Chapter 12: The Great
Depression
Section 1: The Nations Sick
Economy
I.
Economic Troubles on the Horizon
A. Industries in Trouble
1. A number of key industries were barely making
profit in the mid 1920’s.
2. There was a diminished need for many goods
produced in wartime.
3. Production of consumer goods, homes, and
virtually every other product declined.
B. Farmers need a lift
1. Problems
a. Demand for farm products lower than prior to
WWI
b. Many farmers had gone deep into debt to meet
the needs of WWI.
c. Many farmers began to default on their loans.
2. McNary Haugen bill – Proposal to prop
up the farming sector within the U.S.
a. Price supports – Support of a certain price level
at or above market value by the U.S. government
b. 3 parts of the bill…
1. Government to buy surplus of crops at guaranteed
prices..above market value
2. Government sell those crops overseas for whatever
they can get
3. To make up for losses..the government would
increase taxes on food.
** in other words..the loss would be spread throughout
society rather than on farmers alone.
C. Consumers Have less $$ to
Spend
1. As incomes fell ---families had less
money to spend on
necessities.
D. Living on Credit
1. Credit – Arrangement between consumer and
business where the consumer buys now and
pays later.
** Many Americans had been living beyond their
means
2. Businesses were encouraging Americans to
use credit..it was the only way many could buy
E. Uneven Distribution of Income
1. Less than 50% of U.S. families earned
$1500 per yr.
2. Wealthy class kept on getting richer and
the middle class was disappearing..and
becoming part of the growing lower
class.
3. The prosperity experienced during the
“roaring 20’s” never reached most
Americans.
F. A New President
1. Alfred E. Smith –
Democratic Governor
of NY. Career
politician, Catholic
(so?), opposed
prohibition.
2. Herbert Hoover –
Republican, Worked
in Wilson, Coolidge,
and Harding’s
administrations. Had
full support of the
Republican Party and
could point to the
1920’s as years of
prosperity under
republican leadership.
II. The Stock Market Comes
Tumbling Down
• By 1929, many economists were warning
of serious economic “downturns”.
• The Stock Market became the most visible
symbol of the American economy.
• Many Americans thought that investing in
the market was their way to get rich.
Stock Market Floor 1920’s
A. Dreams of Riches in the Stock Market
1. bull market – Period of time when the
stock markets prices are rising.
2. by 1929 nearly 4 million Americans
owned stock.
3. speculation – buying of stocks and
bonds on the chance that you may make
a quick profit.
4. buying on margin – Paying only a % of
the stocks price as a down payment and
borrowing the rest from the brokerage
house.
a. The idea being that you would make
your money on the stock and then sell it
to pay back your money.
b. If prices went up - $$$ if not ??
B. Black Tuesday
B. Black Tuesday –
October 29, 1929 –
The Day that the
bottom fell out of the
stock market – Prices
crashed!
BLACK TUESDAY
(5:06)
1. People dumped their stocks as fast as
they could
2. Most people lost everything that they
owned or worked for their entire lives.
3. By 11/1/1929 - $30 billion had been lost
Where did it go? Into the pockets of the wealthiest investors who were
able to sell all their stocks before anyone realized what was
happening.
C. Causes of the Great Depression
•
Great Depression – Economic downturn
in the U.S. that lasted from 1929 – 1941.
1.
2.
3.
4.
Old and decaying industrial base
Crisis in the farming sector
Easy credit = high debt
Unequal distribution of wealth
• Dow Jones Industrial Average – The
average value of a share of stock from the
nations 30 largest firms that trade their
stock on the U.S. stock market.
• This is a standard measure for the
condition of the U.S. economy
III. Financial Collapse
A. Banks collapsed
1. people panicked and began to withdraw
all their money out of the banks
a. soon banks ran out of cash and
could not cover the withdraws and had to close
down.
