GREAT DEPRESSION

Bracing for the Fall

During the 1920’s, U.S. experiences: Economic growth Business & industry boom Prohibition = alcohol is illegal Renewed focus on isolation from rest of world

Post W.W. I Social progression

Women can vote/Women’s rights Larger personal economic growth…& debt

Credit

Bracing for the Fall

Herbert Hoover elected in 1928 to help continue prosperity of U.S. from 1920’s.

The success of the ‘20’s masked the fact that U.S. business was in serious trouble:

Middle/Low income class wages aren’t raised

Can’t afford to purchase new products

Unsold products = lost $$ for businesses

Bracing for the Fall

The reason for the surplus of products was due to the supply/demand rule.

Prices reflect the demand for a product:When demand is high – prices rise to cash in on

popularity.(PS4, Xbox One, iPhone 6S, etc.)

When demand is low – prices drop to get rid of product.

(Clearance, Markdown, “2 for 1”, etc.)

Bracing for the Fall

Farmers also face similar hardships:

New machinery bought w/ credit helps grow food efficiently

Farmers produce more food then can be sold

Food prices drop because of surplus/lack of demand

Farmers struggle to make $$ to pay off debts (machinery & workers)

Bracing for the Fall

Middle/low class Americans have difficulty finding steady work = lack steady income. Despite lack of steady income, Americans still

buy appliances w/ credit.

Lack of steady income+ buying appliances on credit_______________________________

Americans w/ LARGE credit debts

Bracing for the Fall

Despite lack of jobs, the stock market showed the American economy was strong* (* - was a mirage).

Stock market seemed strong because of Americans buying stock on “speculation”.

Buy stock in company based on potential

If company becomes popular, sell stock at highest $$ (supply/demand)

Bracing for the Fall

2 problems with buying on “speculation”: Biggest risk with buying on “speculation” is when

company fails. People lose ALL invested money in stocks if company fails.

Use loaned-out money to buy “speculation” stocks. If company fails, people unable to pay banks money they

owed

“Speculation” buyers risked bankruptcy

Can avoid bankruptcy if there’s a job to pay off debt.

Can’t work when no jobs available = no $$ to pay off debt

Homework #1

1. Explain why middle/low income classes wages NOT being raised was a serious problem.

2. Define/describe what “supply/demand” is.3. With Americans lacking steady income, what

did they often use to purchase something?4. What were 2 problems with buying stock on

“speculation”?5. What was the risk people were taking by

purchasing stock on “speculation”?

Black Tuesday

With most stocks being bought with “speculation”, stock market reflected a “House of Cards”.

Through the late 1920’s, stock prices had either maintained their price or risen until 1929.

In late October 1929, prices dropped suddenly causing panic throughout stock market.

Black Tuesday

On October 29, 1929 (Black Tuesday), stock prices crashed due to panic selling:

Some people began selling stocks to cash in on highest price

Others feared missing out on high price; causes massive sell-off

Stocks that were once worth thousands became worthless overnight

People who spent life savings on stock market lose everything.

Rock Bottom

Stock market crash was first in a series of bad events: Banks begin closing because they began running

out of money People stop buying goods because they had no $$;

sold whatever they could to make some money Stores go out of business due to lack of sales; fire

employees Unemployment skyrockets as people are desperate

to find work

Rock Bottom

Because of lack of jobs and money to pay off loans, banks foreclose* on loans for houses/properties. * - ask for loan to be paid immediately / re-possess

if unable to pay. Millions of people become homeless:

Homeless shelters become cramped due to overcrowding

People rely on bread lines for food they couldn’t afford

People create make-shift houses called “Hoovervilles” (Shantytowns)

Rock Bottom

With the nation reeling, President Hoover does little to help; wanted to limit the role of the gov’t in the economy.

President Hoover asks churches & charities to help out, but the need was too large for those groups to handle.

American public began to turn on President Hoover, believing he was incapable of fixing the problems Reason why shantytowns are named Hoovervilles.

Rock Bottom

World War I veterans were as affected by stock market crash as anyone. Were promised war bonus for fighting in WW I. Bonuses were unpaid before stock market crash – not

due until 1940.

In need of money, WWI veterans march on Washington D.C. demanding payment of unpaid bonuses.

President Hoover denies payment; WW I veterans camp out in middle of Washington D.C. until payments are made.

Rock Bottom

Angered by the constant nuisance of the soldiers, Hoover orders the U.S. army to remove them from the city.

Army tanks and soldiers forcibly remove soldiers from Washington using: Tear Gas Bayonets Firing shots in air

Photos of the event are captured; Americans are disgusted with Hoover – want him out of office.

Homework #2

1. The stock market resembled a “House of Cards” before the crash; why does this title properly fit the state of the market?

2. The Stock Crash happened due to panic selling; why were people in a panic to sell their stock?

3. Explain how banks closing would lead to unemployment skyrocketing.

4. What is a foreclosure? How did this affect people’s housing situation?

5. What is a Hooverville?6. What were World War I veterans demanding when they

marched on Washington D.C.? What was President Hoover’s response?

7. Who did President Hoover use remove veterans from Washington D.C.?

A New Hope

In 1932, President Hoover is not re-elected; Franklin D. Roosevelt (FDR) takes over as leader of the U.S.

