Chapter 17:

1. Chapter 17: The Great Depression Begins

2. Section 1: Causes of the Depression

3. I. The Election of 1928 • When Calvin Coolidge decided not to run in 1928, he cleared the way for Herbert Hoover to head the Republican ticket. • The Democrats chose Alfred E. Smith, an Irish American from New York’s Lower East Side, and the first Roman Catholic ever nominated for president. Continue

4. I. The Election of 1928 3. Many Protestants were willing to believed that the Catholic Church financed the Democratic Party and would rule the U.S. if Smith got into the White House • Republicans took credit for the prosperity of the 1920’s causing Herbert Hoover to win the election

5. II. The Long Bull Market 4. A long period of rising stock prices in known as a bull market. 5. Because of such a market, by 1929 between 3 and 4 million Americans, or roughly 10 percent of households, owned stock. Continue

6. II. The Long Bull Market 6. Many investors bought stock on margin, meaning they made only a small cash down payment with the rest coming as a loan from a stockbroker. 7. A problem arose if the stock began to fall in price, causing the broker to issue a margin call, demanding the investor to repay the loan at once Continue

7. II. The Long Bull Market • Before the 1920’s, the prices investors paid for stocks reflected the stocks’ true value but hordes of new inventors bid prices up without regard to a company’s earning and profit. Continue

8. III. The Great Crash • Black Thursday (10/24/29): stock market plummets • Black Tuesday (10/29/29): plummeted even more, $30 billion lost (total wage earned by all Americans in that year) 8. The stock market slide was not the major cause of the Great Depression, but it undermined the economy’s ability to hold out against its other weaknesses. Continue

9. III. The Great Crash 9. Another way the crash weakened the banks was that many banks themselves had take depositors’ money and invested it in the stock market, hoping for higher returns than they could get by using the money for conventional loans. 10. A bank run takes place when many depositors decided to withdraw their money at one time, usually for fear the bank is going to collapse.

10. IV. The Roots of the Great Depression 11. Most economists agree that over production was a key cause of the Depression. • Most Americans did not earn enough to buy up the flood of goods they helped produce • Another cause of the Depression was the uneven distribution of income, 5% of all Americans owned 30% of the nation’s income Continue

11. IV. The Roots of the Great Depression 12. Many people who had bought high-cost items such as refrigerators on the installment plan reached a point where paying off their debts forced them to reduce other purchases. 13. When sales of goods slowed manufactures cut production and laid-off employees. Continue

12. IV. The Roots of the Great Depression • Jobless workers had to cut back purchase, further reducing sales 14. The Hawley-Smoot Tariff raised the tax on many imports to the highest level in American history, and damaged America sales abroad. Continue

13. IV. The Roots of the Great Depression • Federal Reserve Board helped cause the Depression by not raising interest rate to stop speculation, the kept the rates low which. The low rates • Encourage banks to make risky loans • Led business leaders to think the economy was still expanding so they borrowed money to expand production (led to overproduction • When the Federal Reserve Board finally did raise interest rates, tightening credit

14. Section 2 Life During the Depression

15. I. The Depression worsens

16. A. Lining Up at Soup Kitchens • People without jobs often joined bread lines or soup kitchens (provided by charities) to get free handouts and food

17. B. Living in Makeshift Villages • Families or individuals who could not pay rent or mortgages lost their homes, often having bailiffs throwing their belongings on the street • The homeless often found themselves living in shantytowns also called Hoovervilles • Hobos

18. C. The Dust Bowl • Farmers had uprooted the wild grasses that held the soil’s moisture to plant crops, when prices dropped it left the fields barren. • 1932 a drought hit the Great Plains, with no grass or crops to hold down the soil, it turned to dust causing the “Dust Bowl” • Hoping for a better life many farmers went to California (Okies)

19. II. Escaping the Depression

20. Groucho Marx • Actor • Animal Crakers

21. Marlene Dietrich • Actress • The Blue Angel

22. Greta Garbo • Actress • Anna Karenina

23. Walt Disney • Movie Maker • Snow White and the Seven Dwarfs

24. James Stewart • Actor • Mr. Smith Goes to Washington

25. Vivien Leigh • Actress • Gone with the Wind

26. Clark Gable • Actor • Gone with the Wind

27. Jack Benny • Radio

28. George Burns and Gracie Allen • Radio

29. III. The Depression in Art

30. Grant Wood • Painter • American Gothic

31. John Steinbeck • Author • The Grapes of Wrath

32. William Faulkner • Writer • The Sound and the Fury

33. Margaret Bourke-White • Photojournalist • Photos in Fortune Magazine

34. Section 3: Hoover Responds

35. I. Promoting Recovery • Hoover was hoping the avoid more bank runs and layoffs by urging consumers and business leaders to become more rational in their decision making • Hoover won a pledge from industry to keep factors open and to stop slashing wages, however the leaders abandoned the pledges Continue

36. I. Promoting Recovery • To increase job availability he increased public works, however it only made up a fraction of the jobs lost in the private sector • Citizens blame the party in power for the stumbling economy so more Democrats were elected to Congress

37. II. Pumping Money Into the Economy • Hoover had to make sure that banks could make loans to corporation also they could expand production and rehire workers • Hoover created National Credit Corporation (NCC) to create a pool of money to enable troubled banks to continue lending money in their communities (did not work) • Hoover strongly opposed the federal government’s participation in relief because he believed only the state and city government should give relief

38. III. In an Angry Mood Continue • “Hunger March”: Supported by the Communist party, marched on the streets of Washington D.C. shouting “Feed the hungry, tax the rich”, the police rounded them up until Congress said they had the right to march.

39. III. In an Angry Mood • Some farmers began destroying crops in a desperate attempt to raise crop prices by reducing the supply Continue

40. III. In an Angry Mood • Bonus Marchers: Wanted Congress to enact a $1000 bonus for each veteran which was suppose to be in 1945 but veterans wanted it early because of the Depression so they marched on Washington D.C. (“Bonus Army”). Senate voted the bill down. • Many of the marchers stayed in D.C. because they had no homes or jobs, some moved into unoccupied building. Hoover orders the building cleared, a police officer fired into the crowd and killed 2 veterans. Continue

41. III. In an Angry Mood • The nationwide press coverage of veterans under assault by troops present and ugly picture to the public • Hoover failed to resolve the crisis of the Depression, but he did more to expand the economic role of the federal government (Reconstruction Finance Corporation 1st time the federal government established a federal agency to stimulate the economy)