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THE GREAT DEPRESSION

THE GREAT DEPRESSION. Unit VIB AP U.S. History. Fundamental Question. Analyze how the Great Depression changed America’s political and economical structures. Past Major American Recessions. Panic of 1807 MAJOR CAUSE: Embargo Act of 1807 Panic of 1819

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THE GREAT DEPRESSION

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  1. THE GREAT DEPRESSION Unit VIB AP U.S. History

  2. Fundamental Question • Analyze how the Great Depression changed America’s political and economical structures.

  3. Past Major American Recessions • Panic of 1807 • MAJOR CAUSE: Embargo Act of 1807 • Panic of 1819 • MAJOR CAUSES: End of War of 1812 and First Bank of U.S. not rechartered • MAJOR LEGACY: Second Bank of U.S. chartered, first example of business cycle contraction • Panic of 1837 • MAJOR CAUSES: Second Bank of U.S. not rechartered and Specie Circular • Panic of 1873 • MAJOR CAUSES: Land and railroad speculation • Panic of 1893 • MAJOR CAUSES: Railroad speculation and Sherman Silver Purchase Act • MAJOR LEGACY: J.P. Morgan bailed out government with $65 million in gold bullion • Panic of 1907 • MAJOR CAUSES: Stock market speculation and bank runs • MAJOR LEGACY: Led to Federal Reserve System • Depression of 1920-1921 • MAJOR CAUSES: War economy to peace economy, influx of laborers, overproduction in agricultural sector

  4. Republican Policies of 1920s • Harding-Coolidge-Hoover’s laissez-faire policies • Banks and corporations increased questionable or corrupt financial tactics • Mellon’s Tax Bill • Revenue Acts of 1824, 1826, 1828 decreased tax rates • Inspired massive consumer and investment spending • Fordney-McCumber Tariff (1922) • Heavily favored industries and factories • Farmers suffered with limited foreign markets

  5. A “Boom” Economy during 1920s • Mass Consumerism • Scientific management and assembly lines spurred production • Welfare capitalism led to wage increases and consumer confidence • Installment plans led to consumer debt • 1920s Socioeconomics • Socioeconomic gap widened further than Gilded Age • 5% wealthy class owned 33% of income • Top 1% owned over 35% of the nation’s wealth • Bottom 20% owned 4% of the nation’s wealth • Agricultural Sector • Overproduction • Price decreases after World War I • Increased farming resulted in poor environmental conditions

  6. The Stock Market and the Crash of 1929 • Background • Speculation • “Buying on Margin” • The Crash of 1929 • 381.17 (9/3/29) • Concern over high stock prices led to massive sell-off • Thursday, October 24 • 299.50 • Monday, October 28 • 260.64 • Tuesday, October 29 • 230.07 • 41.22 (7/8/32)

  7. Causes of the Great Depression • Unequal Distribution of Wealth • Industrial Overproduction • Agricultural Crisis • Overextension of Credit • Bank Failures • Stock Market Crash of 1929 • High Tariffs • Dawes Plan and Foreign Loans

  8. Hoover and the Republicans • “Given the chance to go forward with the policies of the last eight years, we shall soon with the help of God, be in sight of the day when poverty will be banished from this nation.” - Inauguration, March 4, 1929 • “There is no cause to worry. The high tide of prosperity will continue.” Sec. Of Treasury Andrew Mellon, Sept. 1929 • “While the crash only took place six months ago, I am convinced we have now passed the worst and with continued unity of effort we shall rapidly recover.” Pres. Hoover, May 1, 1930 • “The worst is over without a doubt.” Sec. Of Labor James Davis, June 29, 1930 • Hoover’s Economic Philosophy • Promote voluntarism, restraint, and self-reliance • Limited federal government involvement; facilitate with business sector and banking • Hawley-Smoot Tariff (1930) • Historical increase in tariff rates to protect domestic industries • EPIC FAIL - since foreign nations enacted high tariff rates on U.S. goods • Federal Farm Board • Increased power to temporarily hold crop surpluses to curb overproduction • FAIL - since government would not limit production • Reconstruction Finance Corporation (RFC) • Government-backed private corporation to offer loans to banks, corporations, insurance companies, and railroads • FAIL - did not offer relief to individual Americans

