The Great Depression Begins Chapter 14 US History

Timeline: What’s Going On? World 1932 – Gandhi leads a protest against British policies in India – Adolf Hitler takes power in Germany – Japan withdraws from the League of Nations. United States 1929 – The Stock Market crashes – More than 40% of the nation’s banks fail – 8.02 million Americans are unemployed – The 21 st Amendment ends Prohibition.

Section 1: Objectives By the end of this lesson, I will be able to: 1. Summarize the critical problems threatening the American economy in the late 1920’s. 2. Describe the causes of the stock market crash and the Great Depression. 3. Explain how the Great Depression affected the economy in the United States and throughout the world.

Section 1: The Nation’s Sick Economy Main Idea: As the prosperity of the 1920’s ended, severe economic problems gripped the nation. Why it Matters Now: The Great Depression has had lasting effects on how Americans view themselves and their government. Key Terms: Price Support Credit Dow Jones Industrial Average Speculation Key Terms / Names: Buying on Margin Black Tuesday Great Depression Hawley-Smoot Tariff Act

The Nation’s Sick Economy: Business was booming 1920’s = life was prosperous New inventions (radios, Model T, Refrigerators) But…everyone was buying on credit. Take home now, pay later Houses were cheap, cars and appliances were cheap But…No one could pay back their debts Decreased wages, loss of jobs Let’s look at the main reasons that lead to the Great Depression

Main Causes for the Crash 1.Farmers are hurt 1.Too many crops during the 1920’s 2.Rampant Speculation 1.The stocks will always be great… not 3.Buying on Credit/ over speculation 1.Buy now, Pay later 2.People will always buy products… not 4.Gap between Rich and Poor 1.Economy was uneven 5.Bank Failures 1.Harding, Coolidge and Hoover stock-market-crash

#1: Farmer’s Struggle: No industry suffered as much as agriculture During World War I European demand for American crops soared Farmers had to produce for the war effort After WWI Demand plummeted Farmers increased production sending prices further downward

#2: Consumer Spending Down: By the late 1920s, American consumers were buying less (they couldn’t afford it – they were maxed out) Wages for workers decreased Rising prices, stagnant wages and overbuying on credit were to blame Most people did not have the money to buy the flood of goods factories produced = over production

#3: Living On Credit: Many Americans were living beyond their means. Many goods were bought on Credit – an arrangement in which consumers agreed to buy now and pay later for purchases. Many businesses encouraged credit purchases (sound familiar?) Consumer debt started to pile on. Lower wages + lost income = can’t afford debt Buy now and pay later Increased consumerism

#4 -Gap Between Rich And Poor: The gap between rich and poor widened Consumers stopped buying products Employers were forced to layoff workers The wealthiest 1% saw their income rise 75% The rest of the population saw an increase of only 9%

Herbert Hoover won the presidency in He thought the economy would “fix” itself.

Seeds Of Trouble: By the late 1920s, problems with the economy emerged Speculation: Too many Americans were engaged in speculation – buying stocks & bonds hoping for a quick profit Margin: Americans were buying “on margin” – paying a small percentage of a stock’s price as a down payment and borrowing the rest Buying stock EX: cost of stock $100 Person paid $25 Borrows $75 Pays 20% interest Why might this be a problem?

1929 Crash: On October 24, the market took a plunge.. the worst was yet to come On October 29, now known as Black Tuesday, the bottom fell out 16.4 million shares were sold that day – prices plummeted People who had bought on margin (credit) were stuck with huge debts

The Great Depression: The Stock Market crash signaled the beginning of the Great Depression The Great Depression the period from 1929 – 1940 in which the economy plummeted and unemployment skyrocketed Important: The crash alone did not cause the Great Depression, but it hastened its arrival

Financial Collapse: After the crash, many Americans panicked and withdrew their money from banks “Bank Runs” Banks had invested in the Stock Market and lost money People couldn’t pay their mortgages = banks lost money and forced to close In banks fail By 1933 – 11,000 of the 25,000 banks nationwide had collapsed Banks and personal investors weren’t the only people affected by the crash 90,000 businesses went bankrupt Unemployment leaped from 3% in 1929 to 25% in 1933 It’s now at about %6

