The Great Depression

1928-1932

Causes of the Great Depression

President Hoover Takes Office

• Hoover took over as the US economy was still going strong – Farmers were still left out of the prosperity – After WWI ended, demand for food fell drastically • Crop prices declined by 50% or more • From 1919 to 1921 annual farm income fell from 10 billion to 4 billion!

The Great Crash Ends the Golden Twenties

• How does the stock market work?

• Stocks had artificially been rising through-out the 1920’s • • “Black Tuesday” October 29, 1929 – 16,410,030 shares sold – Stock market collapsed – Example of the “business cycle” By end of 1929 stock holders had lost $40 billion

• • • • • •

Banks Collapse

How do banks work?

After crash, people flooded banks to get their money 1929: 641 banks closed 1930: 1,350 banks closed 1931: 1,700 banks closed Over the first few years ~6,000 banks closed • ¼ of America’s banks • Money not insured • 9 million individual savings accounts gone!

Businesses Close, Unemployment Rises

• • • As people stop spending money, businesses stop earning money – Forces them to lay off workers – Now less people working, meaningless money spent – Forces businesses to lay off more workers GNP (Gross National Product) fell from $104 billion in 1929 to $59 billion in 1932 85,000 businesses went bankrupt

• • By 1933 unemployment was at 25% – Considered very bad if it’s over 5%!!!!! Unemployment skyrocketed – 3% in 1929 (1.6 million people) – 25% in 1933 (13 million people) – 1 out of 4 people unemployed in America • Unemployment rate December 2009 10% (over 14 million people)

Hawley-Smoot Tariff

• 1930 Hawley-Smoot Tariff passed – Trying to protect American made goods – Highest peacetime tariff in history – Raised tariffs from 38% to 60% – The world responded by raising their tariffs – Makes depression worse by cutting international trade down

• • • • •

Depression Goes Global

Hawley-Smoot Tariff hurt global trade America stopped loaning money to Europe Germany stopped reparation payments France and England became broke Great Depression became worldwide

• •

Conclusion of the Causes

What caused the Great Depression? Many factors: – Over production on farms and industries – Wealth in too few hands – Too much credit given out – 80% of radios, 60% of cars, buying stock on margin – European economic hardships – Hawley-Smoot Tariff/ decreased international trade – Farm failures

Americans Face Hard Times

• •

Cities

People were forced to move into shantytowns (Hoovervilles) – Towns made from scrap wood and cardboard No money to buy food – Ate at soup kitchens – Waited in bread lines for food

Farmers

• • Advantages?

– They could grow their own food ~1,000,000 farms lost between 1930-1934 – Banks foreclosed

Dust Bowls

• • – 1933 drought hit Great Plains (Texas to North Dakota) – High winds moved through as well Great Plains had loose top soil as a result of over farming – Wind picked up top soil and created the dust bowl – Some dust traveled as far as the Atlantic Ocean!

By the end of the 1930’s California’s population increased by more than 1 million – People travelling there were called Okies – 1939 John Steinbeck’s The Grapes of

Wrath

• • •

Men

Hard for men to handle not working – Walked the streets daily looking for work – Many men abandoned their families 2 million men became hobos (men who rode railcars around the country) No direct relief from the Government

• • • •

Women and Children

Took care of household Tried to work – Some people resented them for it Many children became sick from malnutrition By 1933 300,000 children were out of school – Many went to work in sweatshops to make money

African Americans

• • 50% unemployment rate Racial violence increased – 24 lynching's in 1933 – Why?

• Job Competition • Anger • Needed someone to blame 1930

Mexicans and Mexican Americans

• Whites wanted them deported back to Mexico, why?

– To get rid of job competition • Hundreds of thousands of Mexicans returned to Mexico, some by choice, some by deportation

Hoover’s Response Fails

• • • • •

Herbert Hoover

Believed in small government “Rugged individualism” – People should take care of themselves. No government handouts “Prosperity is just around the corner” “given a chance to go forward with the policies of the last eight years, and we shall soon with the help of God be in sight of the day when poverty will be banished from this Nation” (1928) “ A chicken in every pot , a car in every garage” (didn’t really say this)

• • •

Herbert Hoover Cont’d.

