Unit 12/13 1930s

Causes of Great Depression Stock Market Crash of 1929 (Black Tuesday) Economic Boom of 1920s Overproduction & Underconsumption Speculation, Shaky Banking, and Inflated Stock Prices High Tariffs Restricted International Trade

Effects of the Stock Market Crash The stock market crash set off a “chain reaction” in the American economy. People who lost money on the market could no longer invest of buy as many goods. Business became nervous about the new economic environment Businesses went bankrupt and laid off workers, creating mass unemployment. People lost their savings and could not pay off loans. Banks failed. Prices and demand for goods fell. American banks that had given loans to European countries to rebuild their war-torn economies now wanted their money back. The Depression spread to Europe when these loans were recalled

Human Experience During the Great Depression No “Safety Nets” existed – no social security, no unemployment benefits, etc. People lost their homes, their farms, began begging for food, etc. Children suffered malnutrition Men began traveling from town to town looking for work Shantytowns sprung up full of homeless people Some people relied on charities to provide food and shelter

Herbert Hoover’s Response to the Great Depression Believed in laissez-faire economics Increased federal funding for some building projects – Hoover Dam Rejected direct federal relief for unemployed workers Established the Reconstruction Finance Corporation (RFC) to give loans to banks & businesses Federal Reserve System made it worse by contracting the money supply “Hoovervilles” formed and WWI veterans marched on D.C. for their bonus money

Franklin Roosevelt’s Response to the Great Depression The New Deal – “Relief, Recovery, Reform” Bank Holiday – Roosevelt closed all banks right after his inauguration F.D.I.C. would insure bank deposits S.E.C. would oversee the operation of the stock market Passed the C.C.C., P.W.A., and C.W.A. to help get the unemployed working again The T.V.A. helped to modernize the south with electricity and dams for flood control National Recovery Administration – set product prices, limited production, reduced the work week to 40 hours, established a minimum wage – later declared unconstitutional

Franklin Roosevelt’s Response to the Great Depression The 2nd New Deal – Reform and Security W.P.A. spent over $11 billion and put 9 million people to work Social Security Act – most important law during the New Deal – included unemployment insurance, retirement benefits, and disability/orphaned grants National Labor Relations Act – gave workers the right to unionize “Court Packing” Plan – fearing the Supreme Court would keep overturning his legislation, Roosevelt proposed replacing any justice over 70 years old Ultimately, WWII preparations pulled the U.S. from the Great Depression

Effects of the New Deal Positive Negative Reduced Unemployment Increased the national debt Established “safety nets” Increased federal taxes Introduced regulatory agencies Increased size of federal bureaucracy Increased power of organized labor Completed valuable public works

Reactions to the New Deal The New Deal was supported by many Americans and created a new Democratic coalition: workers, the poor, minority groups, and the “Solid South” Some critics thought the New Deal was not enough – Huey Long wanted to tax the rich and provide guaranteed family income Biggest New Deal threat was the Supreme Court which ruled many New Deal policies and programs as unconstitutional The New Deal did aid the economy, but only World War II ended the Great Depression

Cultural Impact of the Great Depression John Steinbeck wrote about the “Okies” Dorothea Lange – photographed people suffering in poverty Langston Hughes – wrote poetry on African-American hardships Walker Evans – photographed poor tenant farmers in Alabama Margaret Bourke White – Depression photographs were published in Life magazine *****To temporarily escape their problems, people went to “talkies” or went to dance halls or read comic strips or listened to the radio shows****