The Great Depression

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1929-1939

1928: Hoover v. Smith

“A chicken in every pot and a car in every

garage” – Herbert Hoover

A period of severe economic decline, marked by unemployment, decreasing business activity, and falling prices.

Previous depressions: 1830s, 1870s, and 1890s

Shocking after a decade of unprecedented prosperity

Impacted all areas of American life

Damaged confidence in the future

Median incomes plunged to half of what they had been in

1929

¼ out of work

Impacted all areas of American life

Damaged confidence in the future

1920s prosperity was superficial

Causes of the Depression were complex and largely ignored throughout the decade

The wealthiest 5% took in nearly 1/3 of the nation’s income

Nearly ½ of the nation’s families earned less than $1,500 a year—while H. Ford made $14 million

Causes: 1) Mellon’s tax cuts 2) Businesses increased profits while holding down wages

Effects: Depressed consumer purchasing power

Secretary of Treasury

Andrew Mellon

1921-1932

In 1929, 200 corporations controlled ½ of the corporate wealth

Some industries thriving (auto) while others like agriculture declining steadily

Average income for a farmer $273

For an economy to function properly, the total demand must equal total supply

In 1920s there was an oversupply of goods

(mechanization of industry & farming responsible) supply

1920s Economy demand

Installment plans

Borrowing on margin to buy stocks

Private banks loaned out millions

 throughout the 1920s rising debt

America prospered in the 1920s, while European nations struggled to rebuild after the war

U.S. lent $7 billion to Europe during the war

Another $3 billion by 1920

Britain & France loans reparations

U.S.

investments Germany

Fordney-McCumber Tariff of 1922

Hawley-Smoot Tariff of 1930

How a tariff works

An item costs $4 to make in Britain

A 25% tariff is levied on such items

A $1 tax is added to the price

Now the British item is priced at $5

Americans are encouraged to buy the cheaper item produced in the US

By 1929 about 4 million Americans or 3% of the population owned stocks

Stockbrokers were willing to lend up to 75% of the stocks purchasing price

Americans wanted to take advantage of the “bull market”

(rising stock prices)

Example: RCA stock $85 in Sept. 1928, $420 one year later—even though the company had not paid a single dividend

Stock Market plunges

Panic on Oct. 24, 1929 (Thursday), stocks prices plunge

Oct. 29, 1929 (“Black Tuesday”), 16 million shares of stock dumped in one day

7. Shortsighted government policies

Mellon’s tax cuts

Protective tariffs

Federal Reserve Board tightens credit

Tax cuts

Protective

Tariffs

Tightening of credit

1. Depressed purchasing power

2. Inability to sell goods at home or abroad

Depressions effects

Widespread bank failures

Bankrupt businesses

High unemployment

Depression effects

Decrease in worldwide trade

Increasing numbers of homeless persons

Widespread hunger and illness

Dust storm approaching Stratford, Texas - 1934

Dust buried cars and wagons in S. Dakota in 1936

Storm approaching Elkhart, Kansas in 1937

Public opinion made him the villain of the Great

Depression. In fact, the 31st president was a visionary -but a hopelessly inept politician.

--

David M. Kennedy

Hoover Dam (Public Works Projects)

Hoover successfully organized and authorized the construction of the

Boulder Dam (Now called the Hoover Dam)

The $700 million project was the world’s tallest dam

(726 feet) and the second largest (1,244 feet long)

The dam currently provides electricity, flood control and water for 7 western states

Hoover Dam Today

The World War Adjusted Compensation Act of 1924 had awarded WWI Veteran bonuses in the form of certificates they could not redeem until 1945.

The principal demand of the Bonus Army was the immediate cash payment of their certificates.

President Herbert Hoover ordered the army to clear the veterans' campsite.

General Douglas MacArthur commanded the infantry and cavalry supported by six tanks.

The Bonus Army marchers, with their wives and children were driven out, and their shelters and belongings burned.

At least 69 police injured

Party

Home state

Running mate

Electoral votes

States carried

Popular vote

% of Popular vote

Franklin D. Roosevelt

Democrat

New York

John Gardner

472

42

22,821,277

57.4%

Herbert Hoover

Republican

Iowa

Charles Curtis

59

6

15,761,254

39.7%

Happy days are here again

The skies above are clear again

So, Let's sing a song of cheer again!

A New Deal

“ I pledge you, I pledge myself, to a new deal for the

American people.” –FDR 1932

Relief, Recovery, Reform

Depression/New Deal Vocab

.

First 100 days- special session of Congress

Alphabet soup- New Deal legislation

Lame Duck Amendment- 20 th

Amend.

Pump priming-the theory that government spending projects can generate economic growth in a recession.

1 st

New Deal: 1933-1935

2 nd

New Deal: 1935-1936 (greater focus on reform)

End of the New Deal: 1936-1939

New Deal Vocab

.

Brains Trust—professors from Columbia Univ. who had informal conversations about economic and social policy with President Roosevelt.

Black Cabinet—men and women who composed the first sizable representation of African Americans in whitecollar posts in the federal government (i.e. Mary McCleod

Bethune

Mary McLeod Bethune

Rexford Tugwell

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