2. By 1933 – 6k banks had shut down in the U.S.
B. Businesses failed
1. Nations output of goods and services
dropped 50% over the depression
2. 85,000 businesses went bankrupt
C. Economy spiraled out of Control
1. Millions of workers
lost their jobs
2. 23.8%
unemployment rate
in 1932. ALL TIME
HIGH!!
D. Worldwide Shockwaves
1. Hawley-Smoot Tariff – Was designed to
help farmers by reducing foreign
competition.
a.
b.
c.
Highest tariff in history
Other countries raised tariffs on U.S. goods
Further reduced the amount of American goods being bought.\
2. Huge depression in Europe prevented them from buying
American products and helping to rebuild our economy.
Section 2: Hardship and Suffering
during the Depression
I.
The Depression Devastates Peoples
Lives
A. Depression in the Cities
1. shanty towns – Little “towns” consisting of
shacks on the outskirts of towns.
Shantytown “Shack”
2. soup kitchens – Places where food is offered by
charitable organizations to people who are needy.
• 3. Bread Lines – LONG lines of people
waiting for free bread a often supplied by
charitable organizations.
B. Depression in Rural America
1. Between 1929 – 1932 – 400,000 farmers
lost their farms.
** The one advantage that farmers had over
city dwellers…growing food, was then
gone.
C. The Dust Bowl
1. Dust bowl – Territory of the Great Plains
(Texas to N. Dakota). Called this because
of intense wind storms that whipped up
large dust storms.
Dust Storm
2. Okies – A
derogatory term used
to describe migrants
from Oklahoma who
left their home state
to find a better life out
of the dust bowl.
II. Effects on American Families
A. Family Lives Changed
1. families had to turn to each other to
survive..move in with relatives etc..
2. The stress of the Depression led many
families to break up.
B. Men in the streets/on the rails
1. Approx 2 million men wandered the U.S.
looking for ?????
2. The “hobos” as they were called,
became the uprooted, unwanted
members of society.
Unwanted!?
3. Direct Relief – Cash payments,
handouts, food provided to the needy by
the government.
• There was NO SUCH system in this time
period
• Citizens began to beg for/demand it.
• Hoover – “Pull yourself up by your
bootstraps”.
C. Women and Children struggle to
survive.
1. “Penny pinchers” – Women worked very hard
to scrimp and scrape to get their families by.
Made their own clothes, canned food.
2. Women were forced to work outside the home.
3. Children suffered the worst – in many cases
they were left to fend for themselves.
4. By 1933 2,600 schools were shut down = 300k
students without school.
5. Many children had to work in sweat shops to
help the family.
D. Social & Psychological Effects
of the Depression
1. Many were demoralized & lost their will to live.
2. Suicide rate rose 30%. Mental health
admissions Tripled.
3. No ecducation, Dr. and Dentist put off, put off
marriage/kids, basically put their lives on hold.
4. Achieving financial security became a life long
pursuit of many…a lifetime of scraping by left
permanent marks on peoples souls.
Section 3: Hoover Struggles with
the Depression
I.
Hoover Tries to Reassure the Nation
** most thought that the Depression was just
a normal part of the business cycle.
A. Hoover’s Philosophy of
Government
1. The economy should function with
minimal interference from the
government.
2. Government should take a ROLE in
solving economic issues like this
3. Hoover was a humanitarian.
4. Rugged individualism – The idea that
people should succeed on their own, not
rely on others to solve their problems.
E. Hoover takes cautious steps
1. Hoover was not a career politician so..he found it
tough to compromise.
2. He was VERY cautious as to how to handle issues.
3. Hoover asked businesses to work hard to help end
the crisis without government assistance.
4. Basically…Hoover did not do much to solve the
issues that faced society. And people blamed him
for making things worse …not better.
F. Democrats win 1930
Congressional Elections
1. Obviously the Republicans had failed the
people.
