1. The Beginning of the Great Depression in America  1920's had been a period of good economic times  Tues. Oct. 29th, 1929 - NYC Stock market crashed, causing a depression that would last until 1942

2.  Some industries (textiles, steel, & railroads) barely made a profit due to foreign competition and new types of transportation  WW I wartime needs were no longer in demand  Boom industries of the 20’s (autos, construction, & consumer goods) began to weaken  The housing industry began to decline which affected other industries such as building materials, appliances, new furnishing, etc.  Mechanization of Industry – machines doing jobs of workers – more goods – less jobs

3.  in 1920's U.S. Economy was based on the productivity – purchasing power - employment cycle  for many goods to be produced, purchasing demand had to be there: this resulted in high employment and a healthy economy  between 1924-27, U.S. productive capacity doubled but it was due to technological innovation  electricity and mechanical advances made for better production, but no new jobs were added to the economy  so more consumer goods were available, but there weren't enough people to buy them (OVERPRODUCTION)

4.  During WW I farmers planted more crops & took out loans to buy land & equipment  After WW I agriculture suffered in the 1920’s since there was now a lack of international demand for food crops and prices dropped by 50%.  To compensate, farmers boosted production which cause the prices to further drop  Farmers who went into debt lost their farms and had their property seized.  Many rural banks, who had loaned $$ to farmers, began to fail  Although Congress twice passed a bill which would called for federal price support, President Coolidge vetoed it commenting, “Farmers have never made money. I don’t believe we can do much about it.”

5.  By the late 1920’s Americans were buying less due to rising prices, stagnant wages, uneven distribution of income and too much credit  Production of goods expanded much faster than wages  People began living beyond their means, often buying goods on credit  Businesses encouraged consumers to pile up debt which people found difficult to pay off  Faced with debt, people began to buy less

6.  1929, the wealthiest 5% of American families took in nearly a third of the nation’s income  The poorest 40% of the population earned just over a tenth of the national income  this middle class depended on their salaries and when productivity declined they lost their jobs  and because of low savings, they had to cut back on their purchases  this decline in consumption among the middle class ruined the whole country

7. The stock market:  the public invests in cos. by purchasing stocks; in return for this they expect a profit  because of the 1920’s booming economy, money was plentiful, so banks were quick to make loans to investors  investors only had to pay for 10% of the stock's actual value at time of purchase › this was known as BUYING ON MARGIN, and the balance was paid at a later date

8.  this encouraged STOCK SPECULATION - people would buy and sell stocks quickly to make a quick buck  Due to this buying & selling, stock value increased (Ex: G.E stock $130  $396/share)  this quick turnover didn't aid companies.  they needed long term investments so they could pay bills (stock value was like an illusion)  unscrupulous traders would buy and sell shares intentionally to inflate a given co.'s stock value  all of this gave a false sense of security/confidence in the American market

9.  beginning in Oct. 1929, investors’ confidence dropped, leading to a market collapse  all tried to sell at once and the bottom fell out of market = panic selling… (many bankruptcies as banks called in loans)  only a tiny minority of people traded on the stock exchange, but they possessed vast wealth, and the crash had a ripple effect on the economy

10.  Panic!! People rushed to withdraw their money from banks  Banks could not cover the withdrawals since banks had also invested and lost money in the stock market  1929 – 659 banks closed  1933 – around 6,000 banks, ¼ of the nations banks had failed  The federal gov’t did not protect or insure bank accounts at this time

11.  85,000 businesses went bankrupt  Workers lost jobs  Unemployment went from 3% in 1929 to 25% by 1933  One out of every 4 workers did not have a job  Those who had jobs often had to accept pay cuts and reduced hours

12.  In the months before the crash, shrewd stock market speculators began to unload their stocks and take profits  Joseph P. Kennedy, father of John F. Kennedy, sold early and did very well.  It is said that he knew it was time to get out of the market when he received stock tips from a shoe-shine boy.

