The Great Depression

1929-1941

Early Warning Signs…

As early as 1925, Sec. of Commerce Herbert Hoover saw that people were going crazy with the stock market, & he warned Pres. Coolidge.

Even before his inauguration, Hoover urged the Federal Reserve to halt "crazy & dangerous" gambling on Wall Street.

But Wall Street laughed at him & proceeded to issue more loans…

Uneven Prosperity Excessive Buying on Credit Playing the Stock Market Overproduction Trouble for Farmers Trouble for Workers &

Industries

Signs of Economic Danger in the 1920s:

1. Uneven Prosperity

95% of the nation’s money was controlled by 10% of the people.

Working class had no real money! The boom had been bought on credit!

2. Excessive Buying on Credit

Lacking real money to buy goods & products, many Americans had bought on credit.

When the Depression came, they had no money to help them make it through, so they quit spending. This made things even worse!

3. Playing the Stock Market

By the late 1920s, ordinary people were beginning to “play the stocks.”

Rookie investors bought anything, without even knowing what they were buying.

4. Overproduction

As the 1920s progressed, many industries had used the power of the assembly line too well. This created an oversupply of almost everything. With warehouses full to capacity, they began to cut production.

5. Trouble for Farmers

Farmers of the 1920s had wonderful new machines that increased production. But that actually created an oversupply that drove prices down.

Small farmers especially suffered from their own success!

6. Trouble for Workers & Industries Many factory

workers were still working long hours for low pay, while owners got wealthier.

Key industries began to lose money.

Election of 1928

1st time radio played a major role in a campaign. Hoover sounded better on the radio, which helped him win.

Herbert Hoover (Republican)

vs.

Alfred Smith (Democrat)

Stock Market Vocabulary

Making high-risk investments in hope of getting high gain.

Pay a small % of the stock’s price & borrow the rest.

Speculation

Buying on Margin

The Market WeakensThroughout 1929, the market showed signs of weakness.

In September, it began a turn downward, but many still expected a recovery.

So, speculation & credit buying of stock continued.

ThursdayOctober 24

A record 12,894,650 shares were traded. In an effort to stem the panic, major banks & investment companies bought up great blocks of stocks. This helped a little, but not for long.

Black Thursday

Black Tuesday

~October 29, 1929~

The Stock Market Crashes!!!

16 million shares traded (a record) & $30 billion vanished into thin air. The "Era of Get Rich Quick" was over. Jack Dempsey, America's 1st millionaire athlete, lost $3 million. Hundreds committed suicide when they lost their entire fortune in a few minutes.

Panicked & awestruck, disbelieving investors stared blankly at the stock quotes outside the Wall Street Stock Exchange.

“The paper fortunes built up over the past few years crumbled into nothing in this disaster, which touched every man, woman, & child in America…”

Stock Panic Hurt BanksUnemployment Insurance had not been invented.

Many, in heavy debt, just stopped spending.

People sold their stocks below value, leaving no money for themselves. Many were unable to sell at all, & defaulted on loans.

The stock itself had been its own collateral, so when investors defaulted on their loans, they turned the stocks over to the banks. That was fine for the investor, but deadly to the bank, which now had worthless stock paper. Banks began to fail.

Banks Failures: Panic Runs As weak banks began to fail,

people feared that they too would loose money. They began going into banks to demand their money, but no bank keeps enough on hand to satisfy everyone.

When depositors couldn’t get their money out, they would panic & banks soon failed.

A Wise Economist Asks A Question

Business Failures – The Cycle Never

EndsOverproduction & lower consumer demand

Consumer spending decline

Laid off workers spend little money

A Domino Effect…

Did the Stock Market Crash cause the Great Depression?

Not exactly.It was more like the final straw that tipped an unsure economy over the edge.

Main Causes of the Depression

Overproduction of industrial

goods

Buying stocks on margin

Decline in agricultural

prices

High tariffs on imported goods

Great Depression

More Causes of the DepressionGovernment Policies— Tariffs cut down the foreign market for American goods

Availability of Easy Credit— People had great personal debt & the stock market was artificially inflated

Unequal Distribution of Income— Farmers & workers weren’t sharing in the “prosperity” of the 1920s.

Hardships BeginDepression era families made do with less & less as the hard days of the era began in 1930.

Waiting & Waiting Soup Kitchens &

Bread Lines

It’s Hoover’s Fault Shanty towns, known as “Hoovervilles”, sprang

up around the U.S.