2. Democrats quickly won control of both
the House and the Senate. (Much like
2008)
3. People began to call
shantytowns…hoovervilles
III. Hoover takes action
Boulder Dam – A power
plant project designed to
build a hydroelectric
facility AND provide jobs
to jumpstart the economy.
** Hoover was finally
listening to the people
** $800 million cost
A. Boulder Dam & Other
Government Projects
1.
Public Works Programs
– to build roads, dams,
power plants, RR etc..
To provide jobs and
stimulate the economy.
2.
Federal Home Loan
Bank – Lowered bank
interest rates for
mortgages and allowed
farmers to refinance
their loans so they
would not lose their
farms.
• Reconstruction Finance Corporation –
Was authorized by Congress to provide
emergency funds to banks, insurance
companies & RR.
B. Gassing the Bonus Army
1. Bonus Army – WWI Vets who wanted to
get their military service bonus NOW
when they needed it instead of when the
government promised them.
** $1 per day served & $1.25 served
overseas
** Not payable until 1945.
2. Walter Waters – Leader of the Bonus
Army’s march to Washington D.C. to
protest Congress’ previous decision to not
give the bonus early.
3. Congress voted again on the issue and
voted NO….Vets stayed in protest
4. President Hoover ordered the
protestors removed
a. General Douglas MacArthur used the
U.S. Army
b. Used bayonets to “push” protestors out.
c. Tear gas was deployed
* 1k people gassed, 1 infant dead, 8 yr
old boy blinded.
Burning the Encampments
5. The whole thing was a public relations
nightmare for the President as his
faltering image now looked even worse.
6. Citizens were outraged…and the
Presidential election was just around the
corner.
Chapter 13 The New Deal
Section 1: A New Deal Fights the Depression
A. Electing Franklin Deleno Roosevelt (FDR)
1. Republicans knew they had little chance
of getting Hoover Re-elected.
2. Gov. of New York, reform minded – fix
unemployment.
3. “Can do” attitude that voters wanted. He
wasn’t afraid to try to fix things.
B.
Waiting for FDR to take over
1.
America’s problems worsened while waiting for
March’s inauguration.
2.
New Deal – FDR’s plan for fixing economic problems
of U.S.
3. 100 Days – Period from 3/9-6/16 in which FDR and his
government intensely passed laws and provisions
designed to fix our economy. Fifteen pieces of
legislation passed in this time.
C. Reforming banking and finance
1. Bank Holiday – On March 5, 1933 FDR
declared a national bank holiday. All
banks to close until they could prove that
they were stable.
2. Banking Relief Act – Allowed the U.S.
Treasury Department to inspect banks to
determine if they were stable enough to
open.
D. Fireside Chats – Radio talks that FDR
gave that discussed issues affecting the
people. They were informal and relaxed
and it helped ease many people’s fears
about the Depression. FDR would
explain his actions and New Deal
policies so people would understand
what he and the Government were
doing.
1st fireside chat
1. “We have provided the machinery to restore
our financial institutions and it is now up to you
to make it work.”
2. Glass-Steagall Banking Act – Established
the (FDIC) which guaranteed that all bank
deposits would be available for withdrawal.
3. Federal Securities Act – required all
companies selling shares on the stock market
to provide complete information on the
company’s finances or be liable for any
misrepresentations.
II. Helping the American People
A. Assisting Farmers
1. Agricultural Adjustment Act – Sought to raise
farm prices by reducing crop output.
Government paid farmers for letting their fields
stay empty.
1. Reduced quantity would raise prices
B. Providing Work Projects – to provide
relief through paying jobs.
1. Civilian Conservation Corps – Put young men
(18-25) to work building roads, developing parks,
planting trees, helping in soil erosion and flood
prevention projects sponsored by the
government paid $30/week, $25/week was sent
home to the family.
2. Federal Emergency Relief Administration –
Provided $500 million in direct relief for citizens
for food, clothing and housing.
1. Public Works Administration – Provided
money to states to create jobs. Mainly the
construction of schools and public buildings.
