The Great Depression Begins Chapter 17

The Election of 1928 The 1928 election placed Herbert Hoover on the Republican ticket against Democrat Alfred Smith, a four-time governor of New York and the first Roman Catholic to be nominated for president. The issue of Prohibition played a major role in the campaign. Hoover favored a ban on liquor sales. Smith opposed the ban.

Religious differences between the candidates had a major effect on the campaign. The Catholic issue led to a smear campaign against Smith. The Republicans took full credit for the prosperity of the 1920s, and Hoover easily won the 1928 election by a landslide.

Section 1-8 The Long Bull Market The stock market was established as a system for buying and selling shares of companies. A long period of rising stock prices is known as a bull market. Prosperous times during the 1920s caused many Americans to invest heavily in the stock market. Bull Market

Section 1-9 As the bull market continued to go up, many investors bought stocks on margin, making a small cash down payment. This was considered safe as long as stock prices continued to rise. If the stock began to fall, the broker could issue a margin call demanding that the investor repay the loan immediately.

Section 1-10 In the late 1920s, new investors bid prices up without looking at a company’s earnings and profits. Speculation occurred when investors bet on the market climbing and sold whatever stock they had in an effort to make a quick profit.

Section 1-12 The Great Crash By late 1929, a lack of new investors caused stock prices to drop, the bull market to end, & a bear market to take over. As stockbrokers advised their customers of margin calls, customers responded by placing their stocks up for sale, causing the stock market to plummet further. Stock prices fell drastically on October 29, 1929, Black Tuesday, resulting in a $10 to $15 billion loss in value. Bear Market

The Dow Jones Industrial Average was created by Wall Street Journal founder Charles Dow as a way of measuring the performance of the New York Stock Exchange. Today, it looks at the value of stocks in 30 of the top companies trading stock on the NYSE. It is also one index looked at when gauging how well the U.S. economy is performing.

Section 1-13 While the Crash did not cause the Great Depression, it did undermine the economy’s ability to hold out against its other weaknesses. The stock market crash weakened the nation’s banks. Banks lost money on their investments, and speculators defaulted on loans. Because the government did not insure bank deposits, customers lost their money if a bank closed.

Section 1-14 Bank runs resulted as many bank customers withdrew their money at the same time, causing the bank to collapse.

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Section 1-16 Roots (Causes) of the Great Depression Efficient machinery led to overproduction a drop in prices and profits for industry loss of jobs. The uneven distribution of wealth in the U.S. added to the country’s economic problems. In 1929 the top 5% of American households earned 30 percent of the country’s income. * More than two-thirds of the nation’s families earned less than $2,500 a year.

Section 1-17 Low wages added to the economic problems. * Wages did not increase fast enough to keep up with the quick production of goods. As sales decreased, workers were laid off. Unemployment added to a chain reaction that further hurt the economy.

Section 1-18 Many Americans bought on the installment plan, making a down payment and paying the rest in monthly installments. (Too much credit debt) Paying off installment debts left little money to purchase other goods. The Hawley-Smoot Tariff intensified the Depression by raising the tax on imports. Americans purchased less from overseas because of the high cost.

Section 1-19 In return, foreign countries raised their tariffs on American products, causing fewer to be sold overseas loss of more American jobs. Instead of raising interest rates on loans to stop speculation, the Federal Reserve Board made the mistake of lowering the rates. This encouraged banks to make risky loans and misled business owners into thinking the economy was still expanding.

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Section 2-5 The Depression Worsens By 1933 thousands of banks had closed and millions of American workers were unemployed. Unemployed workers often stood at bread lines to receive free food or at soup kitchens where private charities gave a free meal to the poor.

Soup Kitchen Depression-Era Soup Kitchens

Section 2-6 Americans unable to pay their mortgage or rent lost their homes. Those unable or unwilling to move had a court- ordered eviction notice delivered by a court officer or bailiff who forced nonpaying tenants out onto the street.

Hoovervilles Many of the homeless built shacks in shantytowns, which they referred to as “Hoovervilles” because they blamed the president for their financial trouble.

Hobos Making Turtle Soup Hobos were homeless men who hitched rides on RR cars to search for work and/or a better life.

F/F/F 2-Folklore Hobo Signs The hundreds of thousands of hobos who roamed the country developed intricate symbols that they wrote on trees, fences, or buildings to warn or inform other hobos. Many became a part of American folklore. At the height of the Great Depression there may have been as many as 250,000 teenage hobos.

