The Great Depression
1929-1941
The Stock Market
• 1920’s a bull market (long period of risking stock prices) lead
to many Americans to invest heavily in stocks.
• Investors began buying stocks on margin - meaning they
made only a small cash down payment.
Speculation and Margin
• Buyers engaged in speculation- buying stocks and hoping to
make a fortune over night.
• Investors were very sensitive to any fall in stock prices
which lead to investors demanding repayment of the loan
at once (Margin Call) when stocks dropped.
Black Tuesday
• October 29, 1929 The Stock Market Crashed; Wall
Street stocks lost $10 to $15 billion in value.
Possible Causes of the Great Depression
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Overproduction
Purchased on credit and instalments
Low consumption of goods
Laying off of employees
Life During the Great Depression
• Many went hungry; living on streets joining bread
lines or soup kitchens for free handouts.
• Families lost their homes; Homeless people put up
shacks on unused or public lands, forming
communities called shantytowns.
The Homeless
• Blaming President Hoover, for their plight, people
referred to such places (shantytowns) as
Hooverville's.
• Homeless people known as “hobos” began
wandering around the country, walking,
hitchhiking, or most often riding the rails looking
for a better life.
The Dust Bowl
• Engulfed the Dakotas to Texas (Great Plains), dust storms ravaged
America’s pastures and wheat fields became a vast desert.
• Causes: Drought, uprooting of wild grass, and planting of vast wheat
fields drained the top soil of its moisture.
• Effect: Families lost their farms packed up and headed west towards
California in search for jobs.
Escaping the Depression
• Americans escaped through entertainment. (Movies,
or listened to radio programs.)
• Walt Disney produced first feature-length animated
film Snow White and the Seven Dwarfs; MGM
produced The Wizard of Oz.
• Gone With the Wind topped the Depression-era epics.
• Radio melodramas were sponsored by makers of laundry soaps,
nicknamed “soap operas”.
• The homeless and unemployed became the subject of pictures
and stories as artists and writers tried to portray life around
them.
• Novelists such as John Steinbeck evoked both sympathy for their
characters and indignation at social justice.
Hoovers Response
• Government didn’t want to pay for public works
because the government would have to raise taxes.
• Government couldn’t borrow money from banks.
• Feared deficit spending thinking it delay an economic
recovery.
Harley-Smoot Tariff Act
• Aimed to protect American manufacturers from
foreign competition.
• Raised tariffs to the highest level in American
history.
• Damaged trade between American and foreign
countries.
Mexican Reparations Act
• 2 Million Mexicans were forced to move back
to Mexico to free up jobs in America for
Americans.
Hoover’s Programs
• National Credit Corporation (NCC) created a pool of money to rescue
troubled banks so they could continue lending money in their
communities.
• Reconstruction Finance Corporation (RFC) failed because it didn’t
increase its loans in sufficient amounts to meet the need, and the
economy continued to decline.
• Hoover opposed the federal government’s participation in relief
because he believed only state and city govt. should dole out relief.
Farmers and the Bonus Army
• After WWI farmers had heavy mortgages when prices sank they couldn’t
even earn their expenses back.
• Farmers tried raising crop prices by destroying their crops and produce.
• The “Bonus Army” WWI veterans marched on Washington to claim their
bonuses promised from the war; they were cleared out by tear gas, fire,
tanks, and bayonets.
Roosevelt and the New Deal
1933-1935
Franklin D. Roosevelt Takes Office
• “New Deal” Roosevelt’s policies for ending the Depression.
(Relief, Recovery, Reform)
• Roosevelt’s Inaugural Address “the only thing we have to fear is
fear itself.” Believed he could make things better offered an
energy and optimism that gave people hope.
Relief
• Relief: for persons in need by providing money for loans
and jobs.
• Banks - (Bank Holiday) stop bank runs and restore
confidence in banking system.
• Home and Farm owners - (Federal Housing
Administration) Insures loans made by banks and other
private lenders for home building.
• Unemployed - (Federal Emergency Relief Act, Civilian
Conservation Corps, Public Works Administration, Works
Progress Administration.) Provide simple jobs for
unemployed.
Reform
• Reform: Programs to ensure another depression doesn’t happen.
• Federal Deposit Insurance Corporation - insures bank accounts to a
certain amount. (Still active today)
• Tennessee Valley Authority- build dams to control floods and
provide electricity.
• Securities and Exchange Commission- monitor stock market
prevent fraud.
• Social Security Act - support retirees.
Social Security Act 1935
• One of the most important pieces of legislation in
American history, purpose was to provide some security
for the elderly and for unemployed workers.
• Offered money for early retirement to citizens over age
of 65 to free up jobs. Extended support to the elderly
citizens.
Recovery
• Recovery: for nation by passing legislation to assist businesses, labor,
and agriculture.
• Agricultural Adjustment Act - regulated the production of farmers.
• National Recovery Administration - eliminate "cut-throat
competition" by bringing industry, labor and government together to
create codes of "fair practices" and set prices.
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Reaction to New Deal
• Liberty League: Some felt the government interfered
too much in peoples lives.
• Francis Townsend: Give everyone over 65 a pension
$200 a month that must be spent in that month.
• Huey Long: Give each American family an income of
$5,000 a year by taxing the rich.
• Father Coughlin: Wanted nationalization of the banks.
FDR and the Supreme Court
• Ruled some New Deal Programs were unconstitutional.
Ex) NIRA and AAA.
• Roosevelt developed a “Court Packing” Scheme to add
Supreme Court justices to pass his legislation. It didn’t
work but the Supreme Court backed down from declaring
New Deal organization illegal. (Checks and Balances and
Separation of Powers.)
Other New Deal Legislation
• National Industrial Recovery Act (NIRA) provided industry with a
set of rules that were known as codes of fair competition.
• Federal Emergency Relief Administration (FERA) channeled a halfbillion dollars to state and local agencies to fund their relief
project.
• Civil Works Administration employed four million people in the
winter of 1933-1934, 300,000 of them women.
• Agricultural Adjustment Act regulated the production of farmers.
• Civilian Conservations Corps (CCC) offered unemployed young men
18 to 25 years old jobs planting trees, fighting forest fires, and
building reservoirs.
The Second New Deal: 1935-1938
• Works Progress Administration (WPA) the spending of $11 billion
and employment of 8.5 million workers on public works.
• Federal Number One Program offered work to artists, musicians,
theater people, and writers who created many new works.
• National Labor Relations Board (NLRB) Organized factory elections
by secret ballot to determine whether workers wanted a union;
also set up a process of binding arbitration.
• Roosevelt's New Deals gave Americans a much needed
sense of security and stability as Roosevelt shifted his eyes
towards the militaristic governments gaining power in
Europe and in Asia.