The Great Depression Begins

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Chapter 17

• The Great Depression Begins

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Section 1

• Causes of the Depression

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I. The Election of 1928

1. When Calvin Coolidge decided not to run in 1928,
   he cleared the way for Herbert Hoover to head the
   Republican ticket.
2. The Democrats chose Alfred E. Smith, an Irish
   American from New Yorks Lower East Side, and the
   first Roman Catholic ever nominated for president.

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I. The Election of 1928

• 3. Many Protestants were willing to believed that
  the Catholic Church financed the Democratic Party
  and would rule the U.S. if Smith got into the
  White House
• Republicans took credit for the prosperity of the
  1920s causing Herbert Hoover to win the election

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II. The Long Bull Market

• 4. A long period of rising stock prices in known
  as a bull market.
• 5. Because of such a market, by 1929 between 3
  and 4 million Americans, or roughly 10 percent of
  households, owned stock.

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II. The Long Bull Market

• 6. Many investors bought stock on margin,
  meaning they made only a small cash down
  payment with the rest coming as a loan from a
  stockbroker.
• 7. A problem arose if the stock began to fall in
  price, causing the broker to issue a margin call,
  demanding the investor to repay the loan at once

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II. The Long Bull Market

• Before the 1920s, the prices investors paid for
  stocks reflected the stocks true value but
  hordes of new inventors bid prices up without
  regard to a companys earning and profit.

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III. The Great Crash

• Black Thursday (10/24/29) stock market
  plummets
• Black Tuesday (10/29/29) plummeted
  even more, 30 billion lost (total wage earned by
  all Americans in that year)
• 8. The stock market slide was not the major cause
  of the Great Depression, but it undermined the
  economys ability to hold out against its other
  weaknesses.

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III. The Great Crash

• 9. Another way the crash weakened the banks was
  that many banks themselves had take depositors
  money and invested it in the stock market, hoping
  for higher returns than they could get by using
  the money for conventional loans.
• 10. A bank run takes place when many
  depositors decided to withdraw their money
  at one time, usually for fear the
  bank is going to collapse.

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IV. The Roots of the Great Depression

• 11. Most economists agree that over production
  was a key cause of the Depression.
• Most Americans did not earn enough to buy up the
  flood of goods they helped produce
• Another cause of the Depression was the uneven
  distribution of income, 5 of all Americans owned
  30 of the nations income

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IV. The Roots of the Great Depression

• 12. Many people who had bought high-cost items
  such as refrigerators on the installment plan
  reached a point where paying off their debts
  forced them to reduce other purchases.
• 13. When sales of goods slowed manufactures cut
  production and laid-off employees.

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IV. The Roots of the Great Depression

• Jobless workers had to cut back purchase, further
  reducing sales
• 14. The Hawley-Smoot Tariff raised the tax on
  many imports to the highest level in American
  history, and damaged America sales abroad.

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IV. The Roots of the Great Depression

• Federal Reserve Board helped cause the Depression
  by not raising interest rate to stop speculation,
  the kept the rates low which. The low rates
• Encourage banks to make risky loans
• Led business leaders to think the economy was
  still expanding so they borrowed money to expand
  production (led to overproduction
• When the Federal Reserve Board finally did raise
  interest rates, tightening credit

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Section 2

• Life During the Depression

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I. The Depression worsens
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A. Lining Up at Soup Kitchens

• People without jobs often joined bread lines or
  soup kitchens (provided by charities) to get free
  handouts and food

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B. Living in Makeshift Villages

• Families or individuals who could not pay rent or
  mortgages lost their homes, often having bailiffs
  throwing their belongings on the street
• The homeless often found themselves living in
  shantytowns also called Hoovervilles
• Hobos

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C. The Dust Bowl

• Farmers had uprooted the wild grasses that held
  the soils moisture to plant crops, when prices
  dropped it left the fields barren.
• 1932 a drought hit the Great Plains, with no
  grass or crops to hold down the soil, it turned
  to dust causing the Dust Bowl
• Hoping for a better life many farmers went to
  California (Okies)

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II. Escaping the Depression
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• Groucho Marx
• Actor
• Animal Crakers

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• Marlene Dietrich
• Actress
• The Blue Angel

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• Greta Garbo
• Actress
• Anna Karenina

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• Walt Disney
• Movie Maker
• Snow White and the Seven Dwarfs

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• James Stewart
• Actor
• Mr. Smith Goes to Washington

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• Vivien Leigh
• Actress
• Gone with the Wind

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• Clark Gable
• Actor
• Gone with the Wind

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• Jack Benny
• Radio

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• George Burns and Gracie Allen
• Radio

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III. The Depression in Art
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• Grant Wood
• Painter
• American Gothic

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• John Steinbeck
• Author
• The Grapes of Wrath

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• William Faulkner
• Writer
• The Sound and the Fury

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• Margaret Bourke-White
• Photojournalist
• Photos in Fortune Magazine

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Section 3

• Hoover Responds

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I. Promoting Recovery

• Hoover was hoping the avoid more bank runs and
  layoffs by urging consumers and business leaders
  to become more rational in their decision making
• Hoover won a pledge from industry to keep factors
  open and to stop slashing wages, however the
  leaders abandoned the pledges

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I. Promoting Recovery

• To increase job availability he
  increased public works, however it
  only made up a fraction of the jobs
  lost in the private sector
• Citizens blame the party in power for the
  stumbling economy so more Democrats were elected
  to Congress

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II. Pumping Money Into the Economy

• Hoover had to make sure that banks
  could make loans to corporation also
  they could expand production and rehire workers
• Hoover created National Credit Corporation (NCC)
  to create a pool of money to enable troubled
  banks to continue lending money in their
  communities (did not work)
• Hoover strongly opposed the federal governments
  participation in relief because he believed only
  the state and city government should give relief

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III. In an Angry Mood

• Hunger March Supported by the Communist party,
  marched on the streets of Washington D.C.
  shouting Feed the hungry, tax the rich, the
  police rounded them up until Congress said they
  had the right to march.

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III. In an Angry Mood

• Some farmers began destroying crops
  in a desperate attempt to raise
  crop prices by reducing the supply

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III. In an Angry Mood

• Bonus Marchers Wanted Congress to enact a 1000
  bonus for each veteran which was suppose to be in
  1945 but veterans wanted it early because of the
  Depression so they marched on Washington D.C.
  (Bonus Army). Senate voted the bill down.
• Many of the marchers stayed in D.C. because they
  had no homes or jobs, some moved into unoccupied
  building. Hoover orders the building cleared, a
  police officer fired into the crowd and killed 2
  veterans.

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III. In an Angry Mood

• The nationwide press coverage of veterans under
  assault by troops present and ugly picture to the
  public
• Hoover failed to resolve the crisis of the
  Depression, but he did more to expand the
  economic role of the federal government
  (Reconstruction Finance Corporation 1st time the
  federal government established a federal agency
  to stimulate the economy)