The Great Depression

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The Great Depression

• 1929-1941

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Prosperity ENDS

• By the late 1920s, many Americans were involved
  in stock market trading
• Problems had been showing that the economy was in
  trouble, but most people ignored these warnings
• But some events in late 1929 would forever change
  the daily lives of all Americans and most of the
  world

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October 1929

• During 1929 stock prices continued to climb by
  Sept the Dow Jones Industrial Average an
  average of the stock prices of major industries
  had reached an all-time high
• In Oct, however, stock prices began to fall
  slightly, causing some banks to call in their
  loans
• Worried investors began to sell, prices fall

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The Great Crash

• President Hoover assured the nation that the
  problem was not serious, but many investors got
  scared and sold huge amounts of stocks driving
  down prices
• On Black Tuesday, Oct 29, the stock market
  collapsed as millions of stocks were sold
• This truly was the Great Crash!!

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Ripple Effect

• By Nov., the Dow Jones had fallen from 381 to
  198.7 losses totaled 30 billion and this
  contraction period was only part of the
  nations business cycle a span in which the
  economy grows then contracts
• Stock owners were the first to suffer, but the
  ripple effect quickly carried throughout the
  economy and impacted daily life for all Americans

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Daily Lives Affected

• So how did the Great Crash affect all Americans??
  only a few million were involved in stocks
• Risky loans hurt banks businesses couldnt pay
  banks didnt receive
• Consumer borrowing consumers borrowed to buy
  stuff and couldnt repay their loans

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Daily Lives Affected

• Bank runs fear drove millions to run to their
  local bank to withdraw banks had to call-in
  loans to get but people couldnt pay banks
  failed
• Bank failures when no from loans and bank
  runs, thousands closed by 1932 over 5500 closed

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Daily Lives Affected

• Savings wiped out bank failures wiped out --
  by 1933, money of 9 million savings account were
  gone
• Cuts in production businesses could not borrow
  to produce more and few people had to buy
• Rise in unemployment business had to cut back
  on production laid off workers by 1932, 25
  no work

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The Great Depression

• Further cuts in production as unemployment grew
  and incomes shrank, consumers bought less
• Small businesses and factories closed, and farm
  prices plummeted
• The Great Depression, the worst economic downturn
  in the nations history, would last from 1929 to
  1941
• A ripple effect would spread all over the world

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Impact on the World

• In August 1931, Henry Ford was forced to shut
  down and fired over 75,000 This was a sign that
  bad times were definitely here to stay
• When the US economy collapsed, the ripple
  affected other nations that relied on the US for
  (Germany)
• The Crash did not cause the Depression, both were
  results of other serious problems

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Causes of Great Depression

• An Unstable Economy national wealth was
  unevenly distributed and industry produced more
  than could be bought
• Overspeculation speculators bought large
  amounts of stock with borrowed collateral an
  item used by a borrower as payment for a loan
  the market boom was based on borrowed and
  optimism

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Causes of Great Depression

• Government Policies the Federal Reserve limited
  the money supply to discourage lending no to
  help banks or consumers
• Many Americans thought the Depression would not
  last they were wrong and society suffered
  greatly especially those who had NOT been
  involved in stocks

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Hoovervilles

• Although many professionals lost their jobs,
  those at the bottom of society were hardest hit
• Unemployment and homelessness increased some
  homeless built shanty towns called Hoovervilles
  mocking President Hoover for not solving the
  problems

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Farmers Hit Hard

• Farm prices hit bottom by 1932 and many farmers
  lost their farms when they could not repay bank
  loans
• In the South, sharecroppers and tenant farmers
  were thrown off the land and in the Midwest,
  farmers suffered one of the worst environmental
  disasters of the 20th century the Dust Bowl

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Dust Bowl

• Prolonged drought and dust storms combined with
  BAD farming practices helped create the Dust Bowl
• Plowing methods had ripped up the grass that held
  the soil in place, and when it turned to dust, it
  blew away
• Thousands fled from the Midwest, migrating to
  California in search of work relief wouldnt
  arrive until 1940s

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Stresses on Families

• The poverty of the GD strained American society
  as families crowded together in poor living
  conditions to save
• Morale was low, as men could not provide for
  their families, and many women lost their jobs to
  men
• Discrimination also increased for minorities as
  they were thrown out of work to give whites jobs