  9. Dow Jones Industrial Average 1929: 381.17 1932: 41.22 The average of stock prices dropped over 90% Price Indices Consumer prices feel 25% Wholesale prices fell 32% Unemployment 1929: 3.2% 1933: 24.9% Unemployment rates higher in specific regions, among different groups Toledo, OH: 90% GDP 1929: $103.6B 1933: $56.4B Bank Failures 1929: 659 banks ($200,000,000) 1930: 1,300 banks (853,000,000) 1931: 2,294 banks ($1,700,000,000) Income National income fell $80B to $50B Salaries declined 40% Manufacturing wages down 60% Farmers’ income declined 55% Industrial production Down 26% in 1930; 51% by 1932 Investments $10B in 1929; $1B in 1932 Fertility Rates 1928: 93.8 1933: 76.3 Suicide Rates 1920-1928: 12.1 1929: 18.1 1930-1940: 15.4 Depression by Numbers

  10. Hoovervilles Displaced Americans set up shanty towns Came to be known as “Hoovervilles”

  11. Public Reaction to Depression • Blame and Needs • Hoover and Republicans suffer public backlash • Public demands direct government action and intervention • Farmers’ Holiday Association • Bonus March • WWI veterans marched on D.C. demanding early payments of pensions • Federal troops sent in to break up Hoovervilles • Burned down shacks and displaced veterans and families • Public backlash on Hoover increased due to perceived apathy by Hoover

  12. Depression through Pictures

  13. The Dust Bowl (1930-1936) • Causes • Overgrazing • Improper farming techniques • Increased cultivation • Drought in 1934 • Effects • Dust storms • Black Sunday - April 14, 1935 • 300 million tons of topsoil blown across southern Plains region • Plight for farmers • Migration west • “Okies”

  14. Dust Turns Day Into Night

  15. Election of 1932 • Republicans • Herbert Hoover • Blamed and criticized for causing and exacerbating Depression • Democrats • Franklin Delano Roosevelt (FDR) • Campaign promise of a “new deal” and help for the “forgotten man” • Repeal Prohibition • Cut government spending and provide direct assistance for unemployed rather than businesses

  16. Legacy of Election of 1932 • Realignment election leading to the Fifth Party System • Twentieth Amendment (1933) • Lame-duck amendment • FDR expanded intervention and influence of the executive branch • Eleanor Roosevelt exemplified First Lady as more than just a hostess

  17. Democrats New Deal Coalition Catholics Jews Blacks Progressive Intellectuals Urban Machines Populist Farmers White Southerners Labor Unions Low-Income Immigrants Dominated Congress and American public for the next 36 years Increased government involvement in economy and society New Deal Great Society Civil Rights Republicans Pro-business Northeast Conservatives Economic Social Fifth Party System (1932-1968)

  18. John Maynard Keynes • Before the New Deal • Classical economics • Supply and demand, laissez-faire • Economies will naturally recover in the long-run • Say’s Law • “products are paid for by products” • Keynesian Economics • “In the long-run we are all dead.” • Criticized Say’s Law: “supply creates its own demand” • Strong aggregate demand drives economies • Mixed Economies • Some intervention from public sector to stimulate economy • Fiscal policy • Government spending/deficit spending • Monetary policy • Fed increasing or decreasing the money supply

  19. FDR’s Message of Hope • FDR had no specific plan for the Depression • Calming the nation • “… the only thing we have to fear is fear itself.” • Fireside chats • The Three R’s • Relief • Recovery • Reform • Brain Trust • Capable advisers ordered to experiment, be pragmatic • “Do something.”

  20. First Hundred Days* Bank Holiday* Emergency Banking Relief Act* Farm Credit Act Gold Reserve Act 21st Amendment (1933) 18th Amendment and Prohibition repealed Civil Conservation Corps (CCC)* Agricultural Adjustment Act (AAA)* Federal Emergency Relief Act (FERA)* Tennessee Valley Authority (TVA)* Homeowners Refinancing Act (HRA)* National Industrial Recovery Act (NIRA)* National Recovery Administration (NRA) Public Works Administration (PWA) Federal Deposit Insurance Corporation (FDIC) Glass-Steagall Act Securities Exchange Commission (SEC) Federal Housing Administration (FHA) First New Deal - Alphabet Soup

  21. The Second New Deal (1935-1938) • Resettlement Administration (RA)/Farm Security Administration (FSA) • Resettled poor farmers; economic and educational programs for farmers • Revenue Act of 1935 • Increased tax rates on wealthy, capital gains, gifts, inheritance • Works Progress Administration/Works Projects Administration (WPA) • National labor project for infrastructure and humanities • National Youth Administration (NYA) • Rural Electrification Administration (REA) • Public-private effort to electrify farms and rural areas • Social Security Act (1935) • Tax on employee income to be used for retired persons, disabled, dependents, unemployed • Wagner Act (1935) • National Labor Relations Board • Fair Labor Standards Act (1938) • Established national minimum wage • Maximum 40 hour workweek and overtime • Child labor under 16

