Transcript The Great Depression

The Great Depression
1928-1932
Causes of the Great Depression
• American farmers did not share in the
prosperity of the 1920’s. There were surpluses
of crops. The farmers were in debt.
• There was uneven distribution of wealth. Very
few people held the majority of the wealth,
the rest of the country was just getting by or
buying on credit.
Causes of the Great Depression
• The stock market crash marked the beginning
of the Great Depression
• Prices of stock dropped sharply
• People had borrowed money to buy stocks
(buying on the margin)
• As stock prices fell people rushed to cash in
their stocks causing the price to drop even
lower.
Causes of the Great Depression
• October 24, 1929 Black Thursday, On Octber
29th Black Tuesday the bottom fell out of the
stock market. Many stock speculators lost
everything.
• This Great Crash was a hallmark of the
business cycle. Bust follows booms.
The Banks collapse
• The stock market crash led to a chain of
events that quickened the collapse of the
American economy,
• There was a “run” on the banks and many
banks closed. People all tried to get their
money out at once and the bank did not have
the money on hand.
Businesses cut back on Production
• Business leaders believed that cutbacks in
production and laying off workers would save
their companies. The higher the
unemployment rate the lower the consumer
spending. Causing businesses to lower
production even more.
Tariffs
• Hawley-Smoot Tariff raised the prices on
foreign imports. Other nations retaliated and
raised the price on their imports. American
manufacturers and farmers faced closed
markets for their goods. The ripple effect of
the Smoot-Hawley tariff helped destroy
international trade.
Global depression
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Hawley Smoot tariff
Reparations payments
War debt payments
Imbalance of trade
Created a shaky economic structure in Europe
Germany stopped making reparation
paymemts
Global depression cont.
• The United States agreed to suspend France
and Britain”s war debt payments. The
international economy had been funded by
American loans. The crises in the United
States slowed down loans to other countries.
They experienced the same cycle of business
failures, bank collapses, and high
unemployment as the United States.
What caused the Great Depression?
• Historians and economist still debate over the
causes of the depression.
One economist Milton Friedman believed there
was not enough money in circulation after the
stock market crash and bank failures. Others
point to poor decisions made by the
Government.
Americans face hard times
• The Great Depression touched every American
because they either experienced hardship or
knew someone that did.
• Unemployment soared to 24.9%, while
millions of Americans kept their jobs their
wages were cut and their hours were longer.
Americans face hardship continued
• Many people lost their jobs and their homes.
People ate smaller meals, water replaced milk
and meat was scarce.
• Bread lines formed where people lined up to
get handouts from charities or public
agencies.
• The Depression was also used to describe a
state of mind as millions sunk into despair.
Americans face hardship cont.
• In cities and towns across the nation,
Americans faced a terrible plight. The
numbers of unemployed, homeless, and
hopeless continued to rise.
• In rural America (farms) conditions were
sometimes worse. Farmers had been suffering
before the Great Depression and lost their
farms during the depression.
Americans face hardship cont.
• Many farmers moved and travelled about the
country looking for work. The amount paid for
farm products was simply not enough to allow
the farmer to continue farming.
• In protest of falling prices, the Sioux City Milk
producers association dumped 1,000 gallons
of milk on the road outside the city.
Americans face hardship cont.
• Many people lived in makeshift shantytowns
called Hoovervilles, after president Hoover.
Some even slept on subways trains and park
benches. Newspapers used as blankets were
called Hoover blankets. If you turned your
pant pockets inside out it was called Hoover
flags.
The Great Plains becomes a dustbowl.
• A drought in the Great Plains added to the
farmers problems
• As farmers plowed under the grasses of the
Great Plains to plant wheat there was nothing
to hold down the topsoil. The combination of
drought, loose topsoil and wind caused huge
dust storms, these gigantic clouds of dirt and
dust could rise to 8,000 feet.
The Great Plains becomes a dustbowl
• Most of the dust storms started in the southern
Great Plains and moved from west to east. The
plains region of Texas, Oklahoma, Kansas, New
Mexico and Colorado were affectted this region
came to be known as the Dust Bowl.
• Many farm faimilies caught up in the Dust Bowl
had no choice but to migrate out of the area.
These migrants were called Okies regardless of
their states of origin.
The Dust Bowl
• Some 800,000 people migrated out of the
Great Plains area and headed to Washington,
California or cities in the Northeast or
Midwest.
• As a result of migration rural states lost
population while states with large cities
gained population.
American family life suffers
• For some men the loss of a job brought about
shame and despair they felt they were losing
status in the family. Women tried to find jobs
as maids to make ends meet. Many children
quit school and some ran away from home.
Some families clung together and others broke
apart due to the stress of the depression.
Minorities Suffer Hardship
• The poorest of the poor, often minorities with
no financial resources were hit especially
hard. African Americans were the last hired
and first fired. Unemployment for African
Americans hovered around 50% nearly double
the national rate.
Minorities suffer hardship cont.
• Mexican Americans as well faced fierce job
competition from the migrant workers. They
often faced discrimination when looking for
work.
• Some whites in the southwest tried to
repatriate or force Mexican American workers
to return to Mexico. Hundreds of thousands of
people of Mexican ancestry were pushed out
of the country. Even so many more remained.
Hoover’s Response Fails
• President Hoover did not cause the
depression, and he did try to solve the
problem but failed to turn the economy
around.
• At first Hoover felt the government should not
interfere in the economy.
• Policy of volunteerism where business and
industrial leaders would keep employment
prices and wages at current levels.
Hoover’s Response Fails
• At the same time he called for government to
reduce taxes, lower interest rates, and create
a public works program.
• The plan was to put more money into the
hands of individuals and business to
encourage more production and consumption
• Finally Hoover requested that the wealthy give
more money to charity. The idea is that the US
would join forces to combat the depression.
Hoover’s Response Fails
• Volunteerism did not work most people
continued to work for their own best interest
instead of the country as a whole.
• Hoover had also asked the States and local
governments to provide more jobs and relief
measures. (Localism)
• However towns and states simply did not have
enough resources to combat the depression.
Hoover’s Response fails
• When Hoover decided to intervene in the
depression he used Trickle down theory as the
basis of his policy
• RFC Reconstruction Finance Cooperation gave
billions of dollars in federal loans to business,
railroads and banks.
• The banks were supposed to loan more money to
business who would then hire more workers. In
the end the money did not trickle down to the
people who needed it most.
Hoover’s Response Fails
• Hoover did succeed with one project the
construction of a dam on the Colorado River.
This was later renamed the Hoover Dam.
Construction of that dam brought much
needed employment to the Southwest during
the early 1930’s,
Americans Protest Hoover’s Failures
• To many out of work Americans Hoover
became the symbol of failure.
• Some Americans called for radical change in
the form of socialism or communism.
• Other called for more fascist ideals.
• Most Americans however never lost faith in
their country
The Bonus Army
• The Veterans of WWI had been promised a
bonus to be paid out in 1945. But in 1931
many veteran’s groups wanted the money
paid out sooner. Congress agreed, but the
president vetoed the Bill that would pay the
vets sooner.
• In the summer of 1932 almost 20 thousand
veterans arrived in the capital setting up
camps and occupying empty office buildings.
Bonus Army
• The President asked the army to clear the
protestors out. MacArthur and others used
more force than called for by the President.
When people saw photographs of troops
marching against veterans they were shocked.
• The President lost any chance he had for reelection. Americans were ready for a change.