3) Home Construction a. New home construction slowed b. Significant because of its impact on a wide range of economic areas. - Furniture industry struggles (Grand Rapids)

Why do farmers get into trouble? 4) Farmers Struggle 1) World War I had caused an increase in the demand for crops. After WWI the demand and prices fell. 2) Farmers could not pay back loans they had taken out to expand their farms during the prosperous times. 3) Government steps in: PRICE SUPPORTS: (McNary-Haugen Bill) a. Gov’t bought surplus crops at prices higher than the market rate. b. Gov’t would then sell these crops on the world market for lower prevailing prices. c. To make up for the losses of buying high and selling low, the gov’t placed a tax on domestic food sales. Passing the cost of the program onto consumers.

What Happened to People Living on Credit? 5) People Abusing Credit 1) Many Americans appeared prosperous during the 20s, when in actuality they were piling up huge debts due to credit. 2) CREDIT: Consumers agree to buy now and pay later with interest added.

Credit Card Questions Why do people fall into credit card debt? 2) Why do many Americans feel the urge to keep up with their neighbors/friends? 3) What is your philosophy for using credit cards?

How did uneven distribution of income lead to economic trouble? 6) Uneven Distribution of Income 1) Nearly ½ the nation’s families earned under $1,500/year. - Considered the minimum for a decent standard of living 2) Rich Americans in the 20s saw their income increase - The income of the wealthiest 1% rose by 75% 3) Because of this gap many Americans did not have money to buy numerous goods that factories produced

Tuesday: October 29, 1929 - The CRASH!

What was the Crash? A. Early signs of weakness in the market - Early September 1929 stock prices began to decline. Some investors lost confidence and got out of the market.. - October 24th the market plunged again (more people unloaded their stock) B. THE CRASH - BLACK TUESDAY - Tuesday: October 29, 1929 - The bottom fell out of the market and panicked investors sold off stock at a record pace.

What followed after the crash? The Great Depression: Period from 1929-1941, in which the economy was in severe decline and millions of people were out of work. B. Causes 1) Old industry base 2) A crisis in the farm sector 3) Availability of easy credit 4) Unequal distribution of income 5) Stock Market crash

Effects of the Great Depression

Effects of the Great Depression

Effects of the Great Depression

Effects of the Great Depression A. Banks Close - Panicked Americans scrambled to withdraw their savings from banks. - Banks could not cover all their customers withdrawls. * Invested in stock market * Loans, etc… * 1929: 659 shut their doors. By 1933: 6000 were closed. - At this point in history the federal government did not insure or protect bank accounts.

Effects of the Great Depression B. Businesses Struggle - Many companies go bankrupt during the depression - Unemployment sky-rockets - By 1933 25% of the nations workforce was out of a job.

The Devastation of the Great Depression "We just existed," Florence Thompson said. "We survived. Let's put it that way.“ Migrant Mother photo by Dorothea Lange, 1936 http://www.pbs.org/wgbh/roadshow/stories/articles/2014/4/14/migra nt-mother-dorothea-lange

How did the Great Depression affect urban areas? Millions of unemployed laborers were evicted Hundreds of thousands construct shantytowns (Hoovervilles) on the outskirts of town Shantytown – little towns consisting of makeshift shacks made of scrap materials “Here were all these people living in old, rusted-out car bodies…There were people living in shacks made of orange crates. One family with a whole lot of kids were living in a piano box…People living in whatever they could junk together.”

How did the Great Depression affect urban areas? Hunger swept the nation Millions were seen digging in garbage cans for food scraps or to find clothing a delicacy, apple cores were actually sold on street corners

How did the Great Depression affect urban areas? Starving citizens became common sights in wealthy places like Manhattan Soup kitchen = place where food is offered free to the needy Bread lines = lines of people waiting to receive food provided by charitable organization or public agencies

How did the Great Depression affect rural areas? 400,000 farms are lost to foreclosure

How did the Great Depression affect rural areas? A huge drought hits the Great Plains during the first half of the 1930s Dust bowl = the desertification of the Great Plains during the 1930s

Reactions to the Great Depression Herbert Hoover vs. Franklin Delano Roosevelt (FDR)

Hoover’s Presidency I. 1928 Election Results Hoover (R) – Popular vote = 21.4 million Electoral vote = 444 Smith (D) - Popular vote = 15 million Electoral vote = 87 “A chicken in every pot and two cars in every garage” Herbert Hoover www.270towin.com

What was Hoover’s reaction to the Great Depression? A. Hoover’s strong belief in RUGGED INDIVIDUALISM * The idea that people should succeed through their own efforts. They should take care of themselves and their families, rather than depend on the government to bail them out. WHAT DO YOU THINK? IS HOOVER RIGHT? - Hoover believes that individual charities and local organizations should pitch in to help. Also talks with business leaders and asked them not to cut wages or lay off employees.

What was the outcome of the 1930 Midterm Elections? The Democrats gained seats in the House and Senate. Why?? By 1930 people were calling the shantytowns in cities Hoovervilles. (Hoover Blankets & Hoover Flags) - Hoover still refused to support direct relief to the poor.

Too Little Too Late As the Depression drags on, Hoover began to slightly change his philosophy. Began putting money into projects = Hoover Dam (originally was to be called Boulder Dam) Designed to jump start economy and create jobs. 2) Federal Home Loan Bank Act Lowered mortgage rates and allowed farmers to refinance their farm loans. 3) Reconstruction Finance Corporation - Authorized emergency financing to banks, life insurance companies, railroads and other large businesses.

What happened during the 1932 Election? 1) Under Hoover’s watch the Bonus Army (Group of WWI vets) was gassed while they were protesting in Washington D.C. - “This will elect me.” - FDR 2) Results Hoover (R) – Popular Vote = 15.8 million - Electoral Vote = 59 Roosevelt (D) – Popular Vote = 22.8 million - Electoral Vote = 472

Question How did Hoover’s belief in “rugged individualism” shape his policies during the depression? Think about: - What that belief implies about government action? - Hoover’s policies - Whether these policies were consistent with his beliefs?

FDR’s Program - The New Deal The New Deal: FDR’s program to alleviate/fix the problems of the Great Depression. * GOALS: 1) Relief for the needy 2) Economic recovery 3) Financial reform EXAMPLES: CCC (1933) – Provided unemployed men between 18-25 with work. (Mostly on National Parks) Social Security Act (1935) – Provided a pension