1. Global Depression Chapter 15:2 Notes

2. Europe after World War I Europe rebuilding war-torn nations and economies Many received loans from the United States, which had experienced a prosperous decade However, U.S. prosperity in the 1920s was not as real as it seemed to be The collapse of the U.S. economy in 1929 set off a Global Depression that affected many parts of the world!

3. Europe after World War I New governments formed in Germany, Austria, Hungary, Russia, etc., were unstable Frequent changes in government, which meant the leaders were often replaced Countries remained weak Some people were willing to sacrifice democracy for a strong, totalitarian government REVIEW: What is a totalitarian government??

4. Germany Weimar Republic: Germany’s new democratic government, beginning in 1919 Plagued by weaknesses and lack of leadership Germans blamed the Weimar Republic for their humiliating defeat in WWI

5. Germany High inflation… Germans had simply printed more money to pay for WWI Value of money decreased Germany needed money to repay war reparations… so they printed more money even worse inflation Cost of Bread in 1923: 200 billion marks or $131 billion Cost of Bread in 1922: 160 marks or $105.00 Cost of Bread in 1918: >1 mark or 65 cents

6. Germany What did this mean for Germans? Life savings were worthless They could no longer afford to buy things they previously could buy People started to question their new democratic government Dawes Act: in 1924, the U.S. gave Germany $200 million in loans from banks to help stabilize economy and begin paying war reparations… by 1929 the German economy was back on track

7. HERBERT HOOVER ELECTED PRESIDENT, 1928 "We in America today are nearer to the final triumph over poverty than ever before in the history of any land. The poorhouse is vanishing from among us.“ 1928 "I do not believe that the power and duty of the General Government ought to be extended to the relief of individual suffering.... The lesson should be constantly enforced that though the people support the Government the Government should not support the people." (1930)

8. UNEQUAL DISTRIBUTION OF WEALTH HIGH TARIFFS AND WAR DEBTS OVERPRODUCTION IN INDUSTRY AND AGRICULTURE INCONSISTENT MONETARY POLICY STOCK MARKET CRASH AND FINANCIAL PANIC Historians disagree as to the causes of the Great Depression. Most scholars would include:

9. CAUSES OF THE GREAT DEPRESSION HIGH TARIFFS AND WAR DEBTS OVER PRODUCTION UNEQUAL DISTRIBUTION OF WEALTH AGRICULTURE INDUSTRY MONETARY POLICY STOCK MARKET CRASH AND FINANCIAL PANIC

10. THE 1920’S WAS A PROSPEROUS TIME BUT THE PROSPERITY WAS NOT SHARED EQUALLY MANY PEOPLE, LARGELY DUE TO NEWLY INTRODUCED INSTALLMENT BUYING, COULD AFFORD TO BUY CARS, RADIOS AND OTHER NEW PRODUCTS OF THE 1920’S. FARMERS, HOWEVER, WERE IN A DEPRESSION THROUGHOUT THE WHOLE DECADE.

11. RURAL POVERTY IN THE 1920’S

12. UNEQUAL DISTRIBUTION OF WEALTH  Although the nation's total realized income rose from $74.3 billion in 1923 to $89 billion in 1929 it was not distributed evenly.  In 1929 the top 0.1% of Americans had a combined income equal to the bottom 42%. That same top 0.1% of Americans in 1929 controlled 34% of all savings  80% of Americans had no savings at all  The top 1% received a 75% increase in their disposable income while the other 99% saw an average 9% increase in their disposable income.

13. THE CHART ABOVE SHOWS THAT IN 1929 THE TOP 1/10 TH OF 1 % OF THE POPULATION EARNED AS MUCH MONEY AS THE BOTTOM 42% OF THE POPULATION. THE SECOND TWO BARS SHOW THAT THE TOP 1% OF THE POPULATION SAW A 75% INCREASE IN THEIR INCOME WHILE THE OTHER 99% SAW ONLY A 9% INCREASE IN THEIR INCOME IN THE 1920’S.

14. HIGH TARIFFS AND WAR DEBTS AT THE END OF WORLD WAR ONE, EUROPEAN NATIONS OWED OVER $10 BILLION ($115 BILLION IN 2002 DOLLARS) TO THEIR FORMER ALLY, THE UNITED STATES. THEIR ECONOMIES HAD BEEN DEVASTATED BY WAR AND THEY HAD NO WAY OF PAYING THE MONEY BACK. THE U.S. INSISTED THAT THEIR FORMER ALLIES PAY THE MONEY. THIS FORCED THE ALLIES TO DEMAND GERMANY PAY THE REPARATIONS IMPOSED ON HER AS A RESULT OF THE TREATY OF VERSAILLES. ALL OF THIS LATER LED TO A FINANCIAL CRISIS WHEN EUROPE COULD NOT PURCHASE GOODS FROM THE U.S. THIS DEBT CONTRIBUTED TO THE GREAT DEPRESSION. IN 1922 THE U.S. PASSED THE FORDNEY-MC CUMBER ACT WHICH INSTITUTED HIGH TARIFFS ON INDUSTRIAL PRODUCTS. OTHER NATIONS SOON RETALIATED AND WORLD TRADE DECLINED HELPING BRING ON THE GREAT DEPRESSION.

15. . OVERPRODUCTION IN INDUSTRY FACTORIES WERE PRODUCING PRODUCTS BUT WAGES WERE NOT RISING FAST ENOUGH. TOO FEW WORKERS COULD AFFORD TO BUY THE FACTORY OUTPUT. THE SURPLUS PRODUCTS COULD NOT BE SOLD OVERSEAS DUE TO HIGH TARIFFS AND LACK OF MONEY IN EUROPE.

