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THE GREAT DEPRESSION BEGINS

THE GREAT DEPRESSION BEGINS. Photos by photographer Dorothea Lange. HOOVER WINS 1928 ELECTION. Republican Herbert Hoover ran against Democrat Alfred E. Smith in the 1928 election Hoover emphasized years of prosperity under Republican administrations Hoover won an overwhelming victory.

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THE GREAT DEPRESSION BEGINS

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  1. THE GREAT DEPRESSION BEGINS Photos by photographer Dorothea Lange

  2. HOOVER WINS 1928 ELECTION • Republican Herbert Hoover ran against Democrat Alfred E. Smith in the 1928 election • Hoover emphasized years of prosperity under Republican administrations • Hoover won an overwhelming victory

  3. PRESIDENT HERBERT HOOVER • 31st President 1929 to 1933 • Republican • Graduated from Stanford University 1895 • Occupation: Engineer • Food Administration Director during WWI • Secretary of Commerce 1921-28 • “A chicken in every pot and car in every garage”.Hoover quote in 1929

  4. PRESIDENT HERBERT HOOVER • Stock Market Crash • Black Tuesday, Oct. 23, 1929 • Hoover was blamed for not providing “direct relief” to help Americans? WHY? • US Govt. should not provide “direct relief” • laissez faire • Rugged individualism: Americans are self-sufficient and would work themselves out this depression through hard work and determination. • Charitable organizations: Churches, volunteers and people helping one another.

  5. WHAT WOULD YOU DO? Pretend you were President and your country’s unprecedented wealth suddenly evaporated. • American companies are not producing goods or services • Consumer spending declines • The size of the economy continues to shrink • A great drought is turning precious farmland into huge clouds of dust and within a year the Great Plains is ruined • A new political philosophy called Fascism is on the rise in Japan, Spain, Portugal and Germany. • War looms on the horizon. • 25% of US population unemployed • Stock prices are greatly over-valued and the stock market is in ruins • 5,000 banks closed because they loaned out all their money • Millions of people have lost jobs, savings accounts, homes and personal property. • Foreign countries can’t make loan payments • Foreign economies have collapsed

  6. PRESIDENT HERBERT HOOVER Promoting Recovery • Hoover reassures the public; downplayed the public’s fears. • Critics were angry that the conditions worsened as Hoover tried to put a good face on the situation. • Privately, Hoover is deeply worried about the economy and gathers a heads of banks, labor, railroads, labor, big business, and government officials.

  7. HOOVER’S ATTEMPTS TO SOLVE THE GREAT DEPRESSION • Industry pledged to keep factories open and stop slashing wages. • This did not work: by 1931 most businesses reneged. • Next step was public works: • government financed building projects. • Hoover urged governors and mayors throughout the nation to increase public works spending. • Many governors and mayors did not choose to do this. • Pay higher taxes or borrow money from banks (deficientspending) which leaves less money for banks to loan out to people. • Hoover feared that deficient spending could delay an economic recovery.

  8. Pumping Money Into the Economy • Hoover asked the Federal Reserve Board to pump more money into circulation. • The National Credit Corporation was created to have a pool of money that would enable troubled banks to continue lending money in their communities • By 1932 he believed that this wasn’t going to be effective and the government had to do the lending in what was called the Reconstruction Finance Corporation. • The RFC lent out $238 million to approximately 160 banks. • A total of $500 million the US Government provided “indirect” relief to ass insurance corporations, agricultural organizations, railroads and state and local governments. • “TOO LITTLE, TOO LATE”. It did not increase its loans in sufficient amounts to meet the need, and the economy continued its decline.

  9. PRESIDENT HERBERT HOOVER • Reconstruction Finance Corporation • Early in 1932, Congress, responding to Hoover’s appeal, established the Reconstruction Finance Corporation, which became a government lending bank. • With $500 million, US Government provided “indirect” relief by assisting insurance corporations, banks, agricultural organizations, railroads and state and local governments. • The theory was that prosperity at the top would help the economy as a whole. • Many Americans saw it as helping bankers and big businessmen, while ordinary people went hungry. • BUT, no direct relief to American people. Why? Hoover did not support federal public assistance because he believed it would destroy people’s self-respect and create a large bureaucracy.

