1. Chapter 14

2. Chapter Overview The economic boom of the 1920’s collapses in 1929 as the U.S. enters a deep economic depression. Millions of Americans lose their jobs, and President Hoover is unable to end the downslide.

3. The Nation’s Sick Economy  Key industries (textile, steel, railroad) struggled through the 1920’s due to new technology  Wartime industries no longer in high demand  Housing Starts were down

4. Remember from the 1920’s? Review…don’t copy  Superficial Prosperity Credit—installment plans Growing gap between workers and management Key industries suffered losses (RR, Iron, Farm)

5. The Nation’s Sick Economy  During WWI, FARM prices UP as international demand UP  After the war, prices DROP 40%  Boosted production, but caused prices to fall further  Many farms foreclosed and farmers defaulted on their loans

6. The Nation’s Sick Economy  Congress tried to help farmers  McNary-Haugen Bill—called for price supports (government would buy surplus crops at guaranteed prices and sell them on the world market)

7. The Nation’s Sick Economy  Consumers were buying less due to 1) Rising prices 2) Stagnant wages 3) Overbuying on CREDIT 4) Unbalanced distribution of income  Wealthiest 1% income rose 75%, while more than 70% of families earned less than $2,500 per year

8. The Nation’s Sick Economy  Election of 1928 Herbert Hoover vs. Alfred E. Smith  Republican Herbert Hoover won “We in America are nearer to the final triumph over poverty than ever before” “A chicken in every pot”

9. The Nations Sick Economy  Dow Jones Industrial Average —A measure based on the stock prices of 30 representative large firms trading on the New York Stock Exchange Dow Jones Industrial Average  1920’s Dow reached 381 pts (300 higher than only 5 years earlier)  Many investors were average citizens hoping to strike it rich

10. The Nation’s Sick Economy  This unrestrained buying/selling led to upward spiral Speculation—bought stock and bonds on chance of quick profit, ignoring risks Buying on a margin—paying small % of stock’s price as down payment and borrowing the rest  No government intervention

11. The Nation’s Sick Economy  Early Sept. 1929 stock prices fell  Black Tuesday—Oct 29, 1929-Shareholders frantically tried to sell stocks before the market dropped more  Forced to sell for much less than they paid  Signaled the beginning of the Great Depression

12. The Stock Market Crash: Dazed investors gather outside the New York Stock Exchange following "Black Thursday," October 24.

13. The Nation’s Sick Economy  People panicked and withdrew $ from banks  1929, 600 banks closed; 1933 11,000 of the nation’s 25,000 banks had failed  90,000 businesses went bankrupt  1 out of 4 people unemployed

14. The Nation’s Sick Economy  Causes of Great Depression Reduced foreign markets Crisis in farming Availability of easy credit Unequal distribution of income

15. Hardship & Suffering During the Depression  Depression’s affect on cities Homeless/Shantytowns Soup Kitchens & Bread lines—free/low cost food Racial discrimination—unemployment struck African Americans and Latinos first Demands that immigrants be deported

16. Hardship & Suffering During the Depression  Rural Areas 1929-1932, about 400,000 farms were lost 1 Advantage—farmers grew their own food Many farmers who lost their land turned to tenant farming

17. Hardship & Suffering During the Depression  Dust Bowl  Years of plowing removed protective layer of soil  Drought and winds of 1930’s scattered topsoil, exposing grit & sand—the dust traveled miles  Kansas, Oklahoma, Texas, New Mexico, Colorado became known as the Dust Bowl —farmers left land & went West

18. Hardship & Suffering During the Depression  American Family—stayed home, played board games, & listened to the radio Monopoly—1933  Men walked the streets in search of jobs 300,000 Hoboes  Women tried to get jobs but were resented for being selfish

19. Hardship & Suffering During the Depression  Children—malnutrition led to disease or death  By 1933, 2,600 schools across the nation were shut down  Between 1928-1933, suicide rate rose more than 30%  3x as many people admitted to mental hospitals Every aspect of life changed

20. Questions 1. What industrial weaknesses signaled a declining economy in the 1920’s? 2. What did the experience of farmers and consumers at this time suggest about the health of the economy? 3. How did speculation and buying on a margin cause stock prices to rise? 4. What happened to ordinary workers during the Great Depression? 5. How did the Great Depression affect the world economy? 6. How did the Great Depression affect minorities? (2) 7. Why did so many men leave their homes during the Great Depression? (2) 8. How did the Great Depression affect women and children? (2)

21. Hoover Struggles with the Depression  Hoover tried to reassure the nation that the economy was on solid foundation and to remain calm  Hoover felt government should get involved minimally Help competing groups negotiate Encourage, not control Opposed federal welfare—handouts would only weaken Individuals, Charities, & Private Organizations should help care for the less fortunate Asked employees not to cut wages; labor leaders not to strike

22. Hoover Struggles with the Depression  Farmers react to Hoover—burned crops, blocked roads going to market in hopes of raising prices, refused to work  Shantytowns = “Hoovervilles”  Newspapers used to cover homeless = “Hoover Blankets”  Empty pockets inside out = “Hoover Flags”

23. Hoover Struggles with Depression  Hoover Acts Created Federal Farm—helped raise crop prices National Credit Corporation—loan $ to small banks to save bankruptcy Federal Home Loan Bank Act—lowered mortgage rated for homeowners & allowed farmers to refinance Glass-Steagall Banking Act—separate investment from commercial banking Reconstruction Finance Corporation—Authorized $2 Bill. for emergency financing for banks, life insurance, railroads, and other large businesses ○ $ would trickle down

24. Hoover Struggles with Depression  Bonus Army marches on Washington  10,000-20,000 WWI Vets and families to support the Patman Bill Authorized government to pay bonus to vets who had not been compensated for wartime service  Hoover opposed legislation; Senate voted down Disbanded Bonus Army with 1,000 soldiers & tear gas Public outraged at treatment of Veterans  Hoover’s image damaged even more