THE GREAT DEPRESSION
1929-1942
(Text says 1929-1933)
GETTING US UP TO SPEED

1923-1929 PRESIDENT – CALVIN COOLIDGE

“KEEP YOUR COOL WITH CAL” – HIS STYLE MATCHED HIS
CONSERVATIVE POLITICS (GOVT. VERY MUCH HANDS OFF)

CALVIN COOLIDGE DECIDED NOT TO RUN IN 1928

HERBERT HOOVER BECAME PRESIDENT (DEFEATED
ALFRED SMITH)

HOOVER – SELF MADE MILLIONAIRE

Coolidge
EXPECTATION: “GOOD TIMES WOULD ONLY GET BETTER
UNDER HOOVER” “Poverty will be banished from this
nation!”
HOOVER



31ST PRESIDENT OF THE U.S. (1929-1933)
REPUBLICAN
VICE PRESIDENT: CHARLES CURTIS (NATIVE
AMERICAN)
ECONOMIC CONDITIONS
BEFORE DEPRESSION

G.N.P. GREW 40%
The total market value of all the goods and services produced
by a nation during a specified period.

UNEMPLOYMENT 3-4%
• April 2009: 8.9% (Nation)
• April 2009: 12.9% (Michigan)

Increase by 5% since 2008

VERY LITTLE INFLATION

“EVERYONE OUGHT TO BE RICH”

FARMERS, BLACKS, IMMIGRANTS STRUGGLING
STOCK MARKET

What is it and How does it work?
• Companies sell a little of their company to investors
• Use investor’s money to improve the company
• When the company does well, the investor does well

How is it measured?
• Dow Jones Industrial Average (1884 Charles Dow)

Average of the 30 most widely traded industrial stocks in
the NYSE (known as Blue Chip Stocks)
• GM, American Express, IBM, EXXON, etc
• Nasdaq (1971)

tracks approx 4,000 stocks electronically (doesn’t have be
a part of the NYSE)
• S&P 500: tracks 500 large companies
• Russell 2000: tracks 2000 smaller companies
• All of these are just “averages” that represent the entire US
economy and indicates how the rest of the stocks are
performing.
STOCK MARKET CRASH
*BLACK THURSDAY – OCTOBER 24, 1929 (STOCK PRICES FALL, EVERYONE
PANICS AND SELLS)
*Dow Jones Average: Average stock prices of major industries
*TERRIBLE TUESDAY- OCTOBER 29, 1929 (16.4 MILLION SHARES SOLD, NO
ONE WANTED TO BUY, THE GREAT CRASH)
*PREDICTED THAT IT WOULD “BOUCE BACK”– JUST A PART OF THE
“BUISNESS CYCLE”
*BROUGHT ON BY:
1) SPECULATION: THE PRACTICE OF MAKING HIGH RISK INVESTMENTS
IN HOPE OF GETTING A HIGH GAIN
2) BUYING ON MARGIN: PURCHASING STOCK FOR ONLY A FRACTION
OF ITS PRICE AND BORROWING THE REST (10-50% down, borrow the rest.
High interest rate, but could pay back)
***THE STOCK MARKET CRASH DID NOT CAUSE THE GREAT DEPRESSION, IT
TRIGGERED IT
CAUSES OF THE
DEPRESSION

SIX MAIN CAUSES THAT LED TO THE
DEPRESSION
1) AGRICULTURE PROBLEMS




FARM PRICES STAYED HIGH DURING THE
WAR AND JUST AFTER
WARTIME ENDED = PRICES PLUMMETED
FALLING PRICES = FARMERS UNABLE TO PAY
DEBTS FOR LAND
UNABLE TO PAY OFF DEBTS = BANKS
SUFFERED (6000 WENT OUT OF BUSINESS)
2) HIGH TARIFFS AND WAR
DEBTS


FOREIGN COUNTRIES COULD NOT
PAY OFF DEBT
U.S. WOULD NOT LET THEM IMPORT
GOODS
3) GOVERNMENT MONETARY
POLICIES


FEDERAL RESERVE DID NOT KEEP BANKS IN
BUSINESS BY INCREASING MONEY SUPPLY (RESULT:
TOO LITTLE MONEY IN CIRCULATION TO HELP THE
ECONOMY RECOVER)
TODAY – THE FEDERAL RESERVE SETS INTEREST
RATES. BEN BERNANKE is the head of the Federal
Reserve.
4) OVERPRODUCTION AND
CREDIT BUYING


WAREHOUSES HAD PILES OF UN-BOUGHT
GOODS IN THE LATE 1920’S
AUTOMOBILE INDUSTRY SLUMPED AFTER 1925
(ANYONE WHO COULD AFFORD A CAR ALREADY
OWNED ONE)

INDUSTRIES THAT RELIED ON AUTOS SLUMPED
(RUBBER, STEEL, GLASS)