Newspapers were known as “Hoover blankets”

“Hoover flags” were empty pockets turned inside out

HobosMany teenagers & young men sought work wherever they could find it. They took a “hop” on a train, often not even knowing exactly where it was going. They became known as “hobos.”

Hobos

“Hopping trains” was illegal, but they got away with it most of the time. Thousands of hobos wandered the nation in search of a meager living.

Hoover tried to fight the depression in some ways, but he thought this was an ordinary part of the economic cycle.

Fight for few jobs begins

Many unemployed men fought for a handful of jobs.

Hoover believed that private groups were the best way to handle both charity & employment.

Hoover’s PhilosophyRugged Individualism:

A man would be damaged more in character than in health by going on “the dole.”

Hoover’s Attempts to Fix the Problems

He ordered Boulder Dam (Hoover Dam) to be built.

Federal Home Loan Bank Act: Lowered mortgage rates so people could refinance loans & avoid bankruptcy.

The Bonus Army

WWI veterans had been promised a bonus of $1 per day served, in the form of a retirement bond available in 1945.

But, in an effort to survive the Depression, many vets began asking for their bonus early, in 1932. They called themselves the Bonus Army.

The Bonus Army

Leaders of the Bonus Army called for a march on Washington, D.C. At this troubled point in history, a revolution by the masses of unemployed was one of the worst fears of the U.S. Gov’t.

The Bonus Army

By the end of June, marchers numbered more than 20,000 hungry & tired men, women & children.

Some believed this was a communist-led attempt to overthrow the gov’t.

The Defeat of the Bonus Army

Gen. MacArthur, assisted by Major Dwight D. Eisenhower & Major George S. Patton, led Army troops & cavalry in an advance against the Bonus Army, using tear gas, bayonets & swords.

Hundreds were injured & a baby was killed by gas. Marchers were forced out & their camp was burned. There was no way Hoover could be re-elected now.

Election of 1932

Herbert Hoover

(Republican)

vs.

Franklin D. Roosevelt (Democrat)

Franklin D. RooseveltF.D.R. saw the depression as a new kind of economic crisis that the gov’t should take action to stop. He believed that the individual was a victim of the economic crises & should be helped.

He used the radio to explain his plans to the people. His evening “conversations” were called the “Fireside Chats”.

The New Deal

FDR was elected president on his promise to give Americans “a New Deal.”

Once in office, he began putting his New Deal together: a series of programs to provide relief, recovery, & reform for the American people.

He made a famous quote in his inaugural speech, saying “The only thing we have to fear ……is fear itself”.

New Deal Agencies AAA (Agricultural Adjustment Act) WPA (Works Progress Administration) TVA (Tennessee Valley Authority) CCC (Civilian Conservation Corps) FDIC (Federal Deposit Insurance

Corporation) REA (Rural Electrification Administration) SSA (Social Security Administration) PWA (Public Works Administration) SEC (Securities and Exchange

Commission)

Alphabet Soup!Because FDR’s

programs all had acronyms, the New Deal was

sometimes called Alphabet Soup.

The New Deal made the federal

gov’t more involved in

people’s lives than ever before.

Critics of the New Deal

Not everyone was happy with F.D.R.’s plans. Some critics included:

Father Charles Coughlin

Huey P. Long

Dr. Francis Townsend

Judicial Reorganization Bill

Known as the Court-packing plan

FDR wanted to increase the # of justices on the Supreme Court to 15

This would allow him to choose judges supportive of the New Deal

This bill did not pass

The Dust Bowl

Beginning of the Dust Bowl

On top of the financial problems, a major drought

struck the Midwestern U.S. in the early 1930s. Black, ominous clouds

surrounded the sky & covered everything in

sight. Not a house, road, or farm animal could be

seen.

Due to overharvesting year after year, farmers were preventing the

natural prairie grass from replenishing the soil.

Dust deposits were seen up to windows while sand

covered front doors.

Leaving the house meant climbing out windows & shoveling

through sand.

Geography: Environment & Movement

Front wall of a dust bowl storm hits a Kansas town in the summer of 1935. When it did rain at all, it was often a sort of muddy rain.

“The storms cast a pall of crimson across the whole sky. Dawn was clear, but as the winds picked up the dusters came in. They covered everything with a thick heavy coat of what used to be my land.”

Effects of the Dust Bowl Changed the

economic, social, & natural landscapes of the Great Plains.

Corn & Wheat crops throughout the Midwest were destroyed.

Farm fields turned to dust & small lakes into muddy ponds.

Record high temperatures were set that still stand today.

Many farmers lost their land & had to move West.

