The Great Depression

1. The Great Depression 1929-1940

2. Election of 1928 The economic collapse that began in 1929 had seemed unimaginable only a year earlier. The election of 1928 the presidential candidates would paint a picture of the future to be one of prosperity. Herbert Hoover declared “We are nearer to the final triumph over poverty than ever before in the history of any land.”

3. Election of 1928 HOOVER VS. SMITH When President Calvin Coolidge announces that he won’t run for reelection, the GOP nomination went to Secretary of Commerce Herbert C. Hoover. The Democrats nominate Governor Alfred E. Smith of New York.

4. Herbert Hoover Herbert Hoover seemed to be the ultimate problem-solver. As a mining engineer, he had turned marginal operations into thriving enterprises. During World War I, his administration of European food relief was nothing short of brilliant. As secretary of commerce from 1921 to 1928, he transformed a once-sleepy department into a purposeful information clearinghouse.

5. Alfred E. Smith In 1928, Smith was again nominated by Franklin Roosevelt at the Democratic convention and gained an easy first ballot victory. However, Smith’s New York accent, Irish immigrant heritage, Roman Catholicism and ties to big city political machines did not wear well in the South and West. He was soundly defeated by Herbert Hoover and an electorate that equated prosperity with the Republican Party.

6. Campaign Issues By 1928 Prohibition had become a major issue among voters. Hoover who favored the ban on liquor sales was considered a “dry” in the popular language of the day. Smith on the other who disliked the ban was considered a “wet.”

7. Campaign Issues The candidates religious differences sparked a smear campaign against Smith. Many Protestants were willing to believe that the Catholic Church financed the Democratic Party and would rule the United States if Smith were elected. The slurs embarrassed Hoover who was a Quaker and he tried to stop them. The charges did hurt Smith’s candidacy.

8. Smith’s biggest problem however was the prosperity of the 1920s for which the Republicans took full credit. The Republicans had promised to continue the trend with such slogans as “two cars in every garage.” Hoover would receive over 6 million more votes than Smith and won the Electoral College in a landslide 444 to 87.

9. What campaign issues led to Herbert Hoover's election to the presidency? Prohibition Religious Values Economic prosperity

10. The Long Bull Market The wave of optimism that swept Hoover into the White House also drove stock prices to ne highs. The stock market was established as a system for buying as selling shares of companies. Sometimes circumstances in the stock market lead to a long period of rising stock prices known as a bull market.

11. In the late 1920s a prolonged bull market convinced many Americans to invest heavily in stocks. By 1929 3 to 4 million Americans or roughly 10% of the households owned stocks. As the market continued to soar many investors began buying stocks on margin they made only a small cash down payment. The stock had become the most widely visible symbol of a prosperous American economy. Then as now the Dow Jones Industrial Average was the most widely used barometer of the stock market’s health.

12. With a $1000 an investor could buy $10,000 worth of stocks. The other $9000 would come as a loan from a stockbroker who earned both a commission on the sale and interest on the loan. The broker held the stock as collateral. As long as stock prices kept rising buying on margin was safe. To protect the loan the broker could issue a margin call demanding the investor repay the loan at once. Buyers hoping to make a fortune overnight engaged in speculation.

13. What was the stock market like in the 1920s? A bull market with a long period of rising stock prices.

14. Great Crash By late 1929 a lack of new investors in the stock market caused stock prices to drop caused the bull market to end. As stockbrokers advised their customers of margin calls, customers responded by placing their stocks up for sale, causing the stock market to plummet further. Stock prices fell drastically on October 29, 1929, BLACK TUESDAY resulting in a $10 to $15 billion loss in value.

15. Why this did not cause the Great Depression it did undermine the economy’s ability to hold out against its other weaknesses. The stock market crash weakened the nation’s bank. Banks lost money on their investments and speculators defaulted on loans. Because the government did not insure bank deposits customers lost their money if a bank closed. Many bank customers withdrew their money at the same time causing the bank to collapse.

16. Causes of the Depression Overproduction and low demand leads to employee layoffs. Low wages reduce consumer buying power. High tariffs restrict foreign demand for American goods. Unemployment reduces buying power further.

17. How did bank failures contribute to the Great Depression? The failures triggered a crisis of confidence in the banking system. People made runs to banks causing them to collapse. (withdrawing all their money at one time, usually for fear the bank is going to collapse.)

18. Roots of the Great Depression Most economists agree that overproduction was a key cause of the Depression. Most Americans did not earn enough to buy up the flood of goods they helped to produce. In 1929 the top 5% of American households earned 30% of the country’s income. More than 2/3’s of the nation’s families earned less than $2500 a year.

19. During the 1920s many Americans bought high cost items such as refrigerators and cars on installment plans which they would make a small down payment and pay the rest in monthly installments. The Hawley-Smoot Tariff intensified the Depression by raising the tax on imports Americans purchased less from abroad because of the high cost. In return foreign countries raised their tariffs on American products causing fewer to be sold overseas.

20. How did the decline in worldwide trade contribute to the Depression? Tariffs damaged American sales abroad and discouraged imports.