Hawley-Smoot Tariff: #5 Cause of Great Depression The U.S. was not the only country gripped by the Great Depression Much of Europe suffered throughout the 1920s Europe had to repair after WWI Germany forced to pay reparations Congress passed the toughest tariff in U.S. history called the Hawley- Smoot Tariff It was meant to protect U.S. industry In response, other countries enacted their own tariffs and soon world trade fell 40% World Trade Center:

Summary of some of the causes of the Great Depression Overproduction in farming and manufacturing Buying on Credit and Margin Too much in profits, not enough in wages for people (gap between rich and poor) World Economic problems (Europe war debt) Hawley-Smooth tariff hurt Europe Trigger – Stock market crash

Section 2: Objectives By the end of this lesson, I will be able to: 1. Describe how people struggled to survive during the Great Depression. 2. Explain how the Depression affected men, women, and children.

Section 2: Hardship And Suffering During The Depression: Main Idea: During the Great Depression Americans did what they had to do to survive. Why it Matters Now: Since the Great Depression, many Americans have been more cautious about saving, investing, and borrowing. Key Terms: Hoovervilles Soup Kitchen Key Terms: Dust Bowl

Hardships During Depression: The Great Depression brought hardship, homelessness, and hunger to millions Loss of Jobs, Wages, Homes 25% Unemployment African Americans + Latinos affected Racial Discrimination and competition for jobs. Hoboes- Unemployed men who wandered the country Men started to leave their homes Shantytowns - small shack-like towns “Hoovervilles”

Soup Kitchens: One of the common features of urban areas during the era were soup kitchens and bread lines Soup kitchens and bread lines offered free or low-cost food for people Even successful businessmen could be found trying to get free food. Unemployed men wait in line for food – this particular soup kitchen was sponsored by Al Capone

Women and Children in the Depression Women New types of work and involvement Work outside of the home Earned less money than men Share groceries with neighbors Children/Teenagers Poor nutrition/health problems “Hoover Tourists” Ride trains

The Dust Bowl: Over farming during the war lead to poor soil quality (no nutrients) In addition, a severe drought gripped the Great Plains in the early 1930s Wind scattered the topsoil, exposing sand and grit, carrying it 100’s of miles The Great Plains became called the Dust Bowl – plains region that became worthless for farming

Effect Of Depression: Negatives: Suicide rate rose more than 30% between Alcoholism rose sharply in urban areas Three times as many people were admitted to state mental hospitals as in normal times Positives: Many people showed great kindness to strangers Additionally, many people developed habits of savings & thriftiness

Section 3: Objectives By the end of this lesson, I will be able to: 1. Explain Hoover’s initial response to the Depression. 2. Summarize the actions Hoover took to help the economy and the hardship suffered by Americans. 3. Describe the Bonus Army and Hoover’s actions towards it.

Section 3: Hoover Struggles With The Depression: Main Idea: President Hoover’s conservative response to the Great Depression drew criticism from many Americans. Why it Matters Now: Worsening conditions in the country caused the government to become more involved in the health and wealth of the people. Key Terms / Names: Herbert Hoover Boulder Dam

Hoover’s Philosophy on the Great Depression: Herbert Hoover was not quick to react to the depression He believed in “rugged individualism” People should take care of themselves, not depend on governmental hand-outs Laissez-Faire Free or direct handouts would hurt the American people Rely on the Government to fix their problems He said people should “pull themselves up by their bootstraps”

Hoover’s Steps to Recovery: Hoover successfully organized and authorized the construction of the Boulder Dam (Now called the Hoover Dam) This created jobs…but when it was done, there were no jobs He also talked with companies and encouraged them to keep wages the same and not go on strike

Hoover Responds to the Depression Not Good.. Did not offer any direct relief to the people Raised Taxes (doesn’t make sense… people are unemployed…) Well some progress… Federal Home Loan Bank Act Lowered mortgages rates Reconstruction Finance Corporation Emergency financing Banks, life insurance companies, RR and large Businesses

Hoover’s Mistakes Hawley-Smoot Tariff Highest tariff until this time in US History Prevented other European countries to import their goods Bonus Army WWI Veterans – promised cash bonus for serving in WWI Hoover sends the Army to disband the Bonus Army

Hoover Takes Action: Too Little, Too Late: Hoover tried to help farmers and banks and also provided loans for people to pay for their homes He started to realize that it was going to take some time for recovery. The people were growing impatient