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The Great Depression 1929-1939

The Great Depression 1929-1939. Depression Begins. 1 st months after stock market crash – business leaders & public officials insisted that setback minor & temporary. Banking Crisis. Large banks suffered significant losses Borrowers were defaulting on their loans

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The Great Depression 1929-1939

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  1. The Great Depression 1929-1939

  2. Depression Begins • 1st months after stock market crash – business leaders & public officials insisted that setback minor & temporary

  3. Banking Crisis • Large banks suffered significant losses • Borrowers were defaulting on their loans • Banks left with depreciating assets & little income • Banks forced to close – customers lost entire life savings • 1930-1932: 5,000 banks failed

  4. Business Failures • Industries had lost money in stock market • Consumers unwilling or unable to buy their products • Companies force to trim inventories & scale back production schedules & lay off employees • Factories & mines stood idle • Gross National Product – total value of all goods & services produced in one year • From $103 billion (1929) to $56 billion (1933)

  5. Unemployment • Reached staggering levels

  6. Global Depression • Economic trouble in Europe & other parts of the world brought down U.S. economy • Massive war debts • World trade on decline

  7. U.S. Policy & Global Depression • U.S. contributed to worldwide economic downturn • Slapped high tariffs on imported goods • Smoot-Hawley Tariff – highest tariffs in U.S. history • Protected American industries from inexpensive imports • Accelerated global depression by eliminating American market for foreign manufactures & industries

  8. Income Gap & Consumer Debt • Unequal distribution of income another central cause of Great Depression • Small class has wealth & rest have debts • Income gap meant that most people did not have the buying power needed to boost the economy • If workers received higher wages & farmers better prices depression would have been less severe • Reliance on credit

  9. Business Cycle • Depression seen as inevitable part of business cycle – regular ups & downs of business in a free-enterprise economy • Length & severity of the Great Depression went far beyond the normal rhythms of business cycle

  10. Business Cycle PEAK RECOVERY BEAR MARKET BULL MARKET RECESSION TROUGH DEPRESSION

  11. Hard Times • 1929 – 1.5 million Americans unemployed • 1933 – 15 million • Chicago – 50% of city’s workforce was unemployed • Toledo, OH – 80% searching for jobs

  12. Unemployment • Wages fell to $.10 per hour • Factory workers – annual income fell by 1/3 • Reduced number of hours

  13. American Worker • African Americans particularly hard hit • Women hired more cheaply than men

  14. Trying to Make $ • Some unemployed workers took to selling apples on the street • In fall of 1930 – 6,000 unemployed workers sold apples in NYC • Traveled from city to city hopping freight trains or hitchhiking

  15. Life in the City • Federal gov’t did little to assist struggling city-dwellers • City gov’t, religious groups, & charitable organizations tried to provide direct relief

  16. Helping One Another • Mexican Americans – mutualistsas (mutual aid societies) • Chinese Americans – open barrels of rice • Harlem – rent parties • Avoid eviction

  17. Breadlines • Passed out bowls of soup & pieces of bread • 1 out of 5 children in NYC suffered from malnutrition • Long-term health effects with teeth & eyes

  18. Shantytowns • Collections of makeshift shelters built out of packing boxes, scrap lumber, corrugated iron, & other thrown-away items • “Hoovervilles”

  19. Life on the Farm • Shrinking demand for farm products caused prices to drop • Farmers had more products than they could sell • Crops are rotting in the fields & animals slaughtered • Banks foreclosed on farms

  20. Selling the Farm • Bank auctions – residents banded together in order to fight foreclosures • Bid absurdly low prices • Neighbors would give back goods to original owners

  21. Migrant Farmers • Gov’t officials wanted to remove illegal aliens & recent Mexican immigrants from U.S. • Believed would ease strain of depression • Authorities provided funds to transport Mexican migrants to Mexico

  22. Family Life • Economic hardship led to families being broken apart • Marriage rate fell dramatically • Young people put off getting married & starting families • Birthrates declined

  23. Psychological Impact • More than 20,000 Americans committed suicide in 1932 • Shame associated with losing businesses, homes & being unable to provide for family • Guilt with not being able to provide for family

  24. Hoover’s Policies • Economic recovery through individual effort not from government assistance • Rejected idea of direct government aid • Feared direct federal aid would create large bureaucracy & inflate federal budget • Americans should lift themselves up through hard work & strength of character

  25. Rugged Individualism • Success comes through individual effort & private enterprise • Private charities & local communities, not federal government, could best provide for those in need • Local government forced to stretch already inadequate funds to cover growing numbers of needy families

  26. President’s Committee for Unemployment Relief • Designed to assist state & local relief efforts • Appointed experienced philanthropists & businesspersons to encourage donations to private relief organizations

  27. Boosting the Economy • Cabinet continued to propose laissez-faire approach to economy • Urged business leaders to maintain pre-depression levels of production, employment, & wages voluntarily • Started to found some public-works programs (Hoover Dam)

  28. Coping with Farm Crisis • Agriculture Marketing Act – established Federal Farm Board • Find ways to help farmers help themselves • Offered loans & financed creation of farmers’ cooperatives • Allowed for purchase of necessary materials • Provided storage facilities & instructed to buy up surplus • Farmers refused to limit production

  29. Home Loan Bank Act • Established Home Loan Bank Board – provided money to savings banks, building & loan associations, & insurance companies for low-interest mortgages • Encourage home construction • Reduce foreclosures

  30. Reconstruction Finance Corporation • Lend $2 billion to stabilize trouble banks, insurance companies, railroad companies & financial institutions • Hoped to reduce business failures & create more jobs • Provided no direct aid to industries or to small businesses • Money did not trickle down quickly enough to help ordinary citizens

  31. Bonus Army • 10,000 WWI veterans & families protested in Washington D.C. • Support of veteran’s bill that would have granted veterans early payment of pension bonuses owed for services during war

  32. Bonus Army • Demonstrators lived in empty gov’t buildings & camped in open area across Potomac River • Congress rejected bill • 2,000 veterans refused to leave

  33. Violence • Authorities clash – 2 veterans & 2 police officers killed • Hoover orders army to disperse squatters • U.S. Army moved in with machine guns, tanks, & tear gas – burned shacks • Hundreds injured & 3 died (11-week-old baby) • Americans shocked at government’s treatment

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