Chapter 12: The Great Depression 1928-1932

Causes of the Depression Section 1 Causes of the Depression

Prosperity Hides Troubles Optimism Sweeps Hoover to Victory In the 1920’s the U.S. economy was booming Herbert Hoover – an accomplished public servant – to run for the White House Hoover’s philosophy was cooperation and competition

Problems Plague the Agricultural Sector Farmers made up one fourth of the American workforce / to meet the need created by WWI New technology and methods created bumper crops / debts Low prices lead to less profits and fewer purchases

Wealth Is Distributed Unevenly During the 1920’s wages rose steadily and did disposable income Worker productivity increased astronomically One percent of the population earned roughly the same as the bottom 42 percent A healthy economy needs more people to buy more products which creates more wealth

Easy Credit Hides Problems Credit hid the unstable economic activities Installment plan 80% of radios and 60 % of cars were purchased in this manner This was a new mentality of buying unlike the past

The Stock Market Crashes Stock prices were based on little more than confidence Speculation – investors gambled, with money they did not have on stock increases to turn quick profits October 24 “Black Thursday” SELL SELL SELL SELL

Cont… Black Tuesday – October 29 the bottom of the market fell out 16 million shares were sold, billions were lost With a high of 381 in September to a low of 198.7 the Dow Jones dropped like a brick (today 12,891.9) Business Cycle – explained the periodic growth and contraction of economy

The Great Depression Begins The Backs Collapse Great Depression – a period lasting from 1929 to 1941 in which the economy faltered and unemployment soared People lost confidence in the economy and ran to withdraw their saving from banks ( not enough $)

Businesses Close and Unemployment Rises The fall of stock prices and slowing of consumer spending led to less production and layoffs Ect. Ect. Ect. Ect. This was like a snowball rolling down a hill

Tariffs Add to the Woes The government tried to protect American products from foreign competition using tariffs Hawley-Smoot Tariff – raised prices on foreign imports so they could not compete in the American market This would help destroy international trade

The Depression Goes Global Germany ceased their reparation payments U.S. suspended France and Britain's war debt payments International economy had largely been funded by U.S. loans

What Caused the Great Depression? Economists disagree on the exact causes of the Great Depression Milton Friedman believed that the depression resulted from a contraction in money supply John Maynard Keynes believed the lack of government interference was the cause (Read page 372)

Key Concepts How did the prosperity of the 1920’s give way to the Great Depression? What economic problems lurked beneath the general prosperity of the 1920’s? What happened on October 29, 1929? How did the stock market crash contribute to the onset of the depression? What were the primary causes of the Great Depression?

Americans Face Hard Times Section 2 Americans Face Hard Times

Misery and Despair Grip America’s Cities The Great Depression had a deep and lasting impact on the lives of the people who lived through it Every American was touch by the effects of the Great Depression directly or indirectly

Searching for a Job and a Meal Between 1921 and 1929 unemployment rates never rose above 3.7 percent by the peak of the Great Depression the rate was at 24.9 percent

Cont… Workers faced staggering layoffs and signs that read “No help wanted here” and “We don’t need nobody” Women tried to find work and many families went to soup kitchens Bread Line – people lined up for handouts from charities or public agencies

Descending Into Poverty “They used to tell me I was Building a dream And so I followed the mob. When there was earth to plow or guns to bear, I was always there, right on the job. They used to tell me I was building a dream With peace and glory ahead- Why should I be standing in line, Just waiting for bread? Once I built a railroad, I made it run, Made it run against time. Once I built a railroad, now its done- Brother can you spare a dime?” Song lyrics, “Brother Can You Spare a Dime?”

Looking for a Place to Live Americans lost their jobs, ran through their savings, sold furniture, pawned jewelry, and moved; many ended on the streets Hoovervilles – makeshift shantytowns of tents, and shacks built on public land or vacant lots

Poverty Devastates Rural America Commodity Prices Plunge Crop prices fell and debts increase again for farmers Tenant Farmers – working for bigger landowners rather them for themselves Farmers were also faced with drought They were unable to pay their bills and land was foreclosed they were force to leave

The Great Plains Becomes a Dust Bowl Dust Bowl – high plains regions of Texas, Oklahoma, Kansas, New Mexico, and Colorado

Cont…

Desperation Causes Migration Okies – Dust Bowl refugees, regardless of their states of origin Up to 800,000 people migrated out of Missouri, Arkansas, Oklahoma, and Texas (looking for jobs)

Few Americans Escape Hard Times The Depression Attacks Family Life Hoover coined the term depression because he thought it sounded better then “panic” or “crisis” Men felt they had betrayed their families, once “breadwinners” lost their familial status. If employed they felt guilty for their luck while many of their friends and family suffered Women and children suffered too. Women “made due,” children roamed free

Minorities Suffer Hardships Minorities were the last to be hired and first to be fired Blacks used resources like family and religion to cope “The Negro was born in depression, It didn’t mean too much to him, The Great American Depression, as you call it. There was no such thing. The best he could be was a janitor or a porter or shoeshine boy. It only became official when it hit the white man.”

Cont… Repatriation – efforts by local, state and federal governments to encourage or coerce Mexican immigrants and their naturalized children to return to Mexico

Key Concepts How did the Great Depression affect the lives of urban and rural Americans? How did the Great Depression Affect American cities in the early 1930s? How did the Dust Bowl make life even more difficult for farmers on the Great Plains? How did the depression take a toll on women, children, and minorities in America?

Hoover’s Response Fails Section 3 Hoover’s Response Fails

Cautious Response to Depression Fails Hoover Turns to Volunteerism Though Hoover did not cause the Great Depression he worked tirelessly to solve the nations problems Hoover simultaneously called for the government to reduce taxes, lower interest rates, and create public-works programs He asked wealthy Americans to give more to charities

Volunteerism Fails to Bring Relief Volunteerism did not work Businesses cut wages and laid off workers, and farmers boosted production because it was in the best interests of their families Localism – the policy whereby problems could best be solved at local and state levels Hoover also favored “rugged individualism”

Hoover Adopts More Activist Policies Hoovervilles and homelessness were on the rise, trucks pulled by horse or mule were called “Hoover wagons,” campfires “Hoover heaters,” cardboard boxes “Hoover houses.”

Cont… Reconstruction Finance Corporation (RFC) – passed in 1932, it gave more than a billion dollars of government loans to railroads , business, and banks Trickle-Down economics – the idea that money poured into the top of the economic pyramid will trickle down to the base

Cont… Hoover Dam – “Boulder Dam,” construction brought much needed employment to the Southwest

Americans Protest Hoover’s Failures Some Urge Radical Change Some thought the answer to the country’s problems was the rejection of capitalism and the acceptance of socialism or communism.

The Bonus Army Marches on Washington World War I veterans seeking the bonus Congress had promised them (in 1945) converged on the Washington D.C. demanding early payment in 1931 Bonus Army – name given to these veterans

Hoover Orders the Bonus Army Out Douglas MacArthur – (General) along with federal troops were asked by Hoover to “surround the affected area and clear it without delay”