U.S. History Chapter 11 Notes The Great Depression Begins

1. U.S. History Chapter 11 Notes The Great Depression Begins An economic crisis grips the nation during the Great Depression. President Herbert Hoover’s conservative response to the nation’s problems costs him many supporters.

2. Section 1The Nation’s Sick Economy As the prosperity of the 1920s ends, severe economic problems grip the nation.

3. Economic Troubles on the Horizon • Problems began threatening economic prosperity by the end of the 1920s • Farm debt - many farmers were forced to sell in the 1920's • Consumer debt - many people were buying goods on credit • More goods then buyers - prices rose faster than wages • Declining Trade - 1920's U.S. raised tariffs other countries raised tariffs to retaliate • Important industries struggled • Income disparity - Consumers & farmers went steadily deeper into debt

4. Industries in Trouble • Key industries like railroads, textiles, steel barely made profit • Replaced by other forms of transportations • Mining, lumbering expanded during were no longer in high demand • Coal especially hard-hit due to availability of new energy sources - Hydroelectricity, fuel oil, & natural gas • Boom industries - automobiles, construction, consumer goods weakened • Housing starts declined - Affected many related industries

5. Farm Troubles • International demand for U.S. grain declined after war - prices dropped by 40% or more • Farmers boosted production to sell more - Caused prices to drop further • Farm income declined & farmers defaulted on loans • Rural banks failed • Congress attempted to pass the McNary- Haugen bill to help farmers - Price-supports - government bought surplus crops at guarantees prices - President Coolidge vetoed price-support bill

6. Consumers Problems • 1920s - rich got richer & poor got poorer • Prices rose faster that wages • 70% of families earned less than minimum for decent standard of living - $2500 annually • Most couldn’t afford flood of products factories produce • Many people had been purchasing goods on credit (buy now, pay later) • Businesses gave easy credit & consumers piled up large debts • Consumers had trouble paying off debt & cut back on spending

7. OBJ #1 - Describe the CAUSES and SPARK of the Great Depression. How did Overproduction affect both farmers and industry? What system collapsed and caused millions to lose their savings? Explain how buying on Margin created the Spark. How did people lose money because of the spark? I. OBJ #1- Cause & Spark of the Depression A. Causes of the Depression 1. Overproduction, too much stuff (Factories and Farms) a. Factory Workers begin to get layed-off - Workers cannot buy goods, even more goods are overproduced b. FarmersCan’t Survive -low prices (can’t pay loans / make a living) c. Supply & Demand- Prices Drop 2. Bank Failures a. Banks close and loose $$$ b. People default on loans (Can’t pay Back) c. Banks cannot cover their deposits, because it was lent out to bad creditors **5,000 banks close between 1929-1932** d. People loose entire LIFE SAVINGS

8. 1920’s Problems Factories making Too Much, Farms growing too much BANKS Have NO $$ PEOPLE LOST SAVINGS & JOBS NO ONE TO HELP! Factories Fire Workers (Don’t need them) Farm Prices fall (Farmers can’t make $$) Banks Close because they have no money: Loans have not been paid back, can’t give people their savings Farmers & Factory Workers can’t pay back loans to Banks: DEFAULT!!

9. Banks Close Banks have no money to give people + = People Default on Loans People Loose savings

10. Democrat Alfred E. Smith - four times governor of New York Republican Herbert Hoover has served as secretary of commerce under Warren Harding & Calvin Coolidge U.S. had experienced prosperity under Republicans in 1920s Hoover won an overwhelming victory The Election of 1928

12. Dreams of Riches in the Stock Market • Late 1920s – Some economist warning of weaknesses in the economy - Most Americans ignored them • People began investing in stock market - Looked like an easy way to make money • Dow Jones Industrial Average was used as barometer of the market’s health - Measure based on the stock of 30 representative large firms trading on the New York Stock exchange tracks state of stock market

13. 1920s - stock prices rose steadily “Bull Market” People rushed to buy stocks & bonds to make a quick profit - Many engaged in speculation - buy on chance of a quick profit - Began Buying on margin - pay small percent of price, borrow rest Dreams of Riches in the Stock Market

16. September 1929 stock prices peaked & then fell Many investors lost confidence & began selling October 24, 1929 - Market took plunge & many panicked investors unloaded their shares The Stock Market Crashes

17. October 29, 1929 - Stock market crashed (Black Tuesday) - Shareholders sold frantically - Millions of shares had no buyers - People who bought on credit were left with huge debts - Others lose most of their savings The Stock Market Crashes

19. OBJ #1- Cause & Sparks of Depression TOO MUCH STUFF! QUICK REVIEW: Causes: 1. Overproduction 2. Bank Closings Spark: 1. Stock Market Crash Results: 1. Unemployment 2. Life Savings Lost BLACK TUESDAY

20. Financial Collapse • Great Depression - economy plummeted & unemployment skyrocketed - lasted from 1929–1940 • After crash, people panicked & withdraw money from banks • Banks that invested in stocks failed& people lost their money • 1929 to1932 - gross national product was cut nearly in half - 90,000 businesses went bankrupt • 1933 - 25% of workers were unemployed • Those with jobs received cuts in hours & pay

21. Worldwide Shock Waves • Great Depression limited U.S. ability to import European goods • Hawley-Smoot Tariff Act set highest protective tariff ever in U.S. • Other countries couldn’t earn American currency to buy U.S. goods - Many countries retaliated by raising their own tariffs • International trade dropped & unemployment soared around world

22. Causes of the Great Depression • Factors leading to Great Depression: • Declining Trade - Tariffs & war debts cut down the foreign markets for American goods • Farm problems - Many farmers were forced to sell • Easy credit – Borrowed money to invest in market • Income disparity • Federal government kept interest rates low & encouraged borrowing

23. Section 2Hardship and Suffering During the Depression During the Great Depression Americans do what they have to do to survive.

