The Great Depression

The Great Depression Chapter 26

The Reasons For The Crash • Uneven distribution of income • Over half of the nations population was at or below the minimum level of income • Businesses • Profits went to stock holders and owners • If they would have given higher wages, people could have bought more goods and companies could have had more profits • Businesses and farms were productive, but people lacked the purchasing power to buy goods

Easy Credit • People were piling up debt during the Twenties • Banks • Federal banks could not lend money for stock speculation, but private banks could • When the market tanked, people couldn’t repay loans. • Banks closed because people did not pay back loans • Banks close, people lose all of their savings

Unbalanced Foreign Trade • Hawley-Smoot Tariff Act of 1930 • It was designed to protect the market from foreign goods • Nations were unable to sell their goods, could not afford to buy American goods. • Some nations thought the high tariff was unnecessary, so they stopped importing many Americans goods

Mechanization • Technology saves money, but costs jobs • Newer machines could produce more items at a quicker pace, and required fewer workers to maintain • Fewer workers meant less money in the economy to buy the goods that were being produced

Human Suffering • The National Income (total payments to producers of the nation’s goods and services) fell from $81 billion to $41 billion • 1929-1932 • 85,000 businesses closed their doors • 400,000 farms were lost to foreclosure • 6,000 banks, 1/4 of the country’s total, closed • Wiping out 9 million savings accounts • 16 million people lost their job • 1/3 of the nations workforce

Hunger and Suffering • There was no system of direct relief (food, money, or jobs given by the government directly to the people) • No public welfare or social security • No unemployment insurance • Men, women, and children sifted through garbage for food and stole rides on trains to move to “better” areas looking for work

Women in the Depression • Women would find it harder to find a job as more men were looking for work • Some people thought the depression would end if all married women left their jobs and men took over • Women were fired from teaching jobs if they got married • This practice continued into the 40’s

Children in the Depression • Malnutrition in NYC rose from 18% in 1928 to 60% in 1931 • Milk consumption was dropping in many states • Child welfare was one of the first to be cut in many states as the Depression got worse • Schools shut their doors because children were looking for jobs

Farmers in the Depression • Drought hits American farms • Farmers were burning crops, letting unpicked apples rot, and leaving cotton in the field • Why?

The Bonus Army • A group of veterans marched on Washington DC to ask for an Army bonus that was promised to WWI vets • The bonus was to be paid in 1945, but the vets needed the money during these hard times • They set up tents on the outskirts of the city • Soldiers were sent to drive the vets away and burn down the makeshift village on July 28, 1932

Hoover Tries to Help • Hoover convinces business not to cut payroll and unions not to demand higher wages • The Federal Reserve Board made it easier to borrow money • Asks farmers to voluntarily limit production to maintain prices- set up Federal Farm Marketing Board • Large public works projects were started • Boulder Dam (Hoover Dam)

Hoover Tries to Help • Hoover established the Reconstruction Finance Corporation • It made loans to banks, railroads, and other industries to help them get back on their feet • Home Loans Bank Act - helped prevent the foreclosure of peoples homes and farms • These ideas seemed too little too late • Many people blamed Hoover for the Depression, and vote Democratic

Hoover and Rugged Individualism • Rugged Individualism - individuals and local government officials were responsible for the care of children, the sick, old, and disabled. The federal government was in charge of directing these efforts • Hoovervilles - shacks filled with homeless men, women, and children all over the country.

Roosevelt and his New Deal • Roosevelt had a brain trust that was working on economic and social programs that would improve the conditions in the country • Their ideas would form the background of the New Deal • Democrats favored the repeal of Prohibition, while Republicans favored a revision. • Roosevelt won the election of 1932 by a landslide

“…the only thing we have to fear…” • March 4, 1933, FDR gave the speech that would instill hope to people during his inauguration • “This great nation will endure as it has endured, will revive and will prosper… Let me assert my firm belief that the only thing we have to fear is fear itself - unreasoning, unjustified terror, which paralyzes needed efforts to convert retreat into advance.” • What is FDR saying?

FDR’s Secret • FDR was stricken with polio in 1921 • It left his legs almost paralyzed • With the help of his wife, he worked for months to regain mobility • He wore 50 lbs. braces during the Democratic National Convention of 1924 • Would FDR get elected today? Why or why not?

Roosevelt and Crew Get Busy • FDR declared a bank holiday two days after taking office • Every bank was closed to prevent people from continuing to panic and take money out. • Congress met and passed the Emergency Banking Relief Bill • The Treasury Department would inspect all of the banks to see if they were stable. • Unstable banks remained closed, stable banks were allowed to open. • Why is this a good thing? • The bill also takes the US off the Gold Standard.

Fireside Chats • FDR addressed the nation on Sunday evening March 12, 1933 • This was the night before the first banks were to reopen • Why does this appeal to the average American? • Over the next few weeks, a billion dollars in gold and cash would be dug up and brought to banks • The Depression was not over, but it had reached bottom. There was a long way to go to improve

The Great Depression