2. Civil Works Administration – Replaced the
PWA. More money and effort to find jobs for the
unemployed. Paid for the building of 40k schools
and paid 50k teachers.
3. National Industrial Recovery Act – Sought to
promote industrial growth by mandating fair
business practices, set prices for many products,
banned child labor, and set standards for wages
and hours.
C. Helping People with Housing
1. Home Owners Loan Corporation –
Provided government funded loans to
families who faced foreclosure on their
homes. Led to the creation of the FHA
which continues to help homeowners
today.
III. New Deal comes under attack
A. Critics on both sides
1. Liberals believed the New Deal did not go far
enough to help people stuck in poverty.
2. Conservatives believed that FDR spent way too
much money on direct relief for the citizens.
•
B. Supreme Court Reacts to New Deal
1. Supreme Court ruled that the National Industry
Recovery Act was unconstitutional because the
Federal Government had no authority to set the
laws and procedures that they wanted to set.
Just the beginning as the SC challenged the
legality of many of FDR’s policies/programs.
2. FDR accused of “stacking the court” with
Supreme Court Justices that would pass his
policies.
3. As Supreme Court Justices retired, quit
ect…FDR was able to appoint seven Justices
that obviously he viewed as allies to his plans.
C. Three Fiery Critics
1. Charles Coughlin –
Catholic Priest that
had a fiery radio talk
show that was critical
of FDR’s policies and
practices as he felt
they were not strong
enough. Was asked
by the Catholic
Church to back off.
2. Francis Townsend – A
physician and Health
Care officer in
California. Believed
that FDR wasn’t doing
enough to help the
needy. Believed that
the government should
provide monthly cash
benefits to the aged.
That would help the
economy by putting
more cash into
circulation.
•
3. Huey Long – Louisiana Senator, and
eventual Governor who fought for
increased distribution of wealth among
all citizens in the U.S. Even campaigned
for the Presidency. His main
program/policy (Share our Wealth) drew
massive amounts of supporters.
a. Huey Long was assassinated by a gunman at the
height of his popularity.
Section 2: The Second New Deal
Takes Hold
I. The Second Hundred Days
**name given to the second new deal
•
A. Eleanor Roosevelt – First lady who
prodded her husband/President to work
for the “forgotten man”.
i.
She traveled the country seeking out social
conditions that needed improving.
ii. She worked tirelessly to inform the
President of the immense suffering of the
American people.
•
B. Re-Electing FDR
1. “Are you better of today than four years ago”
1. FDR won re-election in 1936.
II. Helping Farmers
A. Farming communities continued to suffer the
worst.
B. Soil Conservation and Domestic Allotment
Act – Paid farmers for not growing soil
depleting crops like cotton.
C. Attempts were made to help sharecroppers,
migrant workers and other poor farmers.
1. Resettlement Administration – provided loans to
small farmers to help set up on new land and get a
fresh start.
2. Was replaced by the farm security administration.
III. Helping Youth, Professionals,
and Others
A. Works Progress Administration (WPA)
– Set out to create as many jobs as
possible as quickly as possible.
1. Had eight million workers who built airports,
schools, roads, parks, libraries,
hospitals…etc..
2. “You worked, your got a paycheck, and you
got some dignity”
3. Teachers, musicians, and artists were also
hired for their abilities.
B. National Youth Administration (NYA) Was created to help the youth of
America. 200k students received aid
and assistance.
IV. Labor and Other Reforms
A. Improving Labor Conditions
1. National Labor Relations ACT – (Wagner ACT)
- Defined unfair labor practices.
a. Established the national labor relations board
which investigated claims of unfair or illegal
business practices.
b. Threatening workers, unjust firings, banning labor
unions ect…
2. Fair Labor Standards ACT – Established
maximum hours and minimum wages.
1. Old age insurance for workers 65 and older and
their spouses. (social security)
2. Unemployment compensation
3. Aid to families with dependant children and the
disabled.