Wanted people to volunteer to help – Donate to charities – Put the nation before their own self-interest Help should come from local and state governments Did not want the government to use direct relief to individuals – Afraid of a vast government bureaucracy – Goes against “rugged individualism”

• •

Hoover Tries to Help

Asked leaders of business to work together – Employers not to cut wages or lay people off – Unions not to demand higher wages or strike Was it effective?

– No because businesses and people acted in their own self-interest

Americans React to Hoover’s Help

• • • • • 1930 Congressional elections – Democrats gained control of the House Farmers burnt crops Hoover Blankets – Newspapers Hoovervilles – Shantytowns Hoover Flags – Pockets turned inside out

We'd Like To Thank You Herbert Hoover http://www.youtube.com/watch?v=jAgm13acwoI

Today we're living in a shanty Today we're scrounging for a meal Today I'm stealing coal for fires Who knew I could steal? I used to winter in the tropics I spent my summers at the shore I used to throw away the paper—We don’t anymore We'd like to thank you: Herbert Hoover For really showing us the way We'd like to thank you: Herbert Hoover You made us what we are today

Prosperity was 'round the corner The cozy cottage built for two In this blue heaven That you Gave us Yes! We're turning blue! They offered us AL Smith and Hoover We paid attention and we chose Not only did we pay attention We paid through the nose. In ev'ry pot he said "a chicken“ But Herbert Hoover he forgot Not only don't we have the chicken We ain't got the pot! Hey Herbie

You left behind a grateful nation So, Herb, our hats are off to you We're up to here with admiration Come down and have a little stew Come down and share some Christmas dinner Be sure to bring the missus too We got no turkey for our stuffing Why don’t we stuff you? We'd like to thank you, Herbert Hoover For really showing us the way You dirty rat, you Bureaucrat, you Made us what we are today Come and get it, Herb!

• • •

Hoover Tries to Help Again

Massive public work program – Building roads, dams ( Boulder/Hoover Dam ), and other projects Reconstruction Finance Corporation (RFC) –

Trickle-down economics

• Gave a billion dollars in loans to businesses and banks • Hoped that these loans would allow businesses to create more jobs and put people back to work Did it work?

– No, because people/businesses acted in their own self-interest and kept the loans

• • ~20,000 WWI veterans and their families marched on Washington DC – Veterans promised bonus checks for WWI service in 1924, payable in 1945 Veterans marched to DC in 1932 hoping to pressure Congress into passing legislation (The Patman Bill) that would allow them to receive their checks immediately

Bonus Army

• • • • Created Hoovervilles all over DC – Moved into abandoned buildings June 15, 1932 the House of Representatives passed the Patman Bill Hoover then vetoed the bill Hoover asked the protestors to leave DC

• • • Most veterans left peacefully, but 2,000 stayed Hoover decided to disband the mob by force – General Douglas MacArthur led troops against the veterans – He raided their Hoovervilles • Used tear gas, fixed bayonets, tanks… Was not what Hoover wanted (too much force)

• • • • The mob was disbanded – 11 month old baby died – 8 year old partially blinded – 2 people shot and many wounded America was outraged at what happened Franklin Delano Roosevelt, “Well…this will elect me.” Americans were ready for a change

Primary Sources

• • The Report on Federal Troops The Whole Story of the Bonus Army

Statement to the Press by President Hoover, July 29, 1932.

A challenge to the authority of the United States Government has been met, swiftly and firmly.

After months of patient indulgence, the Government met overt lawlessness as it always must be met if the cherished processes of self-government are to be preserved. We cannot tolerate the abuse of Constitutional rights by those who would destroy all government, no matter who they may be. Government cannot be coerced by mob rule.

The first obligation of my office is to uphold and defend the Constitution and the authority of the law. This I propose always to do.