24. People lost jobs & were evicted from homes Had to live in parks or sewer pipes Shantytowns - settlements consisting of shacks, arose in cities The Depression Devastates People’s Lives

25. People dug through garbage & begged - Soup kitchens offered free or low-cost food - Bread lines - people lined up for food from charities & public agencies African Americans & Latinos had higher unemployment & lower pay Minorities were also targets of violence (Lynching or deportation) The Depression Devastates People’s Lives

26. Most farmers could grow food for their families About 400,000 farms were lost through foreclosure - Many became tenant farmers: worked for large landowners rather than themselves The Depression in Rural Areas

27. Farmers in Great Plains exhausted land through overproduction 1930s - drought & windstorms scattered for hundreds of miles Dust Bowl - area from North Dakota to Texas that was hardest hit The Dust Bowl

32. Many farm families migrated to Pacific Coast states (Route 66) - California towns became overcrowded - Many people who moved west were from Oklahoma (Okies) The Dust Bowl

33. OBJ #3 - Describe the natural disaster that affected the U.S. during the Great Depression. What was the disaster’s nick-name? What caused the disaster? Where did the people go to try and escape their troubles and how were they treated (nick-names for these people)? III. OBJ. #3- Natural Disaster “The DUST BOWL” A. Great Plains suffers a huge Drought (1931) 1. Causes: a. Drought . . .no rain b. New technology, tractors and steel plows tear-up extra sod that was holding onto soil, drought turns open soil into sand box 2. Huge Dust storms cover ‘Great Plains B. Results 1. Can’t pay banks- Banks take Farms 2. Many Great Plains farmers move to California, a. Try to get jobs on large farms b. Treated poorly in Calif. - *‘Oakies’ & ‘Arkies’-Not wanted in West

35. Family was source of strength for most Americans Believed in traditional values and emphasized the importance of family unity Many families entertained themselves with board games & radio - Monopoly was invented in 1933 Some families broke apart under strain of making ends meet Effects on the American Family

36. Many men used to working & supporting families had difficulty coping Couldn’t find jobs Many stopped trying Some men even abandoned their families - About 300,000 hoboes wandered country on railroad box cars No federal system of direct relief - cash or food from government Men in the Streets

37. Women worked hard to help their families survive the adversity Homemakers budgeted carefully, canned food, & sewed clothes Women worked outside home & were resented by unemployed men Women Struggle to Survive

38. Early 1930s – Some cities refused to hire married schoolteachers Many women suffered in silence & were ashamed to stand in bread lines Women Struggle to Survive

39. Poor diets & health care led to serious health problems in children Lack of tax revenue led to shortened school year & school closings Teenagers left home & rode trains in search of work & adventure - Many died or were beaten Children Suffer Hardships

40. Social and Psychological Effects • 1928 to 1932 – suicide rate rose over 30% • Admissions to state mental hospitals tripled • People gave up health care, college • Put off marriage & children • Stigma of poverty didn’t disappear & financial security became goal • Many people showed great kindness to strangers - Gave food, clothing & a place to stay • People developed habit of saving and thriftiness

41. Section 3Hoover Struggles with the Depression President Hoover’s conservative response to the Great Depression draws criticism from many Americans.

42. President Herbert Hoover told Americans the economy was sound Many experts believed depressions were normal part of business cycle - Believed that it was best to do nothing & let the economy fix itself Hoover believed government should foster cooperation between competing groups Hoover Tries to Reassure the Nation

43. Hoover Tries to Reassure the Nation • Many believed that people should succeed through their own efforts • People should take care of own families & not depend on government • Hoover opposed any form of federal welfare or direct relief to the needy - Believed that hand-outs would weaken people’s self respect & moral fiber - Said that charities & local organizations should help the less fortunate

44. Hoover Takes Cautious Steps • Hoover called meeting of business, banking, labor leaders to solve problems - Asked them to work to together to solve the problems • Created organization to help private charities raise money for poor

45. Hoover’s authorized the construction of the Boulder Dam on Colorado River w - later renamed Hoover Dam - Provided electricity, flood control, water to states on river basin Hoover Takes Cautious Steps

49. Democrats Win in 1930 Congressional Elections • People began blaming Hoover & Republicans for the economic problems • Democrats won House of Representatives • Republican Senate majority down to 1 vote • People Grew frustrated with the Depression

50. Farmers tried to create food shortages to raise prices Burned fields rather than sell crops at a loss Some declared a farm holiday People began calling shantytowns “Hoovervilles” Democrats Win in 1930 Congressional Elections