Section 2-7 As crop prices dropped in the 1920s, many American farmers left their fields uncultivated. A terrible drought in the Great Plains, beginning in 1932, caused the region to become a “Dust Bowl.”

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Okies “Okies” hoping for a better life in California Many Midwestern farmers and Great Plains farmers lost their farms. Thousands moved west to California hoping to find a better life, but most still faced poverty and homelessness. (“Okies”)

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Section 2-10 Escaping the Depression Americans escaped the hardships of the Depression by going to the movies and listening to radio. Stories tended to be about overcoming hardships and achieving success. Walt Disney produced the first feature- length animated film, Snow White and the Seven Dwarfs, in Other films, like The Wizard of Oz, Mr. Smith Goes to Washington, and Gone with the Wind, contained stories of triumph over adversity and visions of a better life.

Walt Disney A young Walt Disney helped Americans survive the Depression

Entertainment Radio Movies

Section 2-11 Families gathered around the radio daily to hear news or listen to comedians like George Burns or a dramatic series like the Lone Ranger. Melodramas, called soap operas, became very popular with housewives. Soap operas received their name because makers of laundry soaps often sponsored them.

Section 2-13 The Depression in Art Homeless and unemployed Americans were the subjects of art and literature during the 1930s. Artists and writers tried to capture the real life drama of the Depression. Thomas Hart Benton and Grant Wood emphasized traditional American values in their art.

Grant Wood Depression-Era Artist American Gothic (1930)

Thomas Hart Benton

Section 2-14 John Steinbeck’s 1939 novel The Grapes of Wrath told the story of an Oklahoma family fleeing the Dust Bowl to find a new life in California. Steinbeck, like many writers of this time, wrote of poverty, misfortune, and social injustice.

Section 2-15 Novelist William Faulkner’s literary technique, stream of consciousness, revealed characters’ thoughts and feelings before they spoke– thoughts they dared not reveal. In his novels, he exposed hidden attitudes of Southern whites and African Americans in a fictional Mississippi county.

Section 3-5 Promoting Recovery To promote economic recovery, President Herbert Hoover held a series of conferences bringing together the heads of banks, railroads, big business, labor, and government. Hoover received a pledge from industry to keep factories open and stop cutting wages. After the pledge failed, Hoover increased public works–government- financed building projects.

Factory A factory financed by the Federal Government

Section 3-6 Hoover asked the nation’s governors and mayors to increase public works spending. At the same time, however, Hoover refused to increase government spending or taxes. He feared that deficit spending would actually delay an economic recovery.

Section 3-7 Americans blamed the Republican Party for the Depression. As a result, in the midterm congressional elections of 1930, the Republicans lost 49 seats and their majority in the House of Representatives.

Section 3-10 Pumping Money Into the Economy President Hoover tried to persuade the Federal Reserve Board to put more currency into circulation, but the Board refused. Hoover set up the National Credit Corporation (NCC), which created a pool of money to rescue banks, but it was not enough to help.

Section 3-11 By 1932 Hoover felt the government had to provide funding for borrowers. He asked Congress to set up the Reconstruction Finance Corporation (RFC) to make loans to banks, railroads, and agricultural institutions. The economy continued to decline when the RFC was too cautious in its loan amounts.

Section 3-12 Hoover opposed the federal government’s participation in relief – money that went directly to very poor families. He felt relief was the responsibility of state and local governments. In July 1932, Congress passed the Emergency Relief and Construction Act to get money for public works and for loans to the states for direct relief.

Section 3-15 In an Angry Mood By 1931 discontent over the economy led to violence. Looting, rallies, and hunger marches began. At a hunger march in Washington, DC, police denied protestors food, water, and medical treatment. Congress intervened, stressing the marchers’ right to petition their government. Congress permitted them to march on to Capitol Hill.

Section 3-16 Between 1930 and 1934, creditors foreclosed, or took possession of, almost a million farms. Some farmers destroyed their crops, hoping the reduction in supply would cause the prices to go up. In 1924 Congress enacted a $1,000 bonus to be paid to veterans in In 1931 a bill was introduced in the House that authorized early payment of the bonus.

Section 3-17 In 1932 the “Bonus Army” marched to Washington, DC, to ask Congress to approve the legislation. After Hoover refused to meet with the Bonus Army and the Senate voted the new bonus bill down, some of the marchers left. Some marchers stayed, moving into deserted buildings in Washington, D.C. When Hoover ordered the buildings cleared, disputes between the remaining people and the police (and later the army) resulted in several deaths.

Bonus Army The “Bonus Army” marched on Washington to try to force Congress to pay them early Veterans’ Benefits

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