  10. Direct Help for Citizens • Hoover strongly opposed the federal government’s participation in relief. Hoover did not support federal public assistance because he believed it would destroy people’s self-respect, violate laissez faire and create a large bureaucracy. • However, states and cities were doing it—but by 1932, they were running out of money. • Many Americans saw it as helping bankers and big businessmen, while ordinary people went hungry. • Political support was building for a relief measure; Congress passed the Emergency Relief andConstruction Act. • The new act called for $1.5 billion for public works and $300 million in loans to the states for debt relief. • It was still not enough; the collapse continued.

  11. Farmers Revolt • During World War I, many farmers had heavily mortgaged their land to pay for seed, feed, and equipment. • After the war, prices sank so low that farmers could not even earn their costs and could not make a profit. • 1930-1934: creditors foreclosed on nearly one million farms, taking possession of them and evicting families • Some farmers began destroying their crops in a desperate attempt to raise prices • In Nebraska grain growers burned corn to heat their homes in the winter. • In Iowa food growers prevented the delivery of vegetables to distributors. • Georgia dairy farmers blocked the highways and stopped milk trucks, emptying the milk cans into ditches.

  12. FARMERS STRUGGLE • No industry suffered as much as agriculture • During World War I European demand for American crops soared • After the war demand plummeted • Farmers increased production sending prices further downward Photo by Dorothea Lange

  13. CONSUMER SPENDING DOWN • BY THE LATE 1920S, AMERICAN CONSUMERS WERE BUYING LESS • RISING PRICES, STAGNANT WAGES AND OVERBUYING ON CREDIT WERE TO BLAME • MOST PEOPLE DID NOT HAVE THE MONEY TO BUY THE FLOOD OF GOODS FACTORIES PRODUCED

  14. GAP BETWEEN RICH & POOR • The gap between rich and poor widened • The wealthiest 1% saw their income rise 75% • The rest of the population saw an increase of only 9% • More than 70% of American families earned less than $2500 per year Photo by Dorothea Lange

  15. THE STOCK MARKET • By 1929, many Americans were invested in the Stock Market • The Stock Market had become the most visible symbol of a prosperous American economy • The Dow Jones Industrial Average was the barometer of the Stock Market’s worth • The Dow is a measure based on the price of 30 large firms

  16. STOCK PRICES RISE THROUGH THE 1920s • Through most of the 1920s, stock prices rose steadily • The Dow reached a high in 1929 of 381 points (300 points higher than 1924) • By 1929, 4 million Americans owned stocks New York Stock Exchange

  17. TROUBLE • By the late 1920s, problems with the economy emerged • Speculation:Too many Americans were engaged in speculation – buying stocks & bonds hoping for a quick profit • Margin:Americans were buying “on margin” – paying a small percentage of a stock’s price as a downpayment and borrowing the rest The Stock Market’s bubble was about to break

  18. THE 1929 CRASH • In September the Stock Market had some unusual up & down movements • On October 24, the market took a plunge . . .the worst was yet to come • On October 29, now known as Black Tuesday, the bottom fell out • 16.4 million shares were sold that day – prices plummeted • People who had bought on margin (credit) were stuck with huge debts

  19. THE GREAT DEPRESSION • The Stock Market crash signaled the beginning of the Great Depression • The Great Depression is generally defined as the period from 1929 – 1941 in which the economy plummeted and unemployment skyrocketed • The crash alone did not cause the Great Depression, but it hastened its arrival

  20. FINANCIAL COLLAPSE • After the crash, many Americans panicked and withdrew their money from banks • Banks had invested in the Stock Market and lost money • In 1929- 600 banks fail • By 1933 – 11,000 of the 25,000 banks nationwide had collapsed Bank run 1929, Los Angeles

