Chapter 12: The Great Depression

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Chapter 12 The Great Depression
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Section 1 The Nations Sick Economy

• Economic Troubles on the Horizon
• A. Industries in Trouble
• 1. A number of key industries were barely
  making profit in the mid 1920s.
• 2. There was a diminished need for many goods
  produced in wartime.
• 3. Production of consumer goods, homes, and
  virtually every other product declined.

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B. Farmers need a lift

• 1. Problems
• a. Demand for farm products lower than prior to
  WWI
• Many farmers had gone deep into debt to meet the
  needs of WWI.
• Many farmers began to default on their loans.

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• McNary Haugen bill Proposal to prop up the
  farming sector within the U.S.
• Price supports Support of a certain price level
  at or above market value by the U.S. government
• 3 parts of the bill
• Government to buy surplus of crops at guaranteed
  prices..above market value
• Government sell those crops overseas for whatever
  they can get
• To make up for losses..the government would
  increase taxes on food.
• in other words..the loss would be spread
  throughout society rather than on farmers alone.

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Consumers Have less to Spend

• 1. As incomes fell ---- families had less money
  to spend on necessities.

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D. Living on Credit

• Credit Arrangement between consumer and
  business where the consumer buys now and pays
  later.
• Many Americans had been living beyond their
  means
• 2. Businesses were encouraging Americans to use
  credit..it was the only way many could buy

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E. Uneven Distribution of Income

1. Less than 50 of U.S. families earned 1500 per
   yr.
2. Wealthy class kept on getting richer and the
   middle class was disappearing..and becoming part
   of the growing lower class.
3. The prosperity experienced during the roaring
   20s never reached most Americans.

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F. A New President

• 1. Alfred E. Smith Democratic Governor of NY.
  Career politician, Catholic (so?), opposed
  prohibition.

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• 2. Herbert Hoover Republican, Worked in
  Wilson, Coolidge, and Hardings administrations.
  Had full support of the Republican Party and
  could point to the 1920s as years of prosperity
  under republican leadership.

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II. The Stock Market Comes Tumbling Down

• By 1929, many economists were warning of serious
  economic downturns.
• The Stock Market became the most visible symbol
  of the American economy.
• Many Americans thought that investing in the
  market was their way to get rich.

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Stock Market Floor 1920s
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• Dreams of Riches in the Stock Market
• 1. bull market Period of time when the stock
  markets prices are rising.
• 2. by 1929 nearly 4 million Americans owned
  stock.
• 3. speculation buying of stocks and bonds on
  the chance that you may make a quick profit.

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• buying on margin Paying only a of the stocks
  price as a down payment and borrowing the rest
  from the brokerage house.
• a. The idea being that you would make your
  money on the stock and then sell it to pay back
  your money.
• b. If prices went up - if not ??

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B. Black Tuesday

• B. Black Tuesday October 29, 1929 The Day
  that the bottom fell out of the stock market
  Prices crashed!
• BLACK TUESDAY (506)

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• People dumped their stocks as fast as they could
• Most people lost everything that they owned or
  worked for their entire lives.
• By 11/1/1929 - 30 billion had been lost
• Where did it go? Into the pockets of the
  wealthiest investors who were able to sell all
  their stocks before anyone realized what was
  happening.

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C. Causes of the Great Depression

• Great Depression Economic downturn in the U.S.
  that lasted from 1929 1941.
• Old and decaying industrial base
• Crisis in the farming sector
• Easy credit high debt
• Unequal distribution of wealth

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• Dow Jones Industrial Average The average value
  of a share of stock from the nations 30 largest
  firms that trade their stock on the U.S. stock
  market.
• This is a standard measure for the condition of
  the U.S. economy

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III. Financial Collapse

• Banks collapsed
• 1. people panicked and began to withdraw all
  their money out of the banks
• a. soon banks ran out of cash and could not
  cover the withdraws and had to close down.
• 2. By 1933 6k banks had shut down in the U.S.