  22. Election of 1936 • Democrats • Popularity of New Deal • New Deal Coalition • Republicans • Alfred Landon, Governor of Kansas • Pro-business and conservative criticism of New Deal

  23. Federal government used posters, songs, advertisements, literature to promote and support FDR’s New Deal programs among the American public

  24. New Deal Reactions • Majority of Americans approved of FDR’s programs • Business leaders and corporations called him traitor or fascist or communist • Boondoggles • American Liberty League • Father Charles Coughlin • Radio broadcasts attacking FDR • Pro-fascist and anti-Semitic remarks • Huey Long – “Kingfish” • Share the Wealth • $5000 for every family, $2,000 annually • Heavily tax wealthy

  25. FDR and Court Packing • Supreme Court reversed several New Deal programs • United States v. Butler • AAA unconstitutional • Schecter Poultry Corp. v. United States • NIRA unconstitutional • Justice Reorganization Bill • Appoint new justices for every justice over 70 • 6 additional justices • Most of Congress defeated bill • Designed to pressure Supreme Court to approve New Deal programs • Compared FDR to fascists in Europe

  26. New Deal and Labor • AFL strengthened by union-backed New Deal legislation • National Labor Relations Act/Wagner Act • Fair Labor Standards Act • Congress of Industrial Organizations (CIO) • Organize unskilled laborers in major industries • Industrial unionism • Strikes • Auto industry recognized United Auto Workers due to sit-down strikes • Republic Steel violent strike helped recognize CIO

  27. End of the New Deal • Roosevelt Recession (1937-1938) • Contractionary monetary policy in lieu of economic expansion • FDR blamed big business • Midterm Election of 1938 • GOP gained seats in House and Senate; Democratic majority preserved • Recession of 1937-1938 • FDR’s controversial court-packing • Congress began to limit or eliminate spending for New Deal programs • Hatch Act of 1939 • Limited politicians and campaign contributions • People who received federal assistance could not use money for campaign contributions • International Concerns • Totalitarian governments spawned defensive preparations

  28. Women and Depression • Men left their families in search of work or worked more than one job • Limited income and absence of fathers placed intense pressures on mothers • Female labor force increased for female-based jobs • Wages remained low compared to men • Suffered backlash as a competitive workforce

  29. Minorities and the Depression • Blacks • Suffered extreme poverty compared to other groups due to racism and worsening conditions • “No jobs for niggers until every white man has a job!” – rally cry in South • FDR and New Deal • Lower wages in NRA; AAA evicted thousands of blacks from tenant farms • WPA hired 1 million blacks in construction and educational projects • Mary McLeod Bethune in NYA • Scottsboro Boys Trial (1931) • Nine blacks youths accused of raping two white girls on a train in Alabama • Appeals showed lack of fair trial, impartial jury, fair sentencing, effective counsel • Natives • Indian Reorganization Act (1934) • Repeal of Dawes Act (1887) eliminating assimilation programs, return of native sovereignty, preservation of native cultures • Immigrants • Immigration was reduced by restrictive policies of 1920s • Suffered discrimination and prejudice with worsening economic conditions • Mexican Repatriation • With farming jobs limited, white Americans migrated west and policies established to push out Mexican immigrants

  30. Federal One • Part of the WPA • Federal Writers Project • Federal Theatre Project • Negro Theatre Project • Federal Music Project • Federal Art Project • Historical Records Survey

  31. EscapismGreat Depression in Arts and Entertainment • Literature • John Steinbeck • The Grapes of Wrath • Of Mice and Men • Photography • Dorothea Lange • Music • Brother, Can You Spare a Dime? • Woody Guthrie • Radio • Comedies • Soap operas • Movies • The Wizard of Oz • Shirley Temple • Snow White and the Seven Dwarves • Marx Brothers

  32. EscapismGreat Depression in Sports and Recreation • Sports • WPA • Athletic facilities • Athletic educational programs • Innovation, consolidation, and sacrifice of professional and college sports • College bowl games • NFL playoffs • Recreation • Games and Monopoly • Gambling • Rodeos • Dance halls and jazz

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