21. Depression Worsens In 1931 to make money, large numbers of unemployed people began to sell apples on the streets of major cities. Selling apples became a popular symbol of the Depression years. 2

22. Depression Worsens In 1930 over 1,352 banks suspended operations across the nation more than twice the number of bank failures in 1929. The Depression grew worse during Hoover’s administration. By 1933 more than 9,000 banks failed. More than 30,000 companies went out of business.

23. Soup Kitchens People without jobs often went hungry. Whenever possible they joined bread lines to receive a free handout of food or lined up outside soup kitchens which private charities set up to give poor people a meal at no cost or low cost food.

24. Living in Makeshift Villages Families or individuals who could not pay their rent or mortgage lost their homes. Landlords would ask the courts for an eviction notice. Court officers called bailiffs then ejected the nonpaying tenants piling their belongings in the street.

25. Throughout the country newly homeless people put up shacks on unused or public lands forming communities called shantytowns. Blaming the president for their plight people referred to such places as Hoovervilles.

26. In search of work or a better life, many homeless and unemployed Americans began to wander around the country walking, hitchhiking or often riding the rails. These wanderers called hobos would sneak past railroad police to slip into open boxcars on freight trains for a ride to somewhere.

27. Hobos camped in what was known as “hobo jungles” usually situated near rail yards. Hundreds of thousands of people mostly boys and young men wandered from place to place in this fashion.

29. Dust Bowl Farmers soon faced a new disaster since the beginnings of homesteading on the Great Plains farmers had gambled with nature. As crop prices dropped in the 1920s many American farmers left their fields uncultivated. A terrible drought in the Great Plains beginning in 1932 caused the region to become a Dust Bowl. (from Dakotas to Texas)

31. Many Midwestern farmers and Great Plains farmers lost their farms. Many families moved west to California hoping to find a better life but most still faced poverty. Winds whipped the arid earth blowing it aloft and blackening the sky for hundreds of miles. It buried livestock and crops and piled up against houses like snow. By 1937 yearly dust storms were about 72.

33. What chain of events turned the once fertile Great Plains into the Dust Bowl? Uprooting the wild grasses A drop in crop prices Drought

34. Escaping the Depression Americans escaped the hardships of the Depression by going to the movies and listening to radio broadcasts. Stories tended to be about overcoming hardships and achieving success.

35. Walt Disney produced the first feature length animated film, Snow White and the Seven Dwarfs, in 1937. Other films like The Wizard of Oz, Mr. Smith Goes to Washington, and Gone with the Wind contained stories of triumph over adversity and visions of a better life.

36. Families gathered around the radio daily to hear news or listen to comedy shows like George Burns or dramatic series like the Lone Ranger. Melodramas called soap operas became very popular with housewives. Soap operas received their name because makers of laundry soaps often sponsored them.

37. What movies and radio shows entertained Americans during the Depression? Comedies Westerns Soap Operas

38. Americans also used radio and motion pictures as ways to forget about the Depression.

39. Depression in Art Homeless and unemployed Americans were the subjects of art and literature during the 1930s. Artist and writers tried to capture the real life drama of the Depression. Thomas Hart Benton and Grant Wood emphasized traditional American values in their art.

40. Grant Wood’s Painting American Gothic Wood’s most famous painting.

41. Thomas Hart Benton’s Paintings

42. John Steinbeck’s 1939 novel The Grapes of Wrath told the story of an Oklahoma family fleeing the Dust Bowl to find new life in California. Steinbeck like many writers of the time wrote of poverty, misfortune and social injustice.

43. William Faulkner’s literary technique stream of consciousness, revealed characters’ thoughts and feelings before they spoke- thoughts they dared not reveal. The Sound and the Fury is his best example. In his novels he exposed hidden attitudes of Southern whites and African Americans in a fictional Mississippi county.

44. Photojournalist Margaret Bourke-White’s striking pictures displayed in Fortune magazine showed the ravages of drought. She photographed homeless people and uncovered the desperation of her subjects.

46. In the 1930s Life was a popular and powerful magazine because it provided a commentary on American Life.

47. Promoting Recovery During the Depression homeless Americans blamed President Hoover for their situations. Many homeless people wrapped themselves in used newspapers they called “Hoover blankets” to keep themselves warm. Some wore their empty pockets inside out and called them “Hoover Flags.” 3

48. On Friday October 25, the day after Black Thursday, President Hoover issued a statement assuring the nation that industry was “on a sound and prosperous basis.” In March 1930 he told the public that “the worst effects of the crash will have passed during the next 60 days.”

49. In an effort to promote economic recovery, President Hoover held a series of conferences bringing together the heads of banks, railroads, big business, labor and government. Hoover received a pledge from industry to keep factories open and stop cutting wages. After the pledge failed, Hoover increased public works a government financed building project.

50. Hoover asked the nation’s governors and mayors to increase public works spending. At the same time however, Hoover refused to increase government spending or taxes. He feared that deficit spending would actually delay an economic recovery. Americans blamed the Republican Party for the Depression. As a result in the midterm elections of 1930 the Republicans lost 49 seats and their majority in the House of Representatives.