13.  Europe also suffered during this period  European countries faced high debt payments from the war to the US  Germany had to pay war reparation after being defeated  Trade between Europe and the US suffered  To encourage European nations to buy US goods, Hoover proposed a MORATORIUM - a temporary postponement of debt and war reparation payments  Before this happened Euro. countries went off the gold standard which decreased the value of the payments they did make to the US  European banks defaulted on payments to US banks

14. TARIFF WARS  In 1930 Congress passed a high tariff (SMOOT HAWLEY) to protect U.S. industry (hoped to stimulate purchasing of U.S. goods)  this turned out to be a fatal error...  Congress did not understand that the world had become a GLOBAL ECONOMY  in retaliation other countries passed high tariffs and no foreign markets purchased American goods, so U.S. productivity decreased again

15. “business is on a sound and prosperous basis” 10-25-1929 “Any lack of confidence in the economic future…is foolish” 11-29 Hoover  Know as “the Great Engineer”  Never held an elected office  Born poor – succeeded with brains and hard work  Great humanitarian  Rugged Individualism - belief that individuals and private agencies should care for the nations poor, sick, etc.  Feared government handouts would weaken people’s self respect  Unprepared to deal with the depression  Blamed by many for the depression

16.  Tried to restore confidence  Made it easier to borrow money  Began a public works program  Did not believe in providing direct relief  Banks closed and people lost their money  Unemployment skyrocketed  Homeless people called newspapers – Hoover blankets and a turn out empty pocket a Hoover flag  As people lost their jobs and homes they lived in shacks which they called Hoovervilles Cardboard shack

17.  Overproduction during WW I caused farm prices to dropped  Farmers dumped milk and burned crops in an attempt to raise farm prices  Used force to try to stop foreclosures  If you refused to leave your farm, it could be tractored - torn down On the left, Mrs. Wilson’s grandfather, an Illinois farmer dumping milk. 1932

19.  He gradually softened his position on gov’t intervention  By 1930 he directed federal funds into projects such as the construction of Boulder Dam to jump- start the economy and add jobs  Federal Farm Board was designed to help raise crop prices  Glass-Steagall Banking Act increased bank reserves and made bank loans easier to get  Federal Home Loan Bank Act lower mortgage rates and allowed refinancing to avoid foreclosure  Reconstruction Finance Corporation provided emergency financing to banks, life insurance companies, railroads and other large businesses

20.  Hoover believed the money would trickle down to the average citizen through job growth and higher wages  Critics believed it only helped corporations  The poor still needed direct relief  Hungry people could not wait for money to trickle down to their tables

21.  World War I veterans had been promised a cash bonus payable in 1945, since 1931, they had been allowed to borrow money on the payment  They came to Washington D.C. in 1932 to support a bill that would pay them the bonus now  The bill did not pass and when the Bonus Army and their families refused to leave the shantytown they were living in, Hoover took drastic measures  The army, led by Douglas MacArthur and his aide, Dwight Eisenhower, gassed and drove the veterans from Washington D.C.  Americans were stunned & outraged at the gov’t’s treatment of veterans  Big trouble when the gov’t attacks it’s own citizens An 11 month old baby died An 8 yr. old was blinded

22. 1932 ELECTION  1 out of 4 was unemployed…  nat'l income was 50% of what it had been in 1929  Republicans nominated Hoover  no hope  winner by a landslide = FRANKLIN DELANO ROOSEVELT (Dem - N.Y. governor)

23. “We have nothing to fear but fear itself” FDR  Married Eleanor Roosevelt, niece of Teddy Roosevelt  Stricken with polio in 1921 – paralyzed the rest of his life  Many believed his political career was over  1928 elected governor of New York  Elected president in 1932  Promised the American people a “New Deal”  First Act – declaring a bank holiday  Used the “fireside chat” to keep the public informed  Government engaged in massive spending projects to improve the economy  Elected for 4 terms as president

25. Shantytowns sprung up when people lost their homes. Later they will be called Hoovervilles. Hardship & Suffering

27.  Unemployment rates were even higher and wages lower  Racial violence occurred  24 African Americans were lynched in 1933  Latinos in the southwest were also targets  Unemployed whites demanded that Latinos be deported  Thousands returned to Mexico

29. One advantage – food, that is until you lose your farm. Farmers who lost their farms became tenant farmers & barely managed. Many left and moved west.

37. 2 million men left their families and wandered the country

38.  Some cities and charities did provide some relief  In New York, the weekly payment was $2.39 per family  Well below what a family needed

42.  People were demoralized  Suicide rate went up by 30%  More people were admitted to mental hospitals  People stopped going to the doctor & dentist  Dreams of college, marriage, raising families were put on hold  Families helped each other & showed kindness to strangers  People developed habits of saving and thriftiness

43.  85,000 businesses failed  6,000 banks closed  400,000 farms were lost because payments could not be made  12,000,000 people were out of work  13% of working women were the only source of income for the family  By 1932, between 1 and 2 million Americans were homeless  At least 25,000 families were nomadic, looking for work  Malnutrition cases rose from 18% to 60% by 1931  5,000 schools closed due to lack of funds  $12.00 – the monthly Red Cross relief payment