U.S. History- The Great Depression 1930's

Economic Recession

Is when a nation’s real output (GNP) declines.

Economic Depression

A severe and prolonged economic downturn (much worse than an economic recession)

Causes for the Great Depression

1. Economic recession

2. Economic Depression

Major Industries (steel, textiles, railroads, etc,…)

saw profits fall drastically. Industries that expanded during WWI faced a diminished need for their goods.

During WWI demand was high. Naturally, this caused prices to rise.

Farmers planted more crops and took out loans to buy land and equipment.

When demand dropped, farmers decided to

produce more hoping to sell more crops and thus make up for the price drop.

People were living beyond their means.

There was a superficial prosperity.

People would buy on credit, take on more debt, and would eventually

default on loans or be forced to cut back on spending. This hurt both businesses and banks.

During the 1920’s almost half of the nation’s families earned less than

$1500 annually. This was the poverty level.

During the 1920s American incomes rose an average of

9%. The wealthy person= 75% (rich getting richer)

FDIC

Federal Deposit Insurance Corporation

In the 1920s banks were opening at the rate

of four to five per day but without many federal restrictions to determine how much start-up capital a bank a bank needed or how much it could lend. As a result, most of these banks were highly insolvent.

What act set the highest schedule of tariffs to date?

The Hawley-Smoot Tariff Act of 1930

This protectionism produced a negative effect on United States exports:

foreign countries couldn’t pay their debts if they had no markets to sell their products. Nations retaliated by raising their tariffs.

Most American economists and political leaders in 1929 still believed in

laissez-faire and the self-regulating economy.

President Hoover asked businesses

to voluntarily hold down production and increase employment

The previous 8 years had been a

“bull market.” also a bear market

Wealth was not real

= paper wealth

Buying on Margin

pay a small % of stock as a down payment. Paid to brokers. This worked if prices continued to go up.

What day was the single most devastating financial day in the history of the New York Stock Exchange.

October 29, 1929- “BlackTuesday”

Banks went out business because

People panicked and withdrew $ from banks. Many banks could not meet the high demand for cash, therefore going out of business.

By 1933 a little over

6,000 banks had failed (1/4 of nations total…)

The unemployment rate went from just over

3% in 1929 to over 25% in 1933.

Shantytowns

towns on the fringes of cities comprised of shacks and mainly migrants who were working or looking for work.

Some whites were angry with

African Americans and Mexican Americans because of job competition

In 1933 24 African Americans die by

lynching

Between 1929 and 1932

400,00 farms were foreclosed on. extreme drought added problems

Due to Great Depression societal consequences:

• Malnutrition increased 

• Schools shut down 

• Suicide rates rose

• Psychology of saving/being poor/ distrust

The Dust Bowl went through what region of the Midwest?

North Dakota to Texas

Why the Dust Bowl went through North Dakota to Texas

Land was exhausted because of overproduction/poor crop rotation/overgrazing. Land exempt from grass and trees to help hold the soil down. 

Herbert Hoover was known as

the man of “the people”

Hoover’s advisors felt that he

shouldn’t do anything too hasty with regard to the economy. They felt it would fix itself.

Hoover felt that people should

take care of their own problems and that any form of government welfare was uncalled for. In many ways, he felt that Federal handouts would morally “corrupt” the nation.

Hoover became the

scape goat ( person. to blame )

Shanytowns were then called

“Hoovervilles”

Newspapers

“Hoover blankets”

Empty pockets

“Hoover Flags”

The Hoover Dam was

Black Canyon on the Colorado River. About 30 miles southeast of Las Vegas.

Spring of 1932

10 to 15,000 WWI veterans (some with families) arrived in Washington D.C. They were there to support the Patman Bill.

Patman Bill

This bill was going to give a bonus to WWI vets– (not supposed to be given until 1945) immediately.

While Hoover opposed the legislation of the Patman Bill and camping near capitol building

he did understand that their 1st amendment rights needed to be upheld.

When Congress defeated the patman bill,

Hoover demanded that the Bonus Army leave, when they didn’t Hoover called on the Army to remove them.

The infantry used what on the veterans that would not leave the Capitol Building’s lawn

gas to disperse the remaining veterans. During this an 11- month old baby dies, 2 people were shot, and many were injured

Roosevelt wins in a ________ victory

landslide

Roosevelt promised in first 100 days

“New deal for the American people” (programs)

“Fireside chats” (people would listen in weekly)

“Bank Holiday”

All banks shut down preventing any more withdrawals

FDIC introduced

Glass Steagall Banking Act

AAA-

Agricultural Adjustment Act- Farmers were paid not to grow crops.

WHY? this was all done to lower supply and raise prices.

CCC-

Civilian Conservation Corp- Men ages 18-25 built roads, parks, planted trees, etc…

“boondoggles”

Wasting time

“Court-packing scheme” 

refers to the act of increasing the number of judges in a court, usually a supreme court, in order to influence the court’s decisions by appointing judges who align with a particular political agenda.

3 people who opposed FDR

Huey P. Long “Share the wealth”

Francis Townsend- proposed a pension plan: all Americans over 60 would get $200 per month

Father Charles Coughlin- spoke out against communism and FDR

NYA

(National Youth Admin)- Provided work specifically for national youth.

WPA

(Works Progress Admin)-The program was given a budget of $5 billion.

Wagner Act

Under the act, the Federal Gov. supported the right of workers to join unions and to engage in collective bargaining.

Established maximum and minimum wages. For the first time, it set a minimum hourly wage (25 cents) and a 44-hour work week.

Social Security Act

Passed in 1935

1) Old age insurance for people 65 or older

2) Unemployment compensation to be administered at the state level

3) Aid to families with dependent children and the disabled was made to the blind, crippled, elderly, and mothers with dependent children.

Frances Perkins

First female cabinet member (Sec. Of Labor). Major factor in creating Social Security

Movies

Many people needed an escape from tough times- they looked to the movies for this escape.

How much of the population attended a movie at least once a week

65%

3 famous movie examples

“Gone With the Wind”

“Mr. Smith Goes to Washington”

“Wizard of Oz”

“King Kong”