THE GREAT DEPRESSION BEGINS

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THE GREAT DEPRESSION BEGINS
Photos by photographer Dorothea Lange
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SECTION 1 THE NATIONS SICK ECONOMY
As the 1920s advanced, serious problems
threatened the economy while Important industries
struggled, including

• Agriculture
• Railroads
• Textiles
• Steel
• Mining
• Lumber
• Automobiles
• Housing
• Consumer goods

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FARMERS STRUGGLE

• No industry suffered as much as agriculture
• During World War I European demand for American
  crops soared
• After the war demand plummeted
• Farmers increased production sending prices
  further downward

Photo by Dorothea Lange
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CONSUMER SPENDING DOWN

• By the late 1920s, American consumers were buying
  less
• Rising prices, stagnant wages and overbuying on
  credit were to blame
• Most people did not have the money to buy the
  flood of goods factories produced

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GAP BETWEEN RICH POOR

• The gap between rich and poor widened
• The wealthiest 1 saw their income rise 75
• The rest of the population saw an increase of
  only 9
• More than 70 of American families earned less
  than 2500 per year

Photo by Dorothea Lange
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HOOVER WINS 1928 ELECTION

• Republican Herbert Hoover ran against Democrat
  Alfred E. Smith in the 1928 election
• Hoover emphasized years of prosperity under
  Republican administrations
• Hoover won an overwhelming victory

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Young Hoover supporter in 1928
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THE STOCK MARKET

• By 1929, many Americans were invested in the
  Stock Market
• The Stock Market had become the most visible
  symbol of a prosperous American economy
• The Dow Jones Industrial Average was the
  barometer of the Stock Markets worth
• The Dow is a measure based on the price of 30
  large firms

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STOCK PRICES RISE THROUGH THE 1920s

• Through most of the 1920s, stock prices rose
  steadily
• The Dow reached a high in 1929 of 381 points
  (300 points higher than 1924)
• By 1929, 4 million Americans owned stocks

New York Stock Exchange
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SEEDS OF TROUBLE

• By the late 1920s, problems with the economy
  emerged
• Speculation Too many Americans were engaged in
  speculation buying stocks bonds hoping for a
  quick profit
• Margin Americans were buying on margin
  paying a small percentage of a stocks price as a
  down payment and borrowing the rest

The Stock Markets bubble was about to break
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THE 1929 CRASH

• In September the Stock Market had some unusual up
  down movements
• On October 24, the market took a plunge . . .the
  worst was yet to come
• On October 29, now known as Black Tuesday, the
  bottom fell out
• 16.4 million shares were sold that day prices
  plummeted
• People who had bought on margin (credit) were
  stuck with huge debts

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By mid-November, investors had lost about 30
billion
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The Cycles

1. Once the market began to slide, stock brokers
   raced to sell stocks, which caused prices to drop
   further, and more stocks to sell, creating a
   downward spiral.
2. Soon investors, lost tons of money, which led to
   stock brokers losing their money, which came from
   banks who then lost their money.

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The Cycles

• 3. Banks not only lost money from stock loans,
  but soon businesses and people could not repay
  their loans as well.
• Banks began to fail and close, causing people who
  had kept their money in banks to lose everything
  as well.
• With banks and businesses failing, unemployment
  rose, and the downward cycles continued.

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THE GREAT DEPRESSION

• The Stock Market crash signaled the beginning of
  the Great Depression
• The Great Depression is generally defined as the
  period from 1929 1940 in which the economy
  plummeted and unemployment skyrocketed
• The crash alone did not cause the Great
  Depression, but it hastened its arrival

Alabama family, 1938 Photo by Walter Evans
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FINANCIAL COLLAPSE

• After the crash, many Americans panicked and
  withdrew their money from banks
• Banks had invested in the Stock Market and lost
  money
• In 1929- 600 banks fail
• By 1933 11,000 of the 25,000 banks nationwide
  had collapsed

Bank run 1929, Los Angeles
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GNP DROPS, UNEMPLOYMENT SOARS