HOUSING CONSTRUCTION FELL 25% BETWEEN
1928-1929

CONSUMERS BUYING “NEW, EXCITING” GOODS
WHETHER THEY COULD AFFORD THEM OR NOT
1920 MODEL T
5) FRAIL SYSTEM OF BANKING



BANKS USED DEPOSITORS MONEY
UNWISELY
PEOPLE PANICKED AND WITHDREW
THEIR MONEY, BUT BANKS DIDN’T
“HAVE” PEOPLE’S MONEY
RESULT: NO MONEY TO LOAN
6) THE DOMINO EFFECT

ONE JOB AFFECTS ANOTHER JOB

ONE ECONOMIC FACTOR AFFECTS OTHER
FACTORS

1930 – 4 MILLION WITHOUT JOBS

82 BREADLINES IN N.Y. ALONE
WAS IT HOOVER’S FAULT?

NO, BUT HIS NAME BECAME A SYMBOL OF THE
DEPRESSION

PEOPLE HATED HIM

STREET PEOPLE SLEPT UNDER NEWSPAPERS
CALLED “HOOVER BLANKETS”

OUT TURNED POCKETS CALLED HOOVER FLAGS

HOMELESS – BUILDING SHANTY TOWNS, HOUSES
OUT OF BOXES, KNOWN AS “HOOVERVILLE'S”
• Unsafe areas
HOOVERVILLE'S
The Great Depression
1929-1941



Distrusting business leaders
encouraged people to invest and to
buy on credit
Communist and Socialist Parties
looked for support
Led to world wide depression
• Domino effect
ECONOMIC IMPACT OF THE
DEPRESSION

SIX MAJOR FACTORS
1) UNEMPLOYMENT

20-25% UNEMPLOYMENT RATE
 April 2009: 8.9% (Nation)
 April 2009: 12.9% (Michigan)
• Increase by 5% since 2008
• 1 OUT OF EVERY 4 PEOPLE WERE
WITHOUT WORK

PEOPLE HAD TO USE THEIR
SAVINGS TO BUY FOOD
2) COLLAPSE OF THE BANKING
SYSTEM

BANKS WERE POORLY MANAGED
• Could not return depositor’s money


THEY INVESTED THEIR DEPOSITOR’S
MONEY INCORRECTLY
ONE BANK WOULD FAIL=PEOPLE
PANICKED
3) DEFLATION


OVERPRODUCTION, LACK OF OVERSEAS
TRADING, AND THE FACT THAT PEOPLE
WERE AT THE END OF THEIR
BORROWING= LED TO DEFLATION
PEOPLE HAD LESS PURCHASING POWER
4. LIFE ON THE DOLE

WELFARE

NOT HONORABLE

ROOSEVELT FELT IT WAS
NECESSARY TO AVOID STARVATION
5. DUST BOWL


ENVIRONMENTAL CRISIS
GREAT PLAINS – DROUGHT AND DUST STORMS
TOOK PLACE

FARMERS SHOULD HAVE KNOWN BETTER

PLANT TREES, ROTATE CROPS

See pages 388-389

FARMERS LOST THEIR FARMS BECAUSE THEY
COULD NOT PAY THEIR MORTGAGES.
Dust Bowl
DUST BOWL
6. ROLE OF JOHN MAYNARD
KEYNES



KEYNESIAN ECONOMICS – MASSIVE
GOVERNMENT SPENDING HELPS A
COLLAPSING ECONOMY
GOVERNMENT WAS SPENDING MORE
THAN THEY WERE TAKING IN
DON’T WORRY ABOUT BALANCE AND
BUDGET
John Maynard Keynes
Surviving the Great Depression




People pulled together—used humor
21st Amendment repealed Prohibition (Feb
1933)
Empire State Building constructed
End of an era:
•
•
•
•
Al Capone caught
Babe Ruth retired
Baby Lindbergh kidnapped and murdered
President Coolidge died
POLITICAL IMPACT OF THE
DEPRESSION
**People lost confidence in big
business and became fearful; they
wanted the government to do
something
**Pictures like this one from
Dorothea Lange helped families and
workers get aid from the government
HERBERT HOOVER VS.
FRANKLIN D. ROOSEVELT

ELECTION OF 1932

DEMOCRATIC NOMINEE: FDR



“USED TO FACING PROBLEMS CHEERFULLY WITH
DETERMINATION”
POLIO
ELECTION OF ROOSEVELT CHANGED THE WAY THE
GOVERNMENT WAS RUN
1932 ELECTION RESULTS
THE NEW DEAL
1932-1939



ROOSEVELT’S PROGRAM TO COMBAT THE GREAT
DEPRESSION
“THE GOVERNMENT HAD A DUTY TO DO
SOMETHING TO HELP PEOPLE”
Inaugural Address: “The only thing to fear, is
fear itself!”
THE THREE R’S

THE “NEW DEAL” WAS A PROGRAM OF :
1) RELIEF
* Immediate Help
2) RECOVERY
* Get back on track
3) REFORM
* make sure it does not
happen again
THE “FIRST HUNDRED DAYS”


MARCH – JUNE 1933= PERIOD
KNOWN AS THE FIRST ONE
HUNDRED DAYS
FDR PUSHED PROGRAM AFTER
PROGRAM THROUGH CONGRESS TO
PROVIDE RELIEF, CREATE JOBS, AND
STIMULATE ECONOMIC RECOVERY
THE “BRAIN TRUST”



