The Nation’s Sick Economy

1. The Nation’s Sick Economy Chapter 22 Section 1

2. Causes of the Great Depression • Industry: Some industries were less competitive • Farming: Farmers produced more than they could sell • Easy credit: Many went into debt buying goods on the installment plan • Income: Rich got richer while the poor got poorer

3. A New President The Election of 1928 Democrats Republicans Alfred E. Smith Herbert Hoover Governor of New York Sec. of Commerce Witty / Outgoing Formal / Reserved Hoover Wins

4. Risky Business • Many Americans practiced speculation & buying on margin • Speculation – very risky • Buying on margin – only paying for part of the stock

5. Stock Market Crashes October 29, 1929 • Stock prices dropped • Investors started selling all their stocks • Wall Street lost $30 billion in one month

6. Financial Collapse • Many Americans lost EVERYTHING in the crash After the Crash • Americans panicked & tried to withdraw their money from the bank • The banks ran out of money and closed • People lost their savings

7. After the Crash, Continued • 85,000 businesses went bankrupt • 1 out of every 4 people were unemployed • People who kept their jobs had cut hours and less wages

8. Hawley – Smoot Tariff Act • Highest tariff in US History • Designed to protect farmers and manufacturers from foreign competition • Backfired – foreign countries couldn’t afford to buy American goods

9. Questions over Section 1 Fill in the following graphic organizer:

10. Hardship and Suffering During the Depression Chapter 22 Section 2

11. Depression in the Cities • Many people were evicted from their homes and lived on the street or in shantytowns • Charities provided food in soup kitchens and bread lines

12. Minorities & the Depression • African Americans and Latinos had the highest unemployment rates • Racial violence increased – there were 24 lynchings in 1933 • Many demanded that Latinos be deported to Mexico • Some left voluntarily while others were deported

13. Depression in Rural Areas • Some farmers were able to grow enough food to feed their families • Over 400,000 farms were foreclosed due to unpaid debts • Many turned to tenant farming but were VERY poor • Thousands left their land and went to California

14. The Dust Bowl • Farmers overused land • Grasslands became unsuitable for farming • Drought and winds blew the soil away

15. Men & the Depression • Men could not provide for their families • 2 million men abandoned their families and wandered the country

16. Relief? • The government did not offer direct relief • Some charities gave a weekly payment of $2.39 for a family

17. Women and Children • Women sewed clothes and canned food • Managed household budgets • Worked outside the home • Many women were too ashamed to admit their hardship

18. Problems • Poor diets and lack of money for health care led to health problems for many children • Malnutrition • Rickets • Pellagra

19. Social and Psychological Effects • Suicide rates rose by 30% • People developed habits of thriftiness • People gave up on dreams

20. Positive Effects of the Depression • People showed kindness to strangers • Gave food, clothing and a place to stay for the needy • Shared resources and helped each other out

21. Answer the following questions • What were positive effects of the depression? • What were negative effects of the depression?

22. Hoover Struggles with the Depression Chapter 22 Section 3

23. Hoover’s Philosophy • Tried to reassure Americans that the economy was on strong footing. • Felt the gov. should play a limited role in helping to solve the economy’s problems. • Gov. role to encourage & facilitate cooperation. • Direct relief efforts not support them finacially.

24. Hoover takes Cautious Steps • Cautious approach to the depression • Asked employers not to cut wages or layoff workers • Asked labor leaders not to demand higher wages or go on strike. • Created a special organization to help private charities generate contributions for the poor. • None of these steps made much of a difference.

25. Boulder Dam • Hoover dam was approved to be built in 1928. Boulder Dam • World’s tallest dam & second largest dam

26. Democrats Win in 1930 Congressional Elections • Political tide turned • Republicans lost control of the House of Representatives & only remained in control by only 1 vote in Senate. • Farmers burned crops rather than sell at a loss. • Declared a “farm holiday” – refused to work in fields. • Calling Shantytowns “Hoovervilles” • Hoover blankets • Hoover Flags

27. Hoover Backs Cooperatives • Attempts to relieve the depression involved negotiating agreements among private entities reflecting his belief in small gov. • Tried to prop up banking system by establishing the National Credit Corporation. • Loaned money to smaller banks

28. Direct Intervention • Appealed to Congress to pass a series of measures to reform banking. • Provide mortgage relief • Funnel more money into business investment • Federal Home Loan Bank Act – lowered mortgage rates & allowed farmers credit • Glass – Steagall Act – separated investment from commercial banking • Reconstruction Finance Corporation – authorized $2 billion for emergency financing for banks

29. Patman Bill Denied • 10,000-20,000 WWI veterans went to Washington D.C. – Bonus Army • Patman Bill authorized the gov. to pay a bonus to WWI veterans. • Was supposed to be paid out in 1945 • Wright Patman believed money should be paid immediately. • Hoover opposed legislation • Called on Bonus Army to leave - refused

30. Hoover Disbands the Bonus Army • Hoover called for the infantry to gas 1,000 people who were injured. • Most Americans were stunned & outraged at the government’s treatment of veterans.

31. Hoover’s Response

32. Extra-Credit Questions • Why was Hoover reluctant to help people during the Depression? • What types of action did Hoover take to remedy the effects of the Depression? • What measures did Hoover take and what results did he achieve to help the economy? • Why did Hoover use to force against World War I veterans? • What was the Patman Bill and what happened when it failed in the Senate? • What happened to the Bonus Army? • How did the treatment of the Bonus Army affect President Hoover?