  21. HAWLEY-SMOOT TARIFF • The U.S. was not the only country gripped by the Great Depression • Much of Europe suffered throughout the 1920s • In 1930, Congress passed the toughest tariff in U.S. history called the Hawley- Smoot Tariff • It was meant to protect U.S. industry yet had the opposite effect • Other countries enacted their own tariffs and soon world trade fell 40%

  22. CAUSES OF THE GREAT DEPRESSION • UNEVEN DISTRIBUTION OF WEALTH • OVERPRODUCTION & UNDERCONSUMPTION • EASY CREDIT • UNBALANCED FOREIGN TRADE • MECHANIZATION • THE IMMEDIATE CAUSE WAS THE STOCK MARKET CRASH

  23. EVENTS WHICH LED TO GREAT DEPRESSION • EFFECTS • Under consumption of goods and services---not buying goods • Families had limited income to purchase goods • Led to falling prices of goods • Led to drop in farm prices • Banks didn’t get back their $$$ • Speculation on stocks • Investors buy stocks on credit • Wealth on paper • Total collapse of US economy, lassiez faire and capitalism • CAUSES • Decrease in consumer spending • Unequal distribution of wealth • Overproduction of goods • Huge farms surpluses • War debts not paid back • Buying on margin (Credit) • Stock Market Crash Black Tuesday,Oct. 23, 1929 events

  24. HARDSHIPS DURING DEPRESSION • The Great Depression brought hardship, homelessness, and hunger to millions • Across the country, people lost their jobs, and their homes • Some built makeshifts shacks out of scrap material • Before long whole shantytowns (sometimes called Hoovervilles in mock reference to the president) sprung up

  25. SOUP KITCHENS • One of the common features of urban areas during the era were soup kitchens and bread lines • Soup kitchens and bread lines offered free or low-cost food for people Unemployed men wait in line for food – this particular soup kitchen was sponsored by Al Capone

  26. CONDITIONS FOR MINORITIES • Conditions for African Americans and Latinos were especially difficult. They were the last hired and the first fired. • Unemployment was the highest among minorities and their pay was the lowest • Increased violence (24 lynchings in 1933 alone)marred the 1930s • Many Mexicans were “encouraged” to return to their homeland. Many Americans wanted repatriation of Mexican Americans.

  27. RURAL LIFE DURING THE DEPRESSION • While the Depression was difficult for everyone, farmers did have one advantage; they could grow food for their families • Thousands of farmers, however, lost their land • Many turned to tenant farming and barely scraped out a living Between 1929-1932 almost ½ million farmers lost their land

  28. THE "SNOWBALL EFFECT" OF THE CRASH • Bankers call brokers wanting their money! • Brokers go to investors to collect their money to pay the bank loans borrowed by broker for investor • Orders to sell any any price… swamped the market--nobody would buy • Brokers go under--stocks are worthless--investors loose their savings! • Run on the Banks: People begin to panic and go to banks---try to withdraw their money…Banks don’t have any money to give back • Banks close---people lost their savings • Businesses close---could not pay back loans to banks. • Workers loose their jobs • No money to buy consumer products • Sales fall---more businesses shut down • More workers lose their jobs domino effect

  29. HOOVERVILLES HOOVERVILLES Hoovervilles or shantytowns, were migrant towns of people who were out of work and on the move to find work. Usually outside large cities where migrants were trying to find jobs. Named after President Hoover because he wouldn’t do anything to help the people who were in need…….