FDR HAD A BRAIN TRUST OF
PEOPLE IN HIS
ADMINISTRATION WITH
EXPERIENCE IN DEALING
WITH PROBLEMS
LAWYERS, SOCIAL WORKERS,
GOVERNORS, PROFESSORS,
INTELLECTUALS, ELEANOR
Eleanor Roosevelt served as
FDR’s legs as she reported
conditions around the country
FIRESIDE CHATS


FDR USED THE RADIO TO DELIVER
HIS MESSAGE
PURPOSE: CALM PEOPLE DOWN AND
RESTORE CONFIDENCE IN THE
FUTURE
BANK HOLIDAY



MARCH 5, 1933 – FDR ORDERED ALL
BANKS TO CLOSE FOR 4 DAYS
PASSED THE EMERGENCY BANKING ACT –
AUTHORIZED THE GOVERNMENT TO
INSPECT THE FINANCIAL HEALTH OF ALL
BANKS
RESTORED CONFIDENCE IN THE BANKING
SYSTEM
ALPHABET AGENCIES


FDR STARTED DIFFERENT
PROGRAMS TO HELP STIMULATE THE
ECONOMY
“PUMP PRIMING”
ALPHABET AGENCIES

FERA- FEDERAL EMERGENCY RELIEF
ADMINISTRATION

HARRY HOPKINS DIRECTOR OF THIS
AGENCY


GAVE OUT MONEY TO PEOPLE IN NEED
THROUGH LOCAL RELIEF AGENCIES (BUY
CLOTHES, FOOD)
WITHIN 2 HOURS = GAVE OUT $5
MILLION
ALPHABET AGENCIES

CCC- CIVILIAN CONSERVATION CORPS
*Provided jobs to young, unmarried
men, (and later women) to work on
conservation and resource development
projects
*Paid $30 month
ALPHABET AGENCIES

WPA- WORKS PROGRESS ADMINISTRATION
*Gave the unemployed work in building
construction and arts programs
ALPHABET AGENCIES

CWA – CIVIL WORKS ADMINISTRATION
* Employed people with federal payroll
* Rake leaves, repaired roads, improved
schools
**Critics: Jobs were meaningless and
unpopular
ALPHABET AGENCIES

SSA- SOCIAL SECURITY ACT
*Gives money to people who are
too old to work or those with
disabilities
ALPHABET AGENCIES

AAA- AGRICULTURE ADJUSTMENT ACT
*Attempted to raise farm prices by
paying farmers to lower farm output
*Supply/Demand
ALPHABET AGENCIES

TVA – TENNESSEE VALLEY AUTHORITY
*Most successful
*Helped farmers and created jobs in
one of the countries least developed
region
*Dams provided cheap electricity,
flood control
ALPHABET AGENCIES

NRA-NATIONAL RECOVERY ADMINISTRATION
*Established minimum wage, maximum
working hours, child labor laws
The 2nd New Deal


First new deal faltered due to
criticism and inadequate recovery
2nd New Deal provided
• More relief programs
• Stricter controls over business
• Stronger support for Unions
• Higher taxes on the rich
The 2nd New Deal


Helped migrant farmers
Social Security established
• Elderly
• Unemployment insurance
• Aid for dependant children, the blind
and physically disabled

FDR won the 1936 election in a
landslide
Critics

Shortcomings of the New Deal
• Minimum wage was low--.25/hour
• Women and minorities not fairly represented-discrimination
• Republicans thought it went to far
• Many thought the New Deal did not do enough
Demagogues: those who spoke out against the
New Deal through manipulation
COURT PACKING PLAN




FDR – WANTED TO INCREASE THE # OF
SUPREME COURT JUSTICES FROM 9 TO 15
FDR WANTED TO PACK THE COURT WITH
JUDGES WHO FAVORED THE NEW DEAL
FDR WAS FORCED TO WITHDRAW THIS BILL
HE DID WIND UP WITH A COURT THAT TENDED
TO SIDE WITH HIM
IMPACT OF THE NEW DEAL

A) IT DID NOT END THE DEPRESSION
* Conservatives and radicals criticized
Roosevelt for either going too far or
not far enough
IMPACT OF THE NEW DEAL

B) CREATED WELFARE
* NOT HONORABLE BACK THEN
IMPACT OF THE NEW DEAL

C) INCREASED FEDERAL BUREAUCRACY
*Programs and agencies developed
*Start of government taking care of
people’s problems
IMPACT OF THE NEW DEAL

D) PEOPLE BEGAN TO EXPECT MORE
FROM THE GOVERNMENT
Cultural Effects of the New Deal


FDR supported the arts
Literature
• Grapes of Wrath—John Steinbeck (1939)
• The Good Earth—Pearl Buck (1931)

Radio and Movies
• Wizard of Oz—1939
• Walt Disney
• Soap Operas –15 minute radio broadcast
Provided escape for a weary American public
Final End to Depression
America joining and preparing for:
WWII