The Great Depression Begins

1. TheGreat DepressionBegins

2. End of the Roaring 20’s • serious problems threatened the economy • Low wages • Farmers raisin more livestock and produce than they can sell • Rise in debt • Industries not making a profit • Lower demand • New technology

3. Farmers’ Struggles • Still producing at WWI levels • Weren’t able to pay back loans • Government tried to help them through price-supports • Government buys surplus crops and sells them around the world

4. Income Distribution • 1920s – rich get richer, poor get poorer • 70% of the nation earned less than $2500 • Still not enough to buy adequate clothing, pay for electricity or heat

5. Late 1920s • 1928 – Herbert Hoover elected as president • People invested in the stock market • Prices continued to climb (bull market) • People began speculating or buying on margin • Speculating - buying risky stocks for a quick profit • Buying on margin – paying a percentage of a stock’s price and borrowing the rest • September 1929 – stock prices rose and then fell • October 29-1929 – stock market crashed

6. The Great Depression (1929-1940) • unemployment • economy • People panicked and withdrew savings from the bank • Banks closed • Weren’t insured by the government, people lost more $$ • 90,000 business closed • Unemployment – 25%

7. Meanwhile…in Europe • Germany – paying reparations from WWI • Most countries were paying back war debts • Weren’t buying American goods

8. Harley-Smoot Tariff • Designed to protect American farmers and manufacturers from foreign competition • Mistake! • Reduced imports which means other countries don’t have American currency to buy American goods • Made the depression worse everywhere

9. Great Depression in cities • Many lost jobs, were evicted and ended up on the street • Some built shantytowns • Old railcars, crates, scrap metal • Soup kitchens and bread lines offered free or low-cost food • Provided by charities or public agencies • Minorities had higher levels of unemployment • Had to deal with more racial violence

10. Great Depression in rural areas • Only slightly better than cities • People were able to grow their own food • Thousands of farmers lost their land • Many became migrants and worked on others’ farms • Many moved to west coast

11. Dust Bowl drought in early 30s removal of prairie grasses overproduction exhaustion of soil winds DUST BOWL • Nothing can grow, so farmers left their land and headed to California (Grapes of Wrath) • Nicknamed “Okies”

12. Effects on the family • Americans found new ways to entertain themselves • Board games (Monopoly invented 1933), listened to radio, card games • Families without jobs struggled to pay bills • Would grow own food • Simplified recipes and got more creative with ingredients • Direct Relief – federal system of distributing cash or food to the poor • Fell to individual cities and charities

13. Men – • used to working • some ran away from their families • some wandered the country looking for work (hoboes) • Women – • did what they could to help their families survive • Canned foods, sewed clothes • worked outside the home • Children - • Poor diets and no health care • School years shortened or schools shut down • Kids went to work in sweatshops • “wild boys”, “hoover tourists” boys would run away from home

14. Social/Psychological Effects • Suicide rate rose 30% • People put off doctor/dentist visits • Many gave up on going to college, getting married or having children • Many people who lived through the Great Depression lived their lives determined ot never be poor again

15. Herbert Hoover’s Presidency • Wanted to reassure Americans that the economy was going to be OK • many politicians believed in the boom-and-bust cycle • Thought economy would fix itself • Hoover thought it would take some government assistance • Didn’t want to give hand-outs • Not a popular decision

16. Herbert Hoover’s Presidency • Hoover called together leaders to figure out a solution • Asked employers not to cut wages or lay people off • Asked unions not to go on strike or demand higher wages • Created an organization to help charities • Proposed the Boulder Dam (Hoover Dam)to employ people

17. Herbert Hoover’s Presidency • People became extremely upset with Hoover • Some farmers would try to raise prices • Throw out produce, prevent goods from getting to the market or refuse to work • Named signs of poverty after Hoover • Hoovervilles, Hoover blankets, Hoover flags • Criticism was widespread • Hoover finally changed his mind and decided to support cooperative efforts to help the economy

18. Government Intervention • Hoover supported attempts by non-government groups • Federal Farm Board – organization of farm cooperatives working to raise prices of farm products • National Credit Corporation – loaned money to smaller banks to prevent bankruptcy • Federal Home Loan Bank Act – lowered mortgage rates and allowed farm owners to avoid foreclosure • Reconstruction Finance Corporation – gave money to banks and large businesses • Was too little too late

19. Bonus Army (Spring 1932) • 10,000-20,000 WWI veterans and families arrived in Washington DC • Came to support the Patman Bill • Gave bonuses to veterans who had not been paid enough • About $500 a person • Hoover did not support the bill, but provided the Bonus Army with supplies and food

20. Bonus Army (Spring 1932) • Congress did not pass the bill • 2,000 remained behind hoping to meet with Hoover • Hoover had the army kick them out • People were injured during the event • Hoover’s popularity suffered even more