16. FARM OVERPRODUCTION DUE TO SURPLUSES AND OVERPRODUCTION FARM INCOMES DROPPED THROUGHOUT THE 1920’S. THE PRICE OF FARM LAND FELL FROM $69 PER ACRE IN 1920 T0 $31 IN 1930. AGRICULTURE WAS IN A DEPRESSION THAT BEGAN IN 1920 LASTING UNTIL THE OUTBREAK OF WORLD WAR II IN 1939. IN 1929 THE AVERAGE ANNUAL INCOME FOR AN AMERICAN FAMILY WAS $750, BUT FOR FARM FAMILIES IT WAS ONLY $273. THE PROBLEMS IN THE AGRICULTURAL SECTOR HAD A LARGE IMPACT SINCE 30% OF AMERICANS STILL LIVED ON FARMS.

17. ONE OF HOOVER’S FIRST ACTS WAS DEALING WITH THE FARM CRISIS Candidate Hoover: "The most urgent economic problem... is agriculture. It must be solved.

18. The net income of American farmers plummeted from $7 billion in 1929 to only $2.5 billion in 1932. Few farmers had electricity or running water and many lived in primitive and isolated conditions. Farm tenancy rose sharply again in the early 1930s with new waves of foreclosures because of farmers' inability to pay their taxes and mortgages. By 1933, banks were foreclosing on some 20,000 farm mortgages monthly, and thousands of small, undercapitalized country banks failed, while thousands were barely surviving. As the Great Depression worsened, farmers experienced abandoned homesteads, collapsing prices, longer working hours, buildings and equipment in disrepair, a lack of cash or credit, and a rising wave of political discontent. FARM INCOME IN BILLIONS OF DOLLARS

19. MANY FARMERS LOST THEIR FARMS. BELOW IS ONE OF THOUSANDS OF FARM FORECLOSURE SALES.

20. STOCK MARKET CRASH AND FINANCIAL PANIC WALL STREET ON THE DAY OF THE CRASH, OCTOBER 29 th 1929

21. Stock Market Crash, continued The trading floor of the New York Stock Exchange just after the crash of 1929. On Black Tuesday, October twenty-ninth, the market collapsed. In a single day, sixteen million shares were traded--a record--and thirty billion dollars vanished into thin air. Westinghouse lost two thirds of its September value. DuPont dropped seventy points. The "Era of Get Rich Quick" was over. Jack Dempsey, America's first millionaire athlete, lost $3 million. Cynical New York hotel clerks asked incoming guests, "You want a room for sleeping or jumping?"

22. REASONS FOR THE STOCK MARKET CRASH STOCKS WERE OVERPRICED DUE TO SPECULATION MASSIVE FRAUD AND ILLEGAL ACTIVITY MARGIN BUYING FEDERAL RESERVE POLICY

23. The Great Depression Factory production declined Businesses failed causing banks to close 9 million people lost money in savings accounts when banks closed Business failures caused unemployment People could not pay mortgages and lost homes and land

32. EFFECT OF DEPRESSION ON CONSUMER SPENDING FROM 1929 T0 1933 IN BILLIONS OF DOLLARS

33. WITHIN EIGHT MONTHS OF TAKING OFFICE HOOVER HAD TO DEAL WITH THE GREATEST ECONOMIC DECLINE IN U.S. HISTORY. HE WAS NOT PREPARED TO DEAL WITH THE SUFFERING THE GREAT DEPRESSION BROUGHT TO AMERICANS. FOR FOUR YEARS THE FEDERAL GOVERNMENT, UNDER THE LEADERSHIP OF HOOVER, MADE ONLY MINIMAL ATTEMPTS TO END THE ECONOMIC CRISIS. “ECONOMIC DEPRESSION CANNOT BE CURED BY LEGISLATIVE ACTION OR EXECUTIVE PRONOUNCEMENT. ECONOMIC WOUNDS MUST BE HEALED BY THE ACTION OF THE CELLS OF THE ECONOMIC BODY - THE PRODUCERS AND CONSUMERS THEMSELVES” HERBERT HOOVER

34. “Hoovervilles”, homeless camps

35. THE ELECTION OF 1932 ELECTORAL VOTES FOR EACH CANDIDATE POPULAR VOTE ALMOST 57% OF THE ELECTORATE VOTED

37. FRANKLIN DELANO ROOSEVELT BECAME THE 32 ND PRESIDENT OF THE UNITED STATES “HAPPY DAYS ARE HERE AGAIN” FDR’S CAMPAIGN SONG: LYRICS ON NEXT PAGE

38. The U.S. Responds to the Depression… In 1932, Franklin Delano Roosevelt became president New Deal: Roosevelt’s plan for reform Public works programs to help the unemployed Public money spent on welfare and relief programs

40. A Global Depression Americans demanded repayment of overseas loans U.S. put high tariffs on imported goods so that Americans would buy American-made goods Hurt nations who sold goods to the U.S. Foreign nations imposed their own tariffs on imports, which meant Americans could no longer sell to those nations

41. A Global Depression Germany and Austria were especially hurt by the Depression because they depended on American loans In 1931, Austria’s largest bank failed, which hurt the economies of many central European nations

42. While some democratic countries like the United States, Great Britain and France were able to recover, others lost faith in their democracy because of the Great Depression and turned towards a new kind of government known as fascism… We’ll learn more about fascism in 15:3 and 15:4… Hitler Mussolini