  30. Impact on Health • Some people starved and thousands went hungry. • Children suffered long-term effects from poor diet and inadequate medical care. • Social and Psychological Effects • 1928–1932, suicide rate rises over 30% • Admissions to state mental hospitals triple Stresses on Families • Living conditions declined as families crowded into small houses or apartments. • Men felt like failures because they couldn’t provide for their families. • Working women were accused of taking jobs away from men. Discrimination Increases • Competition for jobs produced a rise in hostilities against African Americans, Hispanics, and Asian Americans. • Lynchings increased. • Aid programs discriminated against African Americans. Poverty Strains Society

  31. PSYCHO EFFECTS OF THE GREAT DEPRESSION Run on the banks…….Bread and food lines………

  32. THE DUST BOWL • A severe drought gripped the Great Plains in the early 1930s • Wind scattered the topsoil, exposing sand and grit • The resulting dust traveled hundreds of miles • One storm in 1934 picked up millions of tons of dust from the Plains an carried it to the East Coast Kansas Farmer, 1933

  33. Dust storm approaching Stratford, Texas - 1934

  34. Storm approaching Elkhart, Kansas in 1937

  35. CAUSES OF THE DUST BOWL: • THE DROUGHT • NO GRASS TO HOLD THE LOOSE SOIL • LIVESTOCK OVERGRAZED THE LAND • WINDSTORMS BLOW TOPSOIL AWAY Dust buried cars and wagons in South Dakota in 1936

  36. HARDEST HIT REGIONS • Kansas, Oklahoma, Texas, New Mexico, and Colorado were the hardest hit regions during the Dust Bowl • Many farmers migrated to California and other Pacific Coast states Boy covers his mouth to avoid dust, 1935

  37. OKIES ARE ON THEIR WAY WEST!! Photographer Dorothea Lange captures a family headed west to escape the dust storms

  38. HOBOES TRAVEL AMERICA • The 1930s created the term “hoboes” to describe poor drifters • 300,000 transients – or hoboes – hitched rides around the country on trains and slept under bridges (thousands were teenagers) • Injuries and death was common on railroad property; over 50,000 people were hurt or killed

  39. EFFECTS OF DEPRESSION • Suicide rate rose more than 30% between 1928-1932 • Alcoholism rose sharply in urban areas • Three times as many people were admitted to state mental hospitals as in normal times • Many people showed great kindness to strangers • Additionally, many people developed habits of savings & thriftiness

  40. HOOVER STRUGGLES WITH THE DEPRESSION • After the stock market crash, President Hoover tried to reassure Americans • He said, “Any lack of confidence in the economic future . . . Is foolish” • He recommended business as usual Herbert Hoover

  41. HOOVER’S PHILOSOPHY • Hoover was not quick to react to the depression • He believed in “rugged individualism” – the idea that people succeed through their own efforts • People should take care of themselves, not depend on governmental hand-outs • He said people should “pull themselves up by their bootstraps” Hoover believed it was the individuals job to take care of themselves, not the governments

  42. HOOVER’S SUCCESSFUL DAM PROJECT • 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

  43. HOOVER TAKES ACTION: TOO LITTLE TOO LATE • Hoover gradually softened his position on government intervention in the economy • He created the Federal Farm Board to help farmers • He also created the National Credit Organization that helped smaller banks • His Federal Home Loan Bank Act and Reconstruction Finance Corp were two measures enacted to protect people’s homes and businesses Hoover’s flurry of activity came too late to save the economy or his job

  44. DEBTS BONUS ARMY • Bonus Army March in the summer of 1932 over 20,000 veterans from WWI marched on Washington, DC. • Demanded their Bonus promised to them by the government for fighting in WWI. • They were out of work and wanted to feed their families.

  45. BONUS ARMY • A 1932 incident further damaged Hoover’s image • That spring about 15,000 World War I vets arrived in Washington to support a proposed bill • THE PATMAN BILLwould have authorized Congress to pay a bonus to WWI vets immediately • The bonus was scheduled to be paid in 1945 --- The Army vets wanted it NOW!!!

  46. BONUS ARMY TURNED DOWN • Hoover called the Bonus marchers, “Communists and criminals” • On June 17, 1932 the Senate voted down the Putnam Bill Thousands of Bonus Army soldiers protest – Spring 1932

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