Route 66The most famous highway in America might have been Route 66 during the 1930s.

The U.S. highway linked Chicago with California.

Devastated families traveled this road to seek new lives in the West.

Route 66: Chicago to L.A.

This old bridge in New Mexico is part of the old Route 66 – called by those who traveled its length – “The Mother Road.”

The old Route 66 is now deteriorating & just a few tourist spots remain. It has been replaced by Interstate 40.

Arriving in California, most sought work in the migrant seasonal farm industry as crop pickers. Since the owners paid by the amount picked, even the smallest child could contribute to the family income.

Migrant pea pickers camp in the rain. California, February, 1936. (Photographer: Dorothea Lange)

Migrants from drought stricken Oklahoma were called “Okies.”

John Steinbeck:Grapes of Wrath

This novel was about the plight of a Dust Bowl family as they moved to California.

Dorothea Lange

A photographer who changed the way the American public & government viewed the country’s poor.

Her work made people want to help.

Migrant Mother by Dorothea Lange

“I saw and approached the hungry and desperate mother, as if drawn by a magnet… she asked me no questions… She told me her age, that she was thirty-two. She said that they had been living on frozen vegetables from the surrounding fields, and birds that the children killed. She had just sold the tires from her car to buy food… [She] seemed to know that my pictures might help her, and so she helped me.”

Hardships faced by Americans because of the Great Depression:

UnemploymentWhite male unemployment reached at times 33%.

Female unemployment was over 50%.

Teen unemployment hit the upper 60% range.

Minority unemployment soared to as high as 90%.

And just remember, unemployed meant NO money at all at that time…

By the end of 1930, some 3 million children had abandoned school. Thousands of schools had closed or were operating on reduced hours. At least 200,000 children took to the roads on their own.

Hardships faced by Americans because of the Great Depression:

Children left school

A squatter camp (Hooverville) in the Mexican zone of San Antonio.

Hardships faced by Americans because of the Great Depression:

Many became homeless

Unemployed workers with Christmas tree, East 12th Street, New York City. December 1937. Tattered communities of the homeless were called shantytowns or “Hoovervilles”

Across America, churches & other private charities opened breadlines and soup kitchens to feed the needy.

Hardships faced by Americans because of the Great Depression:

Many were without food

Two young homeless wait their turn in a soup kitchen…notice their pails. You provided your own bowl in many kitchens.

Used to being self-reliant, the depression era hit many men psychologically just as hard as it had hit financially. They would do anything not to have to rely on charity…

Hardships faced by Americans because of the Great Depression:

The Psychological Impact

My dad used to remember when he was out of work (and he could do lots of different jobs). He and mother were out of food and she was expecting me. She had to have food. Desperately, he went and applied for welfare, but never stopped looking for work. He finally found a job on a farm that paid $1 a day. He took the job. He went to the welfare office and told them proudly: “Take me off the list. I found a job.” They asked how much he would be making and he told them. They replied: “you were making more than that on welfare.” He replied: “Yes, but I’m earning this.”

Ural (Stanford) Donohoe

Anything for a little cash…

Here, a former business executive took seasonal work selling apples to raise a meager amount of money for his family.

Selling apples, Jacksonville, Texas. October, 1939. Photographer: Russell Lee. Many tried apple-selling to avoid the shame of panhandling. In New York City, there were over 5,000 apple sellers on the street.

Issues for African-Americans Marian

Anderson, famous singer

Mary McLeod Bethune & the “Black Cabinet”

Scottsboro Boys, 1931

9 Southern black males were accused of gang-raping 2 white women aboard a train near Scottsboro, Alabama.

7 of the “boys” were held in jail for over 6 years before their trials began.

There was no solid evidence that any rape had ever occurred.

The juries were all white In a series of trials, they were found guilty and

sentenced to death or to prison terms of 75 to 99 years.

The NAACP was afraid to get involved. The Communist party used this case for propaganda. Charges against 5 were later dropped, and the other

4 escaped.

Constitutional Amendments

20th Amendment Changed presidential inauguration from

March to January (creating a shorter “lame duck” session)

21st Amendment Repeal of Prohibition Gov’t could tax alcohol once again

22nd Amendment Set 2 term & 10 year limits on the office

of president

How did people cope with the trials of the Great Depression?

America Copes with Less

Family & friends were an important part of depression era life. With little money, the family would gather, sing & entertain themselves.

America Copes with Less

Radios still worked, & throughout the depression, they listened to them often.

America Copes with LessMany Americans

used movies (which were finally coming out in Technicolor!) as a method of escape.