The Great Depression

1. The Great Depression 1929-1939

2. 1928: Hoover v. Smith

3. “A chicken in every pot and a car in every garage” – Herbert Hoover

4. Depression: • A period of severe economic decline, marked by unemployment, decreasing business activity, and falling prices. • Previous depressions: 1830s, 1870s, and 1890s

5. Great Depression: 1929-1939 • Shocking after a decade of unprecedented prosperity • Impacted all areas of American life • Damaged confidence in the future

6. Rock bottom: 1932-1933 • 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

7. Causes of the Great Depression • 1920s prosperity was superficial • Causes of the Depression were complex and largely ignored throughout the decade

8. 1. Uneven distribution of income • 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

9. 2. Uneven distribution of corporate wealth • 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

10. 3. Overproduction & under-consumption • 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 demand 1920s Economy

11. 4. Easy credit • Installment plans • Borrowing on margin to buy stocks • Private banks loaned out millions  rising debt throughout the 1920s

12. 5. Large scale international wealth distribution problems • 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

13. Protective tariffs • Fordney-McCumber Tariff of 1922 • Hawley-Smoot Tariff of 1930

14. 6. Speculation on the stock market • 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)

15. Stock prices peaked in Sept. 1929 • Example: RCA stock $85 in Sept. 1928, $420 one year later—even though the company had not paid a single dividend

16. 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

17. 7. Shortsighted government policies • Mellon’s tax cuts • Protective tariffs • Federal Reserve Board tightens credit Depressed purchasing power Inability to sell goods at home or abroad

18. Depressions effects • Widespread bank failures • Bankrupt businesses • High unemployment

19. Depression effects • Decrease in worldwide trade • Increasing numbers of homeless persons • Widespread hunger and illness

21. Dust storm approaching Stratford, Texas - 1934

22. Dust buried cars and wagons in S. Dakota in 1936

23. Storm approaching Elkhart, Kansas in 1937

24. Hoover is ineffective at responding • 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

25. 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

26. Hoover Dam Today

27. Bonus Army 1932 • 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.

28. Hoover responds • 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.

29. Death & disaster: 4 dead, 1,017 injured At least 69 police injured

30. 1932 Presidential Election

31. A vote against Hoover = FDR win Happy days are here againThe skies above are clear againSo, Let's sing a song of cheer again!

32. A New Deal • “I pledge you, I pledge myself, to a new deal for the American people.” –FDR 1932 • Relief, Recovery, Reform

33. Depression/New Deal Vocab. • First 100 days- special session of Congress • Alphabet soup- New Deal legislation • Lame Duck Amendment- 20th Amend. • Pump priming-the theory that government spending projects can generate economic growth in a recession. • 1st New Deal: 1933-1935 • 2nd New Deal: 1935-1936 (greater focus on reform) • End of the New Deal: 1936-1939

34. 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 white-collar posts in the federal government (i.e. Mary McCleod Bethune Mary McLeod Bethune Rexford Tugwell