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Discrimination

• Hard times put Americans at competition for few
  jobs this produced anger, suspicion, and
  violence toward minorities
• By 1932, over 56 of blacks were out of work and
  many whites believed blacks had no right to jobs
  if whites were out of work

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Penny Auctions

• Americans survived the GD by pulling together and
  helping one another most people were willing to
  help those they saw as worse off than they were
• I.E. Farmers created what became known as penny
  auctions where they bid pennies on land and
  machines auctioned off by banks, then sold it
  back to struggling neighbors

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HOBOS

• A large number of youths also left their homes
  searching for jobs, and began riding the rails
  on trains
• They traveled across the nation (illegally) in
  search of jobs and
• These hobos sought out adventure and jobs, but
  lived a dangerous lifestyle with threats of
  arrests, shot at by farmers, and robbed by other
  hobos

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Funny Times

• For many Americans, despair was relieved by
  turning to humor, through jokes, cartoons, radio
  shows, or at the movies
• The homeless slept under Hoover blankets
  (newspapers), empty pockets turned inside out
  were Hoover flags
• Humor was an escape from the problems everyone
  was facing

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Fair Distribution of Wealth

• As bad as conditions were, most Americans did not
  call for major political changes Europe saw
  major riots, but most Americans continued to
  trust in the democratic process
• Some, however, used these times to call for a
  fairer distribution of wealth Socialists and
  Communists wished to see society based on equality

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End of Prohibition

• There were some signs of change in the 1930s
• The 21st Amendment repealed Prohibition in 1933,
  and most people welcomed it
• Prohibition had been an experiment to change
  societal problems but had failed to helped and
  even gave more power to gangsters

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Empire State Building

• For many, the symbol of hope in the GD was the
  new Empire State Building in NYC the tallest
  building in the world at the time (102 stories)
  came to represent a triumph over hardship a
  testament to mans ability to overcome obstacles

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• By the mid-1930s, the old era was fading away
  sport hero Babe Ruth retired from baseball, crime
  gangster Al Capone was convicted of tax evasion
  and sent to prison, and former Pres Coolidge
  president during the high 1920s died
• With the kidnapping and murder of the Lindbergh
  baby in 1932, America echoed with fear of the
  future and needed new leadership for a new era

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Hoovers Limited Strategy

• By 1932, Hoovers strict adherence to beliefs
  that wished to keep govt out of the business of
  helping people had limited his support from the
  public
• Hoover believed that voluntary controls by
  businesses in the US was the best way to end the
  crisis
• Hoover held to this voluntary action, but was
  unable to attract public opinion

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Governmental Action

• The people wanted ACTION by the govt they begin
  to want the govt involved in their lives
  helping them find jobs and earn a living
• Govt responds and begins programs to help put
  people to work -- for dams, public buildings,
  roads, and parks
• Boulder Dam (Hoover Dam) started in 1930

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Governmental Action

• In an attempt to protect industries from foreign
  competition, Congress passes the Hawley-Smoot
  tariff the highest import tax in history
• Europe responds with their own tariffs and
  international trade slows down
• Hoover set up the Reconstruction Finance
  Corporation (RFC), which gave govt credits to
  large industries and lent to banks

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Bonus Army of 1932

• Hoovers limited actions and his insistence that
  local govts should provide relief (not federal)
  deepened his unpopularity
• In 1932 jobless WWI vets and their families
  camped in Washington, DC, demanding payment of a
  promised bonus some stayed and Hoover called in
  fed troops, who used force to drive the Bonus
  Army out

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A New Deal for America

• This image of brutality and his IN-action for
  daily lives, would haunt Hoover during his bid
  for reelection in 1932 people wanted a change!!
• The stage is set for Franklin and Eleanor
  Roosevelt, a compassionate couple with valuable
  political experience, to offer the American
  people a new deal active govt help

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Election of 1932

• The Democrats in 1932 choose Franklin Delano
  Roosevelt to run against Hoover FDR believed
  the govt should intervene with direct action and
  promised a new deal for the American people
• FDR easily wins the election, which was a battle
  between different views of govts role in society

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