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B. Businesses failed

1. Nations output of goods and services dropped 50
   over the depression
2. 85,000 businesses went bankrupt

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C. Economy spiraled out of Control

1. Millions of workers lost their jobs
2. 23.8 unemployment rate in 1932. ALL TIME HIGH!!

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D. Worldwide Shockwaves

• Hawley-Smoot Tariff Was designed to help
  farmers by reducing foreign competition.
• Highest tariff in history
• Other countries raised tariffs on U.S. goods
• Further reduced the amount of American goods
  being bought.\
• 2. Huge depression in Europe prevented them from
  buying American products and helping to rebuild
  our economy.

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Section 2 Hardship and Suffering during the
Depression

• The Depression Devastates Peoples Lives
• A. Depression in the Cities
• 1. shanty towns Little towns consisting of
  shacks on the outskirts of towns.

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Shantytown Shack
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2. soup kitchens Places where food is offered
by charitable organizations to people who are
needy.
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• 3. Bread Lines LONG lines of people waiting
  for free bread a often supplied by charitable
  organizations.

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B. Depression in Rural America

• Between 1929 1932 400,000 farmers lost their
  farms.
• The one advantage that farmers had over city
  dwellersgrowing food, was then gone.

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C. The Dust Bowl

• 1. Dust bowl Territory of the Great Plains
  (Texas to N. Dakota). Called this because of
  intense wind storms that whipped up large dust
  storms.

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Dust Storm
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• 2. Okies A derogatory term used to describe
  migrants from Oklahoma who left their home state
  to find a better life out of the dust bowl.

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II. Effects on American Families

• Family Lives Changed
• 1. families had to turn to each other to
  survive..move in with relatives etc..
• 2. The stress of the Depression led many
  families to break up.

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B. Men in the streets/on the rails

1. Approx 2 million men wandered the U.S. looking
   for ?????
2. The hobos as they were called, became the
   uprooted, unwanted members of society.

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Unwanted!?
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• 3. Direct Relief Cash payments, handouts, food
  provided to the needy by the government.
• There was NO SUCH system in this time period
• Citizens began to beg for/demand it.
• Hoover Pull yourself up by your bootstraps.

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C. Women and Children struggle to survive.

1. Penny pinchers Women worked very hard to
   scrimp and scrape to get their families by. Made
   their own clothes, canned food.
2. Women were forced to work outside the home.
3. Children suffered the worst in many cases they
   were left to fend for themselves.
4. By 1933 2,600 schools were shut down 300k
   students without school.
5. Many children had to work in sweat shops to help
   the family.

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D. Social Psychological Effects of the
Depression

1. Many were demoralized lost their will to live.
2. Suicide rate rose 30. Mental health admissions
   Tripled.
3. No ecducation, Dr. and Dentist put off, put off
   marriage/kids, basically put their lives on hold.
4. Achieving financial security became a life long
   pursuit of manya lifetime of scraping by left
   permanent marks on peoples souls.

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Section 3 Hoover Struggles with the Depression

• Hoover Tries to Reassure the Nation
• most thought that the Depression was just a
  normal part of the business cycle.

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A. Hoovers Philosophy of Government

1. The economy should function with minimal
   interference from the government.
2. Government should take a ROLE in solving economic
   issues like this
3. Hoover was a humanitarian.
4. Rugged individualism The idea that people
   should succeed on their own, not rely on others
   to solve their problems.

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E. Hoover takes cautious steps

1. Hoover was not a career politician so..he found
   it tough to compromise.
2. He was VERY cautious as to how to handle issues.
3. Hoover asked businesses to work hard to help end
   the crisis without government assistance.
4. BasicallyHoover did not do much to solve the
   issues that faced society. And people blamed him
   for making things worse not better.