The first crisis Roosevelt manages is the failing bank system: Banks closed for 4 days Only stable banks could re-open w/ gov’t. approval

President Roosevelt used his “fireside chats” as a platform to reassure the nation during this time. Introduced new policies during these “talks”

A New Hope

Roosevelt orders Congress to stay in Washington for his “Hundred Days” legislation; had 3 goals during this time: Relief for needy Reform agriculture & industry Reform economy

Roosevelt unveils his “New Deal” to Congress to fix the U.S. Congress approves the bills to get nation back on

track Gave relief to those most affected by Depression

A New Hope

New Deal programs are designed to: Fix banks (FDIC) Adjust farm prices (AAA) Put people to work on public works (NRA, CCC,

PWA): Public buildings Highways Bridges Planting trees

A New Hope

Some negative reactions to FDR’s New Deal included: Gov’t was TOO involved in everyday life No ability for private business to compete (TVA) Gov’t didn’t do enough to help those in need (Share

the Wealth)

American public had chance to voice opinion of FDR’s policies by electing a new Congress… More Democrats (FDR’s party) elected to Congress

instead.

A New Hope

Despite criticisms, 2nd New Deal is passed offering social reforms to the nation.

One of the more important programs passed was the Social Security Act. Addressed unemployment & retirement.

A New Hope

Social Security works this way:Small amounts of $$ taken from employee paychecks

Employers would match $$ taken out

Funds are kept in an account run by U.S. Treasury

When employee retires, they receive a monthly payment from account.

A New Hope

The Social Security Act also addressed problems with the needy & unemployed: Unemployed received small monthly payments

while actively looking for work.

FDR wins re-election in 1936 despite pleas from business leaders to elect someone else.

FDR tries to use his popularity to “fix” the Supreme Court. Most Supreme Court judges didn’t like FDR’s New

Deal; felt it gave gov’t too much power over economy.

A New Hope

FDR proposes to add 6 more judges to the Supreme Court—would bring total to 15. FDR would appoint 6 new judges. With 6 new judges, FDR would have majority

support in Supreme Court. Congress rejects proposal; U.S. public outraged

at FDR for trying to “cheat” checks & balances.

Homework #3

1. With President Roosevelt in charge, what did he do to try and fix the banking crisis?

2. Explain the 2 purposes for FDR’s “fireside chats”.3. What were the 3 purposes to FDR’s “Hundred Days”

legislation?4. What were the 3 purposes behind the “New Deal”

programs?5. While the 1st New Deal focused on fixing the

economy, what did the 2nd New Deal focus on “reforming”?

6. Explain how Social Security works.7. Explain why the U.S. was upset over FDR’s “court-

packing” plan.

Dry Spell

During the early 1930’s, the Midwest gets a new nickname: “The Dust Bowl”. Region was suffering through a historic drought

Reasons for historic drought: Record low rain fall over a 3 year span New farm tech. loosened top soil Grazing practices took away grass (kept top soil in

tact)

Dry Spell

States most affected by drought include: KS OK TX CO NM

When high winds/wind storms occurred, loose soil is turned into dust storms.

Dry Spell

With top soil stripped away, Midwest farmers have difficult time growing crops.

No crops

No $$

No farmland Families that lose farms begin migrating west to

look for work; most begin settling in California (field work). Majority of migrant families moved from OK to CA Nicknamed “Okies”

Dry Spell

As nation trudges through Depression, unemployment was at all-time high.

Unemployment rate for the nation during the Depression was 25%. Minority unemployment (African-American, etc.) was

50%

With shelters over-crowded & unable to build Hooverville, homeless would sleep: Under bridges Rusted out car frames Refrigerator boxes

Dry Spell

Mothers stay home to watch kids while fathers looked for work. Women w/ jobs often pressured into giving up job for

unemployed men Some women only hired if husband had a job

Teenage sons would help family by: Working after school, if possible Dropping out of school to work full time

Dry Spell

Teenage daughters would often drop out to help out at home. Watched younger children if both parents had jobs

Teenagers that couldn’t find work often ran away Didn’t want to burden to their families 250,000 (est.) homeless teens roamed country by

1932 Rode trains Begged for food Lived in squatter camps (Hoovervilles)

Progress

Despite the financial struggles, some positives came from the Depression era: Birth of a new labor union Arts & entertainment expanded

Congress of Industrial Organization (CIO) was a new labor union created during the Depression Era: Allowed minorities & women to join

C.I.O. was open to: Unskilled workers (basic manual labor) Skilled workers (plumbers, electricians, etc.)

Progress

One of New Deal Programs (Wagner Act) allows labor unions to negotiate: Improved working conditions Improved wages/benefits

Unions used “sit-down strikes” to get what they wanted: Workers would show up to work Sit at assigned “station” and do nothing With workers present, company unable to hire

“strikebreakers” (temp. workers)

Strikes could cost company millions in lost production; both sides often compromised to avoid lost $$.

Progress

Arts & entertainment (culture) expanded during the Depression as well.

Novels become a means of escape for those suffering, but also gave readers a glimpse into life during Depression.

Grapes of Wrath (John Steinbeck) was A popular novel of the era Detailed the struggle of an Oklahoma family losing

their farm & moving west.

Progress

Movies also became more popular, giving people a couple hours relief from their lives.

Popular movies of the era were: Gone with the Wind Wizard of Oz

Movie stars such as Shirley Temple, Clark, Gable, & Joan Crawford became popular due to their movie success.

Serious topics (slavery, etc.) were often treated lightly to not upset the audience.

Homework #4

1. What 3 reasons contributed to the drought in the Midwest?

2. What was the nickname given to the Midwest throughout the drought? What states were affected?

3. Why did Midwest farmers lose their farms? Where did they move once they lost their land?

4. What was the overall unemployment rate during the Depression? What was the unemployment rate for minorities?

5. Why did teenagers run away from home during the Depression?

6. Explain what a “sit-down” strike is.

7. What popular novel did John Steinbeck write?

8. Why were serious topics covered lightly in movies?