• Between 1928-1932, the U.S. Gross National
  Product (GNP) the total output of a nations
  goods services fell nearly 50 from 104
  billion to 59 billion
• 90,000 businesses went bankrupt
• Unemployment leaped from 3 in 1929 to 25 in
  1933

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HAWLEY-SMOOT TARIFF

• The U.S. was not the only country gripped by the
  Great Depression
• Much of Europe suffered throughout the 1920s
• In 1930, Congress passed the toughest tariff in
  U.S. history called the Hawley- Smoot Tariff
• It was meant to protect U.S. industry yet had the
  opposite effect
• Other countries enacted their own tariffs and
  soon world trade fell 40

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CAUSES OF THE GREAT DEPRESSION

• Tariffs war debt policies
• U.S. demand low, despite factories producing more
• Farm sector crisis
• Easy credit
• Unequal distribution of income

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HOOVERS RESPONSE

• Hoover believed that the economic downturn would
  soon pass.
• He called for voluntary action
• Hoover asked business leaders to pledge not to
  cut wages or production.
• He urged city and state governments to stimulate
  local economies through building projects.
• - However, because this was not mandatory many
  did not listen and it did not work!

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HOOVERS RESPONSE

• Hoover funneled aid to farmers through the
  Agricultural Marketing Act, which helped farmers
  set up cooperative marketing associations.
  However, the act could do nothing to help the
  thousands of individual farmers who went bankrupt
  in the early 1930s.
• Hoovers efforts, did not work! The early 1930s
  saw declining incomes, rising unemployment, and
  mounting business failures.

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HOOVER TAKES ACTION TOO LITTLE TOO LATE

• Hoover gradually softened his position on
  government intervention in the economy
• He created the Federal Farm Board to help farmers
  
• He also created the National Credit Organization
  that helped smaller banks
• His Federal Home Loan Bank Act and Reconstruction
  Finance Corp were two measures enacted to protect
  peoples homes and businesses

Hoovers flurry of activity came too late to save
the economy or his job
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TOO LITTLE, TOO LATE

• Reconstruction Finance Corporation (RFC). The RFC
  was authorized to dispense 2 billion in
  loansmore in federal aid than ever requested by
  a Presidentto faltering banks, insurance
  companies, and railroads.
• - This upset everyday workers because the
  money was going to big businesses not in
  there pockets.
• - This trickle-down approach failed.

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TOO LITTLE, TOO LATE

• Emergency Relief Act, which approved additional
  loans to state governments for unemployment
  relief. However, state governments did not
  qualify for the loans unless they were on the
  verge of bankruptcy.
• With wages dropping, unemployment growing, and so
  little money trickling down from relief measures,
  resentment grew among those hardest hit by the
  Depression.

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BONUS ARMY

• A 1932 incident further damaged Hoovers image
• That spring about 15,000 World War I vets arrived
  in Washington to support a proposed bill
• The Patman Bill would have authorized Congress to
  pay a bonus to WWI vets immediately
• The bonus was scheduled to be paid in 1945 ---
  The Army vets wanted it NOW

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BONUS ARMY TURNED DOWN

• Hoover called the Bonus marchers, Communists and
  criminals
• On June 17, 1932 the Senate voted down the Putnam
  Bill

Thousands of Bonus Army soldiers protest Spring
1932
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BONUS MARCHERS CLASH WITH SOLDIERS

• Hoover told the Bonus marchers to go home most
  did
• 2,000 refused to leave
• Hoover sent a force of 1,000 soldiers under the
  command of General Douglas MacArthur and his aide
  Dwight Eisenhower

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AMERICANS SHOCKED AT TREATMENT OF WWI VETS

• MacArthurs 12th infantry gassed more than 1,000
  marchers, including an 11-month old baby, who
  died
• Two vets were shot and scores injured
• Americans were outraged and once again, Hoovers
  image suffered

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SECTION 2 HARDSHIPS DURING DEPRESSION