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F. Democrats win 1930 Congressional Elections

1. Obviously the Republicans had failed the people.
2. Democrats quickly won control of both the House
   and the Senate. (Much like 2008)
3. People began to call shantytownshoovervilles

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III. Hoover takes action

• Boulder Dam A power plant project designed to
  build a hydroelectric facility AND provide jobs
  to jumpstart the economy.
• Hoover was finally listening to the people
• 800 million cost

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A. Boulder Dam Other Government Projects

1. Public Works Programs to build roads, dams,
   power plants, RR etc.. To provide jobs and
   stimulate the economy.
2. Federal Home Loan Bank Lowered bank interest
   rates for mortgages and allowed farmers to
   refinance their loans so they would not lose
   their farms.

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• Reconstruction Finance Corporation Was
  authorized by Congress to provide emergency funds
  to banks, insurance companies RR.

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B. Gassing the Bonus Army

• Bonus Army WWI Vets who wanted to get their
  military service bonus NOW when they needed it
  instead of when the government promised them.
• 1 per day served 1.25 served overseas
• Not payable until 1945.

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• 2. Walter Waters Leader of the Bonus Armys
  march to Washington D.C. to protest Congress
  previous decision to not give the bonus early.

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3. Congress voted again on the issue and voted
NO.Vets stayed in protest
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4. President Hoover ordered the protestors
removed

• a. General Douglas MacArthur used the U.S.
  Army
• b. Used bayonets to push protestors out.
• c. Tear gas was deployed
• 1k people gassed, 1 infant dead, 8 yr
• old boy blinded.

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Burning the Encampments
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1. The whole thing was a public relations nightmare
   for the President as his faltering image now
   looked even worse.
2. Citizens were outragedand the Presidential
   election was just around the corner.

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Chapter 13 The New Deal
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Section 1 A New Deal Fights the Depression

• Electing Franklin Deleno Roosevelt (FDR)
• Republicans knew they had little chance of
  getting Hoover Re-elected.
• Gov. of New York, reform minded fix
  unemployment.
• Can do attitude that voters wanted. He wasnt
  afraid to try to fix things.

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• Waiting for FDR to take over
• Americas problems worsened while waiting for
  Marchs inauguration.
• New Deal FDRs plan for fixing economic
  problems of U.S.
• 3. 100 Days Period from 3/9-6/16 in which FDR
  and his government intensely passed laws and
  provisions designed to fix our economy. Fifteen
  pieces of legislation passed in this time.

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• C. Reforming banking and finance
• Bank Holiday On March 5, 1933 FDR declared a
  national bank holiday. All banks to close until
  they could prove that they were stable.
• Banking Relief Act Allowed the U.S. Treasury
  Department to inspect banks to determine if they
  were stable enough to open.

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• D. Fireside Chats Radio talks that FDR gave
  that discussed issues affecting the people. They
  were informal and relaxed and it helped ease many
  peoples fears about the Depression. FDR would
  explain his actions and New Deal policies so
  people would understand what he and the
  Government were doing.

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1st fireside chat
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1. We have provided the machinery to restore our
   financial institutions and it is now up to you to
   make it work.
2. Glass-Steagall Banking Act Established the
   (FDIC) which guaranteed that all bank deposits
   would be available for withdrawal.
3. Federal Securities Act required all companies
   selling shares on the stock market to provide
   complete information on the companys finances or
   be liable for any misrepresentations.

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II. Helping the American People

• Assisting Farmers
• Agricultural Adjustment Act Sought to raise
  farm prices by reducing crop output. Government
  paid farmers for letting their fields stay empty.
• Reduced quantity would raise prices

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• B. Providing Work Projects to provide relief
  through paying jobs.
• Civilian Conservation Corps Put young men
  (18-25) to work building roads, developing parks,
  planting trees, helping in soil erosion and flood
  prevention projects sponsored by the government
  paid 30/week, 25/week was sent home to the
  family.
• 2. Federal Emergency Relief Administration
  Provided 500 million in direct relief for
  citizens for food, clothing and housing.

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• Public Works Administration Provided money to
  states to create jobs. Mainly the construction
  of schools and public buildings.
• Civil Works Administration Replaced the PWA.
  More money and effort to find jobs for the
  unemployed. Paid for the building of 40k schools
  and paid 50k teachers.
• 3. National Industrial Recovery Act Sought to
  promote industrial growth by mandating fair
  business practices, set prices for many products,
  banned child labor, and set standards for wages
  and hours.

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C. Helping People with Housing

• 1. Home Owners Loan Corporation Provided
  government funded loans to families who faced
  foreclosure on their homes. Led to the creation
  of the FHA which continues to help homeowners
  today.

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III. New Deal comes under attack

• A. Critics on both sides
• Liberals believed the New Deal did not go far
  enough to help people stuck in poverty.
• Conservatives believed that FDR spent way too
  much money on direct relief for the citizens.

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• B. Supreme Court Reacts to New Deal
• Supreme Court ruled that the National Industry
  Recovery Act was unconstitutional because the
  Federal Government had no authority to set the
  laws and procedures that they wanted to set.
  Just the beginning as the SC challenged the
  legality of many of FDRs policies/programs.
• FDR accused of stacking the court with Supreme
  Court Justices that would pass his policies.
• As Supreme Court Justices retired, quit ectFDR
  was able to appoint seven Justices that obviously
  he viewed as allies to his plans.

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C. Three Fiery Critics

• 1. Charles Coughlin Catholic Priest that had a
  fiery radio talk show that was critical of FDRs
  policies and practices as he felt they were not
  strong enough. Was asked by the Catholic Church
  to back off.

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• 2. Francis Townsend A physician and Health
  Care officer in California. Believed that FDR
  wasnt doing enough to help the needy. Believed
  that the government should provide monthly cash
  benefits to the aged. That would help the
  economy by putting more cash into circulation.

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• 3. Huey Long Louisiana Senator, and eventual
  Governor who fought for increased distribution of
  wealth among all citizens in the U.S. Even
  campaigned for the Presidency. His main
  program/policy (Share our Wealth) drew massive
  amounts of supporters.
• a. Huey Long was assassinated by a gunman at the
  height of his popularity.

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Section 2 The Second New Deal Takes Hold

• I. The Second Hundred Days
• name given to the second new deal

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• A. Eleanor Roosevelt First lady who prodded her
  husband/President to work for the forgotten
  man.
• She traveled the country seeking out social
  conditions that needed improving.
• She worked tirelessly to inform the President of
  the immense suffering of the American people.

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• B. Re-Electing FDR
• Are you better of today than four years ago
• FDR won re-election in 1936.

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II. Helping Farmers

• A. Farming communities continued to suffer the
  worst.
• B. Soil Conservation and Domestic Allotment Act
  Paid farmers for not growing soil depleting
  crops like cotton.
• C. Attempts were made to help sharecroppers,
  migrant workers and other poor farmers.
• Resettlement Administration provided loans to
  small farmers to help set up on new land and get
  a fresh start.
• Was replaced by the farm security administration.

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III. Helping Youth, Professionals, and Others

• A. Works Progress Administration (WPA) Set out
  to create as many jobs as possible as quickly as
  possible.
• Had eight million workers who built airports,
  schools, roads, parks, libraries, hospitalsetc..
• You worked, your got a paycheck, and you got
  some dignity
• Teachers, musicians, and artists were also hired
  for their abilities.

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• B. National Youth Administration (NYA) - Was
  created to help the youth of America. 200k
  students received aid and assistance.

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IV. Labor and Other Reforms

• A. Improving Labor Conditions
• National Labor Relations ACT (Wagner ACT) -
  Defined unfair labor practices.
• Established the national labor relations board
  which investigated claims of unfair or illegal
  business practices.
• Threatening workers, unjust firings, banning
  labor unions ect

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• Fair Labor Standards ACT Established maximum
  hours and minimum wages.
• Old age insurance for workers 65 and older and
  their spouses. (social security)
• Unemployment compensation
• Aid to families with dependant children and the
  disabled.