• The Great Depression brought hardship,
  homelessness, and hunger to millions
• Across the country, people lost their jobs, and
  their homes
• Some built makeshifts shacks out of scrap
  material
• Before long whole shantytowns (sometimes called
  Hoovervilles in mock reference to the president)
  sprung up

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SOUP KITCHENS

• One of the common features of urban areas during
  the era were soup kitchens and bread lines
• Soup kitchens and bread lines offered free or
  low-cost food for people

Unemployed men wait in line for food this
particular soup kitchen was sponsored by Al Capone
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CONDITIONS FOR MINORITIES

• Conditions for African Americans and Latinos were
  especially difficult
• Unemployment was the highest among minorities and
  their pay was the lowest
• Increased violence (24 lynchings in 1933 alone)
  marred the 1930s
• Many Mexicans were encouraged to return to
  their homeland

As conditions deteriorated, violence against
blacks increased
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RURAL LIFE DURING THE DEPRESSION

• While the Depression was difficult for everyone,
  farmers did have one advantage they could grow
  food for their families
• Thousands of farmers, however, lost their land
• Many turned to tenant farming and barely scraped
  out a living

Between 1929-1932 almost ½ million farmers lost
their land
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THE DUST BOWL

• A severe drought gripped the Great Plains in the
  early 1930s
• Wind scattered the topsoil, exposing sand and
  grit
• The resulting dust traveled hundreds of miles
• One storm in 1934 picked up millions of tons of
  dust from the Plains an carried it to the East
  Coast

Kansas Farmer, 1933
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Dust storm approaching Stratford, Texas - 1934
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Storm approaching Elkhart, Kansas in 1937
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Dust buried cars and wagons in South Dakota in
1936
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HARDEST HIT REGIONS

• Kansas, Oklahoma, Texas, New Mexico, and Colorado
  were the hardest hit regions during the Dust Bowl
• Many farmers (Okies) migrated to California and
  other Pacific Coast states

Boy covers his mouth to avoid dust, 1935
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Photographer Dorothea Lange captures a family
headed west to escape the dust storms
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HOBOES TRAVEL AMERICA

• The 1930s created the term hoboes to describe
  poor drifters
• 300,000 transients or hoboes hitched rides
  around the country on trains and slept under
  bridges (thousands were teenagers)
• Injuries and death was common on railroad
  property over 50,000 people were hurt or killed

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EFFECTS OF DEPRESSION

• Suicide rate rose more than 30 between 1928-1932
• Alcoholism rose sharply in urban areas
• Three times as many people were admitted to state
  mental hospitals as in normal times
• Many people showed great kindness to strangers
• Additionally, many people developed habits of
  savings thriftiness

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SECTION 3 HOOVER STRUGGLES WITH THE DEPRESSION

• After the stock market crash, President Hoover
  tried to reassure Americans
• He said, Any lack of confidence in the economic
  future . . . Is foolish
• He recommended business as usual

Herbert Hoover
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HOOVERS PHILOSOPHY

• Hoover was not quick to react to the depression
• He believed in rugged individualism the idea
  that people succeed through their own efforts
• People should take care of themselves, not depend
  on governmental hand-outs
• He said people should pull themselves up by
  their bootstraps

Hoover believed it was the individuals job to
take care of themselves, not the governments
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HOOVERS SUCCESSFUL DAM PROJECT

• Hoover successfully organized and authorized the
  construction of the Boulder Dam (Now called the
  Hoover Dam)
• The 700 million project was the worlds tallest
  dam (726 feet) and the second largest (1,244 feet
  long)
• The dam currently provides electricity, flood
  control and water for 7 western states

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Hoover had little chance to be re-elected in 1932
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Coping with the Depression

• Books popular books such as Gone with the Wind
  allowed people to forget their circumstances
• Movie and radio became an escape from everyday
  life

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Automobiles

• People held onto their cars despite their dire
  economic circumstances as a way to feel like they
  were not so bad off and as a status symbol
• This allowed the auto industry to avoid big
  losses during the depression